MINUTES OF THE
joint Subcommittee on human resources / k-12
of the
senate committee on finance
and the assembly committee on ways and means
Seventy-First Session
April 3, 2001
The Joint Subcommittee on Human Resources/K-12 of the Senate Committee on Finance and the Assembly Committee on Ways and Meanswas called to order by Chairman Raymond D. Rawson at 8:13 a.m., on Tuesday, April 3, 2001, in Room 3137 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
SENATE COMMITTEE MEMBERS PRESENT:
Senator Raymond D. Rawson, Chairman
Senator William J. Raggio
Senator Bob Coffin
Senator Bernice Mathews
ASSEMBLY COMMITTEE MEMBERS PRESENT:
Mr. David E. Goldwater, Chairman
Mr. Morse Arberry Jr.
Mrs. Barbara K.Cegavske
Mr. Joseph E. Dini, Jr.
Ms. Sheila Leslie
Ms. Sandra J. Tiffany
STAFF MEMBERS PRESENT:
Gary L. Ghiggeri, Senate Fiscal Analyst
Mark W. Steven, Assembly Fiscal Analyst
Georgia J. Rohrs, Program Analyst
Judy Jacobs, Committee Secretary
OTHERS PRESENT:
Don Hataway, Deputy Director, Budget Division, Department of Administration
James Hager, Ph.D., Superintendent, Washoe County School District
Nancy J. Hollinger, Lobbyist, Washoe County School District
Anne K. Loring, Lobbyist, Washoe County School District
Elaine Lancaster, Lobbyist, Nevada State Education Association (NSEA)
Kenneth Lange, Lobbyist, Nevada State Education Association (NSEA)
Douglas C. Thunder, Deputy Superintendent for Administration and Fiscal Services,
Department of Education
Gloria Dopf, Educational Equity, Department of Education
Keith Rheault, Deputy Superintendent for Instructional, Research, and Evaluative Services, Department of Education
Senator Rawson informed the committee that they have each received a packet (Exhibit C. Original is on file in the Research Library containing responses from the Clark County School District to questions that were last asked of them. He noted that included in this packet is information from the State Department of Education. He added that a handout (Exhibit D) with information from the Washoe County School District has also been provided to the committee. He pointed out that a significant packet providing information concerning recruitment of teachers will also be supplied to committee members.
Gary L. Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, commented on his handout (Exhibit E) regarding the 2 percent sales and use tax collections for FY 2001 as compared to FY 2000, as well as gaming percentage fee collections for the same time period. He noted that sales and use tax for FY 2001 were projected at the Economic Forum’s meeting on December 1, 2000. He mentioned that sales and use tax collections were projected to increase 5.9 percent and the collections for the gaming percentage fees were also projected to increase 5.9 percent.
Mr. Ghiggeri explained that for the first seven months of FY 2001, sales tax collections have increased 5.1 percent over FY 2000. He added that for the first eight months the gaming collections reflect a reduced amount, when compared to the prior fiscal year, of 2.3 percent. Page 2 of Exhibit E, he said, is the projection of what would occur if sales tax collections remain at 5.1 percent this fiscal year. In this revenue scenario, he pointed out, the General Fund reflects a $5.1 million reduction for FY 2000-01, with no changes in FY 2001-02 or FY 2002-03. He added that, from the estimate of growth provided by the Economic Forum, there would be a reduction of approximately $5.4 million in FY 2002 and $5.7 million in FY 2003.
Mr. Ghiggeri said if the percent fee collections come in “flat” this fiscal year, that would result in a reduction of $33 million in General Fund this year, $34.6 million in FY 2002, and $35.9 million in FY 2003. He reported that in the Distributive School Account (DSA) the reduction in sales tax collections would result in a reduction of $5.3 million this fiscal year, almost $5.7 million in FY 2002, and approximately $6 million in FY 2003.
Senator Rawson asked whether this is a “fairly favorable” estimate on what is expected to happen. Mr. Ghiggeri replied this report assumes, in FY 2002 and FY 2003, that the Economic Forum will not reduce the projected growth level for either sales or percentage fees. He added that if the Economic Forum reduces the base in FY 2001 and also reduces the projected growth in FY 2002 and FY 2003, the reduction in projected revenues for those sources would be greater.
Senator Rawson said it seems that there is an effort to avoid “panic” by making the “out-year” adjustments. He asked whether it is possible the Economic Forum will adjust the “out-years.” Mr. Ghiggeri responded that they may or may not. He said we will know for sure on May 1, 2001. Letters have been sent out to the agencies who project the revenue, he explained. He pointed out that when the Economic Forum meets, the agencies project what they expect revenues to total. Then the Fiscal Analysis Division makes a projection and the Budget Division makes projections. He stated that this is all provided to the Economic Forum for their review to utilize in their projections.
Senator Rawson asked whether the issue of reversions had been addressed. Mr. Ghiggeri replied that if the revenue going into the DSA is reduced, that will affect the estimated reversion in this fiscal year. He said that in FY 2002 and FY 2003, if sales tax collections exceed what is projected in the DSA, there is a reversion to the General Fund. He added that if sales tax collections do not meet or exceed DSA projections, there is usually a supplemental appropriation that is provided to the DSA by the next session of the legislature.
Senator Rawson expressed concern that it is likely there will by “a bigger hole than what is budgeted or projected.” Mr. Ghiggeri said this is possible, but until the revenue projections are received from the Economic Forum, we do not know.
Senator Rawson said the bottom line is that revenues are under what was projected. He asked whether Mr. Ghiggeri would consider the best case scenario to now be that we have a $43 million deficit, and whether that is a fair way to describe it. Mr. Ghiggeri replied that it is. He pointed out that taxable sales are up 5.4 percent this fiscal year, and the collections are only up 5.1 percent. He said it is possible that sales tax collections could increase a small amount. He noted that similarly “gaming win” is up 3.7 percent, but the collections reflect a negative growth. He said this means there is some “credit play” and adjustments will need to be taken into consideration.
Assemblyman Goldwater said he believes the trend in sales growth going down can be attributed to a number of factors. He explained that this includes the slowing economy, lack of large property development, and the Internet, which are all trending down. He stated that the committee needs to be responsible in assuming the Economic Forum growth rates are inflated. He said a reasonable person would assume what has happened in the past, or what is currently happening, would be a trend for the future. He said he believes that in order for the committee to budget responsibly it should assume the worst-case scenario, that there will be a $43 million dollar “hole.” He added that this is just in gaming sales tax revenues and does not include property or motor vehicle privilege revenues and therefore, we are in “crisis.”
Senator Rawson stated in 1991 the legislative session ended with everyone believing that “things in education were taken care of.” He added that the Governor, at that time, was left to cut “wholesale.” He pointed out that if adjustments are needed this session, they should be taken care of in committee meetings. He remarked that he does not want anyone to leave this legislative session feeling that things are okay, and then have “the bottom fall out of it.” He further added, “I especially don’t want to do anything that brings us back into ‘special session,’ so we ought to be facing it and dealing with it here.”
Assemblyman Goldwater said another item he believes is key is that some school board members are present from different counties around the state, and as this budget gets to them, they really need to deal with it.
Mark W. Stevens, Assembly Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, addressed property tax and stated that he looked at the last four or five legislative sessions and examined the numbers that were utilized to estimate the 25 cent property tax included within the DSA.
Mr. Stevens added:
Traditionally, in the last five legislative sessions, the legislature has taken the Department of Taxation’s assessed valuation projections for the fiscal year following the legislative session and have utilized that to project the 25 cent property tax portion that is included within the DSA.
Mr. Stevens commented that preliminary information has been received from the Department of Taxation, which he does not believe has been finalized. He said this information indicates that for the next fiscal year, the 7.9 percent increase assumption that is built into the DSA for FY 2002, may be too high. He added that the preliminary projection from the Department of Taxation indicates there will be an assessed valuation increase of approximately 6.4 percent in the first year of the next biennium, versus the 7.9 percent assumption, which is included in the Governor’s recommended amounts for the DSA.
Mr. Stevens said the committee will need to determine whether an adjustment needs to be made and will probably need to hear from the Budget Division. He added that if the growth rate for assessed valuation was set at 6.4 percent versus 7.9 percent within the DSA, in which there is a 25 cent property tax, the impact of the growth would be worth about $1.8 million. He noted that the 50 cent property tax outside the DSA, which is local revenue, would be worth about $3.6 million, to total approximately $5.4 million in FY 2002.
Mr. Stevens said the committee needs to be aware of this and needs to determine what assumption to plug into the DSA on the “local side or 50 cent side.” Senator Rawson asked when the committee will be receiving final numbers on that assessed evaluation. Mr. Stevens replied it should be very soon. He added that he believes the Department of Taxation is going to finalize those soon and send the information out to local governments for their budgeting purposes in the next fiscal year.
Senator Rawson inquired whether the current figures from the Department of Taxation indicate 6.4 percent. Mr. Stevens replied that is the information he was given on a preliminary basis, but it is not yet final. Senator Rawson said the committee may or may not have a moral and ethical obligation to hold this amount. However, he said, the committee is not legally obligated to appropriate over that amount. He added that the reality of the situation is the money coming in is directly related to the actual assessed evaluation. He noted that whether or not it is appropriated, the actual amount that can be spent is only what is actually brought into this account. Mr. Stevens said this is correct.
Senator Rawson said the “upshot” is approximately $5 million dollars. Mr. Stevens said the difference of a 6.4 percent growth versus 7.9 percent growth, in the first year of the biennium, would be $1.8 million. He noted that within the DSA, that is the “25 cent portion.” He explained that $3.6 million is the 50 cents portion, which is outside the DSA and is considered a local revenue.
Senator Rawson asked whether these are the “red book” numbers previously talked about. Mr. Stevens said the “red book” has not been released; however, these are the numbers that should be in the “red book” when it is finalized by the Department of Taxation.
Regarding revenue projections, Mr. Goldwater asked Don Hataway, Deputy Director, Budget Division, Department of Administration:
Given the things that you have heard so far on the revenue projections, I’m just going to assume that you did the best you could with the information you had at the time when you built the budget, but what are we looking at here? Would you have built it the same way or could we have built it differently?
Mr. Hataway responded that the estimates built into the budget are from the Department of Taxation. He added that the Budget Division does not make a guess on those numbers. He stated that from recent discussions with the director, the actual assessed valuation that will ultimately be certified by the local county assessors is very close to the original number. He testified that the Budget Division is not recommending any changes in that assessment.
Mr. Hataway explained that secured roll numbers that go in the “red book,” are certified by local assessors, unsecured roll is based on a “three-year or “multi-year rolling average” of prior years. He stated “red book” numbers are consistently very conservative. Consequently, he added, it is agreed that the numbers used to build the budget are best. He reiterated that the Budget Division is not making any recommended changes in the assessed valuation.
Mr. Stevens said he reviewed the last 10 years of the Department of Taxations’ revenue estimates in the “red book” received at each legislative session and compared these numbers to the actual collections within the DSA for the 25 cent property tax portion. He noted that in FY 1992, the Department of Taxation, on a $56 million projection, under-projected by $33,000. He noted that the Department of Taxation has been pretty accurate on these numbers. He said that in FY 1994, the Department of Taxation underestimated by $323,000 for a $65 million total. In FY 1996, he remarked, the Department of Taxation over-projected by $242,000, and in FY 1998 they were “virtually right on.” He pointed out that in FY 2000, for the school funds the 25 cent portion, was over-projected by $517,000.
Mr. Stevens said the Budget Division has reviewed these numbers and noted that for two of the last three sessions, those projections relating to the DSA were actually overstated by the Department of Taxation.
Mr. Hataway commented that this is not an easy process. He said:
It really depends upon where the school districts ‘book’ their revenues into the budget. The 25 cent property tax is ‘right on’ because it is outside The Executive Budget; however, defaults, payments of back-taxes, anything that is just ‘out-of-the-ordinary’ from just the general assessed valuations normally ‘book’ into the 50 cent part.
Mr. Hataway noted that the Budget Division does not recommend changing the projected assessed valuation. He noted that the average growth in assessed valuation over a ten-year period is approximately 9 percent. He said the Budget Division felt the 7.9 percent estimated growth in the first year of the biennium was low. He stated that they will not know this for sure until the actual collections are received.
Mr. Goldwater pointed out that this is frustrating because the committee must make the decisions to balance this budget and very difficult revenue projections are being submitted to the committee. He said even in a “good faith effort,” there are huge holes in the budget, almost $50 million.
Mr. Hataway remarked that this is not fair in the sense that the Economic Forum was set up for the purpose of recommending their best estimates. He said:
They based their estimates, in December, on the best current information available. Now what your suggesting is that we took their estimates and said, well we think that’s too high, we’ll just build something different. That’s not how the system works since the Economic Forum was put into place. We use their estimates. We use the Department of Taxation estimates on assessed valuation in good faith, so that is not a fair statement.
Mr. Goldwater indicated that he is correct. Mr. Hataway said:
When I said that you will have to balance the budget, I was talking about the assessed valuation figure. The Governor is on record saying that he will submit recommendations related to balancing the budget based upon what the Economic Forum comes up with on May 1. If those figures are lower, then we will be providing recommendations.
Mr. Hataway noted that, regarding sales tax, the DSA, unfortunately, gets a “double whammy” in the sense that they are supported by the general sales tax of the state and the Local School Support Tax (LSST). He testified that sales tax is currently not the problem, even though it is lower than the Economic Forum had estimated, but the problem is gaming revenues. He explained that their studies show insurance premium tax revenues will offset any losses in sales tax.
Mr. Goldwater apologized for making that accusation. However, he stated, given the trends that staff has pointed out and given the numbers we are working with, and even within the budget itself, there are some “under-projections” on the expense side of the budget. He said he believes insurance premiums will be higher than they thought. He pointed out that a textbook audit reflected some difficult problems. He added, “I think it is unbelievable that we can leave here without an increase in teachers’ salaries. I think there are some things that a reasonable person, at this stage, does not need to wait on the Economic Forum to see that we are going to have a big problem. There are some trends here that are apparent.” He questioned whether we wait for the Economic Forum or start acting now to save the school boards, and children from “budgetary peril.”
Mr. Hataway responded that the largest inflationary increase possible was built into the budget. He remarked that this was based on the Budget Division’s best “guesstimate,” and the trends indicate that this may be low. He said they looked at this and took the advice of the consumer advocate to build in the percentages. He repeated that the Budget Division works with “best estimates” to build this budget.
Mr. Goldwater inquired whether the estimates on property tax revenues were received in November 2000. Mr. Hataway said they were. Mr. Goldwater asked when new estimates would be received. Mr. Hataway explained that the “red book” is normally published in May, but he is not sure when that estimate would be released. Mr. Goldwater questioned whether there is any indication from the department what that number may be, and whether that number will be what the committee works with. Mr. Hataway indicated that Georgia J. Rohrs, Program Analyst, Fiscal Analysis Division, would have the best “guesstimate” of what the “red book” will reflect on assessed valuation.
Mr. Arberry said this picture does not look “rosey,” and this is why we are skeptical at this time. He added that the committee cannot wait until May 1, because of the 120 day time-frame. The committee needs the assistance of the Budget Division in coming up with a plan, he added. He questioned when an alternate plan could be expected.
Mr. Hataway responded that there is another month’s collections, particularly in gaming, and numbers will not be “crunched” until that time. He added that his department is concerned regarding the Economic Forum and what they will do on May 1. He said they will get numbers to the committee as soon as possible. He testified that he seriously doubts there will be “across-the-board cuts” in what are already “tight budgets.”
Mr. Arberry stated that budgets are being closed, and nobody wants to start reopening them to make adjustments. He added that the committee really needs input from the Budget Division so it has a “roadmap” to follow.
Mr. Hataway said:
In terms of the DSA, expenditures are basic, there isn’t anything elaborate to them. I seriously doubt that any recommendations will be made on that. There are some new options that I do not believe the Governor wants to go to, but there is additional money for professional development, remediation, and for early childhood education. I think that would be a “last option” on the Governors part, but it may need to be part of the equation. As far as basic support is concerned and the way the budget is normally constructed, there is not much to work with there.
Senator Raggio reminded committee members that the committee has an equal obligation to construct the budget, as does the Governor. He added that the trends are known, but the Governor and Legislature are bound by the numbers that come from the Economic Forum. As budgets are closed, the committee should be prepared to recognize the need to make some adjustments. He said, “When we close budgets, I think we are going to do so based upon, or we should do so based upon, what the trend shows, what our staff is telling us.”
Senator Rawson commented the committee needs to evaluate and consider every situation, and if committee members want to identify the concerns they have, that’s fine; however, the task is really going to be to identify a plan of cutting this budget, not adding to it.
James Hager, Ph.D., Superintendent, Washoe County School District (WCSD), said as the committee is debating from a statewide perspective, the districts are doing the same from the local perspective. He noted that the expectation level for education is growing at an accelerated rate in school districts throughout Nevada. He indicated WCSD is very pleased that those expectations are there and are proud that the WCSD has taken on the challenges of new standards and higher expectations. He said that in his opinion they have exceeded what the state expects of them. Dr. Hager remarked that on the contrary, revenues are not keeping pace with the cost of these expectations. He said it is a challenge to address these particular issues.
Dr. Hager, referring to Exhibit D, said great strides have been made in the WCSD, thanks to an excellent teaching staff and professional development funds. He stated that Fall 2000 TerraNova testing totals indicate an increase in accomplishments for students. He added that no school in the district falls in the category of “in need of improvement.” He stated that this compares to seven schools in 1997.
Dr. Hager said three schools among five in the state fall within the “exemplary achievement” category, based on the Fall 2000 TerraNova scores. He added that indicators from longitudinal studies continue to show a high increase of academic achievements within the WCSD.
Dr. Hager pointed out that there is a high number of students making great strides regarding advance placement courses. He remarked that the Nevada high school proficiency examination for the class of 2000 had a 99.2 percent passing rate in reading, a 99.2 percent passing rate in writing, and a 96.2 percent passing rate in math.
Dr. Hager said the dilemma WCSD faces is in revenues and expenditures. He referred the committee to Exhibit D, and pointed out that expenditures are increasing faster than revenues. Senator Rawson asked what time period the graph represents. Dr. Hager replied that the graph is hypothetical and it does not represent any specific period of time, only the relationship of where expenditures meet revenues. Senator Rawson questioned whether the “revenue line” and “expenditure line” have crossed. Dr. Hager answered it has absolutely, and that is where reductions were made.
Dr. Hager said they have no avenues to increase revenues and the alternative is to reduce programs or personnel to bring the “expenditure line” at least equal to the “revenue line.” He remarked they are continually being asked whether the WCSD is being efficient. He commented that for the last three to five years, they have had operational audits and have looked at each department to determine whether it is essential or necessary. He testified that the funds saved from these audits go toward balancing their budget, as opposed to taking funds away from students in “direct-line” programs.
Dr. Hager pointed out that at least $1.2 million of General Fund money has been applied to extraordinary maintenance so there is no deferred maintenance or other issues. He noted that an extensive energy retrofit has been done, which they expect will save $920,000 annually. They are also converting a number of school buses to natural gas, he added.
Dr. Hager said WCSD has not put any inflationary increases in its operation budgets for several years. He pointed out that they have gone to lease/purchase financing to replace buses, they have reduced health benefits for all employees, they have deferred purchases of technology infrastructure to include hardware and software, and they have reorganized and downsized their central office staff.
Dr. Hager pointed out that only marginal salary and health benefit increases have been given to employees over the last few years, and, to remain competitive, the WCSD is requesting a 3 percent cost of living adjustment (COLA) for each year of the biennium. He said the WCSD has a very difficult time funding health insurance premium increases without putting it on the employee to absorb the cost. He remarked that insufficient funds have been set aside for increasing energy costs. He added that it is equally difficult to fully fund for school supplies, instructional equipment, library books, and textbooks.
Dr. Hager testified that he believes there is a crisis, and the WCSD will do its part to help. He said they have made a strong commitment that WCSD students will be “world-class competitive.” To do this, he added, they have raised the level of expectations on all of their employees. He noted that all available emergency funds have been used over the last two and a half years in areas outlined today.
Nancy J. Hollinger, Lobbyist, Washoe County School District, said Dr. Hager has presented their case very well. She added that many areas have been downsized to a point where they can no longer do so without losing valuable programs.
Assemblywoman Sheila Leslie stated she believes everything said regarding test results are true. She mentioned that her daughter, who attends Reno High School, is getting a “world class education.”
Ms. Leslie said:
What I hear you saying, Dr. Hager, is that the things on your ‘what do we need’ page are your priorities, rather than some of the things that are in the Governor’s budget, like the Early Literacy Program, the additional training for teachers, not saying those things would be nice to have, but, based on what we have heard here this morning, I would just like for you to confirm that these are your priorities and are they in any order?
Dr. Hager replied that those are their priorities and they are in order. He mentioned that, regarding the Governor’s proposal, there are many things they believe are very important and they are very strong allies on literacy. He stated that it is a “key ingredient” for them to make sure all students are reading by the time they leave the third grade. He added that additional days are an absolute need for teaching staff.
Anne K. Loring, Lobbyist, Washoe County School District, on behalf of Lobbyist Randy Robison, Executive Director, Nevada Association of School Boards, said they stand behind the testimony by school superintendents that was heard during the last two meetings on this subject. She commented that the superintendents are doing an outstanding job of bringing the school district budgets before the committee. She testified that she fully supports their testimony.
Elaine Lancaster, Lobbyist, Nevada State Education Association (NSEA), as president of this organization, presented her written testimony (Exhibit F), and spoke on behalf of the 340,000 students of Nevada that they serve. She commented they also represent approximately 30,000 teachers, education support personnel, and administrators who support increased funding for public schools of Nevada through the NSEA Quality Schools Plan.
In looking at the DSA, Ms. Lancaster said, “This budget shortchanges the children and educators of Nevada. To pass it without additional funding represents a retreat from the responsibility to give our children the full benefit of the extraordinary wealth of this state.”
Ms. Lancaster suggested that, without additional funding for this budget, schools are not as safe as they could be. She added that quality teachers will not be attracted or retained with this budget, and children will not have the textbooks, materials, and supplies they need. She referred to a newspaper article in the Reno Gazette Journal that reported how successful the district has been in becoming more accountable and delivering greater results. She added that Nevada now has 24 Nationally Board Certified (NBC) teachers.
Ms. Lancaster commented that Nevada teachers work extra hours and spend an average of $500 to $1,000 per year of their own money to subsidize their classrooms. She concluded, “To accept this budget when we know that it is not enough is to admit that we lack the fundamental courage to do what is right.”
Kenneth Lange, Lobbyist, Nevada State Education Association (NSEA), presented his written testimony (Exhibit G), and said Ms. Lancaster has shared some of his concerns. As a representative of the school teachers of Nevada, he said, they would like to “shoot a little bit higher” and do what is right for the students of Nevada.
Mr. Lange said NSEA believes that the base salary for teachers should be increased to $30,000 by the end of this biennium. He noted that this represents about a 5 percent increase in order to make the state competitive and keep the teachers we have. He outlined that the Clark County School District is losing 8 percent of its teachers a year, and 50 percent of its teachers have under 5 years of teaching experience. Senator Rawson asked whether there is a dollar amount for this issue. Mr. Lange replied $220 million would “roughly” be the cost.
Mr. Lange indicated there is a need to extend the school year by 3 days. He outlined that Nevada spends well below what other states spend in terms of its total commitment to professional development, and NSEA is committed to a well-trained, highly qualified core of teachers and school employees. He added that the cost for this would be approximately $45 million.
Mr. Lang remarked that enhanced compensation for recognition of “mentor” and “master teachers” is also proposed. He said that there is a recommendation of an allocation of $50 million over the course of the biennium. He said that if higher goals are set for teachers, they will move toward these goals.
Mr. Lange commented that in 1999, Assembly Bill (A.B.) 521 was passed, which was a bill heavily promoted by NSEA to provide safe schools. Unfortunately, he added, the funding was not provided to go with it. He outlined that for half Nevada schools this program would cost approximately $48 million over the course of the biennium.
ASSEMBLY BILL 521 OF THE SEVENTIETH SESSION: Makes various changes relating to discipline of pupils.
Mr. Lange said it is important to provide the kind of environment in which teachers can do a good job; therefore, they recommend $100 per pupil, each year of the biennium, for textbooks and supplies. This represents approximately one textbook for a high school student, he added, and two textbooks for an elementary school student. He pointed out that the cost would be $68 million over the course of the biennium.
Mr. Lange next proposed that the technology budget would be increased by $74 per pupil. He said, “We currently spend only $26 per child, I think that in the ‘Information Age’ this represents a severe impediment to helping our kids get prepared for the jobs of the future.”
Mr. Lange commented that through the Quality Schools Plan, they have “lumped” all of the programs recommended to promote parental involvement, better student achievement measuring, and remediation. Inputs make a difference, he said, the question is whether we can target those inputs in ways that helps us get to where we want to be. He added that he believes these proposals would make a difference.
DEPARTMENT OF EDUCATION
Distributive School Account – Budget Page K12ED-11 (Volume 1)
Budget Account 101-2610
Senator Rawson said he understands that special education growth has been calculated on the basis of overall growth, not on special education growth, and asked about the implications.
Douglas C. Thunder, Deputy Superintendent for Administration and Fiscal Services, Department of Education, said that is correct. For the past three biennia the growth in the number of units has been based on the enrollment growth, allowing these numbers to grow at the same ratio, he added.
Senator Rawson asked what the dollar implication would be. Mr. Thunder responded:
Also, in addition to the growth in units, the dollar amount and the amount per unit has been allowed to grow. If there was salary increase by that amount, which there is not one this time, and then the 2 percent movement on scale. So you’ll notice that the amount moved from $29,389 per unit in the current year up to $29,977, and that is a 2 percent increase. Another 2 percent increase moved that to $30,576. The number of units grew from the current year of 2,291 to 2,402 units. For the second year of the biennium the units grew to 2,514.
Mr. Thunder commented that the total dollar amount for special education in FY 2002 would be $72,014,496, and for the second year of the biennium it would be $76,892,469, if approved.
Senator Rawson inquired whether there is any information of the congressional bill on special education funding. He said he understands Nevada could receive as much as $85 million in federal funding for special education.
Gloria Dopf, Educational Equity, Department of Education, responded that the good news on the federal front is that there is bipartisan support for the increase in special education funding. She pointed out that there are several proposals directed at increasing the funds towards providing 40 percent of the cost of educating special-needs children.
Ms. Dopf said Nevada is currently allocated approximately 12 percent of the cost of educating special-needs children. She added that in FY 2002 it will be 15 percent. She commented that where it goes from here depends on factors being balanced at the federal level. She explained that the impact of U.S. President George Bush, who is interested in reducing and refunding taxes and reducing tax initiatives, will directly affect how this works out. She pointed out that the proposals going forth involve a seven-year to ten-year period for reaching the 40 percent level. She added that the Department of Education has been told there is a $1.25 billion reserve at the federal level.
Ms. Dopf said the amount of these funds directed at Nevada has yet to be discussed, and it will vary depending upon how quickly we increase funds and what the “play out” is over a period of time. This means there is momentum towards the 40 percent level, she added.
Senator Rawson asked, if we were fully funded at the 40 percent level today, would that more than fully fund our special education in Nevada? Ms. Dopf replied that she believes that amount would do a “good deal” to eradicate the $100 million deficit. Senator Rawson commented:
I realize that everyone involved with the special education issue wants more units and wants more funding, and we understand the need for it. But with the likelihood that we are going to move closer to that 40 percent funding, which would probably fully fund Nevada, is this year’s budgeted amount a reasonable progress forward in light of probably more help on the federal side?
Ms. Dopf said the Governor’s recommendation for the 2 percent roll-up is not sufficient to begin to deal with unit funding. She added that the State Board of Education request was to get state funding that supports the unit at the average salary plus fringe benefits over two biennia. She explained that, in order to accomplish that in the first year of the biennium, the agency requested an additional $15 million, compared to the Governor’s recommendations of a $4 million increase over the base budget.
