MINUTES OF THE meeting of the
joint subcommittee on general government
of the
senate committee on finance
and the
assembly committee on ways and means
Seventy-First Session
April 10, 2001
The Joint Subcommittee on General Government of the Senate Committee on Finance and the Assembly Committee on Ways and Meanswas called to order by Chairman William R. O’Donnell at 8:16 a.m., on Tuesday, April 10, 2001, in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
SENATE COMMITTEE MEMBERS PRESENT:
Senator William R. O’Donnell, Chairman
Senator Lawrence E. Jacobsen
ASSEMBLY COMMITTEE MEMBERS PRESENT
Assemblywoman Vonne S. Chowning
Assemblyman Lynn C. Hettrick
Assemblywoman Sheila Leslie
Assemblyman David R. Parks
SENATE COMMITTEE MEMBERS NOT PRESENT:
Senator Joseph M. Neal Jr. (Excused)
ASSEMBLY COMMITTEE MEMBERS NOT PRESENT
Assemblywoman Christina R. Giunchigliani (Excused)
Assemblyman Bob Beers (Excused)
STAFF MEMBERS PRESENT:
Bob Guernsey, Principal Deputy Fiscal Analyst
Steven J. Abba, Principal Deputy Fiscal Analyst
Rick Combs, Program Analyst
Jim Rodriquez, Program Analyst
Carla Watson, Program Analyst
Mindy Braun, Education Program Analyst
Debra Petrelli, Committee Secretary
OTHERS PRESENT:
Terry Savage, Director, Department of Information Technology
Shelly Person, Chief, Planning and Programming Division, Department of Information Technology
Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry
Lon DeWeese, Chief Financial Officer, Housing Division, Department of Business and Industry
Charles L. Horsey III, Administrator, Housing Division, Department of Business and Industry
L. Scott Walshaw, Commissioner, Division of Financial Institutions, Department of Business and Industry
Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry
DEPARTMENT OF INFORMATION TECHNOLOGY
DoIT Computing Division – Budget Page DoIT-23 (Volume 1)
Budget Account 721-1385
Senator O’Donnell said there are eight position requests in this budget and asked whether they are justified. Terry Savage, Director, Department of Information Technology (DoIT) replied that he believes the positions are justified. He added that DoIT has identified specific agencies that have specific web development they would like to proceed with over the next biennium. He stated that part of the approach they would like to take is to make sure the state website has a “consistent look and feel,” that the websites are well developed and professional, and that they provide useful services to citizens. He said the amounts needed to fund these positions have been included in the budgets of the appropriate customer agencies.
Senator O’Donnell asked whether the 21 requested positions are for new website development and other functions, and whether 8 position requests associated with budget account 721‑1385, are specifically for web development. Mr. Savage responded that this is correct. Senator O’Donnell asked whether the other position requests were due to increases in microwave communications, network and Internet support, and project planning. Mr. Savage replied that this is correct.
Senator O’Donnell asked what percentage of training is being done by the division. Shelly Person, Chief, Planning and Programming Division, Department of Information Technology, remarked that a training budget of 10 percent of salary was identified. She added that, in addition to training needs to continue to service their customers, there is a deficit of training in that area. She testified that the division has requested that amount to help make up for that deficit, as well as keep staff continually trained in future endeavors.
Mr. Savage remarked that this is consistent with industry standards. He said it is on the “high end,” because they do have a deficit in the facility in terms of ongoing training. Senator O’Donnell commented that the industry standard is approximately 3 or 4 percent in costs for training, and asked whether the department could get by with this smaller percent. Mr. Savage replied that he does not know what “get by” means and explained that the problem the department has is in the multiple databases they support at the facility and with the database group. He pointed out that they do not have a backup person for many of the applications and many of the database systems they use.
Mr. Savage remarked that a primary person had left the facility for another private industry position. This put the department in serious trouble, he added, in terms of getting coverage because they didn’t have a backup person. He added that part of his intention is to make sure the department has, for each of these functions, not a single point of failure, but at least one primary person and one backup person for each of the primary systems and applications they support.
Mr. Savage commented that with the requested 10 percent, DoIT could accomplish this task. He indicated that with 3 or 4 percent they could accomplish this in some areas but they would not be able to do it “across the board.”
Senator O’Donnell asked whether these types of things should be standardized. He remarked that when you only have one or two people who know these systems and one or both of them leave, it really puts a hardship on the agency. He added that running so many different types of software and operating systems, it is expected that these problems are going to continue and cost the state 10 percent every year, over and above salaries, just for employee crosstraining.
Senator O’Donnell said, “Not to mention the lack of productivity, because when you’re in training, when you get on a new system, you’re not going to be productive for the first two years.” Mr. Savage replied that he agreed. He pointed out that the division is specifically working to deal with these types of problems. He added that one of the things the department has not historically done and has recently implemented is to address “enterprise-wide” types of policy questions. He said that the department just recently started a statewide information technology (IT) security committee. He commented that it was “extraordinarily” well attended with approximately 15 to 18 different agencies present in addition to DoIT.
Mr. Savage pointed out that DoIT is identifying the issues and moving forward. The next committee, he added, will be an IT standards committee to address, exactly, the issues that have been pointed out. He said DoIT’s expectations are that this is not strictly a DoIT committee, but the plan is to bring all of the major user agencies together and develop standards that make sense. He stressed that this would help to avoid the issues Senator O’Donnell has referred to. However, he remarked, they are not at this point yet.
Mr. Savage said:
Where we could really make a difference is on new systems that are coming in on new development, and then, as the old systems get replaced, if we have standards in place that statewide users have agreed to, then, as we get new ones or replacements, everything will fall in line. The training requirements will be reduced, and in general it will make the whole operation much more efficient. But it‘s going to take us a while to get there.
Senator O’Donnell commented, “We have a really tight budget. Can you get by with 3 or 4 percent?” Mr. Savage replied that he understands. He added that the department believes this will adequately address their training needs. He stated that to the extent it is scaled back, it increases the risk rather than stopping working entirely. He said that the number of areas without coverage will go up. He testified that at 3 or 4 percent they would have a real problem.
Senator O’Donnell asked whether the intent is to push competing power out into the field and decentralize. Mr. Savage answered that is the intent. He added that the division is currently addressing this issue with the Welfare Division’s Nevada Operations Multi Automated Data Systems (NOMADS). He explained that DoIT has started a project that includes being able to replicate the database onto a server for only reporting, so people who want to create reports are not actually modifying the database. He added that they would be able to do this without using any mainframe time at all. He pointed out that DoIT will need to synchronize the database with the mainframe from time to time. Reports can then be run “off‑line,” he added.
Mr. Savage commented that this is an ongoing project they have been working on with the Welfare Division. He stated that DoIT has asked Dorothy Martin, Planning and Research Unit, Planning and Programming Division, Department of Information Technology, to look at the possibility of migrating every application off of mainframe systems within the next five years. He added that mainframe software pricing policies are not very good. This is what really “drives” the problem, he noted. He said if they could just deal with the hardware and get reasonable software pricing, a mainframe would make a lot of sense. He commented that after a while, mainframes go out of maintenance and unless software pricing policies change, they will be looking very seriously at letting those machines expire and migrating those applications to other platforms.
Senator O’Donnell stated that some of the training money requested would need to be pared down during this budget term. He added that, because “boxes” are being pushed into the field and decentralizing DoIT, he recommends that some of the agencies pick up some of the crosstraining expenses out of their budgets.
Senator O’Donnell indicated that the division would probably be receiving a 3 or 4 percent training budget. Mr. Savage remarked DoIT will do the best they can with that amount.
Senator O’Donnell requested that DoIT confer with the committee staff regarding he details on the Master Service Agreement (MSA) contractors.
Senator O’Donnell asked whether they had documentation on the requested positions. Mr. Savage replied that they had turned in a fair amount of documentation, but will continue to work with the committee staff to be sure it is in the proper format.
Senator O’Donnell commented that the committee has no further questions regarding the rest of DoIT’s budget accounts, which includes Data Communications & Technical Services, Budget Account 721-1386; Telecommunications, Budget Account 721-1387; and Communications, Budget Account 721-1388. He stated that he feels comfortable as long as some of the training money can be paired down. He added that DoIT is doing a good job and their philosophy is correct in terms of pushing the competing power out into the field. He stated that years ago everything was consolidated and it was thought to be a good idea to centralize, and the philosophy was to buy “bigger boxes.” He said they found out “the bigger the box, the higher the maintenance cost.” With the advent of “super-servers,” he added, there is a lot of competing power that the “bigger boxes” used to do.
BUSINESS AND INDUSTRY
Business and Industry Administration – Budget Page B&I-1 (Volume 2)
Budget Account 101-4681
M-100 Inflation & Per Unit Adjustment – Page B&I-2
E-225 Reward More Efficient Operation – Page B&I-4
E-275 Working Environment & Wage – Page B&I-4
Rick Combs, Program Analyst, Fiscal Analysis Division, referring to Closing List Number 1 (Exhibit C), stated that two technical adjustments are recommended in this budget. He said that decision units M-100, E‑225, and E-275 have been increased. He explained that the amount being transferred from the Industrial Development Revenue Bond Program has been increased in each year of the biennium.
M-305 Unclassified 9%, 4%, ADJ – Page B&I-3
Mr. Combs testified that transfers from other budgets increased from $91,158 in The Executive Budget to $106,250 in Fiscal Year (FY) 2002 and $107,938 in FY 2003. He said the General Fund appropriation and the cost allocation plan revenue recommended in decision unit M-100 and M-305 have been adjusted to ensure the cost allocation plan is funding at 75.3 percent of the expenditures in the budget. He added that this matches the other decision units in the base.
Mr. Combs stated that the first budget closing issue is in the base budget in which the Governor has recommended $1,106 each year of the biennium in the training category for the Women Executives in State Government (WESG) conference, and $1,219 in each year of the biennium in the Bond Expenses Category for the Industrial Development Revenue Bond (IDRB) Conference.
Mr. Combs noted that there has been discussion regarding the need for the WESG conference. He said that Sydney H. Wickliffe, C.P.A., Director, Department of Business and Industry, has indicated that she would attend other training courses offered through WESG during the biennium. He added that she has not specifically indicated which training she will attend or the location in which the training would be conducted. He stated there is $1,500 requested for additional training in decision unit E-225, which he recommends to be approved. He added that if this is approved, but the WESG conference is taken out, there would still be $3,061 in the budget for training. Therefore, he said, the staff recommends deleting $1,106 for the WESG conference from the base budget in each year.
M-525 Americans With Disabilities Act – Page B&I-3
Mr. Combs explained decision unit M-525 recommends $2,600 in each year of the biennium for the cost of maintaining and upgrading various computer systems that are used by a visually-impaired employee in the Director’s office in Las Vegas. He explained that the funding is used for a consultant to provide assistance in training, and to adjust and modify the system that has been developed for that employee so that she can increase her level of responsibility. He added that, based on the information provided by the agency, he believes this recommendation appears reasonable.
E-225 Reward More Efficient Operation – Page B&I-4
Mr. Combs said decision unit E-225 recommends $10,417 in FY 2002 and $21,827 in FY 2003 for additional in-state travel and training costs. He noted that the only adjustment that he recommends is the $11,410 that has been included in the decision unit in FY 2003, which is for the director to travel for the legislative session. He commented that there has been discussion of how that would allow the director to make 20 additional trips to Carson City in the second year of the biennium. He said that, in his opinion, the actual travel she has done does not warrant this much in funding. He recommended reducing the $11,410 in the second year of the biennium to $4,329, based on an annualization of the year‑to‑date FY 2001 for in-state travel costs. He noted that the other items in the decision unit appear reasonable.
Mr. Combs indicated that decision unit E-275 recommends $900 in each year of the biennium for a storage unit. He remarked that this is because the director’s office transferred the position of chief of the Office of Business Finance and Planning from the Reno office to Carson City. He noted that by combining office space the rental costs were reduced.
B&I, Industrial Development Bonds – Budget Page B&I-6 (Volume 2)
Budget Account 101-4683
Mr. Combs stated that the only adjustments in this budget are technical adjustments and most of them are based on information provided by the agency. He pointed out that the application fee revenue is in The Executive Budget at $5,000 in each fiscal year. He said the agency has asked to reduce this amount to $2,500 in each fiscal year based on revised projections for activities in this account. He remarked that the volume cap transfer fee revenue has been decreased from $85,184 in FY 2002 and FY 2003, to $56,250 in FY 2002, and $57,938 in FY 2003. He added that this is the fee revenue that can be transferred to the director’s office to help support the Industrial Development Revenue Bond (IDRB) program expenses in that account. He stated that this enabled the transfer increase and reduction of the cost allocation and General Fund costs.
Mr. Combs, referring to page 8 of the closing list (Exhibit C), said the monorail project in Las Vegas resulted in an additional $50,000 in revenue to this account for the special costs of monitoring that project. He stated that in The Executive Budget, that revenue source was combined in the volume cap transfer fee revenue line item. He noted that, because the monorail project’s revenue does not have anything to do with the volume cap transfer fee, he moved this revenue to a separate line item to identify it separately.
Mr. Combs mentioned that the processing fee revenue line item has been adjusted to reflect the department’s revised projection of activity in the account during the biennium. He said the amounts were overstated because of the processing of the monorail bond issuance in FY 2000. He noted that interest revenue has been increased, based on the increased reserve level in the account during the biennium.
B&I, Labor Commissioner – Budget Page B&I-179 (Volume 2)
Budget Account 101-3900
E-806 Unclassified Pay Changes – Page B&I-181
Mr. Combs stated there was only one major decision unit in this account, which is E-806 recommending $43,542 in FY 2002, and $45,417 in FY 2003. He added that this funding would provide salary increases for the labor commissioner, the deputy labor commissioner, and the chief assistant labor commissioner positions. He outlined on page 28 of Exhibit C, the current FY 2001 salaries of these positions and their projected salaries in the next two years of the biennium. He said these salaries are based on this increase as well as the 9 percent and 4 percent increases that are included for all unclassified positions in The Executive Budget.
Mr. Combs said:
The issue that came up at the Joint Subcommittee for General Government on March 16, 2001 hearing, wasn’t necessarily that the total amount that these positions would be paid after the raises were given would be out of line, but more that the raises that would be given might put them in a somewhat better position than other positions in the department. The subcommittee asked Terry Johnson, State Labor Commissioner, and myself to look into the salaries that other labor commissioners in other states receive and their employees as well. Mr. Johnson did a review which I have attached his memorandum to closing list 1 [Exhibit C], and basically what he discovered was that the labor commissions or the labor groups, in each state are set up so much differently that it’s almost impossible to make an ‘apples to apples’ comparison of the various agencies. Some labor commissioners are responsible for oversight of apprenticeship programs and some are not. Some actually have a department of labor that includes more than the activities of the labor commissioner in this state.
Mr. Combs said that he also checked into this issue by Internet, through the research library, and by looking through publications that are received from national organizations, and arrived at the same problem. He said it is very difficult to determine whether the same responsibilities are being compared. He pointed out that three possible options are listed for the committee to consider in regards to these increases. He explained that one option would be to approve the decision unit to insure the funding for salary increases are included in the budget, and to make a recommendation that salaries are being increased in the unclassified pay bill.
Mr. Combs outlined that if funding is approved in this account it does not increase salaries. He added that salaries are only increased through an adjustment in the unclassified pay bill. He indicated that the unclassified pay bill and the amounts within it are determined at the end of the legislative session. He stated that the committee’s action would be a recommendation.
Mr. Combs stated that option number two would be to adjust the salary increases to an amount determined appropriate by the members of the committee and make a recommendation in that regard.
The third option, he pointed out, would be to approve the positions as recommended in The Executive Budget, and to recommend the issuance of a Letter of Intent, asking the Department of Administration to look at the unclassified salaries for the Department of Business and Industry. He noted that by doing this, it could be determined whether there is sufficient uniformity among the various administrators in the department. He said this would be based on job responsibilities and number of employees on staff.
B&I, Insurance Regulation – Budget Page B&I-33 (Volume 2)
Budget Account 101-3813
Jim Rodriguez, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, pointed out that there are a couple of technical adjustments in this account. He stated that one adjustment is for an unfunded position, which was the result of the omission of the step during data entry of the grade and step in the Nevada Electronic Budget System (NEBS). The addition to the General Fund, he added, would be $178,624 over the biennium. He explained that when the Governor’s budget was received, this position, which is a Health Insurance Portability and Accountability Act (HIPPA) chief insurance examiner, went unfunded. He mentioned that the position was identified but no funding source was identified. He added that this provides the funding source for that position.
Mr. Rodriguez remarked that there is a standard price adjustment for personal computers (PC’s) and a reduction in the number of PC’s based on the division’s latest inventory request.
E-275 Working Environment & Wage – Page B&I-36
Mr. Rodriguez stated that the Governor is recommending funding for four new full‑time positions for this budget account. He pointed out that decision unit E-275 recommends 1 Administrative Aid position. He said the division indicates that this position is needed to free up staff from performing administrative functions such as opening mail and receipting. This position would allow staff to devote more time to functions that are more essential to the division’s operations and productivity. He mentioned that, because the division has so much mail and receipting coming in, other staff are designated to do this work. The staff being used for these functions, he added, range from grade 29 to grade 44. He said the request is for 1 Administrative Aid at a grade 21, to perform those functions. He remarked that the cost for this position is $58,719 over the biennium, with $31,120 in General Fund and $27,599 in cost allocation.
E-277 Working Environment & Wage – Page B&I-37
Mr. Rodriguez indicated that decision unit E-277 requests 1 Management Analyst II position to deal with increased workloads in the Financial Analysis Unit. He stated that this position will conduct financial analysis oversight of all domestic insurers on a quarterly basis. He said the cost of this position is $103,636 over the biennium, of which $54,949 is General Fund and $48,687 is increased cost allocations from other budget accounts. He pointed out that the division has identified this position as its “number two priority” item on their enhancement list. He said this position is also associated with the division moving towards National Association of Insurance Commissioners (NAIC) accreditation.
E-278 Working Environment & Wage – B&I-38
Mr. Rodriquez outlined that decision unit E-278 is a request for 1 Compliance Investigator II position. He said this position is requested to meet increased workload demand in the area of agent licensing. He added that this position will be responsible for investigating complaints regarding conduct of resident licensees and non-resident licensees to protect against fraud and abuse. He pointed out that this position would be 100 percent General Fund at a cost of $94,900 over the course of the biennium. He stated that this is not related to NAIC accreditation, but it does relate to meeting the requirements of the Federal Financial Modernization Act of 1999.
E-279 Working Environment & Wage – Page B&I-38
Mr. Rodriquez commented that decision unit E-279 is a request for 1 Insurance Examiner II position. He said this position is needed to fulfill a statutorily-required function associated with performing annual conduct exams of all title agents, which is currently not being met. The position would cost $119,725 over the biennium and would be totally funded by the Insurance Examination Fund, he added. He stated that the division is asking to accelerate the hire date for this position from October to July. He said the reason is to free up resources to meet other requirements in other areas of the divisions operations.
E-276 Working Environment & Wage – Page B&I-37
Mr. Rodriguez stated that decision unit E-276 requests authority to receive additional funding from the Attorney General’s office. He pointed out that Assembly Bill (A.B.) 134 is being considered by the legislature, which would increase the amounts of fraud assessments collected.
ASSEMBLY BILL 134: Makes various changes concerning assessment imposed by commissioner of insurance upon insurers to pay for program to investigate certain violations and fraudulent acts. (BDR 57-331)
Mr. Rodriguez said part of that increase in collections would come to the Division of Insurance, amounting to $96,475 in each year of the biennium. He noted that this decision unit is recommended as contingent upon passage of A.B. 134.
E-280 Working Environment & Wage- Page B&I-38
Mr. Rodriguez commented that the Governor also recommends a temporary service contract in decision unit E-280. He explained that funding for temporary service contracts was an issue in doing adjusted base budgets. He said the budget office felt it was necessary to leave this amount of funding in their base budget and staff recommends deleting that funding. Funding of $3,250 would remain in the base to cover temporary services.
Senator O’Donnell asked Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry, whether deleting this funding presents any problems within the agency. Ms. Molasky-Arman responded that it does not.
Mr. Rodriguez said staff recommends deleting this decision unit since sufficient funding is already provided in the base.
B&I, Insurance Examiners – Budget Page B&I-41 (Volume 2)
Budget Account 223-3817
E-275 Working Environment & Wage – Page B&I-43
Mr. Rodriguez pointed out that there is one technical adjustment in the budget. He stated that E-275 funds the Insurance Examiner II position in budget account 101‑3813 (B&I, Insurance Regulations), unit E-279. He commented that when this budget was put together there was an error in the revenue transfer amount. He said The Executive Budget reflects $74,000 in FY 2002, and $99,000 in FY 2003, as the transfer amount to budget account 101-3813, for the Insurance Examiner II position. He added that the correct amounts should be $52,385 and $67,340, respectively.
Insurance Education & Research – Budget Page B&I-49 (Volume 2)
Budget Account 101-3824
Mr. Rodriguez said that when The Executive Budget was presented to the Legislature, this budget account reflected a negative reserve balance. He indicated the division has stated the negative reserve would be taken care of through an increase in collections in budget account 101-3821 (B&I, Insurance Recovery). He commented that, by statute, any amount over $40,000 at the end of the year transfers to budget account 101-3824 (B&I, Insurance Education & Research). He stated that the amount being projected to exceed authority is $94,340, which, when adjusted into this budget account, will take care of the negative reserve. He pointed out that at the end of FY 2003, there will be a positive $49,392 in the reserve.
Mr. Rodriquez mentioned that the division is currently in the process of submitting a work program to increase the authority of the transfer.
E-350 Service At Level Closest To People – Page B&I-52
Mr. Rodriguez remarked that the division is proposing to continue an internship program under decision unit E-350. He stated that for various reasons, the division has not had a lot of success in getting this program off the ground. One of the major reasons, he noted, is funding. He explained that the amount of funding available is not sufficient to attract a viable participation level. He commented that staff is recommending this part of the decision unit be deleted and the funds be moved into reserve until the division can come back with a more viable proposal for the use of the funding.
Senator O’Donnell asked whether the division has any problem with this decision unit being deleted. Ms. Molasky-Armen replied that they do not.
B&I, Self-insured Workers’ Compensation – Budget Page B&I-64 (Volume 2)
Budget Account 210-4684
Mr. Rodriguez stated that there is only a technical adjustment in this budget for computer prices and the reduction of the number of computers from five to two. He noted that the division concurs with this adjustment.
B&I, Manufactured Housing – Budget Page B&I-75 (Volume 2)
Budget Account 271-3814
Mr. Rodriguez said there are technical adjustments in this budget for computer prices.
Mr. Rodriguez noted that during the interim the division experienced a significant revenue shortfall. He stated that in the previous biennium, four new positions were added to this account, along with a transfer. He said that these positions were predicated on the increase of revenues coming into the division. He commented that these revenue increases never materialized and the agency suffered a significant revenue shortfall.
Mr. Rodriguez indicated that the division approached the Governor with a request to increase fees and the Governor agreed with that request. Mr. Rodriguez pointed out that these are not minor fee increases, but rather they range between a 20 percent and a 400 percent increase. He outlined that the overall effect is about a 40 percent increase in revenue collections. Unfortunately, he added, for FY 2001 the division is still going to be significantly short in revenues. He stated that this will affect the balance forward into FY 2002.
Mr. Rodriguez pointed out that this budget recommends computer equipment. He said staff recommends deferring the approval of that equipment until the division can get a clearer picture on where the revenues are going to fall. He remarked that the agency is required to pay for the implemented software package in the interim and they have an annual license fee that needs to be paid, so that part would remain in the budget.
B&I, Mobile Home Lot Rent Subsidy – Budget Page B&I-80 (Volume 2)
Budget Account 630-3842
Mr. Rodriguez stated that there are no adjustments in this budget account and staff recommends the Governor’s recommendation.
B&I, Mobile Home Parks – Budget Page B&I-84 (Volume 2)
Budget Account 271-3843
Mr. Rodriguez commented that there are technical adjustments for computer pricing and no other adjustments recommended in this budget account.
B&I, Housing Division – Budget Page B&I-92 (Volume 2)
Budget Account 503-3841
Bob Guernsey, Principal Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, stated there are technical adjustments in budget account 503‑3841 adjusting computer prices.
Mr. Guernsey commented that this budget may be subject to major reorganization and modification with the pending legislation of Senate Bill (S.B.) 552.
SENATE BILL 552: Makes various changes relating to assistance to finance housing. (BDR 25-1448)
Mr. Guernsey added that if that legislation does pass, there would be significant modifications to this budget, which are listed on page 20 of Closing List Number 1 (Exhibit C). He pointed out that S.B. 552 would not only affect the Housing Division, it would also affect the Low Income Housing Trust Fund and the Weatherization Division’s budget.
Mr. Guernsey stated that in the Housing Division there are a number of enhancements contained in the budget, which are not subject to S.B. 552, and were recommended by the Governor.
M-200 Demographics/Caseload Changes – Page B&I-94
Mr. Guernsey pointed out that decision unit M-200 recommends a new half-time deputy attorney general (AG). He mentioned that he is unsure of what the status of legal services would be for the Housing Division if S.B. 552 passes. He said that would include whether the division would continue to use the AG services.
Mr. Guernsey remarked that S.B. 552 would change the status of employees and the department would no longer use the state personnel system, DoIT, or the Purchasing Division. He stated that those assessments would have to be removed from the budget.
E-150 Economic Development – Page B&I-95
E-151 Economic Development – Page B&I-96
Mr. Guernsey said the second phase of the affordable housing study is contained in decision unit E-150 at $43,000. He stated that there is a major enhancement in decision unit E-151 for $600,000 each year for the cost of issuing revenue bonds to assist school districts in recruiting and retaining teachers in critically short areas.
E-710 Replacement Equipment – B&I-96
Mr. Guernsey remarked that decision unit E-710 includes technical adjustments for computer prices.
E-806 Unclassified Pay Changes – B&I-96
Mr. Guernsey commented that this decision unit includes adjustments for salaries and the division is requesting that the chief accountant be retitled to chief financial officer.
Mr. Guernsey indicated that if S.B. 552 passes there will be some major changes in the budget.
Mr. Guernsey stated that after the Fiscal Analysis Division received the budget and adjusted computer prices with the latest prices from purchasing, the Housing Division requested an upgrade for those computers to a “higher model.”
Lon DeWeese, Chief Financial Officer, Housing Division, Department of Business and Industry, commented that the four computers the division asked to be upgraded above the standard size have to do with machines that are doing the cash flow analysis on bond issues. He added that they have over 100 bond issues outstanding, and they will all “get loaded” at once. He said the division needs huge amounts of memory storage and processing power. Additionally, he added, there are two other computers related to the “loan mortgage processing system,” which has over 7,000 mortgages with 30 years of payments on each. He said they have a similar database and memory requirement. He stated that they are trying to store the information “off-line,” so they do not tie up their network. Therefore, he noted, they will have computerized, read-write compact discs (CD) in those machines if the committee approves.
Senator O’Donnell referenced the $600,000 each year for the cost of issuing revenue bonds to assist school districts in recruiting and retaining teachers in critically short areas. He asked, “Are we doing a revenue bond to try to attract teachers and is it for housing?”
Charles L. Horsey III, Administrator, Housing Division, Department of Business and Industry, replied that it would specifically enable the Clark County School District to compete with California. He pointed out that the idea is for Nevada to be able to offer a “lower than market-rate mortgage” for teachers when they purchase their homes, either moving to the state or buying their first home in the state. He said it is very similar to the “bread and butter, single-family” program.
Mr. DeWeese stated that the Internal Revenue Service (IRS) dictates a 2 percent limit on the cost of issuing bonds. He added that when the division issues single‑family revenue bonds, they are usually under that 2 percent limit, which is what they have budgeted for the last few years.
Senator O’Donnell asked whether this would only apply to new teachers. Mr. Horsey responded that it would also apply to existing teachers if they were going to buy another home in the state. He remarked that realistically the division is approximately “75 percent of the way home” in completing this program. He remarked that their hopes are “dimming” that they will be able to pull this major initiative off, because it requires a major financial institution to make a substantial commitment to the program. He added that they have yet to find a financial institution willing to participate that would buy the mortgage rate down 2 percent in the first year or to 1 percent in the second year.
Mr. DeWeese commented that the Interim Finance Committee (IFC) already approved this amount in the current fiscal year. He added that, because that adjustment occurred after the budget was submitted, the division had already requested it as an enhancement.
Senator O’Donnell asked whether there is $600,000 each year of the biennium that the division does not believe they will be able to use. Mr. Horsey said they have been working on this program for two years and they have gotten about three quarters of the way “home.” He stated, “It is not looking good at this time, that is correct.”
B& I, Financial Institutions – Budget Page B&I-107 (Volume 2)
Budget Account 101-3835
Senator O’Donnell commented that ASSEMBLY BILL (A.B.) 626 was proposed and asked whether it would be automatic.
ASSEMBLY BILL 626: Requires money received by department of business and industry for certain investigative costs to be deposited in investigative account for financial institutions. (BDR 18-1445)
L. Scott Walshaw, Commissioner, Division of Financial Institutions, Department of Business and Industry, replied that A.B. 626 would be instituted and it would be amended. He added that A.B. 626 needs to be processed because there is another change affecting Nevada Revised Statutes (NRS) 604 language within it.
Carla Watson, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, pointed out that budget account 101-3835 (Financial Institutions) and budget account 101-3805 (Financial Institutions, Investigations) are intertwined. She stated that the legislative auditor performed an audit on the division and issued a report on February 6, 2001. She said the primary finding of the auditors indicated that the agency has been inappropriately recording administrative operating revenues and expenditures to budget account 101-3805.
Ms. Watson commented that, with the exception of identifying one-time expenditures, the Fiscal Analysis Division’s adjustments concern complying with the audit. She remarked that she has identified the revenues and expenditures in budget account 101-3805 that should be recorded to 101-3835.
Ms. Watson explained that technical adjustments in budget account 101-3835 include base General Fund appropriations and expenditures. She noted that there is an increase of $16,360 in FY 2002, and an increase of $6,518 in FY 2003 for travel, publication, and training costs, which were charged to the investigation budget account 101-3805 and should have been charged to budget account 101‑3835.
M-100 Inflation & Per Unit Adjustment – Page B&I-108
Ms. Watson pointed out that in decision unit M-100 there is a reduction of $1,326 for an adjustment to rent, and postage was reduced for a one-time mailing adjustment.
E-710 Replacement Equipment – (Transfer from Budget Account 101-3805)
Ms. Watson commented that $252,855 in replacement computer equipment for division staff was recommended in the Governor’s budget for account 101-3805 (Financial Institutions, Investigations). She added that fiscal staff has created module E-710 in budget account 101-3835, the operating account. She indicated that pricing has been adjusted based on the latest information received from state purchasing, which has substantially reduced costs.
Ms. Watson commented that fiscal staff has also reduced the recommended number of laptops and portable printers for the Carson City office by two. She said that one laptop computer and printer was designated for storage and one laptop computer and printer was designated for an Accounting Clerk III position, who does not perform examinations. She added that funding for replacement equipment in the operating account has been reduced to $107,150 for FY 2002.
E-805 Major Reclassifications – Page B&I-110
Ms. Watson stated that E-805 recommends eliminating an existing Financial Examiner position, which has been vacant since July 1, 2000. She said this enhancement also recommends funding for two additional Program Assistant II positions in each year of the biennium. She pointed out that recommended funding is $17,619 in FY 2002, and $17,353 in FY 2003. She noted that funding is off‑set by the elimination of the existing financial examiner position.
Ms. Watson remarked that ongoing salary costs for 2 Program Assistant II positions would be approximately $80,000 per year. Based on industry growths, she added, along with staff workloads, there appears to be justification for 1 Program Assistant II.
Ms. Watson commented that if A.B. 324 is passed, it would establish a mortgage industry commission and the regulation of the mortgage industry would then be taken over by this new commission.
ASSEMBLY BILL 324: Revises various provisions regarding regulation of mortgage brokers, mortgage agents and mortgage companies. (BDR 54-491)
Ms. Watson added that the Financial Institutions Division has provided a Fiscal Note and if A.B. 324 passes, they have indicated the division will not need 5 Examiner positions, 2 Program Assistant II positions, and 1 Administrative Aid position.
Ms. Watson said that, based on staff adjustments, the General Fund loan for the Financial Institutions Division would need to be increased and staff would work with the division to arrive at new forecast numbers.
B&I Financial Institutions, Investigations – Budget Page B&I-112 (Volume 2)
Budget Account 101-3805
Ms. Watson remarked that in technical adjustments, the base application fees and the reserve are reduced by $19,500 per year to transfer fines to budget account 101‑3835 (Financial Institutions). She added that base expenditures are reduced by a net amount of $38,485 for travel, dues, registrations, and publication costs, which have been transferred to budget account 101‑3835 (Financial Institutions).
E-710 Replacement Equipment – Page B&I-113
Ms. Watson pointed out that E-710 is reduced by a net amount of $250,070 for computer equipment that has been transferred to budget account 101‑3835 (Financial Institutions).
M-201 Demographics Caseload Changes – Page B&I-113
Ms. Watson noted that module M-201 recommends continued funding of $89,196 and $92,916 in FY 2002 and FY 2003 respectively, for 1 full-time Deputy Attorney General position, approved by the Interim Finance Committee on April 13, 2000. She said funding for this position will be eliminated as a staff adjustment if the position is not approved in the Attorney General’s budget, when it is closes in May.
E-710 Replacement Equipment – Page B&I-113
Ms. Watson stated that after the transfer to budget account 101‑3835 (Financial Institutions), the funding required in module E-710 is $2,785 in FY 2002 for a replacement laptop computer and portable printer for the investigator.
Mr. Walshaw said, “On the Fiscal Note to A.B. 324, 1 of the 2 Program Assistants Ms. Watson indicated, would not be needed any longer, which was one of the two positions we had requested that apparently we are not getting. I just wanted to clear the record up on that.”
Senator O’Donnell stated that he is unclear on this issue. Mr. Walshaw asserted that the Fiscal Note Ms. Watson referred to, indicated that the division would not need 5 Examiner positions, 2 Program Assistants, and 1 Administrative Aid. He noted that the 2 Program Assistants that were referred to in the Fiscal Note were the two positions that were going to be added this session as a result of reclassification.
B&I, Consumer Affairs – Budget Page B&I-119 (Volume 2)
Budget Account 101-3811
Mindy Braun, Education Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, commented that staff recommends no changes in the Consumer Affairs budget.
B&I, NV Attorney for Injured Workers – Budget Page B&I-150 (Volume 2)
Budget Account 101-1013
E-710 Replacement Equipment – Page B&I-153
Ms. Braun stated that there are two decision units in budget account 101-1013. She commented that decision unit E-710 recommends $91,583 for replacement computer equipment in FY 2002 and another $36,842 in FY 2003. At the request of the subcommittee at the hearing on February 21, 2001, she added, the fiscal staff has worked with the agency to determine the need for all items recommended and to determine any potential costs savings.
Ms. Braun said that, based on the review, it was determined that $20,820 could be reduced from the budget in FY 2002 and $10,124 in FY 2003. She noted that the cost savings would include reduction of software upgrades for six workstations, reduction of server installation charges for four servers, the deletion of funding for laptop computers, and revised prices for computers and servers.
E-720 New Equipment – Page B&I-153
Ms. Braun explained that decision unit E-720 recommends $37,872 for DoIT programmer charges to complete the case management system programming that was started in FY 2000. She said this decision unit also recommends $7,681 for software licenses, computer equipment, and two telephone units. Again, she said, the fiscal staff worked with the agency to determine the need for these items. She said that, based on the review it was determined that $676 could be reduced from the budget in FY 2003. She added that this savings would be the reduction of four hard drives.
Ms. Braun said the agency recently advised her that they would like to have their remaining funding for hard drives, which is $3,211 in FY 2003, moved to FY 2002. Senator O’Donnell inquired what the fiscal division recommends. Ms. Braun stated, “My recommendation is that the reductions for the hard drives stay, but if the funding could be recommended to be approved for FY 2002 instead of FY 2003, that would be fine.” Senator O’Donnell asked whether the division has a problem with this recommendation.
Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry, stated she has no problem with this recommendation. She said:
I noted in the recap that the laptop computers are being cut out. We had asked for the laptop computers strictly because it was on the DoIT computer replacement schedule, so that would just mean that we are running behind on the replacement schedule, and other than that, we are continuing to work with Ms. Braun.
Senator O’Donnell commented that he appreciates the concern about the laptop computers. However, he said, “As you can see we are in a real crunch, so we have to do what we can with what we have.”
Business and Industry Administration – Budget Page B&I-1 (Volume 2)
Budget Account 101-4681
Senator O’Donnell stated that his recommendation is that in the Business and Industry Administration budget, the director should be allowed to go to the Women Executives in State Government conference. He said he believes this is an important conference and it would be appropriate for the director to attend that conference. He added that he would like to put this item back into the budget if that is what the committee desires.
Ms. Chowning commented that there is other funding set aside for travel and therefore, does not agree with adding additional funding for travel to the WESG conference back into the budget. Senator O’Donnell replied, “Then we’ll take it out.”
B&I, Labor Commissioner – Budget Page B&I-179 (Volume 2)
Budget Account 101-3900
Senator O’Donnell, referring to option 3 on page 29 of Closing List 1 (Exhibit C), said, “Basically what this would do is approve the salaries that have been requested in The Executive Budget for the labor commissioner. However, we need a Letter of Intent requesting a study for the unclassified salaries in the Department of Business and Industry to determine whether there is sufficient uniformity among the salaries for the administrators other unclassified positions in the department. So I would like to invoke this.”
Ms. Chowning said she strongly agrees with this recommendation. She noted there is actually a strong need for this study system-wide. She added that this would be a good start for a study to be done with the Department of Business and Industry. What is occurring now with the labor commissioner, she noted, is very distressing and appalling. She said, “Frankly, we are very fortunate to have had the people that we have so far work at this low rate, so that is a good recommendation.”
B&I, Housing Division – Budget Page B&I-92 (Volume 2)
Budget Account 503-3841
Senator O’Donnell commented that another issue would be to postpone the closing of the Housing Division’s budget until we know the outcome of S.B. 552. He said staff would not be required to do much work on closing the Housing Division’s budget account until S.B. 552 is acted on. He stated, “Therefore, I would like to hold that budget for closing.”
Senator O’Donnell drew attention to decision unit E-151, (Specialty Population Revenue Bond) in the Housing Division budget requesting $600,000 in the first year and $600,000 in the second year of the biennium for housing for teachers. He said the director has stated that even though the division has completed approximately 75 percent of the work to get this program up and running, the financial institutions that need to underwrite the program are not “coming to the table.” He added that this request was testified to as “not looking good.” He pointed out that by deleting this recommendation, it would “free up” $1.2 million to appropriate in other needed areas. He requested that the committee remove decision unit E‑151 from the Housing Division’s budget.
Assemblyman Hettrick commented that it is his understanding that the Housing Division’s budget is self-funded and it will not actually “free up” any funding. Senator O’Donnell said he believes there is a General Fund appropriation of $600,000 in that account to start a bond issue for revenue bonds.
Mr. Guernsey stated that Assemblyman Hettrick is correct. He added that the budget is totally self-funded, there is no General Fund dollars in this budget. He said removing that initiative would not “free up” General Fund dollars.
Senator O’Donnell commented that if this budget is all self-funded then there is no need to renew it.
Senator O’Donnell said:
There have been several recommendations that I have made and concurred with the Assembly Chairwoman and I would like to ask the staff to make a document to hand out to the committee at the next meeting that we are going to have, so that we can take an action on all of these budgets as recommended by the staff.
ASSEMBLYMAN HETTRICK MOVED THAT ACTION WILL BE TAKEN WITH RECOMMENDATION OF STAFF AT THE NEXT JOINT SUBCOMMITTEE ON GENERAL GOVERNMENT.
ASSEMBLYWOMAN CHOWNING SECONDED THE MOTION.
THE MOTION WAS CARRIED. (ASSEMBLYWOMAN GIUNCHIGLIANI, ASSEMBLYMAN BOB BEERS, AND SENATOR NEAL WERE ABSENT FOR THE VOTE).
Senator O’Donnell adjourned the meeting at 9:57 a.m.
RESPECTFULLY SUBMITTED:
Debra Petrelli
Committee Secretary
APPROVED BY:
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Senator William R. O’Donnell, Chairman
DATE: ___
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Assemblywoman Vonne S. Chowning, Chairwoman
DATE: ___