MINUTES OF THE
SENATE Committee on Finance
Seventy-second Session
April 24, 2003
The Senate Committee on Finance was called to order by Chairman William J. Raggio at 4:09 p.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.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Dean A. Rhoads
Senator Barbara K. Cegavske
Senator Sandra J. Tiffany
Senator Bob Coffin
Senator Bernice Mathews
COMMITTEE MEMBERS ABSENT:
Senator Raymond D. Rawson, Vice Chairman (Excused)
STAFF MEMBERS PRESENT:
Gary L. Ghiggeri, Senate Fiscal Analyst
Bob Atkinson, Program Analyst
Mindy Braun, Education Program Analyst
Denise Davis, Committee Secretary
OTHERS PRESENT:
Dino DiCianno, Deputy Executive Director, Department of Taxation
Rick Bennett, Lobbyist, University of Nevada, Las Vegas
Ron W. Sparks II, Director, Western Interstate Commission for Higher Education, University and Community College System of Nevada
Keith Rheault, Deputy Superintendent for Instructional, Research, and Evaluative Services, Department of Education
Douglas C. Thunder, Deputy Superintendent for Administrative and Fiscal Services, Department of Education
Phyllis Furlong, Budget Analyst, Department of Education
Senator Raggio:
We will open the hearing on Senate Bill (S.B.) 314.
SENATE BILL 314: Requires Department of Taxation to collect and report data concerning electronic commerce that is conducted in this state. (BDR 32‑36)
I introduced this bill because of the interest in taxation of electronic commerce (e-commerce). The Senate Committee on Taxation re-referred the bill to us due to a fiscal note. I understand the fiscal note has been revised.
Dino DiCianno, Deputy Executive Director, Department of Taxation:
My remarks are included in my memorandum of April 15, 2003 (Exhibit C). After the Senate Committee on Taxation hearing on April 3, 2003, the department had discussions with the state demographer and staff at the University of Nevada, Reno (UNR) regarding the required study; the department proposes utilizing the expertise of the state demographer and the resources already available at UNR to conduct the annual study. We amended the original fiscal note as indicated in the memorandum.
Senator Raggio:
That makes the fiscal note nominal. I testified before the Senate Committee on Taxation on April 1, 2003; I have distributed copies of that testimony (Exhibit D) tonight. Nevada has joined the movement to require out-of-state vendors to collect various sales taxes for states on Internet purchases by in‑state residents; Nevada is considering the streamlined sales tax agreement in order to make the laws uniform.
One of my concerns is the reliability of the information we are receiving. A private academic study published in October 2001 caught my attention; it indicated states would lose a total of $13 billion that year due to untaxed Internet transactions. The same study estimated losses of over $45 billion in 2006 and as much as $55 billion in 2011. Nevada losses were estimated to be $151 million in 2001, $444 million in 2006, and $687 million in 2011. It is hard for me to believe that, if this law had been in place in 2001, we would have been able to collect an additional $151 million. Proponents of Internet taxation use studies like this to convince Congress to approve the collection of taxes on remote sales.
There are two reasons we should reject the information from reports such as this and have the Department of Taxation provide information instead. First, the predictions for the growth of e-commerce have been vastly overestimated. The October 2001 study estimated total business-to-consumer e-commerce sales in 2001 would be $55.8 billion and $87.5 billion in 2002; the U.S. Department of Commerce reports these sales totaled $32 billion in 2001 and $45.6 billion in 2002. The study projects an extraordinary growth curve; I do not think it is realistic.
The second reason to reject this information concerns business-to-business transactions. Studies include these transactions, but many states, including Nevada, exempt most or all business-to-business transactions from taxes. For these reasons, I think the estimates of lost revenues are questionable. This is a critical issue; I want the people deciding this matter to have valid data. I am pleased the study can be accomplished for a nominal amount. It is never a bad policy to pause and collect needed data before decisions are made; that is the reason for this bill.
Senator Cegavske:
For the last few years, we have been discussing revenue sources. The biggest concern of small businesses in southern Nevada has been sales lost to the Internet. I have been told over and over, “If you are going to tax something, tax the Internet.” I think this study is important to help us determine what we should do.
Senator Raggio:
We are going to have to consider the issue, so we need to know what to expect. Taxing the Internet may not be the panacea people think it is.
Senator Tiffany:
As I recall, a professor at the University of Nevada, Las Vegas (UNLV) did a study on this issue. Is there any way to find out if this type of study has been done? If a professor at UNLV has already done this, maybe we should not stipulate UNR in the bill. Another question I have is, in addition to identifying tax revenues, will the study also tell us how and where to collect the revenues? Can we collect background information at the same time?
Senator Raggio:
I am not sure the study will be that comprehensive. We are just trying to realistically estimate tax revenues if Internet taxation is approved.
Senator Tiffany:
The researchers will have to identify the major Internet retailers to produce the estimates; the data may be there.
Senator Rhoads:
I believe the National Conference of State Legislatures is involved in this movement; how close are they to legislative action?
Senator Raggio:
I think they are working on the streamlined sales tax agreement. I am interested in obtaining realistic information. Others appear to be accepting the October 2001 study, which is “out of whack” with U.S. Department of Commerce data.
Senator Rhoads:
Is there a moratorium in Congress?
Senator Raggio:
Yes, there is a moratorium until September. They are trying to get the streamlined sales tax agreement done for uniformity purposes.
Senator Coffin:
In my business, I am an active buyer and seller on the Internet; most of my transactions are business-to-business, so taxes are not involved. There are huge numbers of sales occurring on the Internet, and some of the sales are large. For example, there are about 97,000 vehicles for sale on eBay.com. I am looking at a vehicle right now that has 21 bidders; the dealer is in Kentucky. The dealer states Kentucky buyers must pay sales taxes and tag fees, and out-of state buyers are responsible for their own taxes in their own states. My guess is the out-of-state buyer is going to drive the vehicle away and not pay the taxes. The largest Web site for Internet sales is eBay.com, but sales are typically casual; it is hard to estimate those types of sales.
In the 1980s, we passed legislation regarding catalog sales. We hoped the states would eventually get permission to implement such laws, but the issue is still in Congress. If taxation of Internet sales is permitted, is the collection of taxes on catalog sales included?
Senator Raggio:
I do not know.
Senator Coffin:
Whatever numbers a study reports, they will not be reliable. I will support the idea of doing a study, but when legislation is implemented, we will need to rely on actual revenues and not forecasts.
Senator Raggio:
This bill does not take a position in favor of or in opposition to a tax on e‑commerce. It is an issue we will face and I would rather have our own information to consider. I would also like staff to find out if this type of study has already been done. If it has not been done, the department recommendation is a good one.
I believe we have some testimony regarding S.B. 227.
SENATE BILL 227: Makes appropriation to Harry Reid Center for Environmental Studies at University of Nevada, Las Vegas, for support of its environmental research. (BDR S-1062)
Rick Bennett, Lobbyist, University of Nevada, Las Vegas:
When S.B. 227 was heard on March 17, 2003, a few questions were raised. In regard to duplication of research programs between the Desert Research Institute and the Harry Reid Center for Environmental Studies (HRC), there is no duplication of programs and there is no competition for grants and contracts between the two entities. I have a letter from Donald Baepler (Exhibit E) regarding the HRC.
Another question at the March 17 hearing concerned statements made during the 71st Session in regard to a bill with a $250,000 appropriation. In 1999, a bill was approved and the HRC received a $250,000 appropriation that was used for salary supplements for directors and administrators. The 2001 bill was similar to the 1999 bill; it was not approved. During hearings for university budgets, a commitment was made that if the appropriation was not approved, the funding would still be provided through indirect costs. I have researched the issue and determined expenditures were paid through indirect costs. For the record, we kept the commitment we made.
Senator Raggio:
What action are you recommending on this bill?
Mr. Bennett:
When the HRC received the $250,000 appropriation in 1999, it was able to use indirect costs to expand and support some of its other research programs. When the money was not appropriated in 2001, options were limited. If the HRC receives the money this year, it will again expand its efforts. If the HRC does not receive the money, it will continue to support its budget with indirect costs.
Senator Raggio:
Can the HRC continue to do that?
Mr. Bennett:
It has done that and will continue to do that.
Gary L. Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
I have distributed a memorandum updating sales and gross gaming tax collections (Exhibit F). Sales tax collections for March 2003 are still “on target” to achieve the Economic Forum’s revised forecast of 5.2 percent growth for fiscal year (FY) 2002-2003. The Economic Forum will meet on May 1, 2003, to review projections made on December 2, 2002, for revenues in FY 2003, FY 2004, and FY 2005; the Legislature will be bound to these forecasts when it approves the budget for the 2003-2005 biennium.
Gaming tax collections are 13.5 percent higher than a year ago; for the first 9 months of FY 2002-2003, collections are 5.9 percent higher than a year ago. If gaming tax collections decline, the State will still meet revenue projections.
Senator Raggio:
Did we not have a month last year that was abnormal?
Mr. Ghiggeri:
Looking at page 6, even though gaming percentage fee collections were 13.5 percent higher, win statewide was only 0.4 percent higher. There are fluctuations with the collection and the win; on page 8, the percentage change for the gaming tax percentage fee was a negative 11.7 percent for April 2002 and a positive 25.2 percent for May 2002.
Senator Raggio:
We had a real “blip” of some type in May 2002.
Mr. Ghiggeri:
It is tied to the prepaid estimated fee adjustments.
Senator Raggio:
Is that going to happen again?
Mr. Ghiggeri:
It is hard to know what is going to happen. Win year-to-date is only 2.4 percent higher than a year ago. Clark County is 3 percent higher, Washoe County is 1.8 percent lower, South Lake Tahoe is 3.4 percent higher, Elko is 2.5 percent higher, and the Carson Valley area is 2.9 percent higher than a year ago.
Page 5 of my memorandum shows sales tax collections by standard industry codes. Four areas represent approximately 54.7 percent of all taxable sales: general merchandise stores, automotive dealers and service stations, eating and drinking places, and miscellaneous retail. Total taxable sales for those four business types increased 5 percent in February 2003 and 6 percent for the year‑to-date.
Senator Raggio:
Are automobile sales still increasing?
Mr. Ghiggeri:
Auto sales “kept the State afloat” last year when 0 percent financing was offered. Sales have “flattened out” and I think everyone has purchased a new vehicle that is going to.
The committee heard S.B. 244 on March 19, 2003.
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)
My comments are included at the bottom of the supplemental agenda (Exhibit G). This supplemental appropriation of $30,648 was recommended in the Executive Budget; after discussions with the agency, it does not appear the supplemental appropriation is needed. Staff informed the Budget Division the supplemental appropriation is not required.
SENATOR RHOADS MOVED TO INDEFINITELY POSTPONE S.B. 244.
SENATOR CEGAVSKE SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
*****
Mr. Ghiggeri:
The committee heard S.B. 407 on March 31, 2003.
SENATE BILL 407: Makes supplemental appropriation to Western Interstate Commission for Higher Education for unanticipated shortfall in money for Fiscal Year 2002-2003 resulting from reclassification of position. (BDR S‑1225)
My comments are included at the bottom of the supplemental agenda (Exhibit G). As recommended by the Governor, this supplemental appropriation would provide $3800 for a projected salary shortfall in FY 2003. Staff has discussed this item with the Western Interstate Commission for Higher Education (WICHE) and the Budget Division; if $1000 is transferred from the information services category, it appears the shortfall would be approximately $3500. There is a current balance of $1800 in the information services category. Staff also notes there is approximately $3000 available in the out‑of‑state travel category; staff has been advised the agency proposes to transfer some of these funds to the in‑state travel category. At a minimum, staff recommends the supplemental appropriation be reduced from $3800 to $3400. If additional information is made available to staff regarding savings in this budget, it may be possible to reduce the appropriation further.
Ron W. Sparks II, Director, Western Interstate Commission for Higher Education, University and Community College System of Nevada:
This salary shortfall is the result of a required position reclassification. The Budget Division projects a shortfall of $4800 and we concur. I am not sure why staff’s projection differs. You will get the money back, whether the amount is $3400 or $3800, because we will revert it. Another problem with this issue is we collect the money in one account, the WICHE Loan & Stipend account, but we spend the money in the WICHE Administration account. We are basically asking to take a loan from our own account; we will revert back at least the amount of the loan.
Senator Raggio:
This is not a big matter; I think we need to follow staff’s recommendation so we can process it. We would like to get any information available concerning savings; we are looking for every dollar right now. I suggest we amend this from $3800 to $3400 and the Assembly Committee on Ways and Means can also consider this issue.
SENATOR TIFFANY MOVED TO AMEND AND DO PASS AS AMENDED S.B. 407 BY CHANGING THE AMOUNT OF THE SUPPLEMENTAL APPROPRIATION TO $3400.
SENATOR CEGAVSKE SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
*****
Senator Raggio:
Please work with staff to identify any further reductions. We want to accommodate your concerns.
Mr. Ghiggeri:
Senator Cegavske requested a revised fiscal note for S.B. 340.
SENATE BILL 340: Provides in skeleton form for scholarships to pupils with disabilities who attend private schools. (BDR 34-45)
It appears as a memorandum from Mindy Braun (Exhibit H). The revised fiscal note from the Department of Education is on the back of the memorandum. The original fiscal note was about $6.6 million in FY 2003-2004 and $6.8 million in FY 2004-2005; it has been revised to $256,000 in FY 2003-2004 and $792,000 in FY 2004-2005.
Senator Cegavske:
This is an estimated per-pupil cost. Parents will still have to apply for the scholarships. These estimates are more realistic than the previous numbers.
Senator Raggio:
Are we only recognizing one school as qualified for the program?
Senator Cegavske:
One school has 110 students.
Senator Raggio:
The estimate for FY 2003-2004 is based on one school and 50 students; the cost per pupil is $5125. The estimate for FY 2004-2005 uses three schools and 150 students; the cost per pupil is $5279.
Mr. Ghiggeri:
The Department of Education indicates it may need a half-time accounting position if this program grows as projected. This position is not included in the fiscal note.
Senator Tiffany:
It appears to me that the second year of the biennium is overestimated.
Senator Raggio:
Even if the second year was $256,000, we still cannot process the bill. We have an agreement with the Assembly not to send bills over with large fiscal notes right now.
Senator Tiffany:
I find it interesting that the Clark County School District always tells me its per‑pupil funding is $3500 and the amount in the fiscal note is over $5200.
Keith Rheault, Deputy Superintendent for Instructional, Research, and Evaluative Services, Department of Education:
We submitted this information as a fiscal note, but technically it is a transfer. This amount of money will be paid per pupil regardless of whether the school is public or private. I listed the numbers to give you some idea of the amounts we are talking about.
Senator Tiffany:
Where did the $5125 and $5279 come from?
Dr. Rheault:
I got that information from Doug Thunder. Those numbers include all local revenues generated plus the state guarantee plus other funding, according to the formula in the bill.
Senator Tiffany:
Is this for Clark County or is it a statewide average?
Dr. Rheault:
It is a statewide average.
Douglas C. Thunder, Deputy Superintendent for Administrative and Fiscal Services, Department of Education:
Those amounts include the 50 cent property tax and other sources of local revenue, as well as basic support.
Senator Raggio:
We will hold the bill.
DEPARTMENT OF EDUCATION
Discretionary Grants - Restricted – Budget Page K12 ED-21 (Volume 1)
Budget Account 101-2709
Bob Atkinson, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
My comments are included in “Closing List #6-A,” pages 1 and 2 (Exhibit I. Original is on file in the Research Library.). We will be discussing two budget accounts today that sound similar because they contain a number of stand‑alone federal grants. They are separated because they have different indirect cost rates. This budget account contains the grants subject to the restricted indirect cost rate; these grants are listed on page 2.
Senator Raggio:
Are these items all federally funded?
Mr. Atkinson:
This budget account is 100 percent federally funded.
Senator Raggio:
Why is there a different rate?
Mr. Atkinson:
Restricted rates and unrestricted rates are negotiated each year with the U.S. Department of Education. If a “no supplant” clause is included, certain costs cannot be funded through indirect costs; the largest of those that cannot be included is typically rent. We adjusted the grants to the amount of the most recent grant award and information that we have. A number of these grants have partial positions; funding for those positions is transferred to the Staffing Services budget account we will discuss later. Staff recommends closing this account as adjusted and requests the authority to make adjustments if necessary to align transfers to the NDE, Staffing Services account.
Senator Raggio:
Is the Byrd Scholarship Program still included in this account? How many students receive scholarships, and how much do they receive?
Phyllis Furlong, Budget Analyst, Department of Education:
The Robert C. Byrd Honors Scholarship Program is 100 percent federally funded. The program funds approximately 200 students; they each receive $1500 a year for up to 4 years. If a student takes a leave, for a mission trip, for example, the time period is extended. The scholarship pays for 4 years of school.
Senator Raggio:
How does this tie in with the Millennium Scholarship?
Ms. Furlong:
It does not tie in with the Millennium Scholarship.
Senator Raggio:
Do students receive both scholarships?
Ms. Furlong:
Students are eligible for both scholarships. The academic requirements for a Byrd Scholarship are higher than the requirements for a Millennium Scholarship.
Senator Raggio:
Can they attend any school with the Byrd Scholarship?
Ms. Furlong:
Yes, they can. We verify twice a year that they are full-time students and are meeting eligibility requirements.
SENATOR MATHEWS MOVED TO CLOSE BUDGET ACCOUNT 101-2709 AS ADJUSTED BY STAFF WITH AUTHORITY FOR STAFF TO MAKE NECESSARY ADJUSTMENTS.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
*****
Commission on Postsecondary Education – Budget Page K12 ED-34 (Volume 1)
Budget Account 101-2666
Mindy Braun, Education Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
My remarks are contained in “Closing List #6-A,” pages 3 and 4. This account is the administrative budget for the commission. Although this account is listed in the K-12 group, S.B. No. 237 of the 71st Session made the commission an independent agency. There are no major closing issues in this account.
The agency did not request a fiscal note from staff for S.B 457, but it did contact staff to indicate a potential fiscal impact for this bill.
SENATE BILL 457: Prohibits use of false or misleading educational credentials. (BDR 34-1311)
The agency estimates a fiscal impact of $38,483 in FY 2003-2004 and $76,965 in FY 2004-2005; these costs would be for a half-time education specialist position in FY 2003-2004 which increases to full-time in FY 2004‑2005. Currently, there is no data available to reasonably estimate the number of inquiries the commission might receive if this legislation is passed.
Senator Raggio:
Is S.B. 457 in our committee? Is a new fiscal note consistent with this information going to be prepared?
Ms. Braun:
The agency has submitted the information on pages 4-A and 4-B of “Closing List #6-A.”
Mr. Ghiggeri:
As drafted, the legislation indicates there is no fiscal impact. The only reason we are aware of an impact is because the agency contacted us.
Senator Raggio:
We should draft a fiscal note consistent with the agency’s comments.
Senator Cegavske:
During the hearing on this bill, no concerns were expressed at any time. I take exception to the fiscal note. At the hearing, we talked about the people who issue the false credentials. This is a shock to me; we had no testimony on this.
Senator Raggio:
We will schedule the bill and ask the agency to testify.
Ms. Braun:
The administrator of the commission, David Perlman, apologized for not attending the previous hearing; he was notified about the hearing the day it was held.
Senator Cegavske:
I disagree with that. Are we going to close this budget?
Senator Raggio:
Can we close this budget account subject to this issue?
Mr. Ghiggeri:
I believe you can close the budget and add the funding needed for S.B. 457 to the bill. If the bill is not approved, there will be no need for the funding and there will be no impact on this budget.
SENATOR TIFFANY MOVED TO CLOSE BUDGET ACCOUNT 101-2666 AS RECOMMENDED BY THE GOVERNOR AND SUBJECT TO FINAL ADJUSTMENTS.
SENATOR CEGAVSKE SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
*****
Senator Raggio:
Please notify the commission regarding the next hearing on the bill; we also want a formal fiscal note from the commission.
Senator Cegavske:
I would also like an outline of the reasoning behind the fiscal note.
Senator Raggio:
The explanation is on page 4-A.
Senator Cegavske:
I read that letter.
Mr. Ghiggeri:
Staff has no opinion as to the accuracy or completeness of this item; staff is merely presenting it to the committee.
NDE, Staffing Services – Budget Page K12 ED-37 (Volume 1)
Budget Account 101-2719
Mr. Atkinson:
My remarks are contained in “Closing List #6-A,” page 5. The Department of Education has a number of positions that are less than full time and are funded from multiple sources. This account was created during the 71st Session to consolidate these positions and paperwork. There are no closing issues in this account. Staff requests the authority to make necessary adjustments to align revenue sources with the costs of positions.
SENATOR COFFIN MOVED TO CLOSE BUDGET ACCOUNT 101-2719 AS RECOMMENDED BY THE GOVERNOR WITH AUTHORITY FOR STAFF TO MAKE NECESSARY ADJUSTMENTS.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
*****
Student Incentive Grants – Budget Page K12 ED-44 (Volume 1)
Budget Account 101-2606
Ms. Braun:
My remarks are contained in “Closing List #6-A,” pages 6 and 7. Nevada receives annual allotments from the U.S. Department of Education for grant programs; the federal programs are the Leveraging Educational Assistance Program (LEAP) and the Special Leveraging Educational Assistance Program (SLEAP). Matching state funds are required for these programs; the matching rates are explained on page 6. The State match has traditionally been provided by the transfer of a portion of higher education’s share of estate tax revenues from the UCCSN ‑ Special Projects account, budget account 101‑2977.
Senator Raggio:
Does the student have to attend a college or university in Nevada to receive these grants? I am trying to keep the different scholarship eligibility requirements straight in my mind. Are these grants intended for students with financial needs?
Ms. Braun:
Yes; institutions included in the University and Community College System of Nevada and some private institutions in the state qualify. The major closing issue for this account concerns the insufficiency of state matching funds from the UCCSN - Special Projects account. For the 2003-2005 biennium, the state match recommended by the Governor in the UCCSN - Special Projects account is $376,195 per year, but the Governor recommends $448,487 in FY 2003‑2004 and $451,750 in FY 2004-2005 to meet the state match requirements for the programs.
The committee has the three options on page 7 to consider regarding the shortfall. First, if the committee wishes to continue both programs and receive the maximum federal funding available to the state, the committee should decide whether additional higher education estate tax revenues should be transferred or a General Fund appropriation should be made. At this time, a shortfall in higher education estate tax revenues is projected. This option will serve an additional 200 SLEAP students. Second, if the committee wishes to continue both programs at a minimum level equal to FY 2002-2003 levels, the committee should decide whether additional higher education estate tax revenues should be transferred, or a General Fund appropriation should be made. At this time, a shortfall in higher education estate tax revenues is projected. This option will maintain the current number of students in each program. Third, if the committee wishes to continue LEAP and eliminate SLEAP, the revenue from the higher education estate tax would be reduced. This option will maintain the current number of students in the LEAP program.
Senator Raggio:
There are currently about 400 SLEAP students and 500 LEAP students. How long do the programs continue for students?
Ms. Furlong:
The students reapply each year for the funds.
Senator Raggio:
Do they automatically receive funds?
Ms. Furlong:
No, they do not.
Senator Raggio:
Are there any requirements similar to the Millennium Scholarship requirements?
Ms. Furlong:
Students have to meet federal financial need requirements.
Senator Raggio:
Are there any grade requirements?
Ms. Furlong:
Students cannot be on academic probation.
Senator Raggio:
If we select the second option on page 7, the current number of students will be served and the shortfall will be less. My concern with the third option is we will drop all the SLEAP students. What is the difference between SLEAP and LEAP?
Ms. Furlong:
The difference is supplemental funds.
Senator Raggio:
Are matching funds available for each program?
Ms. Furlong:
Yes, matching funds are available.
Senator Raggio:
I think the second option is the preferable option.
SENATOR CEGAVSKE MOVED TO CLOSE BUDGET ACCOUNT 101-2606 AS RECOMMENDED IN OPTION 2 ON PAGE 7 OF “CLOSING LIST #6-A” AND TO USE ADDITIONAL HIGHER EDUCATION ESTATE TAX REVENUES TO MEET SHORTFALLS.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
*****
Drug Abuse Education – Budget Page K12 ED-53 (Volume 1)
Budget Account 101-2605
Mr. Atkinson:
My remarks are contained in “Closing List #6-A,” page 9. This program is 100 percent federally funded, with a minimum of 93 percent of the funds passed through to the school district programs. The revenue and expenditure authority have been adjusted to reflect the most recent federal grant estimates and to reflect the elimination of the Fund for a Healthy Nevada grant.
E-225 Reward More Efficient Operations – Page K12 ED-55
E-710 Replacement Equipment – Page K12 ED-55
Enhancement unit 225 (E-225) has been adjusted to $250 each year for training costs. Decision unit E-710 has been adjusted to reflect the most recent prices available through the Purchasing Division. Staff recommends the account be closed as adjusted and requests authority to make necessary adjustments to align transfers from this account to the NDE, Staffing Services account.
The Legislature has been concerned about the effectiveness of the programs funded by this budget account. Letters of Intent were issued in 1997, 1999, and 2001. The Letter of Intent issued in 2001 requested that the Department of Education staff study effective K-12 substance abuse prevention programs in other states and compare those results to Nevada’s results. The report has not been furnished. The Assembly Committee on Ways and Means held this account; they want to obtain a copy of the 1999 study from the department and possibly select the top two or three effective programs and mandate their use.
Senator Raggio:
Does this have anything to do with the Drug Abuse Resistance Education (DARE) program?
Mr. Atkinson:
It is one of the programs that could be funded.
Senator Raggio:
What is the position of the Department of Education?
Dr. Rheault:
I am responsible for not providing the report as requested in the Letter of Intent. We met with the staffer who oversees the federal money from the Safe and Drug-free Schools and Communities Act after we received the Letter of Intent in August 2001. The staffer was aware major changes caused by the No Child Left Behind Act (NCLBA) would affect funding. Previously, school districts could implement any program desired without any input from the department; NCLBA requires that programs be scientifically-based and proven effective. The Department of Education will approve applications from the local schools. Performance measures are required for all programs and the department will have to provide periodic reports to the federal government. The first report is due December 1, 2003; I could provide a copy of it to the committee or the full Legislature. This last December, we learned the federal government will not be providing a list of effective programs. I think the intent of the legislation is to narrow the number of programs being funded to those that are effective; DARE may be affected.
Senator Cegavske:
I remember the discussions concerning this issue over the last several sessions. There is controversy between parties and between the Assembly and the Senate regarding the effectiveness of DARE. The biggest problem we faced was there was no consensus as to what programs worked. We wanted to put our money into the best programs; that is why the report was important last session. We are very disappointed that we do not have the report again. I have said that my informal discussions with teenagers indicate they think DARE is an excellent program. It is controversial and needs to be analyzed.
Dr. Rheault:
In the 1999 report, there were about 16 different programs; of those 16 programs, we could only say 5 programs were scientifically-based or proven effective through a study.
Senator Cegavske:
Those are the types of things we are looking for so we can consolidate and put our money toward effective programs.
Senator Raggio:
How do you propose to do the report in the future?
Dr. Rheault:
We will be required to report to the federal government as part of NCLBA. Through a Letter of Intent or a verbal promise, we will submit our December 1, 2003, report to you.
Senator Raggio:
In the meantime, what will we utilize this federal funding for?
Dr. Rheault:
We will submit the state plan by May 1, 2003; it will probably be amended based on events in the Legislature. We can correct anything you direct us to correct. The Assembly Committee on Ways and Means wants the number of programs narrowed down to a few effective ones. We can do that when we review applications this summer.
Senator Raggio:
Can we close this budget with the adjustments staff has made and issue a Letter of Intent regarding a study of the effectiveness of prevention programs? Will you heed this Letter of Intent?
Dr. Rheault:
I do not make a habit of not following Letters of Intent. I will also provide the committee with a copy of the information provided to the Assembly Committee on Ways and Means.
Mr. Atkinson:
Staff recommends the account be closed as adjusted.
SENATOR MATHEWS MOVED TO CLOSE BUDGET ACCOUNT 101-2605 AS ADJUSTED BY STAFF WITH AUTHORITY FOR STAFF TO MAKE NECESSARY ADJUSTMENTS AND TO ISSUE A LETTER OF INTENT REGARDING A STUDY OF THE EFFECTIVENESS OF PREVENTION PROGRAMS.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
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School Health Education - AIDS – Budget Page K12 ED-57 (Volume 1)
Budget Account 101-2611
Mr. Atkinson:
My remarks are contained in “Closing List #6-A,” pages 10 and 11.
E-710 Replacement Equipment – Page K12 ED-59
Decision unit E-710 has been adjusted to reflect the most recent prices available through the Purchasing Division.
Staff notes the amount of the federal grant is decreasing significantly; a portion of the federal funding had been transferred to the NDE, Staffing Services account to support a position, but the department is not filling that position because of the decrease in funding.
Mr. Thunder:
I want to point out in 2005, in regard to the $178,873, you have to take the balance forward into account; they are on a different schedule. The grants at that time are from December 1 to November 1.
Senator Raggio:
The federal funding is still declining.
Mr. Thunder:
There was an additional amount in 2002 only. The funding is declining.
Senator Raggio:
Can the money still be used effectively?
Mr. Thunder:
We believe the money is used effectively. The Centers for Disease Control monitors the program very closely and it reports it is pleased with the use of the funds.
Mr. Atkinson:
Staff recommends the account be closed as adjusted and requests authority to make necessary adjustments to align transfers from this account to the NDE, Staffing Services account and Nutrition Education Programs account.
SENATOR CEGAVSKE MOVED TO CLOSE BUDGET ACCOUNT 101-2611 AS ADJUSTED BY STAFF WITH AUTHORITY FOR STAFF TO MAKE NECESSARY ADJUSTMENTS.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
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Discretionary Grants - Unrestricted – Budget Page K12 ED-79 (Volume 1)
Budget Account 101-2706
Mr. Atkinson:
My remarks are contained in “Closing List #6-A,” pages 12 and 13. The difference between this account and the account discussed previously is the programs in this account are subject to the unrestricted indirect cost rate. The current unrestricted rate is 22.4 percent; the current restricted rate is 17.6 percent.
Senator Raggio:
Is this federally funded?
Mr. Atkinson:
This budget account is 100 percent federally funded. The four programs are listed on pages 12 and 13 of “Closing List #6-A.” Some of the programs that were previously included in this account have been eliminated or have been included in NCLBA; these programs are listed on page 13. There are no closing issues in this account.
Senator Raggio:
What is the significance of the class–size reduction program you mention on page 13?
Mr. Thunder:
That was federal money intended to help reduce class sizes. A lot of districts made significant use of it. Class-size reduction is an approved use of some of the teacher quality grants in budget account 101-2713, Improving America’s Schools – Titles II, V, VI.
Senator Raggio:
Did we not previously authorize some of that for class-size reduction?
Mr. Thunder:
I believe it was an Interim Finance Committee action that was authorized for a 2-year or 3-year period.
SENATOR TIFFANY MOVED TO CLOSE BUDGET ACCOUNT 101-2706 AS RECOMMENDED BY THE GOVERNOR WITH AUTHORITY FOR STAFF TO MAKE NECESSARY ADJUSTMENTS.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
*****
Senator Raggio:
I would like to thank everyone for their work on today’s budgets. Since there is no further business, this meeting is adjourned at 5:18 p.m.
RESPECTFULLY SUBMITTED:
Denise Davis,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE: