MINUTES OF THE
SENATE Committee on Finance
Seventy-second Session
March 19, 2003
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 9:08 a.m., on Wednesday, March 19, 2003, in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Dean A. Rhoads
Senator Barbara K. Cegavske
Senator Sandra J. Tiffany
Senator Bob Coffin
Senator Bernice Mathews
STAFF MEMBERS PRESENT:
Gary L. Ghiggeri, Senate Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Pamela Carter, Committee Secretary
OTHERS PRESENT:
The Honorable Miriam Shearing, Associate Justice, Supreme Court
Judy Holt, Manager, Budgets and Finance, Office of Court Administrator
Rick Gimlin, Administrative Services Officer II, State Department of Agriculture
John P. Comeaux, Director, Department of Administration
Pamela B. Wilcox, Acting Administrator, Division of Conservation Districts, State Department of Conservation and Natural Resources
Lorne J. Malkiewich, Director, Legislative Counsel Bureau
Brenda J. Erdoes, Legislative Counsel, Legal Division, Legislative Counsel Bureau
Allan Smith, Manager, Information Systems, Legislative Counsel Bureau
Claire Jesse Clift, Secretary of the Senate, Nevada Legislature
George Pyne, Executive Officer, Public Employees’ Retirement System
Dana Bilyeu, Operations Officer, Public Employees’ Retirement System
Senator Raggio asked the committee look at Senate Bill (S.B.) 246 to accommodate Associate Justice Miriam Shearing.
SENATE BILL 246: Makes supplemental appropriation to Supreme Court of Nevada for unanticipated shortfall in money for Fiscal Year 2002-2003 resulting from deficit in collection of administrative assessments. (BDR S-1223)
The Honorable Miriam Shearing, Associate Justice, Supreme Court, stated S.B. 246 results from decreased administrative assessments needed to fund Nevada courts.
Judy Holt, Manager, Budgets and Finance, Office of Court Administrator, explained estimates based on assessments received in fiscal year (FY) 2002 resulted in a projected $650,000 shortfall this fiscal year. She said the projected shortfall is the basis for their $500,000 request. She noted $650,000 was an optimistic calculation because the Office of Court Administrator is experiencing an actual $720,000 shortfall. She added the Office of Court Administrator has 5 more months to collect administrative assessments in this fiscal year.
Senator Raggio asked whether $500,748 is an appropriate request. Ms. Holt replied $600,000 is a more appropriate request today. Senator Raggio asked the Office of Court Administrator to provide an update to staff on their request. He said backup data indicates administrative assessments in FY 2002 were 3 percent less than the previous year, and the budget was based on a 7 percent increase. Senator Raggio asked whether a shortfall can be determined and whether 2 percent reductions were made and factored into the request. Ms. Holt replied the Office of Court Administrator took savings out of salary cap and applied it to the projected shortfall. She explained the Office of Court Administrator has five attorney and two clerical positions open.
Senator Raggio stated the committee may not be able to fund this request. He asked the Office of Court Administrator to keep the committee informed on shortfalls.
Senator Raggio closed the hearing on S.B. 246 and opened the hearing on Senate Bill (S.B.) 244.
SENATE BILL 244: Makes supplemental appropriation to State Predatory Animal and Rodent Committee of State Department of Agriculture for unanticipated shortfall in Fiscal Year 2002-2003 for salary requirements. (BDR S-1231)
Rick Gimlin, Administrative Services Officer II, State Department of Agriculture, spoke in support of S.B. 244 stating the department of agriculture requests a supplemental appropriation for anticipated shortfalls due to under-budgeting salary merit increases.
Senator Raggio asked whether the merit increases were overlooked during budget planning. Mr. Gimlin replied no, they were budgeted without the salary merit increase. Senator Raggio asked whether the request is for $30,648. Mr. Gimlin replied yes, $30,648 is correct. Senator Raggio asked whether Mr. Comeaux approved this amount.
John P. Comeaux, Director, Department of Administration, replied yes, it was an adjustment made for this biennium. Senator Raggio said the adjustment is actually spending part of the 3 percent budget reduction.
Senator Coffin asked how many positions $30,648 covers. Mr. Gimlin replied that amount is spread over 12 positions. Senator Coffin wondered whether this request will create a pattern for more merit increase requests.
Gary L. Ghiggeri, Senate Fiscal Analyst, explained merit salary increases not budgeted in this account. He said the department of agriculture is currently projecting a shortfall in available personnel payroll funds for the balance of this year.
Senator Raggio closed the hearing on S.B. 244 and opened the hearing on S.B. 245.
SENATE BILL 245: Makes supplemental appropriation to Division of Conservation Districts of State Department of Conservation and Natural Resources for unanticipated shortfall in Fiscal Year 2002-2003 for benefit costs for employees and retirees. (BDR S-1230)
Pamela B. Wilcox, Acting Administrator, Division of Conservation Districts, State Department of Conservation and Natural Resources, spoke in favor of S.B. 245. She explained the conservation districts division is a small agency with a staff of three. She said since the budget was approved, costs for employee benefits have increased, creating an estimated shortfall of $6200. She stated the Division of Conservation Districts has agreed to utilize $2715 in equipment funds to partially offset the projected shortfall leaving a net $3485 to be covered by the requested funds in this legislation.
Senator Raggio asked what benefits need to be funded. Ms. Wilcox replied funding is required for increased costs for employee health insurance.
Senator Coffin explained he can understand the shortfall because agencies were told to fund increased costs for health insurance out of their existing budgets. He said this was an unanticipated cost, and the Division of Conservation Districts is so small it could not absorb it.
Senator Raggio stated the committee has studied the agency’s FY 2003 salary projections containing the notation, “R-236.94, PA-972, PR-260 will need a $6794 supplement.” He said the committee does not know what this means. Ms. Wilcox replied the agency is utilizing $2715 in equipment funds to partially fund the increased cost for health insurance, leaving a balance of $3485 in additional required funding.
Senator Raggio closed the hearing on S.B. 245 and opened the hearing on Senate Bill (S.B.) 247.
SENATE BILL 247: Makes appropriations to restore balances in Stale Claims Account, Emergency Account and Reserve for Statutory Contingency Account. (BDR S-1236)
Mr. Comeaux explained S.B. 247 appropriates, from the General Fund, $2,500,000 to restore the balance in the Stale Claims Account, $400,000 to restore the balance in the Emergency Account, and $3,000,000 to restore the balance in the Reserve for Statutory Contingency Account.
Mr. Ghiggeri stated current account balances are approximately $500,000 in the stale claims account, $55,000 in the emergency account, and $200,000 in the statutory contingency account. He said information in the State accounting system indicate which agencies received funding over the past 2 years. He said the largest single expenditure in the stale claims account is for claims submitted by the Department of Corrections; the largest single expenditure in the emergency account is the Office of the Military; and the statutory contingency account covers legal expenses primarily for costs incurred by the attorney general’s office.
Senator Raggio asked whether any uses were unusual. Mr. Comeaux said the only unusual occurrence is funding from the emergency account for feeding wild horses. He explained during the next biennium this will be funded in the budget for wild horses within the Department of Agriculture.
Senator Raggio asked why feeding costs cannot be funded from the wild horse fund. Mr. Comeaux replied the wild horse fund supports feeding estray horses rather than feeding wild horses. Senator Raggio asked whether Mr. Comeaux would look into utilizing the wild horse fund for feeding wild horses.
Senator Raggio closed the hearing on S.B. 247.
Legislative Counsel Bureau - Budget page LCB-1 (Volume 1)
Budget Account 327-2631
Lorne J. Malkiewich, Director, Legislative Counsel Bureau (LCB), referenced the Legislative Counsel Bureau combined budget request (Exhibit C) for budget account (BA) 327-2631. He explained the requested funding for information technology was reduced from $994,000 to $850,000. He said LCB deleted $293,000 as requested for reprinting Nevada statutes in reports and eliminated a proposal to separate the director’s office from the administrative division.
Mr. Malkiewich referenced page 3, explaining the administrative division’s operations expense comprises approximately $380,000 of the requested $460,000 for FY 2004. He said LCB employs 231 staff and is requesting 3.5 new positions.
Senator Raggio asked how many positions are vacant at LCB. Mr. Malkiewich replied approximately five positions are vacant. He explained LCB tried to hold down expenses during the first year of the current biennium and left positions vacant. He said an attorney position and an auditor position are currently vacant.
Senator Raggio asked Mr. Malkiewich to provide the committee with a listing of vacant positions.
Senator Rawson said LCB needs to increase the staff for legal prior to next session. Mr. Malkiewich replied LCB lost some time during the special session that otherwise would have been devoted to preparing for the 2003 Legislative Session.
Senator Tiffany asked whether LCB was subject to the Governor’s 3 percent budget reduction. Mr. Malkiewich replied the Governor requested Judicial and Executive Branches to participate. He stated LCB achieved its 3 percent reduction through position vacancies and travel and purchase cutbacks. He said the Legal Division cut back on purchases of publications.
Brenda J. Erdoes, Legislative Counsel, Legal Division, Legislative Counsel Bureau, explained legal kept as many positions open as possible for as long as possible. She said the administrative services manager position opened in September 2001 and was not filled for 1.5 years.
Senator Tiffany asked whether the vacancies affected their bill drafting ability. Ms. Erdoes replied it did to some extent. She explained meeting bill drafts goals during the special session put legal behind. She said legal is currently two attorneys down, one due to a vacancy, and one on medical leave.
Mr. Malkiewich said two other requested positions are one half-time Internet technician, for information systems to meet information technology demand, and one janitorial position. He stated an additional cost increase is utility costs. He explained $405,000 was budgeted last year for utilities, and $476,000 represented actual expense.
Mr. Malkiewich stated reclassifications are requested for six positions in occupational studies during the next biennium. He said a one-time appropriation in the amount of $840,000 is requested for information technology and an additional one-time appropriation of $647,000 for building improvement projects is also requested.
Senator Tiffany asked what functions are performed by general improvement staff between sessions. Mr. Malkiewich replied the general improvement position is part time.
Senator Tiffany asked why no portals were provided for legislators’ computers and can this request be resolved. Allan Smith, Manager, Information Systems, Legislative Counsel Bureau, replied cable access can be considered. Senator Tiffany asked for a standard cable cost. Mr. Smith replied approximately $40 to $50 per month.
Senator Raggio asked Information Systems to develop this idea and report back to Senator Tiffany.
Mr. Malkiewich stated another one-time appropriation is the Capital Improvement Project (CIP) program. He explained eight different projects are included in the program. He said $150,000 is budgeted for repairing the exterior surface of the Legislative Building. He added he would prefer not deferring the new roof project because the roof leaks during heavy rainstorms. He said new carpet could be deferred for 2 years. He noted fire doors are a safety issue because they ensure closure after someone exits. He indicated a fire system in the mechanical room is needed but could be deferred.
Senator Coffin asked whether litigation is still being considered on the exterior resurfacing project. Mr. Malkiewich stated the LCB has considered litigation on this issue and has decided against it because the contractors are blaming weather conditions and problems with materials used on the exterior resurfacing project. He said everyone is blaming someone else on this project.
Mr. Malkiewich explained the LCB computers need to be replaced. He said replacement computers are bought slightly used, and the oldest laptop computers are replaced before newer models are replaced. He added janitorial vacuum cleaners and extractors also need to be replaced. He referred to the summary sheet on page 9, noting one-time appropriations. He explained reductions can be made in nearly any area except personnel. He said if staff is cut or positions remain vacant, then services are not provided.
Senator Raggio asked about interim studies increases between FY 2002-2003, FY 2003-2004, and FY 2004-2005. Mr. Malkiewich replied $80,000 had been requested for interim studies during the last several sessions. He said the LCB has tried to limit interim studies to three performed by the LCB. Senator Raggio stated interim committees have been watching their budgets. He asked the LCB for a detail of actual expense for interim studies and permanent committees.
Mr. Malkiewich replied he can provide the committee with the information.
Senator Rawson asked whether long-term employee pay scales are adjusted for longevity. Mr. Malkiewich replied the LCB has several employees who have topped out the pay scale. He explained their salaries are not increased because they are set in the budget.
Senator Rawson asked whether many employees have peaked the pay scale.
Mr. Malkiewich replied the LCB has many employees who have peaked the pay scale. He said this session did not seem to be an appropriate session to request an increase in salaries. He explained the LCB employees deserve a salary increase at some time because of their 20 or more years of service to the LCB and extensive knowledge in their areas of expertise.
Senator Rawson stated the LCB would cease to function at its current level if key personnel were lost to private industry because the State is unable to properly reward them for their work.
Mr. Malkiewich replied only cost-of-living increases have been given to long-term LCB employees. He said the State should prepare now for salary increases to be given later.
Senator Rawson stated many experienced legislators and staff may leave because they are not properly rewarded for their work. Mr. Malkiewich replied in 2011 term limits for many legislators will be up and many experienced staff will retire.
Senator Coffin said capital improvements can be cut but positions have to be filled. He asked whether the June 2001 Special Session was expensive.
Mr. Malkiewich replied the July 2002 Special Session had more of a financial impact than the June 2001 Special Session. Senator Rawson asked the LCB to prepare a financial report on the special sessions.
Nevada Legislature Interim – Budget page LCB-4 (Volume 1)
Budget Account 327-2626
Claire Jesse Clift, Secretary of the Senate, Nevada Legislature, referred to the “Interim Nevada Legislature” handout (Exhibit D), stating page 1 includes funding for cost-of-living increases and the nine-step increase provided for staff in the current biennium by the passage of A.B. No. 673 of the 71st Session.
Ms. Clift noted these figures are not reflected in the Governor’s budget summary. She said numbers requested are not numbers the interim Legislature provided to the executive budget office. She stated the interim Legislature requested that the interim legislative subcommittee to review the LCB November 2002 budget amount of $459,269, representing a 2 percent increase from FY 2002-2003 due to unanticipated employee benefit expenses. She added in December 2002 the Governor provided new numbers for increased expense of employee benefits. She noted the increased expense has resulted in an increase in the agency’s request.
Ms. Clift stated actual expenditures in FY 2001-2002 were lower than appropriated amounts. She said Interim Legislative staff, the assistant secretary of the Senate, and the assistant chief clerk of the Assembly were unable to attend the annual professional development seminar in Minneapolis the week of September 11, 2001. She noted the agency is requesting M-200 be increased to normal funding levels, enabling staff to attend the annual professional development seminar in FY 2004-2005.
Senator Raggio asked what is included in operating expenses, a $21,321 agency request in FY 2003-2004 and FY 2004-2005. Ms. Clift explained operating expenses include those for hotels, rental cars, and seminar expenses for out-of-state training. Senator Raggio requested a projected expenditure listing of out-of-state travel and seminar training for FY 2003-2004 and FY 2004-2005.
Ms. Clift stated M-300 reflects increased cost adjustments for employee benefits such as group insurance, retirement, and workers compensation in the next biennium. She explained module E-710 in enhancements reflects miscellaneous office expenses such as glare screens for computers and desk lamps. She said the summary on page 4 reflects a 5 percent budget increase for group health insurance benefits, retirement benefits, workers compensation insurance, and retired employee group insurance.
Public Employees Retirement System – Budget page PERS-1 (Volume 3)
Budget Account 101-4821
George Pyne, Executive Officer, Public Employees’ Retirement System (PERS), referred to the “Public Employees’ Retirement System 2003 Contribution Rates” handout (Exhibit E) and spoke from prepared testimony (Exhibit F). He said statutory rates will be effective July 1, 2003. He explained PERS contribution rates are adjusted, if necessary, each odd-numbered year in accordance with the previous year’s actuarial valuation. He added PERS is currently looking at the June 30, 2002, valuation to determine any rate adjustments.
Mr. Pyne stated employers and employees share any increases in contribution rates on an equal basis. He noted police and fire fighter member rates are 28.81 percent effective July 1 compared to the current 28.5 percent rate. He explained existing rates for regular members are currently 18.75 percent. He said statutory rates effective July 1 for regular members are 20.25 because PERS adjusted the rate based on a 2002 actuarial rate review which determined a rate of 20.32 percent. He stated 70 percent of PERS actuarial losses are the result of asset losses in the investment market.
Senator Raggio asked whether S.B. 45 would have any effect on increased rates.
SENATE BILL 45: Revises requirements concerning eligibility to participate in Public Employees’ Retirement System as police officer under certain early retirement provisions. (BDR 23-307)
Dana Bilyeu, Operations Officer, Public Employees’ Retirement System (PERS), responded S.B. 45 would have no effect on increased rates. Senator Raggio confirmed there will be an increased cost to the State and local governments. Ms. Bilyeu replied yes, there will be.
Mr. Pyne referred to page 2, stating employee/employer contribution rates are also increasing for regular members and police and fire members.
Senator Raggio asked staff whether there is anything in the budget to cover university professional employees. Mr. Ghiggeri replied the Governor submitted an amendment for university staff retirement, not covered by PERS, resulting in an addition to university budgets. Senator Raggio asked staff to look into whether the State should fund the retirement contribution for university professional employees.
Ms. Bilyeu spoke from prepared testimony (Exhibit G), explaining the PERS proposed budget is trending downward from the base year due to removal of capital expenditures from the base budget.
Ms. Bilyeu said if information technology (IT) was removed from the budget there would be a downward trend of approximately 3 percent from the base year. She noted without IT in the budget, PERS is experiencing an 11 percent decrease each year in the biennium. She pointed out one error in the PERS budget, $22,218 for judicial retirement system actuarial valuation, is also included in the judicial budget. She requested the $22,218 be removed from the PERS budget.
Ms. Bilyeu explained module E-225 in enhancements includes costs for travel, registration, and instructional materials enabling PERS staff to maintain proper and current knowledge in retirement and investment administration and software applications. She said this represents additions to the PERS staff training budget.
Senator Raggio asked the reason for increased in-state travel.
Ms. Bilyeu replied in-state travel includes funds to send staff to software application classes in Reno. She explained out-of-state travel includes funds to send staff to more complex software application classes in San Francisco.
Senator Raggio questioned why nearly $13,000 per year is included in E-350 for in-state travel. Ms. Bilyeu replied liaison officer and payroll clerk training are included in the in-state travel amount. She explained payroll clerks are sent to employer sites to assist in wage and contribution reporting. Senator Raggio requested a breakdown report of in-state travel.
Senator Coffin asked how many payroll clerks are based in southern Nevada. Ms. Bilyeu replied PERS has four benefit counselors in southern Nevada. She said all wage and contribution staff are in Carson City. Senator Coffin asked how many benefit counselors are in northern Nevada. Ms. Bilyeu replied approximately ten counselors are located in northern Nevada and four are located in Las Vegas.
Senator Coffin asked whether all positions are filled. Ms. Bilyeu replied yes, they are filled.
Senator Coffin asked whether the PERS travel budget reflects the new $50 contract rate increase with Southwest Airlines. Ms. Bilyeu replied no, it does not.
Senator Coffin asked whether teleconferencing rather than travel is a consideration.
Ms. Bilyeu replied teleconferencing is typically not used for payroll clerk and liaison officer training because of the interaction between student and instructor. She explained the PERS has looked into teleconferencing counselors but it is neither as effective nor as efficient as face-to-face experience.
Senator Coffin asked whether PERS could offer more frequently asked questions (FAQ) on its Web site.
Ms. Bilyeu replied yes, PERS is updating its Web site and they can certainly look into this. She explained PERS is hoping to offer more specific services at the Web site, enabling members to access their retirement accounts.
Senator Raggio asked whether PERS can hold the line on new staffing since PERS is raising its rates. Ms. Bilyeu replied yes, PERS can review this request.
Ms. Bilyeu stated the PERS is requesting one new IT position to provide full expertise in complex sequel queries, transaction processing, and server administration. She explained the PERS is requesting the addition of 2, grade 23 administrative assistant I positions. She said one position will be located in Carson City to handle imaging member files and the other position will support the Las Vegas office as receptionist.
Senator Raggio asked whether over $1 million in new technology can be deferred. Mr. Pyne replied pension funding is “pay me now or pay me later.” He said there will be increased costs to defer payment. He noted the PERS hopes to achieve full funding by 2024.
Senator Rawson asked whether the PERS would consider extending full funding to 2026. Mr. Pyne replied extending the amortization period beyond 2024 is certainly a consideration. He stated extending amortization will cost more.
There being no further questions, Senator Raggio adjourned the meeting at 10:38 a.m.
RESPECTFULLY SUBMITTED:
Pamela Carter,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE: