MINUTES OF THE
SENATE Committee on Government Affairs
Seventy-First Session
March 14, 2001
The Senate Committee on Government Affairswas called to order by Chairman Ann O'Connell, at 2:00 p.m., on Wednesday, March 14, 2001, in Room 2149 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 Ann O'Connell, Chairman
Senator William J. Raggio, Vice Chairman
Senator William R. O’Donnell
Senator Jon C. Porter
Senator Joseph M. Neal, Jr.
Senator Dina Titus
Senator Terry Care
STAFF MEMBERS PRESENT:
Kimberly Marsh Guinasso, Committee Counsel
Juliann K. Jenson, Committee Policy Analyst
Julie Burdette, Committee Secretary
OTHERS PRESENT:
John P. Comeaux, Director, Department of Administration
Robert Barengo, Lobbyist, Sunrise Hospital and Medical Center
Carole Vilardo, Lobbyist, Nevada Taxpayers Association
Lisa A. Gianoli, Lobbyist, Washoe County
James F. Nadeau, Lobbyist, Washoe County Sheriff’s Office
Stephanie Tyler, Lobbyist, Nevada Bell, and Cingular Wireless
Mary Henderson, Lobbyist, City of Reno
Jan Marie Reed, Executive Officer, Board of the Public Employees’ Benefits Program
Laurie England, Chairman, Board of the Public Employees’ Benefits Program
Bob Gagnier, Lobbyist, State of Nevada Employees Association
Martin Bibb, Lobbyist, Retired Employees of Nevada
Gary H. Wolff, Lobbyist, Nevada Highway Patrol Association
James T. Richardson, Lobbyist, Nevada Faculty Alliance
Patrick C. McLaughlin, Lobbyist, Attorney, Teamsters Local 533
Chairman O'Connell opened the hearing as a subcommittee and requested the explanation of Bill Draft Request (BDR) 23-406.
BILL DRAFT REQUEST 23-406: Establishes procedures for certain state agencies to provide uniforms for certain employees. (Later introduced as Senate Bill 353.)
John P. Comeaux, Director, Department of Administration, stated this bill request, if approved, would make a change in the manner the state provides uniforms to certain employees. Mr. Comeaux continued, saying that currently the procedure involved agency-issue of non-personal items such as belts, badges, patches, handcuffs, etcetera. There is a cash uniform allowance for personal items including shirts, trousers, jackets and footwear.
Mr. Comeaux stressed the proposed bill would provide a voucher system for state agencies to acquire both personal and non-personal items directly from a manufacturer or regional retailer through a statewide uniform contract. He noted agencies would also have the option of issuing purchase orders to employees enabling them to acquire the items directly. Mr. Comeaux summarized, stressing volume purchase discounts negotiated in contracts would result in expenditure savings for the agencies.
SENATOR RAGGIO MOVED TO INTRODUCE BDR 23-406.
SENATOR O’DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS PORTER, NEAL AND TITUS WERE ABSENT FOR THE VOTE.)
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Chairman O'Connell asked for testimony on Bill Draft Request 31-49.
BILL DRAFT REQUEST 31-49: Requires local governments to comply with certain laws and regulations and to pay certain fees and taxes when providing goods or services in competition with private entities. (Later introduced as Senate Bill 355.)
Robert Barengo, Lobbyist, Sunrise Hospital and Medical Center, called attention to growing competition between local governments and private entities. Mr. Barengo emphasized the fact the local government has the ability to have government taxes and fees waived and thereby may compete on an uneven playing field with the private entities.
SENATOR CARE MOVED TO INTRODUCE BDR 31-49.
SENATOR O’DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS NEAL AND TITUS WERE ABSENT FOR THE VOTE.)
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Senator O’Connell said the next request came from Senator Raggio and noted the committee members were familiar with Bill Draft Request 23-1335.
BILL DRAFT REQUEST 23-1335: Prohibits political subdivisions of state from hiring certain state employees for 1 year after termination of state employment. (Later introduced as Senate Bill 354.)
Senator Raggio acknowledged the change of language in chapter 281 of the Nevada Revised Statutes (NRS). He noted under certain conditions, if a state employee terminated employment after receiving specialized training, and took employment with a political subdivision of the state within a year, the local political subdivision would be required to repay the state the costs of the specialized training.
SENATOR RAGGIO MOVED TO INTRODUCE BDR 23-1335.
SENATOR CARE SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR TITUS WAS ABSENT FOR THE VOTE.)
*****
Chairman O'Connell opened the hearing on Senate Bill (S.B.) 164.
SENATE BILL 164: Contingently authorizes purchase of municipal and revenue securities by state for improvement, acquisition and construction of facilities for certain public schools. (BDR 30-52)
Senator O’Connell pointed out to the committee she and Assemblywoman Christina R. Giunchigliani had sponsored Assembly Joint Resolution (A.J.R.) 26 of the Seventieth Session.
ASSEMBLY JOINT RESOLUTION 26 OF THE SEVENTIETH SESSION: Proposes to amend Nevada Constitution to exempt state contracts for improvement, acquisition and construction of facilities for schools from state debt limit. (BDR C-1753)
Chairman O’Connell explained to the committee S.B. 164 would allow certain school districts to use the state’s bonding ability, but such bonds would not reflect against the state debt.
Carole Vilardo, Lobbyist, Nevada Taxpayers Association, stated she would speak in support of S.B. 164. She also referred to Senate Joint Resolution (S.J.R.) 8 of the Seventieth Session saying the bill had originally been heard as a Senate joint resolution, then went to the Assembly side, where because of the duplication of language, it had been absorbed into A.J.R. 26 of the Seventieth Session.
SENATE JOINT RESOLUTION 8 OF THE SEVENTIETH SESSION: Proposes to amend Nevada Constitution to exempt state contracts for improvement, acquisition and construction of facilities for schools from state debt limit. (BDR C-200)
Ms. Vilardo asserted the state debt limit of 2 percent had, at times, been severely impacted and because of that, natural resources had been exempt for a number of years. She went on to explain in light of potential school facilities problems, particularly in the rural counties which might have bond issues with interest rates between 6 and 7 percent, whereas the more populated areas were able to put out bond issues at 5 percent. This bill would allow the rural counties a better borrowing rate. They had determined it would ease the burden if the rural county could go to the state, have the state issue the debt, which would reflect the state’s credit, ultimately affording the rural county a much lower interest rate. Ms. Vilardo said when the resolution appeared on the November 5, 2002, ballot it would parallel the language used to exempt natural resources, insofar as allowing debt for school facilities to be incurred by the state, but not going against the state debt limit. Ms. Vilardo pointed out a concern had been voiced regarding the wording of A.J.R. 26 of the Seventieth Session.
Ms. Vilardo said the suggestion had been made for enabling legislation to be introduced and passed this session so when A.J.R. 26 of the Seventieth Session appeared on the ballot, a reference could be made to specific legislation identifying the intent of the bill. This language, exempting from the debt limit those items for the preservation of property, natural resources, and so on, will be extended to the improvement, acquisition, and construction of facilities for public elementary and secondary schools.
Ms. Vilardo gave as an example, Elko, where there was growth, noting Elko was not a frequent issuer of bonds and had interest rates 1 percentage point or higher than a better-rated county could obtain. This bill would merely be a tool designed to assist the rural counties, in particular, and not impact the state debt limit.
Senator Raggio drew attention to Article 9, section 3, of the Nevada Constitution as the section preserving and protecting the natural resources of the state and (debt contracted for that expressed purpose) was not chargeable against the 2 percent debt limit of the state. The senator then asked the status of A.J.R. 26 of the Seventieth Session. Ms. Vilardo responded it was her understanding the resolution had been passed out of the Assembly Committee on Constitutional Amendments on Tuesday, March 13, 2001, and would be in the Senate the following week. Senator Raggio asked whether this was the second passage through the Legislature. Ms. Vilardo concurred. Senator Raggio then asked if the resolution would incorporate this new language. Ms. Vilardo replied no, but an explanation would be on the sample ballot. Senator Raggio questioned what the language of A.J.R. 26 of the Seventieth Session would add to the existing language in Article 9, section 3 of the Nevada Constitution. Ms. Vilardo replied it would add “debt incurred for schools.” Senator Raggio clarified, stating this bill, if passed, would provide the authority. He inquired, asking if S.B. 164 passed this Legislative Session but A.J.R. 26 of the Seventieth Session did not pass on the ballot, then this would be in the law. Ms. Vilardo responded, noting on page 3, section 6 of S.B. 164 the language defined S.B. 164 would be effective only contingent upon the passage of A.J.R. 26 of the Seventieth Session.
Senator Neal asked for clarification of intent. He continued, saying S.B. 164 would amend Article 9 of the constitution and would extend the clause referencing natural resources to include the construction of school buildings. Ms. Vilardo answered the language in A.J.R. 26 of the Seventieth Session said school facilities. Senator Neal restated, the bill would add to the constitution. Senate Bill 164 would allow the issuance of revenue bonds, but those bonds would not become a part of the state debt limit. Ms. Vilardo replied the bonds would be general obligation bonds, payable from property tax. Senate Bill 164 would allow the lowest possible tax rate because of the lower interest rate. Senator Neal declared it would still be a debt to the entity. Ms. Vilardo emphasized he was correct, and there was no intent to suggest the local entity would not pay the debt. This bill would allow the infrequent issuer of bonds to use the higher credit rating of the state to obtain a lower rate of interest.
Ms. Vilardo clarified, using as an example, a $2-million general obligation bond issue requiring an increase of property taxes to cover $4 million. Senator Neal agreed. Ms. Vilardo, continued, saying $2 million would be the interest. If the local entity could obtain a loan at 50 basis points reduced, it would save a half-cent or a penny in property tax.
Senator Raggio clarified, reiterating the resolution had passed in the last session and would add the language for educational facilities so any bonds for which the state was responsible, dealing with natural resources, would not be chargeable against the 2 percent debt limit. If the resolution was passed again this session and approved by the voters, any bonds the state was responsible for and might be used for building school facilities would also not be chargeable against the debt limit of the state. That would be important for the state’s purposes because the state often runs up against its debt limit in using its bonding authority. It is important to the local entities because if the state was issuing bonds which would be authorized by a bill such as this the bond rate would be much more favorable. This would only be effective if the voters approved A.J.R. 26 of the Seventieth Session, he said.
Chairman O’Connell asked if there were further questions or testimony on S.B. 164; there were none. Chairman O'Connell closed the hearing on S.B. 164 and opened the hearing on S.B. 225.
SENATE BILL 225: Repeals prospective expiration of certain provisions concerning surcharges on telephone services in certain counties for enhancement of telephone systems for reporting emergencies in those counties. (BDR 20-499)
Lisa A. Gianoli, Lobbyist, Washoe County, came forward to refresh the committee on the history of S.B. 225. Ms. Gianoli noted, in the 1995 session of the Nevada Legislature, Senate Bill 473 of the Sixty-Eighth Session authorized a telephone line surcharge to be imposed in Washoe County for enhancement of existing 911 services.
SENATE BILL 473 OF THE SIXTY-EIGHTH SESSION: Authorizes imposition of surcharge on telephone service in certain counties for enhancement of telephone system for reporting emergencies. (BDR 20-734)
Ms. Gianoli said the funds generated by the surcharge were deposited in a special revenue fund established to account for the revenues and expenditures associated with providing enhanced 911 services in Washoe County. The legislation also required an advisory board be established with representatives appointed by the Cities of Reno and Sparks, as well as Washoe County. Ms. Gianoli continued, saying in fiscal year 1995–1996, the Board of Commissioners of Washoe County put into place the enhanced 911 surcharge as allowed. The surcharge is levied to enable public safety answering points (PSAPs) to receive location information when a 911 call is received as well as installing compatible equipment in the three PSAPs located in Washoe County.
Ms. Gianoli stated, in 1996, the necessary technology was installed which allowed the PSAPs to obtain location information on calls placed from landlines. The implementation of phase one of wireless will permit the same information to be obtained when a 911 call is placed from a wireless telephone as well as location to the nearest cell site tower. They were currently working with the wireless providers on contractual matters and expected phase one to be in place in Washoe County in the spring of 2001. She said the current law does not allow for the accumulation in excess of $500,000 of unencumbered monies at the end of any fiscal year. This language prevents the accumulation of dollars unnecessary to actually provide the service. Ms. Gianoli remarked to the committee, in fact, in December 2000, the Board of Commissioners of Washoe County reduced the surcharge from 25 cents to 1 cent in order not to exceed the $500,000 limit set in statute.
Ms. Gianoli stated with phase one implementation, the surcharge would increase, probably up to a 22-cent level. The ongoing costs to provide enhanced 911 was estimated at approximately $1.2 million per year in order to maintain the database and pay providers for the technology as well as maintain the installed equipment. The surcharge would cover the cost of the PSAPs in Reno, Sparks and the North Lake Tahoe area. The surcharge was presently scheduled to sunset December 31, 2001. She elaborated on the permanent funding source for the provision of this vital service, mandated by the 1999 session. The county, cities and industry agreed the surcharge was the method by which to continue to provide this service. In researching the issue, it was found this was the most widely used method for the provision of this service.
Ms. Gianoli summarized, saying she supported the passage of S.B. 225.
Senator Raggio inquired whether the surcharge applied to all users. Ms. Gianoli affirmed it does. Senator Raggio reiterated the surcharge covered the spectrum of all subscribers to telephone service, including the service for the deaf, Telephone Device for the Deaf (TDD), relays, and so on. Ms. Gianoli replied that was correct. The senator asked if they anticipated this would be a permanent charge, required in order to maintain the enhanced 911 service. Senator Raggio then questioned whether the surcharge would continue at the 22-cent level.
Ms. Gianoli responded, saying the 5-year projection, utilizing fairly conservative revenue growth factors, would cover the costs for the 5 years.
Senator Raggio queried the annual total. Ms. Gianoli replied, stating the full 25 cents generated approximately $1.1 million per year. Senator Raggio emphasized his belief in the enhanced 911 services, but was curious as to why the cost was so high. Ms. Gianoli answered the items included database maintenance; Nevada Bell was paid for Automatic Number Identifier (ANI) devices and Automatic Location Identification (ALI) devices charges. There was also a monthly charge totaling approximately $500,000 to $600,000 per year for this service alone. There would also be an estimated bill-back cost of $285,000 per year and other miscellaneous maintenance agreements on equipment.
Ms. Gianoli concluded Washoe County was bound by the provision in the statute not to exceed $500,000 in unencumbered monies, so at the end of any fiscal year, if the unencumbered balance exceeded $500,000, the surcharge would be reduced.
Senator Neal asked how many counties were involved in this project. Ms. Gianoli responded only Washoe County was involved. The senator asked how many users were involved. Ms. Gianoli replied there were approximately 300,000 landline users and approximately 94,000 wireless users. Senator Neal requested clarification on the maximum surcharge; Ms. Gianoli responded, at present, the surcharge was 1 cent, but the maximum was 25 cents. Senator Neal questioned whether Ms. Gianoli anticipated the surcharge going back up to 25 cents. Ms. Gianoli answered the surcharge had been at 25 cents until December 2000, when the surcharge was dropped to 1 cent to meet the provision of the statute, which does not allow for accumulation of unencumbered monies over $500,000. Senator Neal clarified, stating Washoe County raised $1.1 million per year at the full 25-cent surcharge. Senator Neal queried the amount in the fund presently. Ms. Gianoli replied saying there was a little over $500,000, although some was encumbered for specific purposes. It was the unencumbered balance which must be less than $500,000. Senator Neal asked who oversaw the fund. Ms. Gianoli answered Washoe County oversaw the fund; it was part of the audited funds within Washoe County. The advisory board actually made the decisions on spending, although anything needing to be approved beyond the normal limits of county purchasing policy would go before the Board of Commissioners of Washoe County. Senator Neal asked who would set the limit on the fund as it went up or down. Ms. Gianoli answered, stating the board of commissioners would act on a resolution each time.
James F. Nadeau, Lobbyist, Washoe County Sheriff’s Office, testified in support of S.B. 225 and conveyed the support of Dennis Balaam, Sheriff, Washoe County. Mr. Nadeau remarked there had been a close look taken as to the expenditures of funds. It was believed the expenditure was necessary in order to maintain the level of service on both enhanced 911 and the services to the community.
Senator Raggio, stating for the record, asked for clarification on the benefits provided by enhanced 911. Mr. Nadeau replied there were various levels of 911. The initial 911 went to a dispatch center called a public safety answering point (PCAP). Subsequently, technology had brought different levels of available service, automatic number identification (ANI) gave the telephone number of the 911 callers. The next advancement was automatic location identification (ALI), which actually gives the location/address of the landline. Mr. Nadeau explained, initially the technology was unable to track the telephone numbers of the wireless calls. The technology now is able to identify a telephone number and a tower location. He also commented as technology improves and becomes available, so will the levels of service improve.
Chairman O'Connell voiced a concern regarding the privacy issue of wireless telephones.
Stephanie Tyler, Lobbyist, Nevada Bell, and Cingular Wireless, stated she was testifying as a vendor of wireless service for Washoe County. Ms. Tyler continued, saying they had worked with local governments over a 2-year period on this piece of legislation. Nevada Bell and Cingular Wireless had reviewed and concurred with the Washoe County 5-year business plan, which, as explained previously in testimony, defined the services to be provided and how those services would be paid for. Ms. Tyler maintained confidence in the plan and the monies paid and the structure and safeguards in place with this legislation, noting Nevada Bell and Cingular Wireless were comfortable in going forward. She stressed Nevada Bell had specific criteria to be met before it endorsed an enhanced 911 funding plan. Ms. Tyler defined certain requirements, for example, adequate funding for the service, and again restated Nevada Bell’s confidence the business plan, as presented, would meet the customers’ needs to provide the service. Ms. Tyler expressed support for S.B. 225 and Washoe County’s funding plan.
Senator Neal asked for clarification, asking as an example, if someone dialed 911, would the call go to a central location where a dispatcher would see the address on a computer screen, or if there was a bank of telephone numbers and addresses that could be traced backwards without someone utilizing the 911 capability.
Mr. Nadeau responded, restating Senator Neal’s query and elaborating there was a mechanism by which law enforcement could pick an arbitrary telephone number and trace it back without the call going first through the 911 system. Mr. Nadeau stated yes, the telephone company did have a database with the information; however, Washoe County did not have access to the company’s database. He clarified, law enforcement receives the 911 information from the telephone company; the 911 telephone call and address arrive at the law enforcement dispatch center at the same time, but the information is supplied through the telephone company.
Ms. Tyler stated, to further answer Senator Neal’s question, Nevada Bell did maintain a database for all active telephone lines. It was her understanding the information was released to Las Vegas Metropolitan Police Department (METRO) based upon a 911 telephone call. She then said if Senator Neal was asking whether METRO would have access to all the information all of the time, the answer was no, the information was only initiated by the dialing of 911.
Senator Neal clarified, saying the release of the information to a police department or fire department corresponded to the emergency telephone call made by the individual. Ms. Tyler agreed, but stated she would verify the information for Senator Neal.
Mr. Nadeau explained to the committee if law enforcement officers involved in an investigative matter needed a telephone number, there was a procedure and process outlined in statute which must be followed in order to obtain additional information.
Mary Henderson, Lobbyist, City of Reno, stated for the record: “We [Lisa Gianoli, Pat Coward and Mary Henderson] want to express a very sincere, heartfelt thank you to the industry for all the work they have put in with us since 1995, on this issue.” And, she said, as the committee would recall, in past sessions, this had been fairly rancorous. On behalf of the local governments, “we wanted very much to be on the record with how much the support was appreciated,” she said.
Chairman O'Connell requested any further testimony on S.B. 225. There was no further discussion, the chairman closed the hearing on S.B. 225 and opened the hearing on S.B. 298.
SENATE BILL 298: Revises provisions relating to public employees’ benefits program. (BDR 23-542)
Jan Marie Reed, Executive Officer, Board of the Public Employees’ Benefits Program, stated S.B. 298 was a housekeeping bill. The language merely extended the period of time for people to opt in to the program from 30 days to 60 days. Ms. Reed commented, often 30 days was not enough time to obtain the appropriate paperwork, for example, in the case of death. Ms. Reed stated the language also defined the need for a certified public accountant (CPA) who would provide an audit on an annual basis and report the findings of the audit to the board and the Interim Retirement and Benefits Committee. She stated the board also wanted to appoint an attorney specializing in employee benefits. The attorney’s responsibilities would include a biennial review of the program relative to federal and state requirements.
Chairman O'Connell pointed to page 3, section 2, subsection 2, paragraph (h), on line 28, and asked if the program did not have an attorney presently. Ms. Reed replied the program had a representative from the Office of the Attorney General. Senator O’Connell clarified this would be a different attorney than the representative from the Office of the Attorney General. Ms. Reed agreed this would be someone other than that person. The chairman asked if the attorney would be on staff. Ms. Reed replied no, the attorney would be on a consulting basis and probably through the program’s consulting firm. She elaborated, saying as the consulting firm did the compliance audit with regard to federal and state regulations, then the attorney would be working with them to ensure the program had met those requirements from a legal perspective. Chairman O'Connell asked the name of the firm. Ms. Reed replied the consultant was The Segal Company.
Ms. Reed continued, stating some language had been changed regarding a “public employee” because the program is the Public Employees’ Benefits Program. The term had been used throughout the bill. Ms. Reed declared language changes to reflect the practice in place and approved by the consultant regarding the interest-bearing checking account had also been made, particularly in regard to the deposit and redeposit of checks returned from claims. This was done so the third-party administrator did not actually have access to the state’s accounts, but rather, could deposit those checks into a separate account. The practice was a good one and had been in place, however, it was not reflected in the statute.
Chairman O'Connell expressed concern this account only earned 4 percent interest. Ms. Reed confirmed the account only earned 4 percent and any of the other monies handled within the agency are through the Office of the State Treasurer or the Office of the State Controller. Ms. Reed stated the best example would be the case of UICI Administrators [Incorporated, third party administrator for self-funded benefit plans], noting if a check were returned to UICI Administrators, UICI Administrators would then deposit the check into an account for the program, but it would not go into the State’s large funds accounts.
Chairman O'Connell asked Senator Raggio if the committee could suggest a way to assist the program in obtaining a higher interest rate. Senator Raggio replied it was a matter of negotiation when the account was opened. The chairman asked if the program had to deposit with the Office of the State Treasurer or the Office of the State Controller. Ms. Reed responded, stating it was her understanding, as long as the Public Employees’ Benefits Program was a state agency, they had to work with the Office of the State Treasurer which had negotiated the interest rate. Chairman O'Connell stated she had been comparing the program with the Public Employees Retirement System (PERS) and PERS had been able to obtain a better interest rate.
Chairman O'Connell asked for clarification regarding the 1994 cutoff date. Ms. Reed responded the cutoff date had to do with the amount of subsidy paid on behalf of those retirees which had become a fixed amount, while the subsidy for those employees retiring after 1994 was a sliding-scale subsidy, dependent upon the number of years of service. Senator O’Connell asked what the fixed amount was and how many people were affected by the 1994 cutoff date. Ms. Reed said she would provide the amount to the committee and said she believed approximately 2000 retirees were affected.
The chairman asked if Ms. Reed knew how many of those retirees were from another system, for example, county government as opposed to the state system. Ms. Reed declared it was a complicated question because the interpretation of the statute in past years had been if the years of service included at least 5 years’ service in the state system, the retiree would get the state subsidy. Ms. Reed elaborated saying what it meant was the person could work for the state for 5 years, and for 10 years with a non-state entity and get a state subsidy for 15 years of service, as long as he or she retired from the state. So, the first 10 years could have been with a non-state agency and the last 5 years with the state. The person would get a 15-year subsidy as a state retiree, which was why it was difficult to say how many of the 2000 people were state retirees, but they were classified as state retirees receiving a subsidy for state service. Chairman O'Connell asked Ms. Reed if she could elaborate on county and city employees who went into the state system and then retired from the state. Ms. Reed said it was her understanding the counties and cities were required to offer a retirement benefit, but it was often times much less attractive than the state’s Public Employees’ Benefit Program. This posed an issue with regard to where the risk was spread. Those retirees are pooled separately and rated separately. The chairman asked if they bought into the system. Ms. Reed reiterated they were rated separately based on the experience of the non-state group and the rate was set by the actuaries, and they were required to pay on a monthly basis. The chairman asked how their rate compared to the state employee rate. Ms. Reed replied, currently the rates were close, which was why a change in the language from “shall” to “may” set a separate rate was requested. They are rated and tracked separately so it can be determined whether the rates should be the same or different, she said, and the analysis is done as a stand-alone group.
Senator Neal noted page 3, line 28, and asked if they presently utilized the Office of the Attorney General. Ms. Reed replied there currently was a representative from the Office of the Attorney General who met with them and represented them. The senator asked whether, with the proposed change in language, they were saying there was no one in the Office of the Attorney General who met their requirements for evaluating compliance with state and federal law.
Laurie England, Chairman, Board of the Public Employees’ Benefits Program, addressed Senator Neal’s question, stating the board specifically asked the provision be included in the language as there are so many new and frequently changing federal requirements. Ms. England continued, saying this was actually an audit function to compare actual employees who had left, retired, and so on, whichever a particular federal statute covered, allowing them to audit retrospectively versus the attorney general who worked with them on an ongoing basis for actual implementation of the plan. The Office of the Attorney General does not function in an audit capacity specializing in benefit compliance, she said. Senator Neal reiterated, stating the Office of the Attorney General did not have the capability to perform these functions. Ms. England concurred.
Ms. England commented on an upcoming board meeting in which a study by The Segal Company would be presented regarding the retiree situation currently and 20 years in the future. Ms. England stated she would like to present The Segal Company’s study to the Legislature.
Chairman O'Connell stated Ms. England would be afforded the opportunity as the committee on government affairs had concerns regarding the Public Employees’ Benefits Program and meeting the commitment to employees and retirees.
Senator Neal asked how much money using coupon booklets had saved. Ms. England replied she did not know the exact amount. She said she did know they had been paying approximately $40,000 per month for billing and eligibility through a system which was archaic and not accurate. They had switched to a system at approximately half the price, and now had current technology and software.
Chairman O'Connell asked for further testimony on S.B. 298.
Bob Gagnier, Lobbyist, State of Nevada Employees’ Association (SNEA), came forward to respond to the questions raised by the chairman. He said the State of Nevada Employees’ Association sponsored the legislation in 1993 leading to the sliding scale for retired employees. Prior to 1993, every retired employee from state government received the same amount, whether they had worked 5 years for the state or whether they had worked 25 years for the state, he said. The Legislature insisted the final bill be cost-neutral. A compromise was reached, he explained, saying the individuals already retired insisted they not suffer a decrease and they would always receive the base amount. Mr. Gagnier maintained, on a prospective basis, the people with 5-years’ service would receive 25 percent of the base amount. People who had been in state service for 20 years would receive a higher percentage. The people who had already retired were unwilling to accept that compromise. Mr. Gagnier reiterated employees who retired before the January 1, 1994 date, received the base amount set each session by legislation setting the amount for active employees and the base amount for the retirees. As an example, those people who retired prior to January 1, 1994, receive the base amount of $208.92. Those who retired after that date were on a sliding scale of 25 percent for the first 5 years and 7 ½ percent for each year thereafter, up to a maximum of 137 ½ percent.
Martin Bibb, Lobbyist, Retired Employees of Nevada, asserted he concurred with the chairman’s remark health care can, in fact, be of greater concern than a salary increase. Mr. Bibb declared the statement certainly was true for both active and retired employees. However, health care was a larger monthly budgeted item for retired employees. Extending the time period in which people could enter the program, as S.B. 298 would provide, was Mr. Bibb’s stated belief, of benefit to retired employees. He voiced support for the biennial audit and said he looked forward to seeing the study being prepared as Ms. England had mentioned. Mr. Bibb pointed out, as a retiree group, they were concerned with how people were pooled and/or rated in this program.
Chairman O'Connell asked for questions from the committee.
Senator Raggio asked Mr. Gagnier if the State of Nevada Employees Association had any objection to S.B. 298. Mr. Gagnier replied they would support the bill as written.
Senator Porter inquired if the situation had been better for members of the Public Employees’ Benefits Program over the past 2 years. Mr. Gagnier stated it was very difficult to answer that question. Mr. Gagnier related he had been in this business for 40 years and had not found employees felt really good about their insurance. He continued, saying health insurance was always a negative. Mr. Gagnier did say the Public Employees’ Benefit Board had made some improvements and had responded to the request to lower the deductible. He maintained the program still needed improvement, but steps were being taken. Mr. Gagnier testified members were not satisfied with the prescription program, but the issue was being addressed.
Senator Porter said he had heard the same things from members of the program, but had wanted to hear Mr. Gagnier’s thoughts, noting the confidence level was higher regarding the program. Mr. Gagnier asked to add one more thought. The entire health care industry and prescription drug costs specifically were going up nationally at a rate of 19 percent and more. He gave the example of his own office health care coverage, saying there were eight individuals covered under the plan; as of May 15, 2001, the amount would go up $500 per month, and his cost would go down as he was eligible for Medicare. He summarized, saying his cost was cut in half, but the premium was still raised $500 per month and it followed a $500 increase the previous year.
The chairman asked Mr. Gagnier if his primary insurance was the program or Medicare. He responded Medicare was primary.
Gary H. Wolff, Lobbyist, Nevada Highway Patrol Association, voiced support for S.B. 298. Mr. Wolff noted in May, 1997, Washoe County negotiated away its supplementary insurance for the retirees. Therefore, anyone hired by Washoe County after May, 1997, upon retirement, would not have any supplementary coverage from Washoe County. Mr. Wolff said those people could potentially go into the state plan with no subsidy which could cause a significant impact on the state system in years to come. Mr. Wolff stated. in answer to Senator Porter’s question regarding the confidence level of members, yes, the trust factor had gone up. He also iterated there was more work to do on the program. Mr. Wolff brought up the St. Mary’s Health Maintenance Organization (HMO), and for the first time, a single recipient of the program had to pay $75 fee over and above, which was not the case in Clark County. Any employee here in the north, who elected the St. Mary’s HMO would have to pay $75 more for their coverage than those employees in Clark County. Mr. Wolff went on, saying there were many entities involved in the insurance program. He pointed out there was an HMO in the south, one in the north, none in Elko, a self-funded, a separate one for retirees, and so on. So, it was not a true group policy. Requesting his words be on the record, Mr. Wolff stated a trooper asked him: “If this is a group plan why did I have to pay $75 out of my pocket, why wasn’t half that shared with somebody in Clark County to make it more fair?”
Chairman O'Connell thanked Mr. Wolff and noted the question should be asked. The chairman inquired why the inequity existed.
Ms. Reed testified they did know why the inequity existed, the board had made very clear decisions based on actuarial studies. The data showed the HMOs had a history of attracting young, single employees, primarily males, which, by their nature, are the least-costly members in the plan. The plan offered options but had really caused the plan to compete against itself. The consultant had suggested taking the age and sex of all active employees and applying those factors to all of the options the plan chose to have. Ms. Reed continued, saying when those factors were applied to HMOs, Preferred Provider Organizations (PPOs) and the self-funded plan alike, it caused the HMOs to have a higher price when compared to the self-funded plan. It was shown the self-funded plan was much more effective with the age of the people and families in it and the HMOs, therefore, ended up with a premium adjustment. The self-funded plan was used as the benchmark plan because the majority, nearly 90 percent of the members, elected to be in that plan. If the HMO rates, either north or south had a premium higher than the self-funded plan, the additional cost to offer the choice would be borne by the individuals who had chosen the more expensive type of coverage. Ms. Reed explained the southern Nevada HMO plans did not cost more than the self-funded plan, but the northern Nevada HMO plans did cost more. The Public Employees’ Benefits Program had wanted competition, but in the end, one of the competing HMOs said with the cost adjustment and the age-sex factor it did not make sense to them to offer the HMO resulting in only one HMO in the north.
Ms. England explained, in simple terms, the self-funded plan cost X amount, bids came in from the HMOs throughout the north and south. The individual would have to weigh whether there was a cost benefit, co-payments, and out-of-pocket expenses, as compared to the self-funded plan with the deductible, co-payments, and out-of-pocket expenses. Ms. England declared it had been alleged, wrongly so, the board had not been fair, but in fact, they had made it fair. She stressed other states had actually passed legislation to that end.
James T. Richardson, Lobbyist, Nevada Faculty Alliance, testified he wished to go on the record in support of S.B. 298. He noted the bill had been needed and would enable a smoother operation. The Nevada Faculty Alliance had expressed concerns to the board regarding pharmacy costs and on the issue of how to rate retirees. He reiterated concern regarding the HMO in the north and the $75 out-of-pocket expense for the individual. Mr. Richardson urged passage of S.B. 298. He continued, saying the plan was better than it had been. He also emphasized encouraging more funding for the plan.
Patrick C. McLaughlin, Lobbyist, Attorney, Teamsters Local 533, testified for the record his firm had been asked to do an evaluation to compare some alternative plans to the existing plans the state offered. Mr. McLaughlin stated some statistical information had been requested from the Public Employees’ Benefits Program. The information was necessary in order to fulfill his obligation to his client. Mr. McLaughlin noted this would include claims information insurance underwriters required in order to give them a proposal so he could do his job for his clients. Mr. McLaughlin said his firm had been trying to come up with an alternative plan.
Chairman O'Connell asked Ms. Reed if it was possible to give that information to Mr. McLaughlin. Ms. Reed responded, stating a request had been received several months previous for information relative to the state fund, specifically, high-dollar claims, specific claims information, etcetera. As they understood the request, she said, it related to a small interest group interested in possibly leaving the plan. Certainly, at a time a group defined themselves as the group, then the particular information requested by Mr. McLaughlin would be made available for the defined group. Ms. Reed emphasized the plan did not generally give out claims’ information, historical data, and details of claims dollars to anyone other than the consultant who worked on the plan by contract. Ms. Reed said she had explained to Mr. McLaughlin the appropriate time for sharing the information would be when the defined group provided an application for leaving the plan.
Senator Raggio voiced his approval of the policy.
Mr. McLaughlin stated in order for the group to make an informed decision there would have to be an alternative.
Senator Raggio stated those people covered by the plan would not want their information released to just anyone. Mr. McLaughlin said he respected their wishes, but what he was asking for was generic underwriting information, not specific and not confidential.
Ms. Reed interjected, if Mr. McLaughlin was trying to find an alternative plan for a certain set of people and she were to provide the specific information relative to the entire population, the rates he would get from a proposed plan would not be appropriate anyway because he would not be taking the entire population.
Chairman O'Connell asked if the information to be provided to the committee at a later date would contain the generic information Mr. McLaughlin had requested. Ms. Reed said there would be information relative to the projected cost of retirees and the percentage of retirees in the plan.
Chairman O'Connell closed the hearing on S.B. 298 and adjourned the meeting at 3:39 p.m.
RESPECTFULLY SUBMITTED:
Julie Burdette,
Committee Secretary
APPROVED BY:
Senator Ann O'Connell, Chairman
DATE: