MINUTES OF THE meeting
of the
ASSEMBLY Committee on Ways and Means
Seventy-Second Session
February 12, 2003
The Committee on Ways and Meanswas called to order at 7:57 a.m., on Wednesday, February 12, 2003. Chairman Morse Arberry Jr. presided in Room 3137 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. Morse Arberry Jr., Chairman
Ms. Chris Giunchigliani, Vice Chairwoman
Mr. Walter Andonov
Mr. Bob Beers
Mrs. Vonne Chowning
Mrs. Dawn Gibbons
Mr. David Goldwater
Mr. Josh Griffin
Mr. Lynn Hettrick
Ms. Sheila Leslie
Mr. John Marvel
Ms. Kathy McClain
Mr. David Parks
Mr. Richard Perkins
STAFF MEMBERS PRESENT:
Mark Stevens, Assembly Fiscal Analyst
Steve Abba, Principal Deputy Fiscal Analyst
Jeff Ferguson, Program Analyst
Carol Thomsen, Committee Secretary
Connie Davis, Committee Secretary
After calling the meeting to order, Chairman Arberry recognized Brian Sandoval, Attorney General for the state of Nevada.
Mr. Sandoval advised that he was present before the Committee to present an overview of the budget for the Attorney General’s (AG’s) Office for the next biennium. Mr. Sandoval introduced Ann Wilkinson, First Assistant Attorney General; Marietta Lopez, Chief Financial Officer; Jeff Parker, Solicitor General; Elizabeth Quillin, Chief Deputy Attorney General, Las Vegas; Christina Davis, Executive Assistant; and Jonathan Andrews, Special Assistant Attorney General. Mr. Sandoval informed the Committee that he was very proud of his leadership team, which had made his job much easier because of their dedication. Mr. Sandoval also recognized the hard work and devotion of the staff and attorneys of the Office of the Attorney General, who were devoted to the mission of protecting and defending the health, safety, and welfare of the people of the state of Nevada.
Ms. Sandoval testified that he would begin his budget presentation with a brief overview of the budget reductions and measures that either had been, or would be, implemented in order to achieve savings. He stated he would then continue with a brief discussion of each budget account, which would be presented in the order set forth on the agenda, Exhibit A, and would conclude his remarks with a discussion of those budget items that applied across the various budgets within the AG’s Office. To assist the Committee in following the presentation, Mr. Sandoval referenced Exhibit C, “Office of the Nevada Attorney General, Budget Proposal Presentation for FY2003 – FY2005,” a copy of which had been presented to each member.
The Office of the Attorney General, explained Mr. Sandoval, was responsible for serving as the legal advisor on all state matters arising in the Executive Branch of state government. As an independent constitutional officer, the Attorney General had to ensure that the laws were enforced and administered fairly. Mr. Sandoval advised that the office was currently staffed with approximately 320 employees: 140 legal staff, and 180 other professionals.
Mr. Sandoval understood that performance indicators were a priority of the money committees as budget requests were presented. He reported that he and his staff had reviewed the reported indicators for FY2002 and FY2003, as contained in The Executive Budget, and would continue to examine those numbers in an effort to determine what they really meant. According to Mr. Sandoval, the Attorney General’s (AG’s) Office was eager to work with the committees and legislative staff to achieve meaningful performance indicators.
In light of the fragile condition of the state’s economy, Mr. Sandoval reported that the Office of the Attorney General was committed to supporting The Executive Budget recommendations for that office, and would cooperate with the Seventy-Second Session of the Nevada Legislature to buckle down and tighten its budgetary belt. Mr. Sandoval offered the following list of budgetary saving measures:
1. The AG’s Office would not request funding for any new positions, absent new legislation that required additional staff.
2. The office training budget would be reduced by $30,000 for each fiscal year in the next biennium.
3. Voluntary leave without pay would continue to be offered to all employees. Since authorization of that option, there had been 22 participants, which resulted in salary savings of over $22,000.
4. Vacant positions would not be frozen, but rather would continue to be rotated for an extended period of time to achieve salary savings, while at the same time avoiding undue hardship on any one division. Through that process, it was expected that the AG’s Office would realize savings of approximately $600,000 by the end of the current fiscal year, without a reduction in positions.
5. The AG’s Office would examine lease space for satellite offices to determine whether further operational costs could be saved through the consolidation of office space.
6. In a prior session, the AG’s Office had committed to relocating the Bureau of Consumer Protection, the Private Investigator Licensing Board, and the Gaming Division into the AG’s Office complex across from the Capitol Building in Carson City. That commitment would be honored, and the rent savings achieved by that action over the upcoming biennium would initially be utilized to offset moving expenses and any tenant improvements that might be required. Assuming that the relocation could be carried out completely, an approximate rent savings of $242,500 was anticipated over the next biennium, an average of $121,250 per fiscal year.
7. The AG’s Office would also consider the relocation of the Reno office and expected to realize a savings for reduced rent.
8. As a cost-savings measure, if the AG’s Office was not able to identify funding from non-General Fund sources, it would consolidate the functions of the Crime Prevention Coordinator position with those performed by the Children’s Advocate and other unit staff members. That would equate to an annual General Fund reduction of $57,404 per fiscal year.
9. The AG’s Office had cut its original equipment request by almost $200,000, from $443,830 to $248,323.
Mr. Sandoval revealed that in order to further his personal commitment to support budget reductions, he had voluntarily reduced his salary by 3 percent. He informed the Committee that within specific budget accounts, he would provide a brief overview of each account, and highlight the requested enhancements. The supportive information and backup materials were included in Exhibit C, located behind the appropriate tab labeled with the budget account. Mr. Sandoval recognized that unclassified salaries were handled separately through the Unclassified Pay Bill, however, in discussion of each budget, he stated he would identify some of the enhancements related to unclassified salaries.
Mr. Sandoval commenced with the overview of Budget Account 1030.
ATTORNEY GENERAL ADMINISTRATION FUND (101-1030) – ELECTED-24
Mr. Sandoval reported that Budget Account 1030 was the Administrative Fund for the Attorney General’s (AG’s) Office, and was supported by General Fund allocations, the Attorney General Cost Allocation Plan, and billings from boards, commissions, and other agencies that were not assigned to the Cost Allocation Plan. According to Mr. Sandoval, the AG’s Office requested enhancements to the account for additional space in the Grant Sawyer State Office Building in Las Vegas, replacement equipment, and the reclassification of two attorney positions.
With regard to the Las Vegas office expansion, Mr. Sandoval testified that the expansion would include an additional 10,462 square feet of space, which was requested to address the current space needs of that office. The space enhancement would create an annual increase in the budget account of approximately $131,000 per fiscal year, which would be used to pay for 9,539 square feet of space. Mr. Sandoval explained that the remaining 900 square feet of space would be apportioned and paid for via other budget accounts. Acquisition of the additional space would allow the AG’s Office to relocate staff that presently worked in file rooms, copy rooms, and converted conference rooms to more appropriate space. The additional space would also provide workspace, would reopen converted conference rooms, and would provide additional room for file storage. Mr. Sandoval stated it was anticipated that the space would be available for occupancy in October of 2003.
Chairman Arberry asked whether the request for additional office space would comply with the maximum allowable space per labor group, as set forth in the 2003-05 Budget Instructions, and also asked which agency was vacating space to provide the requested expansion.
Mr. Sandoval explained that the entity moving out of the Grant Sawyer State Office Building was the Hearings Division of the Department of Administration. With regard to the allowable space, Mr. Sandoval stated acquisition of the space was more or less an “all or nothing” proposition. The AG’s Office did not need the entire 10,462 square feet, however, was informed by the Buildings and Grounds Division that it could not take over only a portion of the vacated space. Mr. Sandoval advised that without the additional space, there would literally be no remaining room in the Las Vegas office should additional positions be added in the future. According to Mr. Sandoval, the AG’s Office was in the process of moving some of its Deputy Attorney General positions from northern Nevada to southern Nevada. He indicated that the southern office literally did not have sufficient room for those positions, and would have to be creative with office space allocations.
Chairman Arberry noted that guidelines had been set forth regarding allowable space per labor group in the 2003-05 Budget Instructions, and he asked whether the requested space would exceed those guidelines. Mr. Sandoval conceded that the request might exceed the guidelines, and again pointed out that the AG’s Office would rent less space if possible, however, found itself in a “catch-22” position, as additional space was definitely needed, albeit not that amount of space. Mr. Sandoval reiterated that the AG’s Office had been informed it could not rent a portion of the vacant space, and he pointed out that over 20 percent of the space was a common area.
Assemblywoman Chowning stated that during the Joint Subcommittee on General Government meeting of February 11, 2003, it had come to light that the Hearings Division of the Department of Administration proposed to vacate the Grant Sawyer State Office Building in Las Vegas, and the Office of the Attorney for Injured Workers would also like to relocate in tangent with the Division. Apparently, stated Mrs. Chowning, that move had not yet been approved, and it had been brought to the Subcommittee’s attention that the rent per square foot in the new office building would be more than double that of the Grant Sawyer State Office Building. Mrs. Chowning opined that the situation created somewhat of a domino effect, and the availability of space in the Sawyer Building would be tentative, as it was unsure whether the proposal to relocate the Hearings Division would be approved.
Mr. Sandoval explained that the AG’s Office had been informed that the space occupied by the Hearings Division might be vacated, and it was felt the space would be a perfect fit, since it was located on the same floor as the current AG’s Office.
Assemblywoman Giunchigliani believed the Governor had issued an approved plan regarding the square footage price for rental space, and asked whether the Buildings and Grounds Division negotiated rental contracts. Mr. Sandoval replied in the affirmative. Ms. Giunchigliani noted that the proposal to relocate the Hearings Division from the state-owned Grant Sawyer Building to a non‑state-owned building would be subject to further review by the appropriate subcommittee. She asked whether the Cost Allocation Plan would assist with any of the offset costs associated with the request from the Attorney General’s (AG’s) Office for additional space in Las Vegas. Mr. Sandoval replied in the affirmative. Ms. Giunchigliani asked Mr. Sandoval to verify the amount of additional space actually needed by the Las Vegas office. Mr. Sandoval replied that the actual need was 8,500 square feet. Ms. Giunchigliani observed that the additional square footage would allow the AG’s Office to add additional staff persons in the future, should the need arise. Mr. Sandoval concurred with that observation.
Continuing his budget presentation, Mr. Sandoval explained that based on the replacement schedule of the Department of Information Technology (DoIT), much of the equipment within the AG’s Office was due for replacement. He noted that the budget request reflected only the most urgent needs, and would enable the AG’s Office to provide for any unforeseen system problems, and still maintain relatively current technology. Mr. Sandoval advised the Committee that the cost to make all the replacements in accordance with DoIT’s recommended schedule for the biennium would have been $443,830. He reported that the pared-down request for the next biennium was $248,323, for a total savings of $195,507.
Assemblyman Beers remarked that it appeared Legislative Counsel Bureau (LCB) staff had been unable to secure a list of the equipment recommended for replacement, and asked that the AG’s Office staff work with LCB staff to rectify that situation. Ms. Sandoval assured the Committee that his staff would be happy to provide the necessary information to LCB staff. Mr. Beers then asked Mr. Sandoval whether his fiscal staff could ascertain the feasibility of lessening the load on the General Fund regarding the costs associated with the replacement of equipment. Mr. Sandoval replied that his staff would comply with that request, and Mr. Beers commented that perhaps some of the costs could be paid with funds from the fees charged to boards and commissions. Mr. Sandoval indicated that the request had been duly noted.
Mr. Sandoval informed the Committee that the AG’s Office would request the upgrade of two Nevada Department of Transportation (NDOT) Deputy Attorney General positions to Senior Deputy Attorney General. He pointed out that it was difficult to retain experienced attorneys in the Las Vegas market, but it was essential to attract and retain experienced attorneys in the area of eminent domain, construction contract litigation, and tort litigation. Mr. Sandoval conveyed that the request was supported by the NDOT, and a copy of the letter of support was included in Exhibit C under tab “B/A 1030 Exhibit A.” The cost of the enhancement would total $26,182 for each year of the biennium, which would be paid via Highway Fund dollars.
Chairman Arberry questioned the lack of figures in the performance indicators within The Executive Budget. Mr. Sandoval acknowledged that the same issue had been addressed during a previous Senate Finance Committee hearing. He informed the Committee that the AG’s Office was in the process of preparing those numbers and, in fact, had completed the numbers for the current year; that information would be provided to both committees. Mr. Sandoval emphasized that those issues were very important to him as well. Chairman Arberry asked exactly when those figures would be available. Mr. Sandoval stated that his office would meet the deadline set by the Committee, and after discussion, it was determined that the information would be provided by the end of February 2003.
SPECIAL FUND (101-1031) – ELECTED-29
Mr. Sandoval commented that the fund was created under Nevada Revised Statutes (NRS) 228.099, as the Special Litigation Fund, established for the payment of expenses related to litigation. According to Mr. Sandoval, no additional funding would be requested for the general litigation portion of the budget; however, he would request that the same level of funding be authorized for both years of the upcoming biennium as it had been in previous years. Mr. Sandoval noted that the level of funding was important since litigation was unpredictable, and costs were not consistent from one year to the next.
In terms of requested enhancements, Mr. Sandoval explained that the Governor had recommended an additional $2 million be added to the budget to provide for continued litigation in support of the fight against the Yucca Mountain Repository. Billings paid from the Special Litigation Fund to outside counsel would be carefully scrutinized by the Attorney General’s (AG’s) Office to ensure that the financial resource was solely devoted to the legal defeat of the Yucca Mountain proposal. Mr. Sandoval noted that Exhibit C contained a briefing Memorandum dated February 6, 2003, regarding the status of the pending litigation.
Assemblyman Marvel asked whether the AG’s Office would receive any matching funds in the budget account. Mr. Sandoval replied that there were no matching funds available in the budget account. He advised that a recent conversation with Robert Loux, Executive Director, Agency for Nuclear Projects, revealed that approximately $1.6 million remained in the Nevada Protection Fund. He emphasized that those funds would be exhausted prior to utilizing any portion of the proposed additional $2 million. According to Mr. Sandoval, should the proposed $2 million not be expended over the upcoming biennium, it would revert back to the General Fund.
Chairman Arberry asked how long the Yucca Mountain litigation process would take. Mr. Sandoval replied that the first hearing was scheduled in September 2003 in Washington, D.C. in the U.S. District Court of Appeals for the District of Columbia, and he was very hopeful regarding the outcome. However, Mr. Sandoval stated that the AG’s Office remained realistic about the matter, and regardless of the outcome of that hearing, an appeal would be filed in the U.S. Supreme Court. He stated that the AG’s Office was very excited by the prospect that the case would finally be heard in court.
Chairman Arberry stated he was concerned that at some point, the state would simply run out of money to continue the litigation process. He wondered how long it would be until the state cried “uncle,” and entered into negotiations with the federal government regarding the repository. Mr. Sandoval stressed that he was a true believer in the cause, and did not believe the state of Nevada should ever say “never” and give up. He believed the state had a great legal team, was in a good legal position, and was finally in the position to defeat the proposed repository in court. The state was on a level playing field, and Mr. Sandoval stated the AG’s Office was very confident that it had an unbiased judicial panel. He believed it was the right time to be earnest about the litigation. While Chairman Arberry appreciated Mr. Sandoval’s comments, he hoped that the state had an alternate plan in mind should the money run out.
Assemblyman Beers commented that approximately 35 percent of the proposed increase was included in the base budget for the AG’s Office, and he noted instructions dictated that the base budget would essentially request the same amount as spent during the last biennium. Mr. Beers noted that some adjustments were allowed in base budgets, such as removal of one-time expenditures, and the addition of the annual increase of new, partial biennium positions. However, there appeared to be an approximately $700,000 increase in the AG’s Office proposed new base budget versus the budget amount for the last biennium. Mr. Beers remarked that the AG’s Office base budget should be reconciled, and pointed out that overall, there appeared to be approximately $200 million in increases in the base budgets for the upcoming biennium compared to the current biennium spending. He indicated the Committee was experiencing difficulty in reconciliation of that base budget difference, as it represented a rather large increase. Mr. Beers asked Mr. Sandoval to instruct his staff to work with Legislative Counsel Bureau (LCB) staff in an effort to reconcile the base budget.
Marietta Lopez, Chief Financial Officer, Attorney General’s (AG’s) Office, explained that the adjusted base budget included adjustments for such things as positions that were funded during the 2001 Legislature, but had not commenced until October 2002. According to Ms. Lopez, expenses for those positions had to be prorated for a full year, which increased the base budget. Also, there were increases in actual costs for items such as motor pool, because monthly rates would increase, as would the rate per mile, which was also included in the base budget. Ms. Lopez noted there were a variety of reasons to explain the increase in the base budget.
Mr. Sandoval informed Mr. Beers that his staff would be happy to provide the list of reasons that supported the requested increase in the base budget, and would also cooperate and work with LCB staff.
Mark Stevens, Assembly Fiscal Analyst, Legislative Counsel Bureau (LCB), advised the Committee that LCB staff had experienced difficulty in the adjusted base budget process for the AG’s Office, and had not fully explored that aspect. Mr. Stevens indicated that LCB staff would also be happy to confer with staff of the AG’s Office in review of the base budget, and would report back to the Committee.
Assemblywoman Chowning referenced the three pending cases concerning the Yucca Mountain matter, which apparently were scheduled in tandem before the U.S. Court of Appeals for the District of Columbia Circuit in September 2003 (Memorandum of February 6, 2003 Exhibit C). Mr. Sandoval concurred that those cases would be argued in September 2003. Mrs. Chowning then referenced the case heard in the Federal District Court in Las Vegas and the State District Court in Tonopah, which challenged the Nevada State Engineer’s decision that the Department of Energy (DOE) was not entitled to permanent water rights to construct and operate the repository. She noted that an agreement had been reached in December 2002, however, the state’s opposition had been scheduled for filing on December 27, 2002, and asked whether that had taken place. Mr. Sandoval informed the Committee that the referenced document in opposition had been filed with the court.
Chairman Arberry instructed Mr. Sandoval to continue his budget presentation.
AG INSURANCE FRAUD (101-3806) – ELECTED-32
Mr. Sandoval remarked that Budget Account 3806 supported the Insurance Fraud Unit created in the Attorney General’s (AG’s) Office pursuant to NRS 228.412. Insurance assessments provided the revenue stream for the account, and Mr. Sandoval explained that for the current fiscal year, the Insurance Fraud Unit had obtained 17 convictions and thus far had collected $126,915.19. As of December 31, 2002, the Fraud Unit was working on 73 active prosecutions.
With regard to reductions, Mr. Sandoval pointed out that the original budget proposal requested the replacement of two printers at the cost of $3,400; that request had been withdrawn because there were sufficient forfeiture funds to purchase the equipment. Expansions included the additional 10,462 square feet requested for expansion of the Las Vegas office. Mr. Sandoval stated of that total square footage, 274 square feet would be designated for Budget Account 3806, for a cost of $3,758 for FY2003-04 and $3,770 for FY2004‑05.
Mr. Sandoval indicated that the budget included a request to upgrade a Deputy Attorney General position to Senior Deputy Attorney General. He explained that position was the only insurance Deputy in northern Nevada, and performed duties similar to other Senior Deputy positions within the Office of the Attorney General. Those duties would include public appearances on behalf of the unit, teaching classes for Police Officers Standards and Training (POST), and being cross-deputized as a U.S. Attorney. Mr. Sandoval reported that the cost for such reclassification would be $13,019 for each year of the biennium, and the increase would be funded through budget reserves.
Assemblyman Beers asked why, from a public policy standpoint, it made sense for state government to perform the Fraud Unit duties rather than the insurance companies, which were the entities that would be injured by insurance fraud. Mr. Sandoval pointed out that when the unit was initially created, the state was the insurance provider, and the AG’s Office was charged with the responsibility of prosecuting insurance fraud claims. He stated that the duties of the unit had developed over the years, and it would be a policy decision of the Legislature whether the unit was continued. Mr. Sandoval pointed out that the unit was funded via assessments from private insurance companies, as well as the self‑insured companies.
Mr. Beers commented that elimination of the unit would apparently have no effect on the General Fund, and asked whether there was sufficient communication between the unit and the insurance companies. Mr. Sandoval stated he had recently completed a review of the unit, and had instructed staff to communicate often with its clients. He stated that a Deputy AG had recently met with the leader of the organization for the self-insured companies, and it was his understanding that the Chief and the Senior Deputy of the unit would soon meet with one of the largest private insurers in the state. Mr. Beers remarked that the state was basically spending $1 million per year on the unit, and the reported six-month recovery for fines, penalties, restitution imposed or ordered by federal, state, or local agencies was approximately $39,471. He asked the Committee to consider whether it was a cost-effective unit, and asked Mr. Sandoval whether that was an incomplete picture of the recoveries.
Mr. Sandoval stated the figures contained in the quarterly report were the number one concern on his list with regard to the unit, which was why Deputies were meeting with clients. Mr. Sandoval emphasized that he would expect much greater performance from the Insurance Fraud Unit in the future. Based on his discussion with clients, Mr. Sandoval believed that the unit could, and would, function more productively; he advised that it was an issue of concern to him, as well as the Committee.
Assemblywoman Giunchigliani suggested that it was time for the Committee to review all the fraud units within the AG’s Office, and make a determination regarding whether there could be a better structure. She noted that perhaps the Insurance Commissioner could conduct the initial investigation of the referral, and if criminal intent was determined, the case could then be referred to the AG’s Office. Ms. Giunchigliani opined that perhaps several units could be consolidated; she noted that the units were not generating the returns that were originally anticipated. While she would not tolerate any type of fraud, she believed there might be a more concise method to consolidate or eliminate some of the fraud unit budgets.
Ms. Giunchigliani asked whether the fraud units received credit for insurance premium tax. Mr. Sandoval stated that it was his understanding that the Workers’ Compensation Fraud Unit did receive a credit based on assessments. Ms. Giunchigliani believed that issue should be reviewed, as it would impact the General Fund. Mr. Sandoval once again voiced his concern, and stated the performance of the Insurance Fraud Unit had been brought to his attention immediately upon taking office. Having reviewed the resources and staff, he believed the unit could do much better, and felt there was a commitment to do so. Ms. Giunchigliani believed that a different structure should be considered, perhaps via consolidation of all the fraud units, with an initial investigation or screening process. She asked Mr. Sandoval to provide information to the Committee regarding the possibility of combining the fraud units.
AG MEDICAID FRAUD (101-1037) – ELECTED-36
Mr. Sandoval stated that Budget Account 1037 supported the Medicaid Fraud Unit created under NRS 228.410. The federal grant for Medicaid fraud control provided 75 percent of the unit’s funding, and a 25 percent match was required, which had historically been provided via the recoveries successfully attained by the unit. Mr. Sandoval indicated that the Medicaid Fraud Unit had historically maintained a 98 percent collection rate for recoveries on judgments. As of December 31, 2002, the unit had 31 pending investigations, 6 active prosecutions, and had recovered $58,716 in fines, costs, and restitution.
According to Mr. Sandoval, the request for expansion included the additional 10,462 square feet for the Las Vegas office, of which 226 square feet would be designated for Budget Account 1037, for a cost of $3,168 for FY2003-04, and $3,178 for FY2004-05. Mr. Sandoval noted that the unit presently had five State Motor Pool vehicles which were shared between eight Investigators, and it was not unusual for an Investigator to use his or her personal vehicle for office use on a regular basis. Therefore, stated Mr. Sandoval, two additional State Motor Pool vehicles were requested at the cost of $6,750 per fiscal year, which would be paid from the current reserves.
Mr. Sandoval explained that replacement equipment was requested per the Department of Information Technology (DoIT) replacement schedule at the cost of $10,780 for FY2003-04, which would be paid through grants and recoveries.
It was requested that the salary of the Director of the Medicaid Fraud Unit be increased to achieve parity with other positions with similar duties and responsibilities within the AG’s Office, and Mr. Sandoval explained that the current Director had been the only Director of the unit since its inception in 1991. The position was currently funded at $93,344, and the request was for an annual salary increase of $5,506. Mr. Sandoval stated the cost of the increase would be paid through grant funds and recoveries.
According to Mr. Sandoval, the AG’s Office would request approval to create the position of Deputy Chief Investigator of Medicaid Fraud at an annual salary of $67,998. The Investigator in Carson City was responsible for supervision of all unit investigators in both Carson City and Las Vegas, which also included the Senior Investigator in Las Vegas. Mr. Sandoval pointed out that the duties of the position mirrored those of the Deputy Chief Investigators of the Workers’ Compensation Fraud Unit.
Chairman Arberry asked Mr. Sandoval whether he believed that the federal government would at some point require the unit to pay all or a portion of the recoveries it received to the federal government. Mr. Sandoval stated it was his understanding that the unit was able to utilize the recoveries to match the 75 percent funding that was received from the federal government, and would be allowed to retain those funds.
AG WORKERS’ COMP FRAUD (101-1033) – ELECTED-41
Mr. Sandoval explained that Budget Account 1033 was created to support the efforts of the Workers’ Compensation Fraud Unit created under NRS 228.412, and the revenue stream for the account was employer assessments and restitution paid by defendants. Mr. Sandoval remarked of the 222 reported convictions obtained by the Workers’ Compensation Fraud Unit in FY2002, 153 were the result of issued citations.
Mr. Sandoval noted that of the requested additional 10,462 square foot expansion of the Las Vegas office, 418 square feet would be designated for the Workers’ Compensation Fraud Unit, at a cost of $5,733 for FY2003-04, and $5,751 for FY2004-05. Mr. Sandoval explained that replacement equipment was requested per the replacement schedule of the Department of Information Technology (DoIT) at a cost of $33,880 for FY2003-04 only, which would be paid via employer assessments.
Although not documented in The Executive Budget, Mr. Sandoval explained that the AG’s Office had requested the transfer of three agency-owned vehicles to the Motor Pool Division, as it had been determined to be more cost-effective to utilize State Motor Pool vehicles, rather than the agency owning its own vehicles.
Mr. Sandoval informed the Committee that the budget requested approval of the purchase of equipment and software necessary to upgrade the current “numeric touch pad” security entrance devices in the Reno office. The proposed upgrade would be a security card reader system similar to those used in Carson City offices, and the Grant Sawyer State Office Building in Las Vegas. Mr. Sandoval noted that the card system was easy to maintain, allowed regulation of days and hours of access, and categorized entries based on need and security levels. The project would be vendor-installed, and training would be at a minimum. Mr. Sandoval stated there would be five proximity card readers, along with two panic alarm buttons. In addition to the five card readers, a security camera would be installed at the main receptionist desk area, and Mr. Sandoval stated the cost of that building improvement was estimated at $8,250, which would be paid via employer assessments.
Assemblywoman Giunchigliani opined that the Workers’ Compensation Fraud Unit appeared to be one that could be eliminated. The budget constituted a General Fund “hit,” and she believed the Committee should review the budget with a view toward elimination of the unit. She asked Mr. Sandoval to take that into consideration when he prepared the request for potential consolidation of the units.
Assemblyman Hettrick was of the opinion that an audit should be conducted in order to determine whether all of the units were cost-effective. The quarterly reports depicted a substantial amount of carry-forward funds, but the actual money in employer premium restitutions constituted very low amounts. Mr. Hettrick stated he was concerned that there was not enough business for the unit, based on the transfer of the Workers’ Compensation function to private companies, which also maintained fraud units. Mr. Hettrick pointed out that initially, the unit was believed necessary for self-insurers, however, the figures in the quarterly report for self-insured referrals indicated zero for the quarter, and two for the year. He wondered whether the unit was really necessary at the present time, and concurred with Ms. Giunchigliani that because of the offset to the General Fund, such units should be reviewed very carefully throughout every agency, to ensure that the funding was justified.
While Mr. Sandoval appreciated Mr. Hettrick’s comments, and stated that the AG’s Office would review the Workers’ Compensation Fraud Unit, he believed that the unit did, could, and would perform an important service to the state. He would, however, be happy to work with Mr. Hettrick in that regard.
AG OFFICE OF CONSUMER PROTECTION (330-1038) – ELECTED-45
Mr. Sandoval stated Budget Account 1038 was created pursuant to NRS 228.340, which established the account for maintenance of the Office of the Consumer Advocate, and to carry out the responsibilities of the Bureau of Consumer Protection. Per Mr. Sandoval, for the current fiscal year, the Telemarketing Consumer Fraud Unit of the Bureau of Consumer Protection had reported receiving 8,993 complaints, and recovering $1,287,310: $671,187 for consumer recoveries; $575,483 in settlements for the state; and, $40,639 for restitution to the Consumer Affairs Division.
According to Mr. Sandoval, enhancements requested for the unit included five additional file cabinets for files that had to be maintained by the unit for the Organ Donor Task Force/Anatomical Gift Fund, and the Task Force for Renewable Energy Conservation. Both task forces were created in 2001 with administrative duties assigned to the Bureau of Consumer Protection. Mr. Sandoval advised that the cost for the requested equipment would total $1,410, which would be paid from mil assessment reserves.
Assemblywoman Chowning indicated that the Bureau of Consumer Protection was an example of the past effort to combine several different fraud units. On February 11, 2003, during the meeting of the Joint Subcommittee on General Government, the Division of Consumer Affairs had reported that $1.2 million in restitution had been provided to the citizens of Nevada, which was phenomenal in her estimation. Mrs. Chowning asked whether the aforementioned $1.2 million in consumer recovery referenced by Mr. Sandoval had come about as a result of working hand-in-glove with the Division of Consumer Affairs, or did that constitute an additional $1.2 million in restitution to the citizens of Nevada. Mr. Sandoval replied it was his understanding that the $1.2 million collected by the Bureau of Consumer Protection represented additional money to the consumers in the state of Nevada. Mrs. Chowning stated that would double the amount, which was fantastic. She noted that one aspect of the Division of Consumer Affairs had been the effort to eliminate the telemarketing scams in Nevada. However, it appeared that telemarketers from other states were now calling citizens of Nevada, rather than calling from Nevada to the other states, which created almost as great a problem as there had been in the past. Mrs. Chowning opined that there was still much work to be done in that area.
Assemblywoman Giunchigliani referenced the two aforementioned task forces, the Organ Donor Task Force/Anatomical Gift Fund, and the Task Force for Renewable Energy Conservation, and asked exactly what was the purpose of those task forces. Mr. Sandoval explained that the task forces were located within the Bureau of Consumer Protection pursuant to statute.
Assemblywoman Gibbons further explained that the Organ Donor Task Force had been placed under the Attorney General’s Office during the 2001 Legislative Session because of a lack of funding. It was believed that the necessary funding could be raised via private sources, and Mrs. Gibbons indicated the Task Force had increased donor awareness within the state by approximately 20 percent. It also held meetings at least three times per year to find opportunities to increase awareness. According to Mrs. Gibbons, the Task Force was committed to securing funding via private sources.
Ms. Giunchigliani stated that although she had assisted in the process, in review of the budgets, the question arose regarding whether the Bureau of Consumer Protection was the proper location for the Organ Donor Task Force, since private donations were solicited, however, that information was not revealed in the budget presentation. She believed that it was now the proper time to determine whether the Task Force for Renewable Energy Conservation should be placed under the Public Utilities Commission (PUC). Mrs. Gibbons stated that former Attorney General Frankie Sue Del Papa had been specific in her reasons for placing the Organ Donor Task Force under the Bureau of Consumer Affairs, and she would ascertain those specifics and provide that information to Ms. Giunchigliani.
Assemblywoman Giunchigliani asked Mr. Sandoval where the amounts received from private donations would be listed for the Organ Donor Task Force, and how the Renewable Energy Conservation Task Force was funded. Mr. Sandoval remarked that the Renewable Energy Conservation Task Force was a product of statute, and he believed it was a good fit with the Bureau of Consumer Protection, because the Bureau played a major role in setting energy policy for the state. With regard to the Organ Donor Task Force, Mr. Sandoval indicated that he would provide the requested information regarding private funds. Ms. Giunchigliani believed that would be helpful.
Mr. Hettrick referenced the performance indicators listed in The Executive Budget, which indicated that the Bureau of Consumer Protection negotiated savings to utility customers in the amount of $485 million. He believed the PUC had played a part in that outcome, even though the Bureau assisted in fighting the electric price increases for consumer protection; he stated he had trouble allocating 100 percent of that savings to the Bureau. Mr. Hettrick questioned the aforementioned direct recoveries of approximately $1.2 million, and noted that $51,193 and $676,468 were depicted as the actual amounts collected under Performance Indicators number 3 and 4. Mr. Hettrick asked for clarification regarding the additional recoveries. Mr. Sandoval indicated the referenced $1.2 million total consisted of:
Mr. Hettrick stated he was concerned because the total expenditures for the Bureau of Consumer Affairs were approximately $4.2 million, and the reported recovery was $1.2 million. He believed the Committee should closely review every single unit to ensure cost-effectiveness. Mr. Hettrick pointed out that many wonderful agencies had been established that included good people attempting to do a good job, however, if the recovery was not present to justify the existence, the Legislature should closely review the situation, and ensure that every unit was cost-effective.
Chairman Arberry asked whether Mr. Sandoval believed the mil assessment should be lowered based on the projected FY2003-04 ending reserve. Mr. Sandoval reported that he had spoken to the Consumer Advocate regarding that issue, and it had been determined that it would be necessary to retain the current mil assessment at .75, and reductions in the assessment would not amount to a significant savings.
AG CRIME PREVENTION (101-1036) – ELECTED-49
Mr. Sandoval stated the budget account was supported by General Fund dollars and the sale of “missing children” license plates. As previously stated, as a cost-savings measure, the Attorney General’s (AG’s) Office would consider the elimination of the position of Crime Prevention Coordinator, if outside non‑General Fund, funding sources were not available to support the salary of that position. Mr. Sandoval reported that the duties of the position would be absorbed by the Children’s Advocate, along with other unit staff members. The elimination of the Crime Prevention Coordinator position would result in an annual cost savings of $57,404 for the General Fund.
AG TORT CLAIM FUND (75-1348) – ELECTED-53
According to Mr. Sandoval, the Tort Claim Fund was an internal service fund supported by the collection of assessments assigned to state agencies. He pointed out that the AG’s Office was not requesting any enhancements to be funded via the budget account.
Begging the Committee’s indulgence, Assemblywoman Chowning referenced Budget Account 1036, AG Crime Prevention, and noted that the sale of “missing children” license plates had generated $58,000. Since the proposal was to eliminate the position of Crime Prevention Coordinator, Mrs. Chowning asked how the $58,000 would be allocated. Marietta Lopez, Chief Financial Officer, AG’s Office, explained that the fees collected on the license plates were used for outreach projects within the communities, such as providing information to schools and other organizations, and assisting with fingerprint packets for schools. Mrs. Chowning asked whether any portion of the revenue from license plate sales was used for salaries. Ms. Lopez replied that it was not used for salaries.
Chairman Arberry declared the Committee in recess at 8:47 a.m. He reconvened the Committee at 9:11 a.m. and opened the hearing on Budget Account 1002.
AG EXTRADITION COORDINATOR (101-1002) – ELECTED-56
Mr. Sandoval stated that Budget Account 1002 was 87 percent funded via General Fund appropriations, with the remaining amount funded via restitution payments. Although the Governor had not recommended the request, the AG’s Office requested the replacement of two computers that were purchased in July 2000. Mr. Sandoval explained that request was consistent with the DoIT replacement schedule, and consistent with the AG’s Office replacement requests within other budgets. According to Mr. Sandoval, if the equipment request were not included in the budget, the Extradition Coordinator would have to wait until 2006 to replace the equipment; therefore, it was requested that the budget account be increased by $3,800 for replacement equipment.
AG COUNCIL FOR PROSECUTING ATTORNEYS (101-1041) – ELECTED-59
Mr. Sandoval explained that Budget Account 1041 was primarily funded through administrative assessments, and a small portion of General Fund dollars. Pursuant to Nevada Revised Statutes (NRS) 241A.090, the Council was also authorized to receive grant funding. Mr. Sandoval stated the AG’s Office was seeking an increase in administrative fees, and the Governor had recommended an increase of revenue to the account via an increase in the administrative fee of $4.80 for misdemeanors.
Assemblyman Marvel asked why the increase in the administrative assessment fee was necessary, since the money was placed in reserve. Ms. Lopez explained that by the beginning of the new biennium, there would be no reserve funds remaining in the account. The account was originally funded with General Fund dollars that went forward from year to year, however, that had been expended. Ms. Lopez stated there had been no revenue received from fees paid by those attending conferences; she noted that many people would not attend a conference where fees were required. Ms. Lopez reported that some grant funds had been received, however, those funds could not be utilized to pay salary expenses. Mr. Marvel pointed out that there was a current reserve balance of approximately $32,000. Ms. Lopez stated it was her understanding that at the time the budget was prepared, it was anticipated that additional revenue would be placed in the reserve, however, no additional revenue had been generated.
Chairman Arberry inquired whether the budget would require revision. Ms. Lopez indicated that she would work with Budget Office staff and Legislative Counsel Bureau (LCB) staff to determine what action should be taken regarding Budget Account 1041. Chairman Arberry asked when the revised information would be available for Committee review. Ms. Lopez believed it would possibly be ready within the next two weeks. Chairman Arberry asked Ms. Lopez to keep LCB staff apprised of the status of the budget account.
Assemblyman Marvel asked whether the account received any General Fund allocations. Mr. Sandoval replied that no General Fund money was received. Mr. Marvel pointed out that the account could not be brought before the Interim Finance Committee (IFC) since it did not receive General Fund dollars. Mr. Sandoval stated the AG’s Office would seek $100 from the General Fund, which would enable future IFC review. Chairman Arberry asked whether that aspect would be included in the aforementioned revision of the account. Mr. Sandoval replied in the affirmative.
Chairman Arberry noted that the Executive Director of the Council had planned to hold sufficient training courses to generate $16,836 in revenue, and asked whether the training class registration fee collections as recommended in The Executive Budget were overstated. Mr. Sandoval replied in the affirmative, and explained that to date, no money had been collected, and it was his understanding that the Coordinator had recently attained a grant for $16,000 to sponsor a training seminar for prosecutors on domestic violence.
AG VICTIMS OF DOMESTIC VIOLENCE (101-1042) – ELECTED-63
Per Mr. Sandoval, Budget Account 1042 was primarily funded via federal grants, which required matching state fund dollars. Requested enhancements included a salary adjustment for the Ombudsman, and Mr. Sandoval explained that an increase was requested from $49,840 to $51,955. He pointed out that because of the nature and responsibilities inherent in the position of Ombudsman, the incumbent was required to possess the following qualifications and abilities:
Mr. Sandoval pointed out that the current salary was inconsistent with other ombudsman positions within the state. He referred the Committee to the tab contained in Exhibit C entitled, “BA 1042, Exhibit A.”
Chairman Arberry asked about the impact of the missing court sub-grants in expenditure category 19. Ms. Lopez stated that category 19 was the sub-grant for courts, and in FY2002, there had been no expenditures. However, she remarked that the budget would be revised to indicate a base budget amount of $93,128 based on expenditures that would be paid out in FY2003.
CFS JUVENILE PROGRAMS (101-1383) – ELECTED-70
Mr. Sandoval commented that The Executive Budget recommended transfer of the operation of the Juvenile Justice Programs, Budget Account 1383, to the Attorney General’s (AG’s) Office. He stated the AG’s Office had met with Michael Willden, Director, Department of Human Resources (DHR), and his staff to discuss budget items. The DHR and the AG’s Office were working together to examine how to best facilitate the transfer of the Juvenile Justice Programs, and assign staff to ensure positive results for both the DHR and the AG’s Office. Mr. Sandoval believed that Budget Division analysts were in the process of meeting to further examine the budget, and he expected that within the next week Mr. Willden and his staff would report back to the AG’s Office with their proposal regarding how to best achieve the shared goals. Both entities realized there would be issues in terms of splitting budgets, and Mr. Willden would present proposals subsequent to the meeting regarding how to best accomplish the end result.
Assemblyman Marvel asked whether there was a budget in place for the transfer of the Juvenile Justice Programs’ budget account. Mr. Sandoval replied in the affirmative, and explained the budget account could be found in The Executive Budget, page ELECTED-70.
Assemblywoman Chowning stated her concern was that when budget transfers were initiated, an account was often not transferred in its entirety. She indicated she would not like to see the program crippled, with only half the job being accomplished. According to Mrs. Chowning, if the budget account was slated for transfer, it should include all staff involved in the program. Mr. Sandoval emphasized that the AG’s Office shared that same concern, had identified that aspect, and hoped to have the results of the proposal today.
Chairman Arberry asked when the revisions to the AG’s Office budget accounts would be presented to the Committee. Mr. Sandoval stated the information would be available by the end of February 2003.
Chairman Arberry referenced Budget Account 1348, Tort Claim Fund, and asked why the vehicle assessment rate increased by $9.59 in FY2003-04, and then decreased by $3.61 in FY2004-05; he wondered what had driven the overall change in the assessment. Mr. Sandoval deferred to Ms. Lopez. Ms. Lopez explained the rates would be increased in the first year of the biennium to build up the reserves, and would be decreased in the second year. Actually, she pointed out that the per-car vehicle rates would be “flip-flopped” over the two years of the biennium to even out the costs. She noted the actual rates were based on the actuarial studies.
Chairman Arberry asked for an explanation regarding the figures for the general/fleet-tort claims, which apparently would be reduced from approximately $4.9 million to approximately $3.6 million. Andrew Clinger, Deputy Director, Budget Division, requested clarification regarding the figures currently under discussion. Mark Stevens, Assembly Fiscal Analyst, stated the figures under discussion were the General/Fleet-Tort Claims figures under the “Summary – Expenditures” headings on page ELECTED-55 of The Executive Budget. The actual year cost was almost $4.9 million, and the Governor’s recommendation for FY2004 was approximately $3.6 million. Mr. Clinger explained those figures were based on the actuarial study. Mr. Stevens indicated that the Committee would like to know whether there was an unusual expense in the actual year, or would it be under-funded in FY2004. Mr. Clinger noted that an extraordinary event had occurred in FY2002, with a cost of approximately $1.2 million; he stated he would provide the details to the Committee at a later date.
ETHICS COMMISSION (101-1343) – ELECTED-67
Mr. Sandoval remarked that public integrity was an issue of great importance to the people of the state of Nevada, and was also a priority of his administration. As the Committee was aware, the Ethics Commission was in need of investigatory and administrative resources; therefore, Mr. Sandoval had requested that the Ethics Commission’s budget be included in the AG’s budget in an effort to provide needed administrative and investigative assistance to the Commission. He informed the Committee that the AG’s Office had met with representatives of the Ethics Commission to discuss the proposal, and those representatives had indicated that they were not receptive to such change. Mr. Sandoval stated that he respected their position and, while he had viewed the transfer as an opportunity to assist the people of Nevada and provide the Ethics Commission with needed support, he had no desire to make the change without the Commission’s consent. In light of the Commission’s position, Mr. Sandoval requested that the Ethics Commission be removed from the Attorney General’s (AG’s) budget.
Mr. Sandoval stated that in addition to The Executive Budget submitted by the Governor’s Office, the AG’s Office would also request the transfer of the Advisory Commission on Sentencing, created by NRS 176.0121, and the position of Elder Rights Attorney of the Office of Specialist for the Rights of Elderly Persons, created by NRS 427A.123, into the AG’s Office. As a former legislator, Mr. Sandoval stated he had had the opportunity to serve on the Advisory Commission on Sentencing. The Commission, with the assistance of the staff of the AG’s Office, could be utilized as a support system for law enforcement, prosecutors, and concerned citizens, especially those in the rural areas, in studying and evaluating the effectiveness of policies and practices regarding the sentencing structure within the Criminal Justice System.
Assemblywoman Leslie asked where the Advisory Commission on Sentencing was currently located. Mr. Sandoval replied it was his understanding that the Commission was currently housed within the Department of Administration, and had remained dormant for several years. Ms. Leslie asked whether there was a current budget for the Commission. Mr. Sandoval replied that the Commission was not included in The Executive Budget. Ms. Leslie asked whether the proposal would necessitate creation of a budget to facilitate the transfer to the AG’s Office. Mr. Sandoval stated the AG’s Office would like a budget to accompany the transfer of the Advisory Commission on Sentencing, but was willing to accept the transfer without the provision of budget funds. Ms. Leslie asked what was specifically envisioned for the Commission as part of the AG’s Office. Mr. Sandoval stated he was very cognizant of the proposed drug and mental health courts that were of interest to Ms. Leslie, and viewed the Commission as the perfect vehicle or quorum to discuss the issues associated with the drug and mental health courts. He indicated the Commission was composed of prosecutors, law enforcement personnel, and legislators. Mr. Sandoval opined that the Commission would provide an opportunity to review the status of the courts outside the legislative session, and would work with the corrections system in the state of Nevada. Ms. Leslie inquired whether a barrier currently existed that would require legislative action. Mr. Sandoval replied that he would research that aspect and provide information to the Committee at a later date.
According to Mr. Sandoval, with regard to the position of Elder Rights Attorney, the protection of Nevada’s seniors was an issue of great importance to the current administration, and he was personally committed to enhancing services to further that goal. Transfer of the Elder Rights Attorney position to the AG’s Office would be an important step toward strengthening enforcement protection efforts for seniors. Mr. Sandoval pointed out that the position, in conjunction with the AG’s Office staff in the Human Resources Division, the Consumer Affairs Division, and the Medicaid Fraud Unit could work to form a more cohesive unified front, serving to better protect and secure the health, welfare, and safety of Nevada’s seniors. Mr. Sandoval indicated that he had met with Mr. Willden to discuss the merits of the transfer.
Mr. Sandoval stated that concluded his budget presentation, and thanked the Committee for the opportunity to present the budget. He restated his thanks to the staff of the Attorney General’s Office for their commitment to protecting the health, safety, and welfare of the people of Nevada.
Mr. Beers opined that Mr. Sandoval’s budget presentation represented a very responsible approach to budgeting, considering his short time in office.
Mr. Sandoval reiterated that the information requested by the Committee at today’s hearing would be provided by the end of February 2003.
Chairman Arberry asked the Committee to consider introduction of a bill draft request (BDR) presented by the State Controller’s Office.
Chairman Arberry advised that the BDR was an act related to education, which would revise the provisions governing the distribution of money by the State Treasurer from the Distributive School Account (DSA) to school districts and charter schools. Chairman Arberry explained the legislation would move the distribution date from the first of the month to the middle of the month.
Mr. Stevens advised the Committee that the State Controller had experienced difficulty making the quarterly payment to school districts from the DSA by the first of the quarter; one or two months could be paid by the first, with the third month paid by approximately the tenth of the month. Mr. Stevens stated he had not discussed the matter with the State Controller’s Office, but his guess was that the request would be to move the date to the fifteenth of the month in order to facilitate one quarterly payment.
Chairman Arberry stated he had questioned the effect of the change on school districts, however, noted that once the bill was before the Committee, the districts would have the opportunity to present testimony.
ASSEMBLYMAN MARVEL MOVED FOR COMMITTEE INTRODUCTION OF BDR 34-97.
ASSEMBLYMAN GOLDWATER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Mr. Stevens provided an update of the future meeting schedule to the Committee.
Assemblyman Beers asked that the following disclosure be made a part of the record:
For the record, Mr. Chairman, my wife is a full-time, paid employee of Clark County. She supervises a Parenting Project that receives three pass-through grants. The grants pass through the Nevada Department of Human Resources. One passes through the Bureau of Alcohol and Drug Abuse and two pass through the Community Connections Unit. Because my wife’s salary is not paid from these grants, our household does not have a pecuniary interest in issues regarding these grants or the agencies that administer the grants.
However, if this Committee considers budgetary choices that might reduce or eliminate the source of any of those grants – thereby affecting the financial viability of the Project – I will abstain from voting on those issues to avoid any appearance that my commitment in a private capacity to my wife and the Clark County Parenting Project may affect the independence of my judgment.
I have been advised by our legal counsel to disclose this information to you and the Committee. Therefore, I ask that my disclosure be included as a part of the Committee’s minutes. Thank you.
With no further business to come before the Committee, Chairman Arberry adjourned the hearing at 9:34 a.m.
RESPECTFULLY SUBMITTED:
Carol Thomsen
Committee Secretary
APPROVED BY:
Assemblyman Morse Arberry Jr., Chairman
DATE: