MINUTES OF THE ASSEMBLY COMMITTEE ON EDUCATION Sixty-eighth Session May 1, 1995 The Committee on Education was called to order at 3:30 p.m., on Monday, May 1, 1995, Chairman William Z. Harrington, M.D., presiding in Room 330 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. William Z. (Bill) Harrington, Chairman Mr. Wendell P. Williams, Chairman Mrs. Gene Wines Segerblom, Vice Chairman Ms. Patricia A. Tripple, Vice Chairman Mr. Thomas Batten Mr. Max Bennett Mrs. Deanna Braunlin Mrs. Vonne Chowning Mrs. Marcia de Braga Mr. Mark Manendo Mr. P.M. Roy Neighbors Ms. Jeannine Stroth STAFF MEMBERS PRESENT: H. Pepper Sturm, Chief Principal Research Analyst OTHERS PRESENT: David Perlman, Commission on Postsecondary Education Robert McCart, Executive Director, Education Dynamics Institute Sherry Loncar, Nevada Parent Teacher's Association Chairman Harrington announced the companion bill to Assembly Bill 411, Assembly Bill 493 was now in the committee. Assemblyman Barbara Buckley had explained at a previous meeting the problems with Assembly Bill 411. ASSEMBLY BILL 411 - Revises amount of surety bond required of certain private postsecondary educational institutions. The hearing was opened on Assembly Bill 493. ASSEMBLY BILL 493 - Establishes account to indemnify students enrolled in licensed private postsecondary educational institutions that discontinue service or violate certain laws. Mr. David Perlman, Administrator, State of Nevada Commission on Postsecondary Education, spoke in support of the establishment of a tuition recovery fund. He spoke from prepared testimony (Exhibit C). He recapped issues identified in the previous hearing on A.B. 411 involving increasing the financial protection of students attending private postsecondary schools. He discussed problems incurred by students of institutions closing their doors unexpectedly including students' inability to complete their training and receive recompensation. Mr. Perlman noted during the April 12, 1995, hearing discussion was held on how to assess fees for the recovery fund, including consideration of the school track record. In reviewing licensure statistics, Mr. Perlman found of the twenty schools operating continuously for the past ten years or longer, there have been complaints against five and two have changed ownership, leaving only thirteen to benefit from a lower fee. Mr. Perlman explained the funding mechanism of A.B. 493 is a five dollar per student flat fee similar to the four dollar student fee now being collected. The student fee was adopted in 1989 to replace the bi-annual renewal fee. A.B. 493's single flat rate collected in conjunction with the existing four dollar fee would be easy to audit for compliance and would not increase the administrative workload of the agency. Mr. Perlman stated he felt multiple assessment levels would create problems. He stressed the need to increase the financial protection for students and felt the establishment of the fund to be fair and reasonable. Discussing other components of A.B. 493, Mr. Perlman stated the most significant one was a major overhaul of the refund policy. The new language simplifies the required methodology and is in line with national trends of a pro rata policy. He asked the committee to consider amending Page 1, Lines 8 and 9, deleting the words "or a person representing a student or enrollee". Assemblyman Tripple asked what the magnitude of the problem was. Mr. Perlman stated 54 schools had closed since 1990. Five required tapping the bond. In most cases the bond was adequate to cover the costs of the students. Sometimes student records are not accessible so the Commission can find out what the student is owed. In one case a correspondence school closed with approximately 3,000 to 4,000 students enrolled. The school had been in business since 1968. He explained the students are out what is owed on their federal loans plus many fees added on when the loans go into default. If only one school fails and not enough money is in the bond or an adequate amount to reimburse students, it becomes chaotic for the students. Ms. Tripple asked what the demand is for the type of education provided by the private postsecondary schools. Mr. Perlman explained any institution which is not a Nevada public school falls under this category. He made a conservative guess of 15,000 new students enrolling yearly, with a steady increase. Assemblyman Segerblom asked for clarification of the proposed amendment asking if it was "or a person representing a student or enrollee," Page 1, Lines 8 and 9. Mr. Robert McCart, Executive Director, Education Dynamics Institute, Las Vegas, Nevada, spoke in favor of A.B. 493. Mr. McCart stated he felt it was important consumers feel they are protected. He noted the bill speaks towards a flat fee per student and not a sliding scale and not exempting certain institutions. As a member of the industry, Mr. McCart felt no institution should be exempt. All institutions should have to participate. Administratively, the flat fee per student would be easier to enforce than any other method. Mr. McCart expressed concerns regarding the fact no provisions have been made in the bill for new schools coming in after the fund has reached its cap. He suggested new schools be required to pay into the fund for the same period of time all current institutions are required to do so until the fund is capped. This would allow the fund to go over the cap from new schools participating and the new schools would have to provide for the protection current schools are already providing. He also supported Mr. Perlman's suggested amendment regarding Page 1, Lines 8 and 9. There was no testimony against A.B. 493. ASSEMBLYMAN SEGERBLOM MOVED AMEND AND DO PASS ON A.B. 493. ASSEMBLYMAN CHOWNING SECONDED THE MOTION. Assemblyman Braunlin asked if Mr. McCart's concern would be included in the proposed amendment. Chairman Harrington stated he believed it would and asked for clarification. Ms. Braunlin referred to Mr. McCart's testimony regarding new schools coming to the state and until the cap is reached, they would not be required to pay into the fund. Mr. McCart stated the fund would reach a cap of $250,000 in approximately three to four years as the bill is written, based on current enrollments. At that time any new schools coming into the state would not be required to pay into the fund when operating. Mr. McCart noted the new schools were the ones most likely to go out of business. If the fund has to be tapped to reimburse those students, the schools still in business would have to pay into the fund again to bring it back up to the cap level. He recommended new schools pay into the fund for the same period of time current schools pay into it. It would allow the fund to go over the cap and funds would be available in the event of a large closure within the state. Mr. Perlman, taking an opposing view, citing the summary of the veto on a similar bill last session, stated it seemed to be a barrier to free trade to require a new school to post a bond and pay into the fund. What was done to address the issue was double the bond from $5,000 to $10,000 which Mr. Perlman felt was adequate. Assemblyman Bennett stated he felt it would be hasty to vote on the bill until the amendments are available in writing for consideration. Mrs. Segerblom stated she was happy with the idea of a $10,000 bond. Mr. McCart noted his school carried a $10,000 bond. Plus they will be paying into the fund. New schools coming into the state would only be required to carry the bond and not pay into the fund if they begin business after the bond has reached its cap level. His concern is not the money but whether currently operating schools should bear the brunt of the fund and not new schools. Mrs. Braunlin stated she would feel more comfortable waiting until Assemblyman Buckley was available to view the amendments in writing and address them since A.B. 411 was her bill. ASSEMBLYMAN SEGERBLOM WITHDREW HER MOTION. ASSEMBLYMAN CHOWNING WITHDREW HER SECOND. It was agreed to put off making a final decision on A.B. 493 until Wednesday, May 3, 1995, when Ms. Buckley could be in attendance. The subcommittee on Assembly Bill 492 reported back to the Education Committee. ASSEMBLY BILL 492 - Requires school districts to contract with privately owned businesses for provision of certain services. Chairman Harrington distributed the proposed amendments for A.B. 492 (Exhibit D). Initially, prior to the amendments the bill required school districts to contract out ancillary services if the same or better services could be obtained for less money. Several conditions were also provided including liability protection for school districts, monies saved would remain in the school districts and private contractors had to meet some of the same standards, background checks and fingerprinting requirements as current district employees. The decision of the subcommittee was to present several amendments to the full Education Committee (Exhibit D) with no recommendation. He explained the amendments include changing "shall" to "may" regarding bid acceptance. If bids are solicited, districts are not obligated to accept the bids. Clerical, security and health services were eliminated and construction services were added. If the school districts do decide to privatize, they must have an offer of the same or better quality for less money, current employees must be given the opportunity to counterbid, districts are encouraged to privatize gradually through the natural retirement attrition of the employees or school district growth, and are encouraged to have incoming companies give priorities to the current employees, so the number of misplaced workers would be minimized. The school districts are not mandated to privatize in any way, currently having the authority to do so without restrictions. Dr. Harrington stated the bill, with the proposed amendments, would put some restrictions on districts on how they go about privatization. He recommended the committee amend and do pass A.B. 492. Assemblyman Bennett, referring to Section 5, Subsection 1, asked if administrators were discussed as being part of the "laundry list" of positions to be considered for privatization. Dr. Harrington answered many people had mentioned administration could be improved, but it was not specifically on the list. He had no problem with including administration. Mr. Bennett stated he would feel more comfortable including administration. Often successful programs come from private management firms. Assemblyman Batten stated he had reviewed the amendments. He asked if the "x'd" out portions on (Exhibit D) were what was being taken out. Dr. Harrington answered affirmatively. Mr. Batten stated he felt school districts had taken advantage of their current ability to privatize. ASSEMBLYMAN BATTEN MOVED TO INDEFINITELY POSTPONE A.B. 492. ASSEMBLYMAN NEIGHBORS SECONDED THE MOTION. Chairman Williams expressed his support for the motion. He explained the amendments were presented to the last school district in the state, Clark County School District last Tuesday evening. Clark County had not gone on record opposing A.B. 492 before that time. Discussions have been held with current employees on drafting a bill to protect workers from being privatized. Mr. Williams discussed the changes A.B. 492 had undergone during its time in the Education Committee. He explained employees have a strong interest in drafting legislation to protect themselves. Assemblyman Chowning stated she was one of the dissenting votes in the subcommittee. Taking clerical, nursing and security services out of the bill makes it more agreeable, but Mrs. Chowning stated she is not comfortable with school districts or the state of Nevada having no liability for the errors or omissions of an independent contractor. She felt private contractors would not be members of the full "team" of those supporting and protecting students. She questioned taking control away from districts and the state under any category. Mrs. Segerblom offered her support for the motion. Mr. Bennett declared his support for the motion. He felt the problem was more in the administrative and management areas than with the employees. Mr. Batten stated passage of A.B. 492 would send the message that the legislature is here to ensure micro management of the affairs of the various entities involved. Assemblyman Manendo supported the motion, stating he was concerned professionalism was being traded for money. He also felt workers were being punished with possible problems occurring in the administration. He asked Mr. Williams why it took Clark County so long to have a position on A.B. 492. Mr. Williams indicated it was hard to answer Mr. Manendo's question. He discussed the feelings of the superintendent of the Clark County School District who disclosed he felt the bill would be more restrictive to the district. The final vote from the school board in Clark County was 5-0, a unanimous vote in opposition. Mr. Manendo asked Chairman Harrington if he had contacted workers who would be effected by A.B. 492 and if any he spoke with were in favor of it. Dr. Harrington stated this was a classic case of the general taxpayers wanting to get the most for the least amount of money versus the special interest people who work for school districts whose jobs would be in competition. He noted many people who called expressed knowledge of where waste existed in the system they worked in. Mr. Manendo encouraged Dr. Harrington to draft a bill dealing with waste in school districts. He discussed professionalism and safety and the concerns of his constituents for their jobs and the safety and protection of the students. Chairman Harrington discussed how he felt the bill had been badly misrepresented. Assemblyman Stroth explained how the subcommittee tried to craft amendments for A.B. 492. She agreed with the statements of Mr. Manendo and Mr. Bennett. Stating she supported the concept of privatization, Ms. Stroth discussed how competition ups the level of the product. She encouraged readdressing the issue in the next Legislative session in a different manner. Ms. Stroth expressed her support for the motion. Mrs. Chowning discussed her concerns for student safety. She stated it was the reason she asked a representative of the Clark County School District for information. Partly because of that, the Clark County School District was forced to take a vote on the issue. Originally the position of the district was split. The final vote, as described previously, was unanimous. Chairman Harrington stated he would vote against the motion because he believed the bill as amended provides some protection for current employees. He reiterated his belief in privatization under the correct circumstances. The general interest of society is to get the most services for the least amount of money. THE MOTION TO INDEFINITELY POSTPONE A.B. 492 PASSED WITH CHAIRMAN HARRINGTON CASTING THE ONLY DISSENTING VOTE. Chairman Harrington announced Senate Bill 87 had passed out of the Assembly. Assembly Bill 6, a similar bill, was no longer needed. ASSEMBLY BILL 6 - Authorizes 4-day school week under certain circumstances. ASSEMBLYMAN STROTH MOVED TO INDEFINITELY POSTPONE A.B. 6. THE MOTION WAS SECONDED BY ASSEMBLYMAN BENNETT. Mr. Williams commented the committee might want to retain A.B. 6 available in case S.B. 87 is unsuccessful when returned to the Senate. THE MOTION CARRIED. There being no further business to come before the committee, the meeting was adjourned at 4:14 p.m. RESPECTFULLY SUBMITTED: Barbara Prudic, Committee Secretary APPROVED BY: Assemblyman William Z. Harrington, Chairman Assemblyman Wendell P. Williams, Chairman Assembly Committee on Education May 1, 1995 Page