MINUTES OF THE
SENATE Committee on Finance
Seventy-second Session
May 16, 2003
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:28 a.m., on Friday, May 16, 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
James D. Earl, Committee Secretary
Senator Raggio:
We now have the final amendment on Senate Bill (S.B.) 191, Amendment No. 724. I am assured this is the amendment we adopted yesterday. I will entertain a motion to amend and do pass S.B. 191 with Amendment No. 724.
SENATE BILL 191: Makes various changes governing education to facilitate implementation of federal No Child Left Behind Act of 2001. (BDR 34‑635)
SENATOR CEGAVSKE MOVED TO AMEND AND DO PASS AS AMENDED S.B. 191 WITH AMENDMENT NO. 724.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.)
*****
Senator Raggio:
We have bill draft request (BDR) 18-1348 before us. We requested this BDR some time ago. It concerns financing of the Commission on Economic Development to carry out certain training programs for employees of businesses. Mr. Guernsey, will you tell us exactly what the BDR does?
BILL DRAFT REQUEST 18-1348: Makes various changes concerning financing of Commission on Economic Development to carry out certain training programs for employees of businesses. (Later introduced as Senate Bill 496.)
Bob Guernsey, Principal Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
In closing the budget of the Commission on Economic Development, the committee limited the annual funding for support of the train employees now program, commonly known as the TEN program, to $750,000 annually. That amount involves a combination of the balance forward and the annual appropriation. The budget is closed with a recommended appropriation of $500,000 each year, allowing a maximum carryforward of $250,000. Excess funds would revert to the General Fund. This differs from the current practice whereby commission funding does not revert.
Senator Raggio:
Committee, that is consistent with our request. I will entertain a motion to introduce BDR 18-1348 as a committee bill.
SENATOR RAWSON MOVED FOR THE INTRODUCTION OF BDR 18‑1348 AS A COMMITTEE BILL.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Senator Raggio:
We heard S.B. 324 on April 11, 2003, and again on May 6, 2003. This bill deals with the Veterans Home Account and the gift account. Our action was to amend and do pass, and to place money in the operating account instead of the gift account. I think we are in conflict with the action of the Assembly. We now have before us Amendment No. 634, which implements our closing decision. It also resolves a conflict in sections 2 and 9 of Assembly Bill (A.B.) 192. I will entertain a motion to use Amendment No. 634 to amend our action on S.B. 324.
SENATE BILL 324: Makes various changes concerning Veterans’ Home Account and the Gift Account for Veterans’ Home. (BDR 37-305)
ASSEMBLY BILL 192 (1st Reprint): Revises provisions relating to issuance of special license plates. (BDR 43-181)
SENATOR RAWSON MOVED TO AMEND AND DO PASS AS AMENDED S.B. 324 WITH AMENDMENT NO. 634.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Senator Raggio:
We have Amendment No. 751 before us. It modifies A.B 353. This bill deals with credit card usage at the University and Community College System of Nevada. The amendment defines “commercial purposes.” Additionally, in section 2, page 2, line 22, the amendment would provide the text, “except as otherwise required by federal law.” We suggested those two modifications. However, this amendment still needs to be tweaked because we still need to delete section 6 in addition to the other sections that were deleted. We will have that amendment later in the day and use it to take action.
ASSEMBLY BILL 353 (1st Reprint): Makes various changes to provisions regarding University and Community College System of Nevada and Board of Regents of University of Nevada. (BDR 34-76)
We have received a fiscal note on S.B. 184. Senator Mathews was the bill’s sponsor. The bill deals with occupational diseases, specifically treatment of hepatitis. It is a sizeable fiscal note from the Risk Management Division in the Department of Administration, involving $165,000 in fiscal year (FY) 2004 and $345,000 in FY 2005. There are additional associated fiscal notes.
SENATE BILL 184 (1st Reprint): Revises certain provisions governing occupational diseases contracted by police officers. (BDR 53-851)
Senator Rawson:
I want to address several items. I have a memorandum from the State treasurer talking about budget conflicts.
Senator Raggio:
We are going to go over the budget conflicts in a minute.
Senator Rawson:
We talked about a potential adjustment involving grade IV research staff.
Senator Raggio:
I think we are going to take up the Legislative Counsel Bureau budget tomorrow. We will consider that issue tomorrow.
Senator Rawson:
I want to ensure we do not overlook something. The Tahoe Regional Planning Agency (TRPA) people have expressed concern to me several times. They need a continuing resolution. A bill is working its way through the Legislature. It is a good idea to back that up with a resolution. We have to provide authority for the TRPA to continue its mission in the Tahoe Basin. If the bill is approved by the Senate is also approved by the Assembly and is not vetoed by the Governor, TRPA will be okay. However, if anything disrupts that process, we could end up without TRPA oversight for an entire biennium. That is not a good idea. I suggest we follow through with a resolution authorizing TRPA. If it turns out to be in conflict with the bill, then the resolution will be of no effect. We have passed such resolutions in the past.
Senator Raggio:
Does not the Legislative Commission have the authority to appoint this committee?
Senator Rawson:
I think the authority flows from a resolution that must be approved each session. We have passed resolutions for the last three sessions. It is at least worth having staff look at the issue. It could be serious for the Tahoe region if we let the matter drop.
Senator Raggio:
Do we have to take action by any specific date?
Gary L. Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
Resolutions can be passed at any time.
Senator Raggio:
We will take a look at this later.
Senator Mathews:
I took the opportunity to look at the fiscal note on S.B. 184. The note cannot be right. All the agencies already test for hepatitis A and B. As a nurse, I can tell you, the test for hepatitis C is simply a test for one more thing. It cannot cost this much money.
Senator Raggio:
We will ask staff to contact the agencies. You are welcome to contact them as well.
Mr. Ghiggeri:
When we heard the bill, we were instructed to ask the agency to submit revised fiscal notes. These are what we received. We have not had an opportunity to go through them. We simply wanted to get the information to you.
Senator Mathews:
I will contact them as well. This type of monetary charge should simply not be made.
Senator Raggio:
Mr. Ghiggeri, would you quickly review our actions to date?
Mr. Ghiggeri:
As of yesterday, considering the differences between the Governor’s budget and actions taken thus far by this committee, there is a need to raise approximately $828 million in new taxes over the biennium. According to current indications, at the end of FY 2003, the State will be about $1 million below the 5 percent minimum ending fund balance. Current estimates put the State at about $391 million below the 5 percent ending fund balance at the end of FY 2004. This figure is cumulative from the previous fiscal year. At the end of FY 2005, the State would be about $828 million below the 5 percent minimum ending fund balance.
Senator Raggio:
Is that based on Senate actions to date?
Mr. Ghiggeri:
Yes, it is based on Senate actions affecting the General Fund, and it includes restoration of the rainy day fund, the $50 million recommended by the Governor in the second year. It also includes the effect of S.B. 191 as approved by this committee yesterday.
Senator Raggio:
We need to go over the differences in the actions taken by this committee and the Assembly Committee on Ways and Means. Would you take us through this?
Mr. Ghiggeri:
You have a closing report prepared by the Legislative Counsel Bureau (Exhibit C. Original is on file in the Research Library.) based on actions taken through yesterday. These numbers represent what we have in the system.
The Assembly Committee on Ways and Means (Ways and Means) has eliminated funding for the Washington Office. The Senate Committee on Finance (Senate Finance) has continued the operation of the Washington Office and has provided about $8,000 annually above what the Governor recommended.
Senator Raggio:
I suggest we maintain our position on this budget. Since there is no objection, let us move on.
Mr. Ghiggeri:
The differences affecting the Office for Consumer Health Assistance begin in enhancement E-502 and E-600. The Assembly continued the one ombudsman position. The Assembly has approved Assembly Bill 236; it has a fiscal note indicating the agency would need the additional ombudsman for a prescription drug program. Additionally, the payback by the General Fund to the Workers Compensation Fund, as recommended in the Executive Budget, was over 10 years. Ways and Means provided for a payback of 6 years, while Senate Finance provided for a payback over the current biennium.
ASSEMBLY BILL 236: Directs Office for Consumer Health Assistance to assist consumers in gaining information regarding certain prescription drug programs. (BDR 18-203)
Senator Raggio:
Is that a payback of the total amount over the current biennium?
Mr. Ghiggeri:
Yes, the total amount would be paid back over the next 2 years.
Senator Raggio:
I suggest we approve the ombudsman position to be consistent with the action of the Senate Committee on Government Affairs. That puts us in line with Ways and Means. What is the total amount of the payback?
Mr. Ghiggeri:
It is $122,000 as adjusted by staff. It seems a bit much to stretch out repayment over 6 years. It takes more time to keep track of this.
Senator Raggio:
I think we should remain with our position to repay over the biennium. They would go with us on the payback, and we would go with them on the ombudsman issue. Hearing no objections, let us continue.
Mr. Ghiggeri:
Ways and Means approved deletion of E-500 from the budget of the Lieutenant Governor’s office. Senate Finance approved it as recommended by the Governor. This decision unit includes additional funding of about $24,000 in FY 2004 and $14,000 in FY 2005 for out-of-state travel. Out-ofstate travel expenses of $10,000 annually would provide for one additional trip to attend a national Lieutenant Governor’s association meeting and one additional trip to Washington, D.C., for the Lieutenant Governor and staff to meet with the Nevada congressional delegation regarding issues involving the State. Additional in-state travel funding over the biennium would ensure the agency’s involvement on a statewide level in tourism and economic development issues with emphasis on rural Nevada. This decision unit reinstates budget reductions contained in decision unit E-600 in the operating categories for printing equipment repair and dues and registration of approximately $4,400 in FY 2004.
Senator Raggio:
What is the total amount involved over the biennium?
Mr. Ghiggeri:
The amounts are approximately $23,000 the first year in general funds and about $14,000 the second year.
Senator Raggio:
I think we need to keep this in the Lieutenant Governor’s budget. It is a rather small amount. Without objection, let us move to the controller’s office.
Ways and Means deleted E-275; that decision unit involves approximately $140,000 annually. It would have provided support for two positions for the integrated financial system, an accountant III and a management analyst I.
Senator Raggio:
What is the committee’s feeling on this issue?
Senator Tiffany:
We should be consistent in support of this constitutional officer.
Senator Raggio:
Is there any objection to maintaining our position? I hear none. Moving on, I think we received a letter from the State treasurer.
Mr. Ghiggeri:
Senate Finance added the $151,000 annually as recommended by the budget office for postage costs. These costs had previously been absorbed in the overhead by general services mail. Way and Means did not add that funding. The treasurer has indicated a willingness to go without the funding. I would have to defer to Mr. Comeaux.
Senator Raggio:
Which budget involves the prepaid tuition issue?
Mr. Ghiggeri:
That is the next one.
Senator Raggio:
There was a recommendation for $205,000 in marketing, which the treasurer said was essential for the program to remain viable. His letter stated he would accept the additional postage cost and a cut in the Millennium Scholarship budget, but needed the marketing money. Based on his recommendation, I propose we adopt that position or, otherwise, we stand on our position. If Ways and Means is willing to do that, I think it would be satisfactory. I do not think we should make the one cut, and leave the treasurer hanging on the other. Nevada college savings is also part of this account.
Mr. Ghiggeri:
Let us move on to judicial selection. Ways and Means reduced this budget by $1,722 annually. Senate Finance closed this budget as recommended by the Governor. The $1,722 would provide for a judicial workshop.
Senator Raggio:
Was the basis for the cut that they have never held these workshops?
Mr. Ghiggeri:
That is correct.
Senator Coffin:
I think we should hold our position. The in-state travel budget does not take into account the increase in travel costs. Ticket prices have gone up, and, in some cases, they have almost doubled.
Senator Raggio:
Based on that, we will hold our position. It is not a large amount.
Mr. Ghiggeri:
Ways and Means deleted support costs in the University of Nevada, Reno budget for the Fire Science Academy in Carlin. The amount involved is about $786,000 annually and about $40,000 for a one-time equipment purchase.
Senator Raggio:
I think we received a letter from the chancellor stating fire services have been funded historically. This is not a new concept. We will see what the Ways and Means position is. I have an indication from one of the leadership that their position was not necessarily a firm one. There was a suggestion that one member was using this to obtain a strategic objective of some sort.
Senator Tiffany:
I do not like this item. I do not want to appear to vary from the Senate position, but I have never liked this item drawing general funds.
Senator Raggio:
I think the majority of this committee disagrees with your position.
Senator Tiffany:
I recognized that when closing the university budgets. However, you have three people over here who are just fine with it coming back.
Senator Raggio:
Well, let me take a poll. How many members of the committee want to adopt the Assembly position? I do not want to waste time here. How many want to delete the Fire Service Academy from the budget? I see only Senator Tiffany.
Senator Coffin:
That would make us in total agreement on the university.
Senator Raggio:
No. We might change our vote on the Henderson College issue.
Senator Coffin:
There was an article in the paper today concerning faculty workload. It suggested there was a great difference between how the University of Nevada, Las Vegas (UNLV) portrayed the situation to us and the results of an investigation by the Las Vegas Review-Journal.
Senator Raggio:
What item was investigated?
Senator Coffin:
The investigation concerned faculty workload. UNLV was the only institution the paper looked at. I do not know how forthcoming the university personnel were. We asked some direct questions on this topic. We might be embarrassed if we were to go much farther without double checking to ensure everything in the budget is correctly portrayed.
Senator Raggio:
Is this the only item at this time on that particular budget?
Mr. Ghiggeri:
That is correct.
Senator Rawson:
Whenever the university system owns a property, maintenance for the property is included in the budget. The university owns the fire science facility whether we like it or not, and it ought to be maintained by the system. It does not seem to me that inclusion in the budget would break any convention. Are we?
Senator Raggio:
No, that is what the chancellor’s letter indicates. Let us move on to the State Arts Council.
Mr. Ghiggeri:
Ways and Means added $250,000 annually in room tax dollars to provide funding for the Las Vegas performing arts center. Senate Finance did not provide that funding. This is part of the additional funding identified when we closed the tourism budget. There was about $630,000 in additional funding, and Senate Finance directed a portion of that funding to offset General Fund costs in the Nevada State Railroad Museum budget and in the State parks budget. There is sufficient funding available to do what is recommended by the Assembly and what has been approved by the Senate regarding room tax dollars.
Senator Raggio:
Could we do both?
Mr. Ghiggeri:
You could do all three.
Senator Raggio:
Did they approve our action otherwise?
Mr. Ghiggeri:
I do not believe they have taken action on that.
Senator Raggio:
I think we have to accommodate both if we are going to do that.
Mr. Ghiggeri:
Ways and Means eliminated funding for the Merit Award Board. Senate Finance closed the budget with the Governor’s recommendation.
Senator Raggio:
Why did they eliminate that? It is a small amount.
Mr. Ghiggeri:
I have to defer to them.
Senate Finance provided funding for a cost of living adjustment pay increase for positions in the predatory animal account. Ways and Means did not fund that.
I believe funding was withheld on the National Association of Insurance Commissioners budget based on passage by Senate Finance of A.B. 453. That legislation was passed by the Senate Committee on Commerce and Labor on May 13.
ASSEMBLY BILL 453 (1st Reprint): Makes various changes to provisions relating to insurance. (BDR 57-546)
Senator Raggio:
What is the difference there?
Mr. Ghiggeri:
Senate Finance did not add the additional revenue for that legislation. Based on the current status of the legislation, I surmise Senate Finance could go with Ways and Means on that issue.
Senator Raggio:
Are you recommending we go with them on that?
Mr. Ghiggeri:
Yes.
The difference on the Commission on Tourism involves E-180, the transfer to cultural affairs or arts council for what was previously discussed. The handout reference to “museums” is incorrect. The transfer to the Nevada council on arts is $250,000.
Senator Raggio:
If we go with them on the other one, will this take care of it?
Mr. Ghiggeri:
Yes. But, we have to go together. They would have to go with us on E-732 to provide the funding.
Senator Raggio:
So we need to look at the Commission on Tourism budget, is that right?
Mr. Ghiggeri:
Correct.
The next issue deals with vital statistics. Senate Finance closed this budget as recommended by the Governor. Ways and Means provided General Fund support of approximately $400,000 in FY 2004 and about $348,000 in FY 2005 to provide funding for the centennial events registry.
Senator Raggio:
That is close to $800,000. Why does this need to be funded in this amount?
Mr. Ghiggeri:
This was not discussed in the human resources subcommittee.
Senator Raggio:
I think we need to hold on that.
Mr. Ghiggeri:
The only difference in the health aid to counties budget is $100 added by Senate Finance to provide the access to the Interim Finance Committee (IFC) during the interim.
Senator Raggio:
I think we want to provide the opportunity for access, so we should hold our position.
Mr. Ghiggeri:
The only differences of note in the next seven pages of the handout is in the food inflation issue in the prisons budget. The only difference reflected in all of the prison accounts is food inflation.
Senator Raggio:
We added that.
Mr. Ghiggeri:
Senate Finance adopted the Governor’s recommendation. Ways and Means deleted it.
Senator Raggio:
I thought we agreed we should add that.
Mr. Ghiggeri:
Senate Finance included inflation by adopting the Governor’s recommendation, but Ways and Means did not add inflation.
In the public safety director’s office account, the only difference is Ways and Means has deleted about $3,700 annually in out-of-state travel funding. This funding would provide travel to conferences by the director, deputy director, and the public information officer. This is funded by an interagency cost allocation.
Senator Raggio:
I think we can go with them on that.
Mr. Ghiggeri:
Under the state parks budget, Senate Finance added the amount in E-732 that was transferred from the tourism account. This is a reduction in General Fund dollars of about $206,000 in FY 2005.
Senator Raggio:
What did they do? Did they retain the general funds?
Mr. Ghiggeri:
They left the general funds in the budget. They did not take any action other than funding the arts council budget with the additional funding.
Senator Raggio:
Is this part of what we did in the other one?
Mr. Ghiggeri:
This is part of a larger expenditure.
Senator Raggio:
We need to take all three of these when we first talk about the arts council budget.
Mr. Ghiggeri:
That is correct.
Senate Finance action reduces General Fund need in the State parks budget where one-time needs are identified in FY 2005.
Senator Raggio:
Okay.
Mr. Ghiggeri:
Senate Finance closed the wildlife budget reducing General Fund support by $200,000 annually, funding that from the reserve category. This leaves the projected reserve balance in the wildlife budget at approximately the same level recommended by the Governor at the end of the biennium, approximately $1.5 million. We should have information on S.B. 420 in the next several days.
SENATE BILL 420: Makes various changes relating to Division of Wildlife of State Department of Conservation and Natural Resources. (BDR 45-1254)
Senator Raggio:
We need to get that bill out of Senate Finance.
Mr. Ghiggeri:
We are working on that feverously. That is a fee-increase bill. We have received an amendment and revised revenue estimates from the agency. We found some glitches in those estimates.
Senator Raggio:
I think we had better defer action until we know where we are going. It is based on fees, is it not?
Mr. Ghiggeri:
Their whole budget is based on that.
The last account is the Veterans Home Account. The only difference involves the gift fund.
Senator Raggio:
The Assembly sent money to the gift fund. Is that right?
Mr. Ghiggeri:
Yes, they sent approximately $97,000 annually to the gift fund and reduced the General Fund savings by that amount each year of the biennium.
Senator Raggio:
What does the committee want to do? We just amended the bill. Let us hold on to this at this point since we are amending the bill.
Mr. Ghiggeri:
Another issue the committee should consider that is not listed on the closing sheet is the Department of Motor Vehicles (DMV) field services budget. Ways and Means closed this account by approving the addition of 30 positions for the Carey Avenue field office, 18 positions for the Sahara Avenue field office, and by placing funding to add positions in the Flamingo Road and Henderson field offices, totaling approximately $1 million in FY 2004 and $2.1 million in FY 2005 in reserve with direction that the agency return to the IFC to request use of this funding for either staffing or technology improvements. Senate Finance closed the account by approving the addition of 29 positions for the Flamingo Road office and 22 positions for the Henderson office as well as the previously mentioned positions. Senate Finance also directed the agency to propose the use of funding for new positions to expand kiosks if necessary. Staff would like some resolution of this issue before we do a lot of data input. We need some direction in one way or the other. At this point, time is precious.
Senator Tiffany:
Could we get the total number of positions? I remember we added 129 positions.
Senator Raggio:
I thought we added 120, and we deferred 9 in the Reno office, or something like that.
Mr. Ghiggeri:
We put the Reno office in reserve. We eliminated 11 positions in Carson City for Saturday operations. We eliminated the amount associated with the 3 days of customer service training.
Senator Tiffany:
What was the total of one compared to the other?
Mr. Ghiggeri:
It appears you are in basic agreement other than the manner in which the funding is placed in the budget. Ways and Means approved funding for the positions, but, instead of giving the agency authority to hire, it placed the funding in reserve.
Senator Raggio:
Did they approve all the positions?
Mr. Ghiggeri:
They approved the reduced level of positions.
Senator Tiffany:
How many positions is that?
Mr. Ghiggeri:
It is either 121 or 129. I cannot recall.
Senator Raggio:
That is very similar to ours.
Mr. Ghiggeri:
It is very similar.
Senator Raggio:
The only difference is where the money is put.
Mr. Ghiggeri:
Senate Finance closed the National Guard Benefits budget by adding $12,000 in general funds in each fiscal year. This would increase the tuition reimbursement rate to 50 percent. Ways and Means closed this budget as recommended by the Governor with no additional funds. Based on Assembly action, the estimated reimbursement rate is 44 percent. This does not show on the differences report because it has not yet been entered into the system.
Senate Finance closed the student incentive grants budget by adding general funds of $6,872 in FY 2004 and $10,135 in FY 2005. This funding continues the grants for post-secondary education for approximately 500 students in the Leveraging Educational Assistance Program (LEAP) and 400 students in the Special Leveraging Educational Assistance Program (SLEAP). Ways and Means closed this budget eliminating the SLEAP. This reduced the higher education estate tax revenue by $129,420 in FY 2004 and $126,000 in FY 2005.
Senator Raggio:
The difference is that the Ways and Means action eliminates the program for about 400 students in the SLEAP portion. I think we discussed this at length.
Mr. Ghiggeri:
Senate Finance closed the budget containing teacher-signing bonuses as recommended by the Governor, maintaining General Fund support of $5 million each year. This involves individual signing bonuses of $2,000. Ways and Means closed this issue by eliminating the $5 million in each year and requesting the funds be transferred to the Distributive School Account (DSA) to be combined with two other Governor-recommended stipend programs, the high‑impact and high-risk programs, and to finance retirement credits.
Senator Raggio:
I think we should stay with the Governor on signing bonuses. Are there any other comments?
Mr. Ghiggeri:
I have information I can discuss concerning the DSA. Senate Finance closed the budget by eliminating the Governor’s recommended funding of approximately $4 million in FY 2004 and approximately $20 million in FY 2005 for full-day kindergarten. In making this decision, Senate Finance requested the program be placed on an “add list” if funding becomes available. Ways and Means did not approve the recommendation of the Governor, but, instead, approved funding for a competitive grant, full-day kindergarten pilot program in the amount of $2.8 million in FY 2004 and $3.2 million in FY 2005.
The Governor recommended funding for class-size reduction of $108 million in FY 2004 and $114 million in FY 2005 to maintain a pupil-to-teacher ratio of 16 to 1 in Grades 1 and 2, 19 to 1 in Grade 3, and 23.5 “at risk” kindergarten teachers. Senate Finance closed this issue by reducing the Governor’s recommended funding by $22 million in FY 2004 and approximately $24 million in FY 2005 to implement a mandatory pupil-to-teacher ratio of 22 to 1 in Grade 1 through Grade 5, with flexibility for Grade 6 as appropriate. Ways and Means closed the issue as recommended by the Governor, and, by adding approximately $14 million in FY 2005 to implement a student-to-teacher ratio of 16 to 1 in all kindergarten classes in FY 2005.
Senate Finance closed the high-impact stipend issue as recommended by the Governor with approximately $8.5 million in FY 2004 and $8.8 million in FY 2005, and closed the “at risk” stipend program with $7.7 million in FY 2004 and $8 million in FY 2005. Senate Finance indicated the amount of the individual stipends at $3,000 for high-impact and $2,000 for “at risk” would be reduced if necessary in order not to exceed the budgeted amount. Science was included as a high-impact area in considering the high-impact stipend. Senate Finance approved flexibility for school districts to determine on a yearly basis the positions within the eligible areas that would be considered high impact based on need. In addition, a 2-year commitment to remain at the school is part of the eligibility requirements for the stipends. Ways and Means closed this issue by eliminating $33 million for the two stipend programs and directed a portion of the funding, $2.7 in FY 2004 and $7 million in FY 2005, to expand the purchase of retirement credits to include all “at risk” schools as well as schools designated as demonstrating need for improvement. In addition, $9 million annually was redirected for negotiating the implementation of skill‑based, career-ladder pay. Approximately $15 million was to be applied toward increasing the beginning salary to $30,000.
Regarding the $50 books and instructional supplies, both Senate Finance and Ways and Means approved the amount as recommended by the Governor; however, the Assembly included a “supplement not supplant” clause, while the Senate approved fencing off all textbook, instructional supplies, and instructional software funding. The total funding for textbooks, instructional supplies, and instructional software is approximately $64 million in FY 2004 and approximately $67 in FY 2005.
The Governor recommended a 10 percent increase to cover health insurance costs for all school district personnel. Senate Finance made no modifications to this recommendation. Ways and Means approved an increase of 15 percent, costing approximately $6.8 million in FY 2004 and $7.9 million in FY 2005.
The Governor recommended a 2 percent cost of living salary adjustment for all school district personnel effective July 1,2003. Senate Finance approved the Governor’s recommendation. Ways and Means approved an additional 2 percent increase for school district personnel in FY 2004 at a cost of approximately $37.5 million and an additional 4 percent in FY 2005 at a cost of approximately $119 million.
Those items are not on the closing list, but the committee should be aware of them.
Senator Raggio:
Let us look at the projected unappropriated General Fund balance based on Senate action (Exhibit D).
Mr. Ghiggeri:
I want to stress that this is a working document and will change as information becomes available. Based on actions to date, we will need approximately $828 million in additional revenue to bring the budget into balance.
Senator Raggio:
That is in the second column.
Mr. Ghiggeri:
That is correct. That amount includes $50 million to restore the stabilization fund.
Senator Raggio:
Committee, that is the amount required to bring us to the required General Fund balance. Is that correct? That includes all our actions so far, particularly on the DSA and other major items.
Mr. Ghiggeri:
That is correct.
Senator Tiffany:
What are the largest budgets not included in this computation?
Mr. Ghiggeri:
I have included actions taken by the subcommittee in the savings portion. The largest savings will be in the DSA.
Senator Raggio:
I think she is asking which large budgets still remain to be closed.
Mr. Ghiggeri:
Everything has been closed by subcommittee action.
Senator Tiffany:
We have a figure of $828 million. What budgets have been closed but not posted on your working document?
Mr. Ghiggeri:
I have tried to estimate the actions taken by the subcommittees in this report. For example, Medicaid has not been closed in full committee, but it is reflected in these numbers. Temporary Assistance to Needy Families (TANF) is reflected in these numbers. The Division of Child and Family Services (DCFS) is not reflected because I have no estimates. This committee should close that budget tomorrow.
Senator Raggio:
Does that budget have the potential of adding to this?
Mr. Ghiggeri:
I think that closing will be neutral. Large savings were recognized in Medicaid, check-up, TANF, and DSA budgets. Those are the areas where there were large savings.
Senator Tiffany:
How does this relate to the $900 million or $1 billion of the Governor’s recommendation?
Mr. Ghiggeri:
It has been reduced to approximately $828 million.
Senator Raggio:
That is if we hold together on the action we took on the DSA, for example.
Mr. Ghiggeri:
The DSA has around $75 million in reductions. There were some $40 million just in the mandatory class-size reduction.
Senator Tiffany:
So, this is close to being what our numbers are.
Mr. Ghiggeri:
As I pointed out, the FY 2005 figures include $50 million for the restoration of some of the funding in the stabilization of State government account. If that funding were excluded, the number would be down to about $780 million.
Senator Raggio:
This also does not include any potential action this committee might take on pending bills requiring appropriations.
Mr. Ghiggeri:
That is correct.
Senator Rawson:
There is what, maybe a $150 million difference, between the Governor’s recommendations and the Senate actions?
Mr. Ghiggeri:
Yes, and one thing to keep in mind is that the Governor’s budget provided approximately $60 million in the second year over what was required for the minimum ending fund balance. I would caution that you probably need to leave some wiggle room when any new revenue estimates are made because you are plowing new ground. These estimates are really “guestimates” of what the new revenue sources will raise. If you cut it too close, the revenue may not be there.
Senator Raggio:
Estate tax funding is shown in these figures as revenue. That may or may not materialize at the level plugged in here.
Mr. Ghiggeri:
That is correct. The largest portion of new revenue you will see plugged into FY 2004 and FY 2005, about $44.7 million in FY 2004 and about $42.3 million in FY 2005, is the transfer of estate tax to the General Fund. Otherwise, there are very few revenue enhancements.
Senator Raggio:
The best guess on that is it may involve a $10 million overstatement.
Mr. Ghiggeri:
That is correct. There probably will be a shortfall in the estate tax revenue that is built into the DSA for the next 2 years also.
Senator Rhoads:
I understand the figure $827 million at the bottom of the column titled Senate Finance, but what is the $889 million in the last column?
Mr. Ghiggeri:
The Governor had approximately $61 million more included in his ending fund balance. The Governor was approximately $61.5 million over the 5 percent minimum ending fund balance. I believe he may have included that amount as a cushion to hedge against unknowns in the “guestimates” of the revenues.
Senator Rhoads:
Why is the entry for the 5 percent minimum balance $123 million for Senate Finance, and the entry on the Governor’s side is a negative $917,000?
Senator Raggio:
That is the difference between the Executive Budget entry of $124 million and the $123 million of Senate Finance.
Mr. Ghiggeri:
That is correct. That is the difference between the 5 percent minimum ending fund balance requirement. The difference in those numbers is the difference in expenditure levels. The 5 percent is applied to the ongoing costs. If you reduce your operating costs, then you reduce your need for ending fund balance.
Senator Raggio:
With no further issues we can address now, we will adjourn at 9:22 a.m.
RESPECTFULLY SUBMITTED:
James D. Earl,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE: