MINUTES OF THE
JOINT Subcommittee on
General Government
of the
Assembly Committee on Ways and Means
AND THE
Senate Committee on Finance
Seventy-second Session
April 24, 2003
The Joint Subcommittee on General Government of the Assembly Committee on Ways and Means and the Senate Committee on Finance was called to order by Chairman Vonne Stout Chowning at 8:30 a.m. on Thursday, April 24, 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.
Assembly COMMITTEE MEMBERS PRESENT:
Mrs. Vonne Stout Chowning, Chairman
Mr. Bob Beers
Ms. Kathryn A. McClain
Mr. David Parks
ASSEMBLY COMMITTEE MEMBERS ABSENT:
Mr. Joshua B. Griffin (Excused)
Senate COMMITTEE MEMBERS PRESENT:
Senator Sandra L. Tiffany, Chairman
Senator Dean A. Rhoads
Senator Bob Coffin
STAFF MEMBERS PRESENT:
Mark W. Stevens, Assembly Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Jim Rodriguez, Program Analyst
Bob Atkinson, Program Analyst
Julie Walker, Committee Secretary
OTHERS PRESENT:
Myla C. Florence, Director, Department of Employment, Training and Rehabilitation
Kraig Shutte, Chief, Bureau of Disability Adjudication Nonstatutory, Department of Employment, Training and Rehabilitation
John P. Comeaux, Director, Department of Administration
P. Forrest Thorne, Executive Officer, Board of the Public Employees’ Benefits Program
Richard Saperstein, Nevada Committee of Blind Vendors
Elizabeth Perring, Nevada Committee of Blind Vendors
Mike Diamond, Executive Director, Nevada Committee of Blind Vendors
Assemblywoman Chowning:
The Assembly Committee on Ways and Means and the Senate Committee on Finance Joint Subcommittee on General Government will come to order at 8:30 a.m. The first closing we will consider is Budget Account 101-3269.
DETR, Disability Adjudication – Budget Page DETR-43 (Volume II)
Budget Account 101-3269
Jim Rodriguez, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
The Governor’s recommendation proposes to add 20 new positions to the adjudication account. The request is for seven disability adjudicators, nine administrative staff positions, one computer network specialist, physician, psychologist, and rehabilitation supervisor. In September 2000, the Interim Finance Committee (IFC) approved 10 positions for this budget account. The department has indicated the request is made due to the fact that the demand for their caseload work was far in excess of what they were able to complete, and the cases have to be deferred to other out-of-state adjudicating offices. To date, none of the 10 positions approved at the November 2000 IFC have been filled because funding for those positions was not forwarded to the department for the hiring of the positions. The same situation exists for the current request for 20 positions. They have the authority for the positions, but the funding is not in place. Staff recommends that the committee defer this decision unit and provide the department the ability to come to IFC when that funding is in place to rejustify the positions.
Myla C. Florence, Director, Department of Employment, Training and Rehabilitation:
We agree with staff’s recommendation with regard to this issue. We are disappointed that even though funding is approved by the Social Security Administration for20 positions, funds have not been released. Recognizing that we would have the ability to go back to IFC should the 20 additional positions be approved to hire, we agree with the recommendations of staff.
Assemblywoman Chowning:
Do you know when that funding will be available?
Ms. Florence:
When Congress returns in May, it hopes to get budget issues underway.
Senator Tiffany:
Do we have an office in Las Vegas?
Ms. Florence:
We have an office in Las Vegas and it is housed at the Social Security Administration office. There is one staff person there. All of the adjudications are handled out of the Carson City office.
Senator Tiffany:
Why does Las Vegas have such a low presence?
Ms. Florence:
Primarily because the adjudications do not require personal contact. It is documentation and review by physician consultants.
Assemblywoman Chowning:
Is the average time to adjudicate a disability claim 104 days?
Kraig Shutte, Chief, Bureau of Disability Adjudication Nonstatutory, Department of Employment, Training and Rehabilitation:
Currently, our initial processing times are running between 75 and 80 days.
Senator Tiffany:
If a client qualifies for Supplemental Security Income (SSI) benefits, is that client automatically qualified for Medicaid?
Ms. Florence:
That has to do with the dual application process for Medicaid and SSI. I believe the Department of Human Resources testified on that bill and is supportive of the measure.
Senator Tiffany:
If that goes through, would there be an effect on your processing?
Ms. Florence:
No. It would impact the Medicaid portion.
Assemblyman Beers:
Could you describe any negative implications of passing off adjudication cases to federal adjudicators?
Mr. Shutte:
Because the Social Security Administration has not been able to provide adequate funding or resources to keep up with the workload, one resource that is available to this State is a federal disability unit in Richmond, California. They have been assisting us for the past 2 years because we did not have the staffing available to process all of our cases. Our continuing eligibility reviews are mainly done by the office in California. However, they have other workloads beyond us. We are fortunate that they have been able to help us for now. I expect that assistance will continue through this federal fiscal year which ends in September. After that, it is uncertain. We will have to look at what our spending plan will provide us going into the fiscal year beginning in October in terms of how much of that workload we can assume on our own.
Senator Tiffany:
If we could get an answer about a Las Vegas office, that would be helpful.
Mr. Shutte:
We have had preliminary discussions with the Social Security Administration about starting a satellite unit in the Las Vegas area. Because of the population growth, the Las Vegas Social Security Office is looking for new facilities and they will be relocating. There are also plans to place a social security office in Henderson. There are no specific time frames; however, I think they looked at having these relocations done by the end of 2004. We have been in discussions in terms of co-locating with either one of those facilities and starting a unit with up to 15 employees. There are some advantages to doing that. It would be cost effective if we were to go to a location close to social security and also because of the tie-in of the computer network. It would be more practical to be hooked up either across the hall or the same facility where we could share those networks and the computer capabilities.
Mr. Rodriguez:
Item number 2 on the subcommittee’s closing list (Exhibit C) is a recommendation for $40,000 each year of the biennium for an upgrade to the bureau’s paperless process pilot project. The 2001 Legislature approved funding for this project of $33,512 in FY 2002 and $50,000 in FY 2003. The $40,000 requested in this decision unit would provide for an upgrade of the software to that system. In the rehabilitation budget accounts there are requests for $2500 each year of the biennium for Americans with Disabilities Act (ADA) expenditures. This falls in line with the decision that the subcommittee had approved for the rehabilitation budgets and staff would recommend approval of that decision unit. Enhancement 276 recommends $1100 each year of the biennium to provide training for the ten positions approved at the September IFC, E-450 recommends $12,906 each year of the biennium and additional funding for travel. In FY 2002 this bureau spent $8739 in travel. The additional $12,000 in authority would increase the overall authority to $27,034 each year of the biennium, which is a significant increase in travel.
Assemblywoman Chowning:
Could you tell us why the travel expense has increased?
Ms. Florence:
This budget and program are really agents of social security. The SSA provides all of the funding and they tell staff what they are required to do in order to act as agents on their behalf. Training is required by social security. They often get into new computer issues or disability adjudication processes. If the anticipated number of conferences are not held, that funding is not used.
Assemblywoman Chowning:
Why is there a 50 percent increase?
Mr. Shutte:
We were trying to anticipate all the needs and changes, particularly conversion to electronic processing. Social security generally schedules a number of regional and national conferences on a yearly basis, and we want to make sure we have sufficient funding. I think it is appropriate for members of my management staff, if possible, to attend as well, so they get that exposure.
SENATOR TIFFANY MOVED TO CLOSE BUDGET ACCOUNT 101-3269 WITH STAFF RECOMMENDATIONS AND RECOMMENDATION ON E-500 TO APPROVE THE EXTRA $20,000, BUT RETURN TO INTERIM FINANCE COMMITTEE; APPROVE THE $40,000 FOR THE PAPERLESS PROCESS; APPROVE THE ADA AUTHORITY AND TRAVEL, ALL WITH TECHNICAL ADJUSTMENTS.
SENATOR MCCLAIN SECONDED THE MOTION.
SENATE: THE MOTION CARRIED UNANIMOUSLY.
ASSEMBLY: THE MOTION CARRIED. (ASSEMBLYMAN GRIFFIN WAS ABSENT FOR THE VOTE)
*****
Assemblywoman Chowning:
We will go to Budget Account 101-2580.
DETR, Equal Rights Commission – Budget Page DETR-80 (Volume II)
Budget Account 101-2580
Assemblywoman Chowning:
Is the Equal Rights Commissioner here?
Ms. Florence:
Lynda Parven is the administrator for the Nevada Equal Rights Commission, and you will recall in earlier testimony we have talked about the limited travel budget available for the equal rights commission.
Assemblywoman Chowning:
The commissioner cannot be here because of limited travel?
Mr. Rodriguez:
That is correct. The first item for consideration is the Governor’s recommendation to add two compliance investigators in decision unit E-501. The recommendation is for $86,537 in FY 2004 and $110,986 in FY 2005. The commission has noted in the past they have made improvements for faster processing of equal rights claims. Those gains are offset by increased caseloads; therefore, they request more positions to bring down the processing time to a goal of 270 days. A more realistic figure with the two positions would be 311 days.
Assemblywoman Chowning:
If these positions are approved, what would be the maximum benefit?
Ms. Florence:
We anticipate a 330-day processing of claims.
Assemblywoman Chowning:
You are down to 316 days now. Do you think you will go up even with the new investigators?
Ms. Florence:
The intakes are exceeding staff capacity. When you add the backlog to that, it extends the processing time. If S.B. 450 passes, that will expedite case processing with utilizing the priority process that is employed by the Equal Employment Opportunity Commission (EEOC). All those factors will show some improvement. When economic times are difficult, more charges are filed alleging discrimination than when economic times are good, so all of the variables impact their caseloads.
Assemblywoman Chowning:
Are the commissioners being effective and are they meeting?
Ms. Florence:
The commission meets quarterly. The members of the commission are committed to the objectives of this program, making more public presentations, and being more proactive in the prevention of discriminatory practices. That would have a positive impact on the caseload.
SENATE BILL 450: Makes various changes to provisions governing Nevada Equal Rights Commission. (BDR 18-475)
Senator Tiffany:
In connection with S.B. 450, will our employees need to have training on that before they know how to implement those procedures?
Ms. Florence:
Yes, they will.
Senator Tiffany:
Will there be a lag time for the prioritization to take place if we get the bill passed?
Ms. Florence:
Training would be provided by the EEOC board. We will be planning to accomplish that before the next fiscal year so there should not be a lag time.
Senator Tiffany:
If that bill is passed, will the 311-day processing time change because of implementing this process?
Ms. Florence:
We did not calculate that aspect into this number. I will have to check for you, but presumably it would go down. I do not think we can project what that number will be without 6 months of experience to determine how many cases meet the standard for investigation. We will be having performance indicators that can be tracked. The common indicator not only measured by us but by EEOC is average age of cases.
Assemblyman Beers:
Will you be getting the performance indicators you mentioned before this budget is closed? That would be the percentage of cases that fall into each category and their conclusion, whether they were determined to be justified or not.
Ms. Florence:
The indicators we are proposing are on the budget. We can provide you with indicators that are tracked by EEOC, and I believe we did that in our response to staff.
Assemblyman Beers:
Do you have the percentage of your cases that are sexual preference?
Ms. Florence:
The number of cases that fall into sexual orientation are very small, less than six Statewide per year because often that allegation can be related to a federal discriminatory practice as well. Many of those cases can be dually certified and charged both State and federal.
Assemblyman Beers:
Are there any other cases where we pay 100 percent of the cases with State funds?
Ms. Florence:
That is the only area. Those cases are beyond the scope of federal law.
Assemblyman Beers:
How can we reduce the figure to something comparable to the rate of growth of the State?
Ms. Florence:
The only area increasing in this budget is personnel and personnel-related costs. During the last session I could not recommend additional positions even though the backlog was extensive at that time. The performance was not up to standards and I wanted to have the opportunity with new administration to see that we could make progress before we questioned staff. No staff has been requested for this budget over the last 3 years.
Assemblywoman Chowning:
I would like Mr. Rodriguez to discuss the performance indicators as to the past and what we will be able to receive in the future.
Mr. Rodriquez:
Those have been provided previously, but I will look them up again and provide you with another copy.
Item number. 2 in the closing list highlights the General Fund recommendation to decrease the General Fund budget by 3 percent in order to meet the Governor’s mandate. The department has met the cut through an increase in vacancy savings of $41,221 in the first year and $41,364 in the second year. This is not a reduction in budget, it is a reduction to meet the 3 percent decrease through an increase in vacancy savings for the budget account. The EEOC contract has been approved at the budgeted level.
Ms. Florence:
This is a reflection of the change in management that EEOC has increased the contract for the first time in several years. Still they do not fully fund this program.
Mr. Rodriguez:
Decision unit E-500 requests $2182 in FY 2004 and $2906 in FY 2005 for additional travel. Decision unit E-710 is the equipment request for computers and software. We would request authority to make adjustments as necessary.
SENATOR TIFFANY MOVED TO CLOSE BUDGET ACCOUNT 101-2580 WITH GOVERNOR RECOMMENDATIONS AND TECHNICAL ADJUSTMENTS BY STAFF.
ASSEMBLYMAN PARKS SECONDED THE MOTION.
Assemblyman Beers:
I will be voting against this budget because it is growing twice as fast as Nevada is growing.
Senator Tiffany:
I want to clarify that it is not. The General Fund portion is approximately 12 percent, the capital improvement projects (CIP) and the inflation, but it is 12 percent from the General Fund growth.
Assemblyman Beers:
The calculation I have is 20.5 percent.
Senator Tiffany:
You probably have federal funds rolled into that.
Assemblyman Beers:
It is on the budget document. You can do the calculations.
Mr. Rodriguez:
Mr. Beers is correct that the overall growth in this program is 26 percent. Most of that is General Fund. The federal fund piece is about 44 percent of the total budget.
Senator Tiffany:
What would the General Fund growth be?
Mr. Rodriguez:
The General Fund growth would be 18 to 20 percent. The General Fund piece here is for the positions for the growth and the two compliance investigators. That is where you will get the greatest amount of increase. The rest of the budget carries very little play and the rest of the budget is very low in operating costs and travel costs, so you would not be able to find any other cuts in this budget account of significance other than in the personnel category. If you make the determination that they need the positions to address the caseload, then there is no area for this budget to really produce any significant savings other than cutting the requests for the positions.
Ms. Florence:
I do not believe there has been additional staff provided since the 1997 session. If you were to track the General Fund growth over time, it would be below what the normal increase has been due to the increased population of the State. Last session I could not recommend additional positions. I needed to see if we could get management control in place and processes and procedures established. We have demonstrated that could be done, and that is why I am comfortable requesting those positions.
Senator Coffin:
I have followed this budget over the years. I watched how it was continually behind because of a high workload per person and because more people were becoming aware of the agency and their rights. I understand why this kind of growth in a budget can make Mr. Beers feel uncomfortable and sometimes things are just simply population driven. In this case it is demand driven because it is based upon need, and more women have found out they have rights, more glass ceiling cases, more gender discrimination that they did not know about. In arguing for the budget, I have watched it come under control from my own personal experience and from general observation of the management of the agency. There have been times when it was not managed well, consequently, they did not get the correct amount of people. They probably should be asking for 3 or 4 people this session. The reason is they should have been getting 2 or 3 of the last 5 sessions. Finally, everything has come to a head and they realize how far behind they are. I will be voting yes.
Assemblywoman Chowning:
Can you tell me what the current backlog is?
Ms. Florence:
We have 20 cases back to 1999, 80 from 2000 and there have been cases before I came aboard that were back to 1993.
Mr. Rodriguez:
The federal piece of this budget account is fixed. It funds a certain level of activity and once beyond that activity, the General Fund will absorb the operations of the budget. The contract will fund a maximum of 1059 cases, and cases beyond that will be absorbed by General Fund. The only real area of significance in this budget account is personnel and the choice for the committee is to provide the resources to address the backlog or reduce the request for positions and generate some General Fund savings, and let the backlog grow.
SENATE: THE MOTION CARRIED UNANIMOUSLY.
ASSEMBLY: THE MOTION CARRIED. (ASSEMBLYMAN GRIFFIN WAS ABSENT FOR THE VOTE AND ASSEMBLYMAN BEERS VOTED NO.)
*****
Retired Employee Group Insurance Budget Page PEBP-8 (Volume III)
Budget Account 101-1368
Bob Atkinson, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
There is an update on page 3 of the closing list, Exhibit C. The recommendations included in the Executive Budget increased the amount of the subsidy that would be provided to retirees by the same percentage as the growth in the State contribution on behalf of active employees. The first year the subsidy was recommended at $280.78; that is a 6.4 percent increase. The second year the subsidy was recommended at $316.26; a 12.6 percent increase. The funding was not in the budget to support that level of subsidy. If that amount of subsidy was funded, the assessment rate that is charged to all agencies would have to be increased. We indicated that assessment would have to increase to 1.72 percent in the first year and 1.88 percent in the second year. We can get an update from the budget division and discuss the available options.
Assemblywoman Chowning:
Could you explain this situation?
John P. Comeaux, Director, Department of Administration:
When the budget office calculated the amount of assessment that would be required, the increase in the assessment that the Legislature approved in the special session last fall was taken into account and included in our calculation of the new subsidy amount. We did not adjust for the shortage that would be created for this fiscal year. We probably are close to having adequate funds in the budget for the next 2 years to provide the subsidy on a stand-alone basis for that period. However, we will not be able to pay the final two bills from Public Employees Benefits Program (PEBP) this fiscal year.
This is an extremely difficult account to estimate because once the amount of base subsidy is set, the actual amount of funding required to provide it depends on the number of retirees during the period and their length of service. I explained to the Governor if the assumptions became reality, the additional amount for full funding identified by Mr. Atkinson is $5.3 million over the biennium. Approximately half of that would come from the General Fund, so that would be another $2.6 million in General Fund over the biennium. He could not recommend adding the additional funding. The recommended amount would get us into the second year of the biennium and we would be in a better position to deal with that in the next Legislative session. The other option available is to reduce the amount of the subsidy to be provided to match the amount of funding that the assessments built into the budget would provide.
Assemblywoman Chowning:
If the situation does not get better as you suggested it might, then we would knowingly have funded a budget with a $5.3 million deficit, and that is a bad budget practice.
Mr. Comeaux:
We would be creating a cash flow issue for PEBP because in March 2005 there would be no funds to pay the bill. The assumptions upon which Mr. Atkinson’s calculations are based are not unreasonable. That does not mean they are correct.
Mark W. Stevens, Assembly Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
This is more than a cash flow issue. If you approve this budget with the increased subsidy and the projections of expense hold true, it will create a cash flow problem. However, you will have a hard cash dollar liability that someone will have to pay, probably in the 2005 session. I do not remember underfunding a program of this amount based on the projections made and knowing that the bill would come due later. I would advise you this is not a good idea and I would agree with the statement that it would not be based on sound budgetary principles. I believe that you need to provide the funding for this or reduce the subsidy. I would not characterize this as a cash-flow issue.
Assemblywoman McClain:
I think going in with a deficit is bad policy. My suggestion would be to increase the assessments. It is not that much over what is in the budget.
Assemblywoman Chowning:
That would fund the Governor’s budget, but in order to fund the recommendations by the Governor, we have to either have a large deficit or we have to increase the assessment rates. In General Funds that equals 2.5 million.
Senator Tiffany:
I think the Governor made the decision for us. The option I see is to reduce the amount of the retiree subsidy.
Senator Coffin:
I agree with Senator Tiffany on her discussion. The revenues are based upon an untested tax. If I could see the budget projections and if the economy became stronger, I could go with option 1 and increase the assessment rates, but I do not think this will happen. I think we need to ask the retirees to pay for the next 2 years.
Assemblywoman Chowning:
We would be setting a precedent. This would be the first time we would require the subsidy to be decreased for retirees while not decreasing it for the State employees.
Senator Coffin:
I understand what you are saying. You are pointing out the difference. But the problem is that they do have active budgets with revenue flowing. By sacrificing somewhere else in their budget, if they choose to, or we tell them to, they can find a way to pay for it. On the other hand, retirees have no other way. That is why it is different.
Assemblywoman Chowning:
The subsidy would be reduced for the retirees but it would stay in place for the State employees. That is a policy decision.
Senator Coffin:
It is a policy decision, but I do not want it to become a long-term policy decision. It is a short-term decision for 2 years. That is my intent.
Assemblywoman McClain:
I do not see where any agency budget is lean. When the assessments are increased, it is 0.22 and a 0.33 of 1 percent over the 2 years in the biennium. I cannot vote to cut anything for a retiree. I feel we can raise the assessments across the board, it is $5 million out of a $5 billion budget.
p. forrest thorne, executive officer, board of the public employees’ benefits program:
The impact of reducing the retiree’s subsidy base amount for the average 15‑year or pre-1994 State retiree would be $37.92. For those with 20 years of service, the category in which the majority of the retirees are included, the difference would be $51.95. The tentative rate that was set by the board for a State early retiree is a payment of $118.19 per month by the retiree. A single Medicare retiree would be paying $14.36. That is the base to which you are adding $37.92.
Assemblywoman Chowning:
Mr. Comeaux, can you discuss whether the Governor expected each retiree to pay $51.95 out-of-pocket each month?
Mr. Comeaux:
No. I do not think that is what he intended to say. His intention, when the budget was put together, was to recommend an increase in the subsidy for retirees equivalent to the increase that he recommended for the State contribution for active employees. In executing that, the amounts were incorrect in the budget. If the Governor’s recommendations originally presented in the Executive Budget had happened already, I think his recommendation would be different. He has a problem recommending that we put another $2.3 million in General Fund when the situation is so uncertain.
Assemblywoman Chowning:
Even if the subsidy was reduced as intended for both groups, the retirees as well as the active employees are in a different picture out-of-pocket than they were a year ago. They now have increased expenses.
Mr. Thorne:
That is correct. The self-funded plan is looking at increasing deductibles and increasing co-payments for doctors, specialists, emergency rooms and hospital stays, and also an increase in the maximum expenses which are out-of-pocket per year. That is an across-the-board change that applies to both actives and retirees. The deductible is going from $250 per person to $500 per person, with options for them to reduce premium outlays by further increasing the deductible to either $1000 or $2500 per individual. Sixty percent of the retirees are post-1994, subject to the graduated scale. Of those, 1700 out of 3000 have 20-plus years of service. There are another 2200 pre-1994 who are at the base amount.
Assemblywoman Chowning:
That would mean 2200 would have to pay $37.92 per month and 1700 would pay $51.95. There are variations in between for the rest. What about the prescriptions?
Mr. Thorne:
We maintained the generic co-pays at retail, increased the brand name co-pays, and for non-formulary drugs, or non-preferred drugs, 100 percent must be paid with access to the discounted pricing. Mail-in prescriptions changed to a reduction of the generic co-pay, increased the brand names, and the insured pays 100 percent on non-formulary.
Assemblywoman McClain:
I say we cannot cut the subsidy to retirees and the $5 million can be absorbed in the agency budgets. Option 1 is my choice.
Assemblywoman Chowning:
I agree that the retirees should not have to come out-of-pocket and that is going to happen enough with these new decisions that we have had to make.
Senator Tiffany:
I would like to look at option 3. Perhaps we should take Assemblywoman McClain’s motion on option 1, and if it fails on the Senate side, I will have another motion.
ASSEMBLYWOMAN MCCLAIN MOVED TO CLOSE BUDGET ACCOUNT 101-1368 AS RECOMMENDED BY THE GOVERNOR WITH STAFF TECHNICAL ADJUSTMENTS AND TO CONSIDER OPTION 1, WHICH IS TO INCREASE THE AMOUNT NECESSARY FOR THE GOVERNOR’S RECOMMENDATION OF THE RETIREE SUBSIDY PROVIDED FROM INCREASED ASSESSMENT RATES TO AGENCIES.
Mr. Atkinson:
For clarification, on the motion would be to increase the assessments so the proper amount would come into this account in order to fund the retiree subsidy that was recommended by the Governor. In the budget accounts that paid this assessment, which is every budget in the State that has employees, the increased amount for the retired employees’ insurance would be increased. A reduction would be made somewhere else in their budget so no additional funding would be needed fund the increase.
Assemblyman Beers:
We are giving up future reversions, because not all vacancy savings would be reverted back at the end of the biennium. Either the taxpayers pay it, or the beneficiaries pay it. Is the motion currently before us that taxpayers pay it?
Mr. Stevens:
Approximately half of this would not be subject to General Fund reversion because it would be non-State funding. As I understand the motion, some vacancy savings or some other savings factor would be built into the budgets to offset this. That would have an impact on reversions. If those vacancy savings are increased, that would be additional savings that would have to be generated by each of the budget accounts that are funded from General Fund and that would have an impact on reversions, not necessarily a 1:1 ratio, but you would revert less dollars if you increased that vacancy savings amount.
THERE WAS NO SECOND TO THE MOTION.
THE MOTION FAILED.
*****
SENATOR TIFFANY MOVED TO CLOSE BUDGET ACCOUNT 101‑1368 WITH STAFF ADJUSTMENTS AND OPTION 3, WHICH WOULD REDUCE THE AMOUNT OF RETIREE SUBSIDIES.
SENATOR COFFIN SECONDED THE MOTION
Senator Coffin:
My intent is to try and find the money to pay for this. In every session I have served in, there is a short list of items, which we can find money for sometimes, based on the soundness of the tax proposals decided upon.
Senator Rhoads:
I will be supporting this motion also, and I assume this will be going to conference. These people really do need some relief.
Assemblyman Beers:
We are increasing the assessments, one part of which is General Fund, by almost 30 percent over the course of the next biennium in this budget. We are still making a substantial increase in taxpayer’s contribution to retiree’s health benefits, although we are asking retirees to pay for part of that increase.
Mr. Atkinson:
The amount shown for FY 2003 is not reflective of the entire cost for FY 2003 because the account is unable to pay all of the current obligations. The account will be short approximately $2 million for FY 2003. Additionally, the assessment was increased about 21 percent by the 18th Special Session last summer. Only 9 months of that increase are included in 2003. Leaving the subsidy the same as it is now would create some of the increase in 2004 and 2005, because that decision was made last summer.
Assemblywoman Chowning:
Is the percentage of the total increase in the assessments without reducing the amount of the retiree’s subsidy 30 percent? If we reduced the amount of the retiree’s subsidy, is it still a 30 percent increase?
Mr. Atkinson:
In 2003 the total amount is not reflected on the statement because there is neither the money nor the authority there to pay it. We currently estimate that the cost in this account for 2003 is $18 million. If we reduce the subsidies to stay within the Governor’s recommendation, we will have $17 million for subsidies in 2004 and $19 million in 2005.
Assemblywoman McClain:
If you look at the briefing document, page 2, Exhibit C, a 1.49 percent assessment was built into 2004, 1.66 percent in 2005. That was not enough. The budget office has admitted they made a mistake. To make up for that mistake it would increase to 1.72 in 2004 and 1.88 percent in 2005. That is $2.5 million of General Fund money. We know we have budgets that have not closed that also have assessments that could easily absorb this 0.22 percent increase. There is no way I will support Option 3. I am not taking away from retirees.
Assemblyman Beers:
Because over the interim we made a supplemental emergency addition to the assessment, it is still true that the proposal before us increases the funding for the retiree subsidy 30 percent over last biennium’s budgeted amount. However, we budgeted too little last time. An $18 million figure for FY 2003 is already more than that budgeted for FY 2004. The motion before us is to fight back against that large inflation of medicine and medical services problem by taking a portion out of taxpayers’ pockets and a portion out of the beneficiaries’ pockets. Is that the motion under consideration?
Senator Coffin:
Option 3 is to increase the benefit to retirees, but not as much as we have increased the benefit to retirees in the past. We are splitting this increased cost between taxpayers and retirees, is that correct?
Mr. Atkinson:
The current year subsidy amount that became effective October 1 of last year is $263.89 per month. That is the base amount. If we were to fund a subsidy that would be within the amount of funding in the Executive Budget, next year that $263 subsidy would be reduced to $242 and then the following year it would go to $280. It would be a reduction from this year to next year, but in the third year it would get back above where it now is.
Assemblyman Beers:
Under Option 1 the subsidy would have gone from $263 to $280 and then to $316.
Mr. Atkinson:
In FY 2001 the subsidy was $208, in 2002 it was decreased to $202, and the 18th Special Session then raised it to $263.89.
Assemblywoman Chowning:
I will speak against the motion because I am not comfortable charging retirees an additional $38 or $52 while we are charging retirees as well as State employees more for the services they previously have had. A decision has already been made to double the deductible. The costs are going up across the board for retirees and State active employees, except now we are telling the retirees that they are going to be charged even more. I speak against the motion.
SENATE: THE MOTION CARRIED UNANIMOUSLY.
ASSEMBLY: THE MOTION FAILED. (ASSEMBLYMAN GRIFFIN WAS ABSENT FOR THE VOTE AND ASSEMBLYMEN BEERS, CHOWNING AND MCCLAIN VOTED NO.)
*****
Assemblywoman Chowning:
We are closed on the Senate side and open on the Assembly side.
DETR, Blind Business Enterprise Program – Budget Page DETR-75 (Volume II)
Budget Account 101-3253
Ms. Florence:
The Blind Business Enterprise Program account is intended for the purpose of providing information, assessment, training, and placement of blind individuals in vending business opportunities in public buildings. Those buildings include federal, state and local municipal buildings statewide. We project an increase of up to 30 facilities in 2004 and 32 in 2005. This program has not grown in proportion to the increase in population in our State. In 1991 there were 20 operators and 24 facilities; in 2003, we have 21 operators and 28 facilities. Over that 12-year period opportunities for vendors should have been more aggressively pursued.
Senator Tiffany:
Are you saying we should have had more operators or more facilities?
Ms. Florence:
The number of both operators and facilities should have grown.
Senator Tiffany:
What do you think the numbers should be?
Ms. Florence:
I do not believe the blind population has grown in proportion to the general population growth. In our indicators we are clearly to provide more opportunities for blind individuals to participate in the program, not only in terms of identifying those individuals through vocational rehabilitation programs, but through training programs that would be aligned with the vocational rehabilitation services so we would always have people available.
Senator Tiffany:
How many operators would you add?
Ms. Florence:
I would target 25 operators for 2004 and 27 for 2005. We are planning 3 facilities for 2004 and 2 in 2005. The program has been more aggressive in pursuing legal challenges to facilities that do not agree that this program has priority rights under the Randolph Sheppard Act.
Assemblywoman Chowning:
Do you feel training for the number of people involved is sufficient to achieve the maximum result?
Ms. Florence:
The training provided to new operators is a new focus for us. It is a focus that clearly requires improvement. The bureau chief has been working with teaming partners for new vendors. The teaming arrangements provide for on-site training as well. I believe the budget supports our vision for stronger improved training in the upcoming biennium.
The base budget provides funding for 5.5 full-time equivalents (FTEs) within this budget. Three of those are business enterprise officers who are responsible for working with the operators and providing comprehensive on-site reviews to evaluate fiscal and business practices. The level of resources has been consistent over the years. Decision unit E-450 provides $1300 for participation in Randolph Sheppard Act conferences, which are held in Washington, D.C. Decision unit E-500 is the most significant module with our budget. This module would provide funding for the remodeling and expansion of new facilities. Decision unit E-710 replaces computers over 5 years old and provides for the normal $150 per FTE calculation that the department uses for minor equipment. The total budget for the upcoming biennium is $2.4 million in 2004 and $2 million in 2005. The objective is to continue to provide opportunities for vendors in public buildings throughout the State including rural areas.
When I came to the department, I requested Legislative audits of all divisions within the department. That set the tone for a difficult working relationship with the existing committee of vendors. The audit was shared with the committee in June 2001. Later that year, grievances were filed against the division and the department; now we are dealing with litigation. One of the issues presented to members of this committee has to do with active participation. I have copies of minutes of meetings where members of the prior committee of blind vendors were involved in discussions about budget and the direction of the program. Prior to April 2002, we were advised that an election is required every 2 years and should be conducted in April. Once that occurred and a new committee was elected, members of the prior committee sent letters to the bureau indicating they were resigning from participation. In fact most of the letters were the same, “I cannot recognize the counterfeit committee elected on April 7, 2002,” and communication at that point was shut down.
There is a committee that was elected under the rules and provisions in April. That committee is functioning and participating with the bureau and a series of meetings have been held where these issues have been discussed.
Assemblywoman Chowning:
Was the committee elected in April 2002 involved in the discussions regarding the budget?
Ms. Florence:
There is documentation of meetings that started early in February 2002 and subsequent to that time.
Assemblywoman Chowning:
Would that have included the members of the committee elected in April?
Ms. Florence:
Actually, it included members of both.
Assemblywoman Chowning:
Have the members who are current members of the committee elected in April been involved in budgetary conversations?
Ms. Florence:
Yes, that is correct.
Senator Tiffany:
During the last audit in 2001 there were six recommendations. These included adequately monitoring information from the operators, particularly on the profit and loss statements; ensuring internal controls were in place and there were adequate accounting controls; monitoring functions of the current staff, to name a few. I did not understand the grievance which reads: “The bureau has done little to oversee and monitor operators who do business with companies in which they have an ownership interest.” This is outrageous. What has your department done about this?
Ms. Florence:
The bureau proposed procedures from the time period of June through May 2002. They regularly conducted on-site comprehensive reviews as recommended in the audit. The profit and loss statements are reviewed, and as part of a contract modification, operators are required to declare whether they have any ownership interest that may impact the program.
Senator Tiffany:
I also read that in some circumstances, there were expenses that were being taken off the profit and loss statements because they were reimbursed. Has anyone corrected that?
Ms. Florence:
I believe we have. Those are the steps we have undertaken under the 2001 audit; however, there have been 10 audits over the years since 1967. If staff had taken proactive steps during these years, I do not think we would be in this situation.
Senator Tiffany:
The same problems appeared in the audit of 1993, so to see it again in 2001 was disappointing. I assume you will get this under control.
Assemblywoman Chowning:
Will the people who wish to speak please come forward.
Richard Saperstein, Nevada Committee of Blind Vendors:
I am a blind vendor in the vending program. My testimony is presented in (Exhibit D). I believe you have been misled by Myla Florence’s testimony. She talks about an audit done in 2000 on the business enterprise program. Actually, that audit was directed to be done on Nevada’s Services to the Blind and Visually Impaired, and the end result was an audit performed on two vendors in the program. Indeed, there were some discrepancies found in that audit, but the response to the audit against the vendors has been atrocious. The method in which they go about conducting audits leads me to believe there is a lot of work to be done.
A major financial institution is audited about every 2 to 3 years. The bureau comes out and does quarterly reviews, but they have targeted vendors and have done reviews every 2 weeks. The budget proposed to you requests compensation for 5.5 full-time employees, 3 are business enterprise officers. The mandate under the federal act is those three individuals conduct financial reviews and audits of the vendors, but their prime directive is to mentor, train, and ensure the success of each and every vendor in this program. Not only do the business enterprise officers conduct their reviews, but the bureau has done outside audits on a regular basis of the vendors with sales in excess of $150,000. They spent $24,000 of our money last year doing it and they are proposing $24,000 more this year. If we are going to support 5.5 full‑time employees, why are they spending this money doing outside audits? My concerns are that this budget is filled with a lot of waste. In programs of similar size, specifically Washington, Oregon and Idaho, there are two state staff members assigned to the management of their programs. There is no reason for 5.5 full-time employees in a program the size of Nevada’s. The State does not support this program with any money, the federal government does not support this program with any money, and the vendors themselves pay every dime that goes into this program. We expect to have some value for the money we pay. The three business enterprise officers are no more than little auditors and finger-pointers.
I have been assigned and recently acquired the galley at the Fallon Naval Air Station. I have been out there for 6 months. I have seen the bureau out there once in that 6-month period of time to conduct their quarterly review. I am the one who put the proposal together. The bureau chief said, “Here, you do it,” and I did and was successful. I am the bureau’s biggest supporter when I think they are correct; I am also their worst enemy when I think they are wrong. I think they have been very wrong in the last 2 years in the way in which they have managed this program.
I would like to see a budget that is realistic to the needs of the vendors and the program. There is no need to spend the money on personnel salaries that have been proposed. I would like to see no more than three full-time State employees assigned to the vending program. The rest is waste. If the business enterprise offices were doing what they were supposed to do, to mentor, to train, and to ensure the success of every vendor in this program, there would be no need for the partnering companies for the small locations proposed by the bureau. I know they have proposed approximately $63,000 for contract services. There is no need for that. The business enterprise officers should be doing that. That is their job.
Mr. Saperstein:
They say they will acquire five new locations within the next biennium. As I understand it, those locations are a major vending location in the City of Las Vegas, stands at both McCarran Airport and the Reno International Airport, the Las Vegas Visitors Convention and Visitors’ Authority, and the Reno-Sparks Convention and Visitors’ Authority. That is all wishful thinking. We were in McCarran at one time. It was a disaster because they did not want us there. Yes, we have a priority right. The law allows a priority right for the blind to be in these locations. I know that Las Vegas Visitors and Convention Authority and the Reno-Sparks Convention Center are under contract with various entities to provide services there. McCarran Airport does not want us there. I believe the bureau is working with the city in order to provide for this vending location with approximately 200 machines. They have also proposed $300,000 for equipment at that location. In conjunction with the beverage of the city or the drink of Las Vegas, which will either be Coke or Pepsi, we are going to be working with that company to provide this service. There is no need for us to spend $300,000 for equipment when Coke or Pepsi will provide all the equipment we need. I am here to ask that you, as the first line of defense for the vendors, approve a budget that is meaningful to the program.
Elizabeth Perring, Nevada Committee of Blind Vendors:
I have submitted by written testimony (Exhibit E). I wish to make a comment with regard to the issue concerning the committee election. I have been in the program 9 years. During that time and prior to that time it is historical that we have a committee election at the Sagebrush, which is what we did. The majority of the vendors were there and they voted. We have always done it that way. We did it that way in February at the Sagebrush. Then on April 7, the bureau held another election. All of the first committee has offered to resign. All of the second committee will resign, and there has been a petition handed to the bureau to request a new election for our organization. We do not feel we are being represented by the committee holding those petitions today. We need to be able to have input and full and active participation in this program. The majority of the vendors of our program want a new election. The bureau has a petition to that effect, and they will not allow it. We feel that the bureau is not including us in anything they do.
Assemblywoman Chowning:
If there are a number of recommendations that you have, you need to tell us now or get those to us so we can take them into consideration. You need to state numbers.
Ms. Perring:
Is it possible for you to make a recommendation that the bureau work with the vendors?
Assemblywoman Chowning:
Yes, but as I said, that is long term, that is helping to develop the next budget. What we have here today is this budget and we have to work with it.
Assemblywoman McClain:
Part of today’s budget is performance indicators. I think we could include some performance indicators that would facilitate that request, including some training goals, mentoring goals, and cooperation.
Mr. Saperstein:
I think the performance indicators are skewed. I think that the performance indicators should show the quality of life of some of the vendors and they do not. They will say they have 21 vendors placed, but some of these vendors make $10,000 per year in locations that really should not be part of the program. This is what the business enterprise offices should be charged with. They should be monitoring locations to ensure that locations with vendors are actually viable. Many are not. There are 21 vendors, but most of those are making less than $30,000 per year. There are some who do well because of the high-profile locations that they run. Most do not. This is the problem we have with the budget number. They look great, but if you get into the meat of the numbers, you find that a lot of money is being spent on locations that will not return a dime to the vendor or to the program.
Assemblywoman Chowning:
I would request that you put your suggestions regarding the areas of funding in writing so our staff can take that into consideration. This account will have to be closed by next week.
Mike Diamond, Executive director, Nevada Committee of Blind Vendors :
The committee has my written testimony (Exhibit F). The only issue I will deal with is training. There is no training going on. New operators are told “here is a cash register, figure out how to work it.” They are not training the teaming partnerships or other blind vendors to help new vendors. The vendor is being asked to do the job of the business enterprise officer. Ms. Florence said the business enterprise officers are working diligently with the operators on comprehensive review. It is not training. It is not helping. It is trying to find something wrong with the operators. They have lost the mission and the vision of this program.
Assemblywoman Chowning:
There is approximately $40,000 per year for training dollars in this budget. Do you think that should be less or more?
Mr. Diamond:
The way it is done now, it is not worth it. I recommend that they use another blind operator to train blind operators. They have brought in companies that do not understand the problems of this program, the problems of a blind operator, and the concerns of a blind person being in a public location where price matters. They are willing to pay companies $40,000, but when I brought in a program I developed when I was a blind enterprise officer, it was put aside. We need to take care of our own. They do not take care of their own. They try to find business for private entities, not blind people. The teaming partnerships are with private companies who wind up taking them for money. They are expanding the program to private enterprises. They are not expanding it to the blind. At this time I would also like to make Mr. Bert Hansen’s written testimony part of the record because there is no time for him to testify (Exhibit G).
Assemblywoman McClain:
If you give us suggestions on specific budget items, give us some specific performance indicators that we can also use to address training, mentoring, and facility construction. Put together your goal for what you think the agency should be doing and we can take a look at the performance indicators for the next budget cycle.
Assemblywoman Chowning:
Performance indicators are a critical part of the budget and the future goals, because that is what can be tracked. We are asking for recommendations because we respect your input, but we cannot make a commitment here today that everyone is going to be happy.
This meeting is adjourned at 11:05 a.m.
Julie Walker,
Committee Secretary
APPROVED BY:
Assemblywoman Vonne Stout Chowning, Chairman
DATE:
Senator Sandra L. Tiffany
DATE: