SENATE COMMITTEE ON FINANCE

MINUTES OF THE

SENATE Committee on Finance

Seventy-First Session

February 7, 2001

The Senate Committee on Financewas called to order by Chairman William J. Raggio at 8:00 a.m., on Wednesday, February 7, 2001, in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator William J. Raggio, Chairman

Senator Raymond D. Rawson, Vice Chairman

Senator Lawrence E. Jacobsen

Senator Joseph M. Neal Jr.

Senator Bob Coffin

Senator Bernice Mathews

COMMITTEE MEMBERS ABSENT:

Senator William R. O’Donnell (Excused)

STAFF MEMBERS PRESENT:

Gary L. Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau

Bob Guernsey, Principal Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau

Lu Chen, Education Research Statistician, Fiscal Analysis Division, Legislative Counsel Bureau

Bob Atkinson, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau

Jim Rodriguez, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau

Patricia C. Hampton, Committee Secretary

OTHERS PRESENT:

Don Hataway, Deputy Director, Budget Division, Department of Administration

Giles Vanderhoof, Brigadier General, The Adjutant General of Nevada, Nevada National Guard, Office of the Military

Miles Celio, Administrative Officer II, Carson City, Nevada National Guard, Office of the Military

Jeanne Greene, Director, Department of Personnel

Kim Foster, Administrative Services Officer, Department of Personnel

Tracy Raxter, Chief, Administrative Services Division, Department of Administration

Polly Hamilton, Executive Director, Commission On Ethics

Todd Russell, Vice Chairman, Commission On Ethics

Wm. Gary Crews, CPA, Legislative Auditor, Audit Division, Legislative Counsel Bureau

Senator Raggio requested committee members advise the committee chair, either before or at the beginning of the meeting, that they have Bill Draft Requests (BDRs), so action can be taken on those items.

Office of the Governor – Budget Page ELECTED-1 (Volume 1)

Budget Account 101-1000

Don Hataway, Deputy Director, Budget Division, Department of Administration, suggested unless there are questions on the base budget, items in decision unit M-100, or on salaries, he would address the three primary additional decision units that need to be considered.

Senator Raggio stated the biggest question will be regarding the seven new positions requested.

Mr. Hataway said he needs to correct a statement made the previous day at the Assembly Ways and Means meeting. He noted the positions are to be filled in July rather than October, as previously stated. Senator Raggio questioned whether the positions can be filled by July. Mr. Hataway answered that is the Governor’s desire.

Senator Mathews called attention to the fact information on salary requests for individual positions has not been provided for review. She inquired whether this information would be available since these would be public employees. Mr. Hataway said he will provide that information.

M-200 Demographics/Caseload Changes – Page ELECTED 2

Mr. Hataway said there is a request in decision unit M-200 for five new positions: two clerical support personnel and three professional positions. He explained he has researched staffing levels in the Office of the Governor over the last dozen years, and in fiscal year (FY) 1992 the number of legislative-approved positions was 22 full time equivalent (FTE). He said that figure dropped to 19 during the recession years, and in 1999, 24 FTE positions were approved.

Mr. Hataway stated the base budget requests 21 FTE positions and another clerical position will be used for fill-in when there is a need. He pointed out this is the same complement of staff as existed 10 years ago. He said with the increase in population and the number and complexity of issues, the Governor feels he needs the capacity in his professional staff, as well as the clerical staff, to address the changing times.

Mr. Hataway explained one of the professional positions is a Legislative Director. He stressed the Governor has made a concerted effort to work with both parties of the Legislature and interim committees to try to get as many committee recommendations in The Executive Budget as possible. He said the Governor feels the addition of one professional staff, concentrating in the legislative area, would be a major step in improving the budget coming to legislators.

Mr. Hataway emphasized the Governor is firmly committed to the fundamental review process. He said copies of the report of the review committee will be forthcoming. He pointed out many of the recommendations are incorporated in the current budget, but many have not been. He explained that by the time the committee finished the review, there was not enough time to put many of the recommendations in the budget.

Mr. Hataway stated the request for a Deputy Policy Advisor, Policy Analyst and Legislative Director are needed to meet the growing demands on the Governor’s office.

Mr. Hataway emphasized the Governor feels the report of the Governor’s Steering Committee to Conduct a Fundamental Review of State Government is only one aspect of the consortium of talent available to make changes to state government. He pointed out there is the report of the fundamental review steering committee, the Division of Internal Audit reports, and staff working on their areas of emphasis, as well as the Legislative Counsel Bureau (LCB) audit.

Mr. Hataway pointed out the LCB audits, over the years, have identified a number of improvements benefiting the Executive Branch of government. He commented the amount of communication the Governor’s office receives certainly warrants the two requested clerical positions.

Senator Raggio asked whether the positions will be non-classified. Mr. Hataway confirmed the positions are non-classified. Senator Raggio inquired how the salaries for these positions will be determined. Mr. Hataway responded the budget shows the Deputy Policy Advisors salary to be $70,000, the Legislative Director $65,000, and the Policy Analyst $50,000. He said salaries for the 2 Executive Assistants are recommended to be $39,691 each.

Senator Rawson asked whether the Governor has adequate flexibility to hire who he needs, even if it means combining some of the salaries. Mr. Hataway answered that he does.

M-201 Demographics/Caseload Changes – page ELECTED-2

Mr. Hataway stated this is a proposal to establish a position of Family Resource Coordinator and a support position of Executive Assistant. He pointed out one of the things identified in the fundamental review report is that many times in state government one part does not really know what the other part is doing. He said one of the recommendations of the review committee is to require agencies to track contracts and grants made to local governments and non-profit organizations. He stated an all-agency memo was issued in the early stages of FY 2001 requiring agencies to track this information for the first time.

Mr. Hataway maintained this information will be very telling in the way the state is currently doing business in the family and child services area. He explained the Governor wants the coordinator position located in the Governor’s office, so the activity can be high profile. This will allow the Governor to get a handle on where the services are currently being provided, how they are being provided, whether they are being provided in the best possible way, and whether the state is getting “the best bang for it’s buck.”

Mr. Hataway stressed that the Governor is tired of reading that the state is at the bottom or top of whatever list is coming out, showing Nevada to be the worst nationally. He stated the Governor has made a commitment in this budget for additional services to children and families and he wants to go a step further and develop a coordinated plan as to how to provide the best services for the funds expended.

Mr. Hataway stated that, ultimately, this program will work into an informational tool to direct people seeking services to the best level of service and the best organization to provide the services.

Senator Raggio asked how this would differ from programs currently in place. Mr. Hataway explained the Family Resource Centers are only one element of the delivery system currently in place. He stated there are a multitude of non‑profit organizations providing niche-marketing services to families and children. He stressed the Family Resource Centers are only one small aspect of where the state is putting funds into the system.

Mr. Hataway said unless there is a comprehensive view of what services are currently being provided throughout the state, a lot of funds will be wasted.

Senator Raggio asked how the Family Resources Coordinator position will interact with the public. Mr. Hataway answered that, in the beginning, the position will conduct an analysis to determine how funding is used and what organizations are providing the services. He stressed there are a lot of good programs, but there is not a coordinated effort in the state to see how the funding is being used.

Senator Raggio asked why two positions are required. Mr. Hataway explained the second position provides clerical support for the Family Resources Coordinator position.

E-375 Environmental Policies & Programs – Page ELECTED-3

Mr. Hataway said this request recommends transferring the Office of Science, Engineering and Technology from the University and Community College System of Nevada (UCCSN) back to the Governor’s office. He said because of the tightness of the last budget, there were no funds recommended for the program, but through efforts of the Senate, there was a bill passed allocating funding.

Mr. Hataway explained the Governor believes the office of Science, Engineering and Technology belongs in his office. He suggested the UCCSN, economic development, and gaming, in relation to the impact of Internet gaming, are a few of the organizations that could benefit from additional efforts in this area. He pointed out the Governor feels, similar to the Family Resource Program, the function of Science, Engineering and Technology needs to have a higher profile than it has in its current location.

Mr. Hataway referenced the report Chancellor Nichols referred to in her presentation during joint budget reviews. He said this report was done by the Petell Institute on the primary use of funds currently in this biennium for technology. He stated the report is a well-laid-out plan of what the state should be doing with its resources in the technology area. He said the report outlines six or seven strategies for this area and who the key partners should be.

Mr. Hataway noted the law states the Governor will appoint the Technology Coordinator. He explained the Governor wants to bring the whole function back to his office, not as a separate budget, but as an integral part of his office.

Senator Rawson indicated the science and engineering community has always hoped the function would be in the Governor’s office, and that the Governor would be interested in their input, for the good of the state. He stated he believes this to be a well-planned and well-placed move.

Mr. Hataway pointed out there will need to be a BDR to “fine-tune” the roll of the UCCSN. Senator Rawson noted he has a BDR dedicated to this. Senator Raggio requested Senator Rawson and the Governor’s office work together.

Senator Jacobsen stated the appearance of the Governor’s office should be indicative of being Nevada’s top office. He suggested there is a need for the Governor’s office décor to be upgraded.

Senator Coffin stated he does not have a quarrel with any of the initiatives in the budget of the Governor’s office. He said he has felt for a long time the Governor’s office is understaffed. He noted the Governor has to travel a great deal on gaming and energy issues and there needs to be someone in the Governor’s office who can make necessary informed decisions.

Senator Coffin asked about the Capital Improvement Program project for the Blaisdel Building. He stressed the building should not be renovated, it should be torn down. He said the building is the only thing that ruins the appearance of the capitol mall. He stated he is against any proposal that would provide funds to rehabilitate the building.

Senator Raggio asked whether the Governor is planning additional office space for the seven new positions. Mr. Hataway explained the plan is to have the new staff offices in the Capitol Building. He said 1800 square feet in the basement will be refurbished and the Capitol Annex will be totally remodeled, as well as minor remodeling in the Blaisdel Building.

Mansion Maintenance – Budget Page ELECTED-5 (Volume 1)

Budget Account 101-1001

Mr. Hataway reported this is a flat-line budget. He said there are adjustments for additional property and content insurance, as well as utility adjustments for natural gas and electricity. He pointed out that in the second year of the biennium, additional funds are included for food and host-fund expenses related to activities during the legislative year.

Senator Raggio noted the mansion has been expanded and a new facility for entertainment and meetings has been added. Mr. Hataway pointed out this project has been paid for through private fundraising. Senator Raggio commented it is a wonderful addition and has enhanced the usability of the mansion and its property.

Senator Raggio pointed out it has come to his attention some of the things done at the mansion have been at the personal expense of the Governor. He stated that should not have occurred. He appointed Senator Jacobsen to meet with the First Lady to determine whether anything further is needed at the mansion. Mr. Hataway mentioned there has been a Capital Improvement Program (CIP) project planned for the mansion that the committee might want to review.

Senator Raggio closed the hearing on the Mansion Maintenance Budget and opened discussion on the Office of the Military Budget. He welcomed Brigadier General Giles Vanderhoof of the Nevada National Guard and congratulated him on his appointment as the Adjutant General of the state.

OFFICE OF THE MILITARY

Military – Budget Page MILITARY-1 (Volume 3)

Budget Account 101-3650

Giles Vanderhoof, Brigadier General, The Adjutant General of Nevada, Nevada

National Guard, Office of the Military, spoke from his prepared text (Exhibit C).

Senator Raggio commented on the respect the committee has for the Nevada National Guard and its accomplishments and the committee’s respect for General Clark, the retired Adjutant General.

M-100 Inflation and Per Unit Adjustment – page MILITARY-2

General Vanderhoof remarked the base budget has no enhancements. However, he said, there is an error regarding utilities in this budget. He said in decision unit M-100 on page 2 of the budget, it shows $11,311, which is grossly insufficient. He said the figure should be closer to $120,000. He explained there was a problem in the way utilities were accounted for because of the computer software. Senator Raggio said the correct amount needs to be provided. General Vanderhoof said the budget office and the Legislative Counsel Bureau Fiscal Analysis Division are working to come up with the correct figure.

Senator Raggio asked whether this will change the General Fund appropriation. Miles Celio, Administrative Officer II, Carson City, Nevada National Guard, Office of the Military, said the General Fund appropriation would need to be augmented by several hundred thousand dollars. Senator Raggio inquired when the information would be available. Mr. Celio responded he would have it by the end of the week.

Senator Raggio said staff has indicated there is an error in the funding ratio for federal and General Fund cost allocation. He said the recommended adjustments will realign state and federal revenues to reflect the correct allocation of approximately 37 percent state General Fund and 61 percent federal funds for the biennium. He stated the net affect of this change will be a reduction in General Fund obligation of $95,571 over the biennium, with a corresponding increase in federal funds obligation.

Don Hataway interjected that the Budget Division is working with staff to rectify this error. He agreed some adjustment is needed. He stated he does not think it will be as much as the $95,571, but a final reconciliation will be provided.

M-200 Demographics/Caseload Changes – Page MILITARY-3

Senator Raggio said this provides additional funding to continue support of an Environmental Scientist position. He stated this was approved by the Interim Finance Committee (IFC) to assist the military in complying with the District Board of Health of Clark County air pollution control regulations, as well as Nevada underground injection control regulations. He asked whether that is still necessary.

General Vanderhoof answered that it is and added this is reimbursed 100 percent by the federal government. Mr. Celio pointed out this funding was only recently approved on December 4, 2000.

Senator Raggio noted two positions were approved by the 1999 Legislature to meet anticipated workload increases in the move to the guard’s new Readiness Center. He asked what the status is of the center. General Vanderhoof replied the plan was to move into the facility in April or May of 2001, but it appears it will now be September or October 2001. He explained that, because of the weather, some of the construction items that had been done, had to be torn down and rebuilt.

Senator Raggio noted another Readiness Center is planned for Las Vegas. General Vanderhoof explained there are five additional units in Las Vegas and there is no room for them in the Henderson or Clark County Armories. He said another armory, just a little larger than the newer one in Clark County, is needed. He reported sites are being investigated and $225,000 has been received from the federal government. He stated the request to the state is for $75,000 to accomplish the “35 percent design plan.” He pointed out once the “35 percent design” has been completed, the federal share of the funding for construction can be requested.

Senator Jacobsen noted he had participated in the change of command of the Nevada National Guard. He reported this event is somewhat of a family affair and is well attended. He said he is pleased to know there are people ready and willing to serve and give their all if the call should come. He commended them for their efforts.

National Guard Benefits – Budget Page Military-8 (Volume 3)

Budget Account 101-3653

Senator Neal inquired why no additional funding above the FY 1999-2000 is requested for the military’s tuition reimbursement program. General Vanderhoof said both he and the Governor have concerns regarding this account. He said when the Legislature brought this program into effect the military was given authority to reimburse up to 50 percent of qualifying Guardsman’s tuition, depending on the availability of funding. He said in the last legislative session the maximum reimbursement was increased to 100 percent.

General Vanderhoof pointed out that the tuition reimbursement program is an important recruiting tool for the department. He said given the number of guard members currently taking advantage of the program, there is only sufficient funding to grant approximately 25 percent of the tuition reimbursement. He recalled when this program was first initiated, it was geared specifically toward the junior airmen E-1 through E-6, to aid in enlistment and retention. He said subsequent to that time, the program has grown to include partial reimbursement for medical school and graduate students.

General Vanderhoof said he needs to review the department’s policy and determine whether more focus needs to be placed back on the people for whom he believes the program was originally intended, the junior enlisted people. He said he will be discussing this budget with the Governor and making adjustments, as necessary. General Vanderhoof stated he could cut out at least $5,000 if he removed the medical school and graduate students from participation. He stated he is not opposed to paying those students; however, his primary concern is for E-1 and E-6 enlisted personnel.

Senator Raggio pointed out some of these students may be eligible for the Millennium Scholarships and this may reduce the number needing reimbursement. General Vanderhoof agreed and said that would be another factor considered during his review. Senator Raggio requested to be kept informed on what information the review provides. General Vanderhoof agreed to provide the information.

Senator Jacobsen noted it is difficult to provide an honor guard at funerals in both the North and South of the state. He stressed we owe veterans a service at the cemetery. General Vanderhoof stated he agreed. He commented that between the Army National Guard and Air National Guard, more than 400 color guard and honor guard ceremonies a year have been conducted at funerals. He said it has been acknowledged by the “guard bureau and the air force,” that with the draw down in active forces, the guard has not been as active in the communities as in the past. Therefore, some funding has been provided to take care of some things that were previously provided strictly by volunteers, he said.

General Vanderhoof stated he is looking in to other ways to provide burial honor guard services because he does not want a single veteran to be buried without this kind of honors. At the same time, he said, given there are more than 400 burials a year he admitted this is taxing on the workforce. Senator Rawson suggested using a smaller cannon, which would require a smaller crew. General Vanderhoof agreed. He noted what is done at these services is prescribed.

Adjutant General Constructional Fund – Budget Page MILITARY-6 (Volume 3)

Budget Account 101-3652

Senator Raggio noted there is another budget for construction, but there is not a need to review it. General Vanderhoof agreed. He stated this was strictly a “flow‑through” budget.

DEPARTMENT OF PERSONNEL

Personnel – Budget Page PERSNL-1 (Volume 1)

Budget Account 717-1363

Jeanne Greene, Director, Department of Personnel, presented an overview of department changes (Exhibit D) and the handout entitled, “State of Nevada 2000 Salary and Benefits Survey.” (Exhibit E. Original is on file in the Research Library.)

Ms. Greene reported the Human Resources/Integrated Financial System (IFS) is up and running. She said the conversion occurred in March 1999 and employees are being paid accurately and timely through the system. She stated this was the department’s biggest accomplishment in the last two years, in addition to the daily workload.

M-201 Demographics Caseload Changes – Page PERSNL-3

Ms. Greene pointed out decision unit M-201 contains 3 items. The first item is an increase in the International Business Machines (IBM) maintenance of the IFS RS6000 computer, she reported. She said the original maintenance agreement was negotiated at a very low price because it was paid in advance for two years and that arrangement is no longer available.

Ms. Greene said the second item is for an increased software maintenance agreement. She explained the department is billed by the IFS project for a portion of the agreement.

Ms. Greene noted item three is for printing costs for IFS “rollout” materials. She explained that written communication is critical to the success of the “rollout.” Funds being requested will cover a variety of costs, such as the printing of system implementation documentation, policies and procedures, as well as training documentation, she said.

E-225 Reward More Efficient Operation – Page PERSNL-4

E-908 Transfer from B/A 1365 – Page PERSNL-6

Ms. Greene stated decision unit E-225 ties into decision unit E-908. She explained the Department of Information Technology (DoIT) has been paid for data entry services for the past few years. She said previously there were five data entry operators performing services. She stated that through the IFS implementation, the belief is, positions can be reduced to two data entry operators and those positions are being transferred to the Department of Personnel. She said this will result in a savings of $82,000 in Fiscal Year (FY) 2002 and an additional $7,000 in FY 2003.

E-275 Working Environment & Wage – Page PERSNL-5

Ms. Greene said decision unit E275 requests continued funding for a Program Assistant III position. She explained the position has been in the budget for four years on a temporary basis. She stated the position supports the IFS system and performs several other duties, shown on page 4 of Exhibit D.

Senator Raggio asked about the request of $138,000 in each year of the biennium for overtime. Kim Foster, Administrative Services Officer, Department of Personnel, explained that expenditures in the base budget, including the overtime, are requested to be funded in the next biennium mainly for the IFS project. She pointed out it is hard to project what will be incurred for IFS in the coming biennium. She said there is a great deal of work needing to be accomplished.

Senator Raggio asked whether this amount of overtime would be needed with current staffing, and new positions to be added. Ms. Foster stated the hope is that overtime will be reduced. She said the staff is tired and overworked, but the data warehouse is still being developed and more reporting is being produced.

Senator Raggio asked whether the agencies are doing data entry input. Ms. Foster explained the implementation for IFS has been started and the expectation is it will be completed in 2003. She said 85 agencies have “inquire only” access to the system and 37 agencies are entering timesheets. She stated the projection is to “rollout” to 420 sites and 800 users.

Senator Raggio recalled the policy has been that overtime should be worked for compensatory time rather than pay, and the overtime in the budget appears to be in conflict to the policy. Ms. Foster agreed, but said with the huge amount of work, it was not possible to give compensatory time off because the employees were needed to do the work. Senator Raggio commented this is a concern and requested the conflict with policy be discussed with committee staff.

Senator Jacobsen asked about the information regarding shortages in many positions. He inquired whether other states are contacted to see if potential employees would be available. Ms. Greene stated recruitments for high-need positions are open on a continuous basis. She pointed out all jobs are posted on the Internet and there is advertising in newspapers, especially in states where it is known there is to be a reduction in the workforce.

Senator Jacobsen asked to be furnished with a list of the various position shortages currently existing in Nevada. Ms. Greene answered a list will be provided.

Senator Neal noted the performance indicators showed 37,000 applications were processed in the year 2000. He asked what positions people are applying for. He said it would seem that out of 37,000 applications, some correctional officers could be found. Ms. Greene explained there are an adequate number of applications received for some classes, typically in the clerical areas. She said many applications for correctional officer positions are received. However, she added, there is a testing process and many applicants are lost through that process.

Ms. Greene pointed out the Peace Officers’ Standards and Training (P.O.S.T.) have recently revised standards and the hope is that will assist in recruitment efforts.

Ms. Greene explained the 37,000 represents every application in the system. Senator Neal asked how many people were hired in the state last year. Ms. Greene stated that in 1999, 3,790 employees were hired and she feels that number would be close to the same for 2000. Senator Raggio requested the number of hires in 2000 be provided.

Senator Raggio recalled that the Governor imposed a hiring freeze. Ms. Greene stated the hiring freeze is still in effect.

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

Ms. Greene said decision unit M-200 is a request for a new clerical position for the Las Vegas office. She pointed out that as the growth of southern Nevada continues, so does the need for state workers to service the area. She stated this position would assist training officers, work with the employment management committee, assistant in scheduling grievances, and work with the hearing officers on appeals. Senator Raggio asked how many employees would be in the Las Vegas office. Ms. Greene answered the new position would bring the total to 19 positions.

E-300 Maximize Internet & Technology – Page PERSNL-5

Ms. Green pointed out that in decision unit E-300, there is a request for $20,400 each year for travel for IFS implementation. She said this would allow the trainers to go to the agencies to provide training. She noted it is anticipated there will be 24 sessions conducted per quarter to train IFS users. She stated eight of the sessions will be in Las Vegas, requiring overnight trips, and two rural tours will be done per quarter.

Ms. Greene said the second item is to allow Internet connections for the balance of the staff in the Department of Personnel. She explained currently only about half of the employees have Internet access. She said this request is for $6,664 in each year of the biennium.

E-710 Replacement Equipment – Page PERSNL-5

Ms. Greene stated that decision unit E-710 is for equipment replacement in the amount of $77,549 in FY 2001-02 and $52,283 in FY 2002-03.

E-720 New Equipment – Page PERSNL-6

Decision unit E-720 contains two items, Ms. Greene said, the first being 20 software licenses. She explained the software provides employees with the tools needed to access the state mainframe and obtain Legacy System data. She called attention to the second item, requesting four modems, which will provide dial-up access to the Department of Personnel’s Human Resources system from off-site, for employees providing training and assistance to the agencies. She said the request is for $1,100 in FY 2002.

Ms. Greene reminded the committee the department is required to do a salary survey every two years (Exhibit F), the purpose being to compare state salaries with those of states, which are Nevada’s primary competitors for employees. She explained the focus is on specific jobs, making direct comparisons of salaries paid by the State of Nevada to participants having comparable jobs.

Ms. Greene said that this year the survey included 48 local governments and private sectors in 10 western states, 15 Nevada public employers, 5 school districts, 7 hospitals, and 21 private employers. Ms. Greene pointed out the survey shows the state lags the in-state market by 26 percent, shown in the chart on page 4 of Exhibit F.

Senator Raggio stated this shows a dramatic downturn in the comparisons of salaries by state employees. Ms. Greene agreed. She said the chart shows Nevada has been losing ground since 1990, having been behind by 7 percent at that time. Ms. Greene stated that in 2000 the state is 26 percent behind.

Senator Raggio said the committee is aware of most of the information, but it is helpful to have the survey report. He said the survey will be looked at when the issue of compensation is addressed.

State Unemployment Compensation – Budget Page PERSNL-8 (Volume 1)

Budget Account 101-1339

Ms. Greene explained this budget is basically a flow-through account. She said agencies are assessed for unemployment insurance, and when claims are submitted, they are paid through this account.

COMMISSION ON ETHICS

Ethics Commission – Budget Page ELECTED-18 (Volume 1)

Budget Account 101-1343

Polly Hamilton, Executive Director, Commission on Ethics, pointed out the new organization of the commission, which is due to changes made by the last legislative session, took effect in October 1999. She said the most dramatic changes were the addition of a Commission Counsel position and an Executive Director.

Ms. Hamilton reported that since the changes, processes have been expedited, but still handled within the bounds of the law. She said there is a process in place that weeds out frivolous complaints against public officers or employees. She explained that two of the eight members of the commission meet to determine whether there is just and sufficient cause to move forward on a complaint. If not, it is dismissed at that point, she said.

Ms. Hamilton pointed out the panel is assigned on a rotating and random basis. She said there is an ongoing list of panel combinations, each including no more than one of the same political party. Also, she noted, the chairman and vice chairman cannot serve on a panel. She said as complaints are filed, they are randomly assigned on a rotating basis.

Tracy Raxter, Chief, Administrative Services Division, Department of Administration, reviewed the base budget. He said this budget reflects a continuation of the Executive Director and Commission Counsel positions. He noted there will be a BDR submitted by the Department of Administration to remove the sunset provision placed on the positions by the 1999 Legislature.

Mr. Raxter stated there is a recommendation to have In-State Travel funding for 12 commission meetings to be held during the year. He said another adjustment is under the Information Services category, where for the coming biennium, some one-time equipment purchases are being deleted.

E-275 Working Environment & Wage – Page ELECTED-20

Mr. Raxter explained decision unit E-275 is a request for $1,120 to provide training for three staff members. Senator Raggio asked whether the proposed funding will be adequate to provide the services for which the agency is responsible.

Todd Russell, Vice Chairman, Commission on Ethics, reported the funding, over the past year and a half, has been found to be adequate. He explained the funding for additional positions in the last legislative session significantly helped the Commission on Ethics in the state.

Senator Raggio recalled one of the concerns regarding changes made last session was that among other things, specified procedures were to be followed if someone felt an opponent wronged him or her during an election. Mr. Russell reported there were no election complaints. He commented the procedures have been very good for the state of Nevada. He said, having talked to those serving on the commission in the past, he found there has been a major change. He stated the commission is very organized and operates efficiently.

Mr. Russell pointed out the commission has a website that shows all current opinions and there is an index of the opinions on the website. He stated there has been a great deal of training with local employees and officials in the state. He noted this has eliminated a lot of issues. Mr. Russell stated the Commission on Ethics is far better prepared in the area of providing financial disclosure.

Mr. Russell pointed out there were a lot of financial disclosure back fees and penalties waived. He said this was primarily due to a lack of accountability for mailings of notices under the former office.

Ms. Hamilton informed the committee the office is at 3476 Executive Point Way, Carson City, Nevada, and the agency is open from 8 a.m. to 5 p.m.

Senator Jacobsen asked what happens if the board cannot make a decision. Mr. Russell answered a meeting did occur during which there was a tie vote, but after discussion, an equitable resolution was achieved on that particular matter. He added the sincerity and nonpartisanship of the commission members, plus the application of the law in a very strict manner, allow the resolutions to occur.

Senator Jacobsen inquired whether complaints from walk-in traffic can be taken or action can only occur through written notification. Ms. Hamilton stated there is a small amount of walk-in traffic, but filing a complaint against a public officer or employee does require, at the very minimum, filling out a form. She pointed out all forms are available on the website and can be filled out on the website, downloaded and printed. She explained the website includes all statutes the commission enforces and administers. She stated feedback has been very positive.

Senator Neal asked what the purpose is of requested funding in the base budget for investigations. Ms. Hamilton pointed out the request is reduced this year because most of the funds were not used over the current biennium. She explained she conducts the majority of investigations on complaints in the form of telephone calls to people identified as witnesses, the subject of the complaint, and the person filing the complaint. Ms. Hamilton said a private investigative firm is on retainer in the event there is a large investigation, or one needing to be done undercover.

Senator Neal said he is under the impression information to the commission should come through a hearing. Ms. Hamilton responded that when the panel meets, it has the entire complaint, as well as responses and replies that were filed. She said the preliminary investigation would have been completed as to whether there is enough credible evidence to move forward on the complaint, not as to whether there had actually been a complaint. She stated the commission would only determine whether there had been an actual violation after there is a hearing and they had deliberated to render the opinion. Senator Neal asked whether Ms. Hamilton has the authority to drop a complaint before a hearing. Ms. Hamilton responded she does not.

Wm. Gary Crews, CPA, Legislative Auditor, Audit Division, Legislative Counsel Bureau, reported on the Legislative Counsel Bureau Audit Report Summaries. (Exhibit F. Original is on file in the Research Library.) He explained this is a summary of almost all the audits conducted over the past two years. He called attention to another exhibit, Exhibit G, entitled, “Introduction to Office of Legislative Auditor.”

Mr. Crews noted that in 1987 there were concerns raised by the Legislative Commission that the Executive and Judicial Branches of state government were perhaps not implementing the audit recommendations. He pointed out many of the recommendations result in significant savings or revenue enhancements to the state. Consequently, legislation was passed requiring an audit follow-up process, he said.

Mr. Crews stressed the follow-up has been an important process. He pointed out the Legislative Commission recommended to the Senate Committee on Finance and the Assembly Committee on Ways and Means that audit subcommittees be formed during legislative sessions to follow up on audit recommendations. He maintained the forming of the subcommittees has proven to be extremely fruitful over the past several years.

Mr. Crews called attention to page 3 of Exhibit G, where it is indicated what has been accomplished over the past two years by implementing the audit recommendations. He pointed out more than $20 million in savings or revenue enhancements have been realized as a result of the audit recommendations. He acknowledged implementation of the recommendations would not have occurred without the support of the Legislature, the Legislative Commission, and the Audit Subcommittee. He stated it is important for the agencies to know there is support from the Legislature.

Mr. Crews stated it is his belief much more can be saved. He explained how Exhibit F is organized. He said the various agencies audited during the biennium are listed in the Table of Contents. Mr. Crews asked the committee to turn to page 66 of Exhibit F. He said this is a summary of audit results of the Nevada Mental Health Institute. He stated the summary shows the institute failed to collect approximately $650,000 from Medicare for bad debts. He noted that bad debt is an eligible reimbursement from Medicare. Additionally, there were other substantial problems dealing with accounts receivable and billings, he stated. Mr. Crews stated the billing is not being done at the correct rates, it is being under billed and when the billing is done, there is no follow-up on what is receivable. He estimated $400,000 to $500,000 in additional revenues are available to be collected by the institute.

Mr. Crews called attention to page 106 of Exhibit F. He explained this deals with the Division of Parole and Probation, Department of Motor Vehicles and Public Safety. He stated there have been a number of discussions with this agency over the biennium. He said the department has been before the Audit Subcommittee and the Legislative Commission several times. He pointed out approximately $900,000 in supervision fees went uncollected. He stated with legislative backing, within a year, the collections have increased $800,000 a year.

Senator Raggio stated he does recall this, but asked whether it is practical to expect payment of supervisory fees in a lot of cases. Mr. Crews answered he believes the real problem is the information is not available in a form that can be used to monitor the cases. Senator Raggio said he is not questioning that there is some ability to recover the fees, but in a lot of the cases the parolee does not have the funds. Mr. Crews agreed.

Mr. Crews noted there is a process in place to waive the supervisory fee, but this is not done consistently and there is no oversight for that function. He reiterated revenues did increase the year after implementing some of the audit recommendations, by $800,000, and the division appears to be doing a better job.

Mr. Crews pointed out the problem was the agency was initially not very receptive to the audit recommendations. He pointed out there was a turnover in the position of Director, Department of Motor Vehicles and Public Safety, as well as the Chief, Division of Parole and Probation, in that department, and there has recently been more cooperation.

Mr. Crews called attention to other recommendations in the report dealing with categories I and II for police officer training. He said there was a recommendation to consider going to category II because there is approximately $500,000 a year in training costs that can be realized by making that change.

Mr. Crews noted the Director of the Department of Motor Vehicles and Public Safety has brought the training issue to the attention of this committee. He said the savings for training are reflected in the department’s budget. He stated it has been indicated that restitution collections have gone up approximately $50,000 each month since the audit. It appears there will be an additional $3 million to $4 million each year, in additional revenues or savings, as a result of implementing the audit recommendation, he added.

Senator Raggio stated he noticed on page 111 of Exhibit F, the agency rejected a number of the recommendations. Mr. Crews stated that is correct. He said this position appears to have been reversed at the last Audit Subcommittee meeting. He pointed out this was after the change in administration.

Mr. Crews commented on the textbook audit of school districts, which will come before the committee at a later date. He stated information on that audit is shown on page 24 of Exhibit F. He explained that when this information was presented to the Audit Subcommittee, Senator Rhoads, chairman of the committee, felt the report should be presented to both the Senate Committee on Finance and the Assembly Committee on Ways and Means, as well as the education committees of both houses of the Legislature. He informed the committee he will be present at committee meetings when this is to be discussed.

Mr. Crews pointed out that recommendations have been made on cutting the cost of outside medical care at the state prisons. He stated approximately $3 million in savings have been realized as a result of implementing controls. Mr. Crews reiterated that the support of the Legislature is needed to ensure recommendations are implemented.

Senator Raggio stated he is going to ask the Audit Subcommittee to bring this to the attention of committees and subcommittees during budget hearings. Senator Raggio stressed the audits are a necessary process. He complimented the Audit Subcommittee on doing a good job, and said the subcommittee has been very good in allowing the agencies to make responses before there is any publication of the report.

Senator Jacobsen pointed out that Senator O’Connell, as chairman of the Legislative Commission, has a concern regarding accountability and there is a responsibility to make sure things that are inadequate are brought to light.

Senator Coffin asked whether the audit of the Lied Library will be under normal function, or other audits will have to be postponed to do the audit on the library. Mr. Crews said the Legislative Commission approved the audit for the library and a report is anticipated to be available during this legislative session. Mr. Crews stated the Audit Division recognizes the public scrutiny of the Lied Library project and extra attention is being given to this audit.

Senator Jacobsen remarked the Tahoe Regional Planning Agency (TRPA) was a unique situation for the Audit Subcommittee because it is a bi-state agency, and Nevada was excluded from participating in the audit performed by California. Mr. Crews pointed out that was several years ago. He stated the state auditor for California did not want to do a joint audit, but Nevada was allowed to review the work papers of the audit.

Senator Raggio stated that if there is any problem with being able to audit that agency, the committee would like to be notified. Mr. Crews said there is no problem in auditing TRPA separately; California state auditors just do not want to do a joint audit.

Senator Raggio asked whether the textbook audit went to the extent of looking at the amount for textbooks and other supplies, that was put into the formula over a 10-year period, and the percentage of the funding that was actually used for textbooks. Mr. Crews answered that a 5-year period was reviewed. He stated that during the first two years of the 5-year period, all the funding allocated for textbooks was not used for that purpose. He said in years 3 through 5, the funding was used for that purpose. It has been indicated that all the textbook funding was not used for that purpose in the year 2000, he added.

Senator Raggio stressed that the Legislature provides funding for textbooks as part of the formula. He pointed out it appears the school districts are not using the percentage of the formula for textbooks; they were using it in collective bargaining and other things.

Senator Jacobsen asked whether all members of the Legislature receive the audit report. Mr. Crews stated it has been the policy of the Legislative Commission that an Executive Summary of every audit be sent to each member of the Legislature when the reports are released. He pointed out when there is a critical area, such as textbooks, an entire copy of the report is sent to every legislator.

The meeting was adjourned at 9:57 a.m.

RESPECTFULLY SUBMITTED:

Patricia C. Hampton

Committee Secretary

APPROVED BY:

Senator William J. Raggio, Chairman

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