Ms. Dopf stated that, with regard to how quickly the federal funds will catch up, all of the proposals refer to “rolling it out” over a seven-year to ten-year period. She added that for next year, the department will not receive an amount that would significantly impact the amount per unit or the districts’ shortfall of $100 million.
Senator Rawson asked whether the requested $15 million is holding us at the same level or is it growing from the level we were at in the last biennium. Ms. Dopf replied that $15 million for the first year of the biennium and $32 million enhancement for the second year is intended to get half the way to the enhanced unit funding. She added that this would be a state support of approximately $50,000 per unit, which is the average salary plus fringe benefits.
Senator Rawson questioned if, under our present circumstances we cannot enhance anything, how we do not “lose ground” in special education. He also inquired, if we keep the same level of funding with growth at the same level and with no enhancement, whether the Governor’s budget will provide for this or do we need to do something. Ms. Dopf responded that the Governor’s budget would only provide the 2 percent increase in the unit funding. Senator Rawson reiterated, “Well, we know this is going on now, and the potential is to lose ground or to gain ground on that. If we want to keep it at an even ground, what do we have to do?” Ms. Dopf said she would need to calculate what is needed to keep it on an even ground. She added there would be additional support needed to cover the salaries for teachers, which are growing more than the 2 percent.
Senator Rawson stated that the decision the committee needs to make is whether to stay at the same level or lose ground, not enhance, this session, because the resources are not there. He said whether or not the resources show up, the enhancement can be considered. Ms. Dopf stated she would research this issue and get back to staff.
Mrs. Cegavske said the National Conference of State Legislatures (NCSL) has taken on special education funding as a priority. She pointed out that some areas of concern include whether there is a sufficient number of special education teachers, an “over diagnosis of students” for funding, and a shortage of specific materials needed for students’ use. She added that these items need to be addressed and the State Department of Education needs to get involved as well.
Senator Rawson stated the Senate Committee on Human Resources had a report from the Elko County School District on its work on the 22 to 1 ratio program for Kindergarten through grade 5, concerning class-size reduction. He said there has been no lost ground by going to this program. He mentioned that he believes teachers are seeing benefits in grades 3 through 5, which is what was expected. He added that teachers of Kindergarten through grade 3, who had smaller classes, believe this is a better configuration, and could be extended to any school district.
Senator Rawson mentioned that Terra Nova testing has not shown a drop in test scores for classes that went from a student-teacher ratio of 16 to 1 to 22 to 1. Mr. Thunder said that the Governor’s budget continues the program as it exists, and does not add any additional elements or lower the ratios in any of the grades. He noted that the Governor’s budget continues with a student to teacher ratio of 23.5 to 1 for kindergarten and provides funding for student-teacher ratios of 16 to 1 in grades 1 and 2, and a ratio of 19 to 1 in grade 3.
Mr. Thunder pointed out that funding in this area for the first year of the biennium is $91.8 million and for the second year of the biennium it is $97.8 million. He added:
I would just like to point out that there is also a federal component that’s not in this budget, but there is a federal class size reduction funding which currently is in the $5 million range. If we alter what we’re doing with class size in those grades, we have to be very careful or we could loose the $5 million because it would be considered a supplanting issue. With the federal program, Nevada has been given the privilege of using some of the class size money for other purposes, because we’re already below the class sizes that the federal government required, and that is just something we need to bear in mind if we’re looking at significantly changing the requirements for the program.
Senator Rawson said that as we move through the next couple of years, the Legislature is apt to lose track of this issue. He requested that someone in the Department of Education remind the committee of all the implications of that program. This way, he added, any adjustments can be made appropriately.
Senator Raggio questioned how the department proposes additional funding would be utilized, assuming that the recommendations are adopted for class-size reduction. He added as a “second scenario,” if the flexibility that has been given, by waiver, to Elko County were allowed on a statewide basis, how the federal funding for this purpose would be utilized?
Keith Rheault, Deputy Superintendent for Instructional, Research, and Evaluative Services, Department of Education, replied that the wording has been put forward, to allow the project to go to a student-teacher ratio of 22:1, as a pilot project. He added that when the school districts make application for federal class‑size funding, it would “take away” if they chose to go to a 22:1 ratio. He added that he believes it would remove their options from using it for any purpose other than teachers’ salaries. He said this is because the ratio is above the federal level.
Mr. Rheault further added:
But I think because the way the wording is used as far as pilot projects, and it is not going to be statewide initiated in all districts, but I think they would be limited to what they could use the money for and that would be to hire salary positions to reduce it to the 20 to 1 ratio. I believe this is in the federal class-size reduction funding formula.
Senator Raggio inquired how this funding has been allocated up to this point. Mr. Rheault replied that school districts had to make application to the State Department of Education. If the district met the class-size requirement it had an option to use these funds for professional development, he added. He pointed out that that option would not be available if Nevada chose to go to a 22 to 1 student‑teacher ratio.
Senator Raggio asked what the federal standard is for class-size. Mr. Rheault said he believes it is a 20 to 1 student-teacher ratio.
Mr. Thunder indicated that this seems to be “in a state of flux” right now as well as what the federal government is going to do in the future. He said the federal standard class-size was initially an 18 to 1 student-teacher ratio and now it is a 20 to 1 student-teacher ratio. He added that the department is currently waiting on confirmation of where this will “fall out” exactly.
Senator Rawson pointed out that the committee would like this information when it becomes available. Mr. Thunder said staff has been provided with information concerning the utilization of class-size funds.
Senator Rawson said he has noted the migration in this area. He said that from 1998 to 2001, in Kindergarten the numbers of class size changed from a 22.7 to 1 ratio, to a 23.6 to 1 ratio. In first grade the change was from a 15.8 to 1 ratio, to a 16 to 1 ratio, and in second grade a 15.8 to 1 ratio to a 16.2 to 1 ratio. In third grade, he noted that the 19 to 1 student-teacher ratio remained the same. He pointed out that other grades have migrated a full student or two and there are great concerns about this issue.
Mr. Thunder mentioned that another use of federal class-size funding would be for reduction of student/teacher ratios in other grades if a district meets the federal class size requirement.
Senator Rawson commented on the adult high school diploma program. He stated that the Legislative Committee on Education directed a letter of support to the Assembly Committee on Ways and Means and the Senate Committee on Finance urging consideration and support to requiring school districts to average enrollments or allow funds to follow students as they enter and leave the adult and alternative education programs. It was also requested, he added, to provide adequate services for English as a second language to students. He commented that there is dynamic growth in this area.
Senator Rawson said that in this letter the Legislative Committee on Education also supports using 1.5 percent of the funds for state-level administrative costs. He asked whether the department could explain the effects of this letter of support, and whether any assumptions are based on it. Mr. Rheault replied:
The four recommendations that came out of the Legislative Committee, at the time the current budget you’re looking at, when the calculations were made, I believe it is $14.6 million for FY 2002, and $15.6 million in FY 2003. We did not include the recommendation that we be allowed to use the 1.5 percent of that for administrative purposes and monitoring. I know we did provide to staff, just a break‑out of what that might entail as far as what we would do with that funding. We would propose that it come off the top of the total funding being recommended in the Governor’s budget. And I believe in FY 2003, for example, that would be $234,000, and a little bit less than that in FY 2002.
Mr. Rheault stated that the department’s proposal, for the average daily attendance figure for limited English proficient students and for the tracking of funding for this program, is to move toward a performance-based formula. He said it could be based on various categories of numbers of students. He added that one way to serve the “English as a second language” population would be to have 5 percent of the $15 million total be reserved for competitive funds. He noted that the adult education programs would make application to the Department of Education, and based on need and ability to supply these services, the department would determine who would be entitled to those competitive funds. He commented that up to 5 percent of these funds could be channeled to programs that most need the funding for English-language learners.
Mr. Rheault testified that in 1999 the department was given the authority to come up with a formula and make sure it was equitable. He stated that they have altered some things this past biennium, but it is now time to determine how to distribute adult education funds. He added that the proposal they would like to initiate in the second year of the biennium through this formula is the most equitable.
Senator Rawson stated that it is his understanding that the adult education task force did not recommend this proposal and asked who ultimately would make the decision on the formula. Mr. Rheault suggested that the department make the decision as in the past, which was for the department to develop a formula and equitably distribute the funds. He said the department chose to work with the task force and bring it back in order to be sure that they did not “jump the gun.” He pointed out that the task force did not make this decision because of the four adult prison programs. The formula takes away some of the funding they were used to, he added, and they could not reach an agreement. Therefore, no consensus could be reached. Mr. Rheault said the following:
We’re not losing money. The additional funds that are being reduced from the prison programs are being re-allocated to the general adult programs in the school districts in community-based organizations. We think, and we provided some evidence, that there was room for a little bit of “clean-up” as far as expenditures.
Mr. Goldwater stated that the department has always been excellent with enrollment projections and asked whether they currently are comfortable with enrollment projections for the DSA. Mr. Thunder replied that the department is comfortable with these projections, but noted that of the 17 districts, Clark and Washoe Counties are growing very quickly, and there are only 2 other counties that showed increases over the prior year; therefore, 13 of the 17 districts are actually declining in enrollment. He noted that when they refer to growth, they are primarily focusing on two counties. Senator Rawson commented that in conjunction with this, Esmeralda County requested to be “held harmless” at 110 students. Senator Rawson requested that the department work with staff on this issue.
Senator Rawson pointed out that school improvement programs contain increased estate‑tax funding of approximately $20 million. He noted that the Remediation At-Risk Pupils Program remains at the same funding for the next biennium and the Professional Development Centers are on the increase. The Nevada Early Literacy Intervention Program, he mentioned, which is a new program recommended by the Governor, is at a cost of $5 million per year. He further commented that these programs are important to the governor, but if cuts are made, these programs would be considered. He added that they are estate taxes, and there are pros and cons to whether or not we want to spend down that surplus very far. It is possible, he commented, that the federal estate-tax funding will be lost at some time in the next decade; therefore, we need to be careful about spending into the principal of this tax.
Mr. Dini questioned whether there is duplication in the Early Literacy Intervention Program and the class-size reduction-third grade effort. Senator Rawson replied that he believes this is mainly for 3-year and 4-year old children. Mr. Thunder agreed and said it focuses on children before they enter school. Senator Rawson commented that this should be looked at closely to avoid duplication. He added that there are questions about the development centers and the other development money that is being spent, as well as how teachers will be trained.
Mr. Thunder corrected himself and said the Early Literacy Program is in the lower grades and there is also money for early childhood. Senator Rawson asked whether there is some duplication in this area. Mr. Rheault remarked that there could be some duplication because the Class-Size Reduction Program does authorize some third grade positions to be utilized for reading recovery. However, he said he does not believe there is duplication because when the program was presented by the Governor’s staff, most of this funding was for training of teachers on the better use of reading and instruction of reading at the grade levels. He added that funding in the Class-Size Reduction Program is earmarked for specialists in reading recovery.
Senator Rawson asked whether all of the Kindergarten through grade 3 (K-3) teachers are trained out of the Regional Professional Development Program. Mr. Rheault said the plan is that they all be trained but it would be over a 4-year period. Senator Rawson inquired whether these teachers were compensated for this training and whether it was an “off-hours” training. Mr. Rheault explained that, to his knowledge, there is some funding included for substitute teachers (sub‑pay) as part of the $5 million per year funding, and that dictated how many teachers could be trained each year.
Senator Rawson reiterated that he wants to know whether there are any other adjustments necessary in the DSA. Mr. Rheault acknowledged they have been covered.
Senator Rawson inquired whether there is a distinction between intervention and remediation and whether there is an actual plan that is approved by the state.
Mr. Rheault explained:
I don’t believe we do anything for intervention. I do know on all the remediation funds, districts submit plans and then we review them with Legislative Counsel Bureau (LCB) staff and budget office staff and so we do scrutinize remediation funding very close, but I haven’t made the distinction between intervention type plans from districts versus remediation.
Senator Rawson asked whether it is easy to tell the difference between the plans. Mr. Rheault replied it is not. Senator Rawson questioned whether these plans should all be under Mr. Rheault’s direction. Mr. Rheault said it would probably make things more consistent, but it is working okay currently.
Mr. Thunder remarked that projections in the Early Literacy Program were based on programs that now exist in Clark County and he is unaware of additional programs that could be used.
Senator Rawson commented on Education Technology and Distance Education/Satellite Downlink saying this is the “3T” Program (teacher-training, textbooks, and technology). He added that the Governor recommends elimination of funding through the DSA in this area. He noted there is a $20 million “one‑shot” appropriation in the budget. He said the current law refers to the Commission on Education Technology as having a role in seeing where these funds go. He pointed out that a decision might be required concerning whether the $20 million should be allocated through this commission.
Mr. Thunder commented that there is funding in budget account 101-2673 (Education State Programs) for the continuation of meetings of that commission for a relatively small amount to cover travel. He added that the $20 million is proposed as a “one-shot,” and was actually proposed as being allocated to the districts on the basis of enrollment. He noted that it covers more than technology; it covers training, technology, and textbooks. He added that, in the past, funding for technology has been channeled through the Commission on Educational Technology.
Senator Raggio said he would object strongly if this funding does not go through the Commission on Educational Technology. He explained that this commission is a vital part of the Education Reform Act and was established for this purpose. On behalf of the Senate Committee on Finance, he said it is the committee’s recommendation that funding continue to be allocated through this means. He added that we would otherwise be dismantling a vital part of education reform. Similarly, he stated, the money for professional development centers, which is an enhanced amount, needs to be allocated in a manner consistent with how regional development centers have been funded in the past.
Senator Raggio further stated that he is aware of a pilot program for Clark County, which should also be authorized in the same manner. A great disservice would otherwise be done to the other counties who need certain, specific training. He added, “I would make a strong recommendation that we not deviate from those concepts.”
Mr. Goldwater stated that he concurs with Senator Raggio. Senator Raggio mentioned that his suggestion is not inconsistent with what he understands to be the Governor’s purpose. He noted that the Commission on Educational Technology can certainly allocate this funding within its understanding, including the matter of textbooks.
Mr. Hataway said this is the point he wanted to emphasize. He added that the remediation and professional development funding that is in the budget is exactly what the Legislative Commission on Education wants. He remarked that, regarding technology, the Governor recommended it go directly to the school districts and they make the decision.
Senator Rawson indicated that the Governor’s interest is that it meets the purpose that he had in mind. Mr. Hataway remarked that the commission has a role to make sure that the “master plan” for technology of the state is up to date and they have an ongoing roll.
Mr. Thunder said that having worked with the Commission on Educational Technology for several years, he believes one problem is it is a fairly slow process and funds do not get out as quickly as when it is directly distributed by a formula. He added that much of the spending by school districts must be done in the second semester of the first year.
Senator Rawson remarked that the committee could direct that this process move more quickly or by formula. Senator Raggio said he believes something could be done to make this more responsive, but not necessarily by a strict formula. This was the reason, he added, that the established plans were created and a formula based only on enrollment would not meet the needs of those plans. He asserted that this is the reason this program needs to be monitored in some way.
Senator Rawson noted there is a significant increase recommended in Early Childhood Education to go from $500,000 each year to $4.5 million. He asked whether a spending plan has been developed in this program. Mr. Thunder acknowledged that this is a recommendation from the Governor and something he strongly supports. He stated that it continues the Nevada Even Start Literacy Projects and these funds would also be distributed on a per-student basis among various schools.
Ms. Dopf commented on the requested enhancement for the Early Childhood Education Program. She said it includes a $2 million enhancement for which a business plan was done. She added that this contemplated the expansion of programs for early childhood education through a prevention model whereby there would be early intervention services available for early childhood programming throughout the state. She pointed out that the business plan developed for the $2 million enhancement would require a plan to be developed by the school district for early intervention that could use the expansion of the Nevada Even Start (NEST) model or any other model of early intervention to provide services to the pre-school population (3-year to 5-year olds).
Ms. Dopf mentioned the business plan also includes an advisory group that would look at early childhood intervention services and provide a comprehensive strategic early childhood plan for Nevada. She added that $4 million would double the efforts and that $2 million would not have provided the intervention to every youngster that was known to exist under the 3-year to 5-year old group. She pointed out that $4 million would provide the enhancement that would double the population that could be reached.
Senator Rawson acknowledged that early intervention can be very productive. If the committee has to make those “tough” decisions, he added, it is possible that these plans could be more fully developed during the first year and could be implemented in the second year of the biennium. Ms. Dopf said the department would work with whatever amount of funds are available to make this program effective.
Ms. Dopf commented on the costs savings of prevention or early intervention versus later expenditures, and said she feels that their plea has been made very effectively for the amount of services and funds requested. Senator Rawson pointed out the difficulty of this year’s budget for the committee and the many difficult decisions the committee is facing.
Senator Rawson adjourned the meeting at 10:03 a.m.
RESPECTFULLY SUBMITTED:
Prepared by:
Debra Petrelli
Committee Secretary
APPROVED BY:
Senator Raymond D. Rawson, Chairman
DATE:
APPROVED BY:
Assemblyman David E. Goldwater, Chairman
DATE: