MINUTES OF THE ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS Sixty-eighth Session February 27, 1995 The Committee on Government Affairs was called to order at 9:35 a.m., on Monday, February 27, 1995, Vice-Chairman Neighbors 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: Mrs. Joan A. Lambert, Chairman Mrs. Deanna Braunlin, Vice Chairman Mr. P.M. Roy Neighbors, Vice Chairman Mr. Max Bennett Mrs. Marcia de Braga Mr. Pete Ernaut Mrs. Vivian L. Freeman Mr. William Z. (Bill) Harrington Ms. Saundra (Sandi) Krenzer Mrs. Gene Wines Segerblom Mrs. Patricia A. Tripple Mr. Wendell P. Williams COMMITTEE MEMBERS ABSENT: Mr. Douglas A. Bache, excused Mr. Dennis Nolan, excused GUEST LEGISLATORS PRESENT: None STAFF MEMBERS PRESENT: Denice Miller, Senior Research Analyst OTHERS PRESENT: Robert Hadfield, Nevada Association of Counties; Jim Regan, Churchill County Commissioner; Carolyn Stockton, Nevada Rural Housing Authority; Bob Gagnier, State of Nevada Employees Association; Antoinette Jacobs, Citizen; Tom Grady, Nevada League of Cities; Rose McKinney James, Business and Industry; Jim Demme, Nevada Rural Housing Authority Vice-Chairman Neighbors chaired the meeting in Chairman Bache's absence. He indicated Assembly Bill 204 would be rescheduled as all interested parties were unable to attend. Assembly Bill 35 was the only bill to be heard on the agenda. ASSEMBLY BILL 35 - Reorganizes Nevada rural housing authority. (BDR 25-943) Assemblyman John Marvel introduced A.B. 35. He was the bill's sponsor. He stated it was time to take the Nevada Rural Housing Authority out from under the Business and Industry Division and put it under chapter 315 of the Nevada Revised Statutes as originally intended. The authority was set up under the auspices of the Nevada League of Cities and the Nevada Association of Counties. Washoe and Clark counties have their own authorities. The authority is composed of local businesses, mayors and county commissioners. He introduced Carolyn Stockton the Executive Director of the Nevada Rural Housing Authority and Tom Grady from the Nevada League of Cities who would be speaking on the bill. Mr. Marvel was, of course, highly supportive of the bill. Assemblyman Freeman questioned the amendment of line 23 on page two of the bill. Mr. Marvel pointed out the authority was no longer under the jurisdiction of the budget act and therefore did not have to report to the Governor. The purpose of this bill was to remove the authority from state oversight. Assemblyman Krenzer wanted to know if a decision had been made to require one commissioner of each housing authority to be a tenant. Mr. Marvel mentioned that was covered under another bill, Assembly Bill 204. He called on Carolyn Stockton to elaborate. Carolyn Stockton, Executive Director of the Nevada Rural Housing Authority, said the new bill would be set up to have two commissioners appointed by the League of Cities, two by the Association of Counties and one at large from the general public. The public appointee could be the one required to be a tenant of the project if A.B. 204 were to be passed. Bob Hadfield, Executive Director of the Nevada Association of Counties, noted the attendance of Jim Regan, Churchill County Commissioner and President of the Nevada Association of Counties, to fully support the measure. He reiterated some of Mr. Marvel's comments. He remarked the housing authority was created and placed under the state as a temporary measure until it could be organized with other people being responsible. The Nevada Association of Counties is prepared to accept that responsibility. Tom Grady, Executive Director of the Nevada League of Cities, mentioned the League has been a part of the housing authority since its establishment in 1973. The League has had the honor of having city representation on the board for most of the past 22 years. He is the Secretary/Treasurer of the senior housing complex in Yerington which is managed by the Nevada Rural Housing Authority (NRHA). The League has always assumed that NRHA would someday be able to operate outside of state oversight as was originally intended. The board, appointed by the Governor, has always managed the authority with little attention from the state. All funding is federal or private with no state funds involved. Since the state reorganization, the authority has been functioning under the Department of Business and Industry with all finances under the control of the State Treasurer and State Controller. This has caused considerable duplication of effort. There are separate audits required from the state and federal authorities and both have different fiscal year ends. Mr. Grady stressed the loss of funds due to these conflicts. He said it was difficult working under the Department of Business and Industry while working under a board appointed by the Governor. One of the Association's major concerns is the $60,000.00 plus assessment in the state budget for the oversight which is federally and privately funded. Mrs. Freeman reconfirmed that the oversight money was federal. Mr. Grady restated that it was. Assemblyman Harrington wondered if there were potential problems with two commissioners coming from the Nevada League of Cities and two coming from the Nevada Association of Counties and one member whose appointment must be agreed upon by both parties. If the two disagree a very sensitive situation could develop. Mr. Hadfield responded the two groups have a long-standing record of mutual cooperation. Because both entities are representatives of rural Nevada, they share the same goal of assisting those residents with their particular issues. He did not foresee any problems in that area. Mrs. Krenzer digressed to her previous question. Regardless of any other bill, would a tenant be considered for appointment to the board of commissioners. Mr. Grady believed it would not be fair for him or Mr. Hadfield to answer that question. It would need to be discussed with the present board. He did not think they would be in opposition to it, but the current board members would more than likely continue their tenure until an opening presented itself for another appointment. Assemblyman Bennett asked Mr. Grady about the $60,000.00 in federal funds for state oversight and wondered how much the program had been running on totally. Mr. Grady indicated the entire budget was about six million dollars at present. He said Mrs. Stockton would address budget issues further in her testimony. Mr. Harrington questioned whether language reflecting an alternate voting procedure for appointing the one commissioner would be acceptable. Mr. Hadfield mentioned Mr. Grady's comments and agreed that he would not be comfortable with any changes until discussing it with his current board members. The bill is acceptable in its present form. Mr. Jim Regan, member of the rural housing board of commissioners, stated they had an excellent office and staff. The board has studied long and hard and finally decided the best way for the agency to go was to be independent of the state. There are grants available that need to be applied for, particularly the Housing Preservation grant. It is designed to help low income and handicapped individuals with such things as insulating their homes, putting in thermal windows, ramps and re-wiring. A much better job could be done in obtaining this type of grant assistance if the NRHA was independent of the state. Ms. Rose McKinney James, Director of the Department of Business and Industry, advocated the privatization of the NRHA and removal from state authority so that it could have some independence. She has worked very closely with the authority and has recognized the ability of the agency to provide the best services possible has been hampered by the fact they are a state office. There are other agencies in the Department with similar concerns. In this case, one of the major problems was the NRHA was never intended to be a permanent state agency. Thus far, the state has done a good job in stabilizing this authority and providing it with the administrative oversight necessary to get it established. The NRHA now has adequate accountability to go forward and stand alone. There is, however, a budgetary impact to the Department of Business and Industry, specifically to the Director's office. There is further impact to the state as a result of the state cost allocation that was provided by the NRHA. It will be necessary to work through those issues. With respect to the cost allocation to the Director's office, it is based in part on full time positions as well as on a formula the budget office has developed with reference to their funding sources. There are 27 agencies that would be impacted if they were asked to absorb the amount that NRHA is currently providing. She asked the representatives present to give their best thought to a formula or mechanism to help avoid any significant impact. Assemblyman Ernaut was confused on the fiscal impact from the standpoint of money loss versus services no longer provided. Ms. McKinney James indicated he was correct. The overall administrative services would no longer be furnished but it has more to do with manner in which the budgets have been built. The budgets were created to rely on this cost allocation and the absence of that then requires the other agencies in the Department to absorb it or demands an appropriation of some other kind. Mr. Ernaut queried whether there would be a better way to handle the situation with a phase-out the old and phase-in the new type approach. Ms. McKinney James agreed it was an option worth exploring. Assemblyman Lambert asked about the fiscal note calculations on page three of the handout (Exhibit C). She wanted to know what services the $5,000.00 cost allocation for LCB was for. Ms. McKinney James could only provide explanations given to her by her budget analyst. She said it was based on a formula devised every six years which looks at the costs associated with providing services to agencies. Each agency is subjected to its own formula. Mrs. Lambert wondered if she could explain the LCB charge for the Department as a whole; was it for bill drafting or some other services. The indication was for a variety of services. Each agency that is not a general fund department is asked to provide the state allocation costs and it is reflected in their budget. Mrs. Lambert requested an answer at a later time and Ms. McKinney James complied. Mrs. Krenzer wanted to know if Ms. McKinney James would object if one of the commissioners who would be appointed was a tenant of an NRHA project. She replied no, she would not object. Mr. Ernaut inquired of Mr. Hadfield regarding his previous question. Mr. Hadfield referred the committee to the fiscal note on page three of the handout (Exhibit C). There he pointed out problems for both the Department of Business and Industry as well as the Nevada Association of Counties. As Director of Business and Industry, Ms. McKinney James has the difficult mission of providing the support services of the entire Department. In order to do so, the state has adopted an allocation system that attempts to spread the cost of furnishing those services across all of the agencies. She is not able to reduce staff because some of the functions presently being offered would be gone. That would be unrealistic. However, if the NRHA is required to pay those costs, they will have to reduce staff because they do not have other funds available except those used to maintain their programs. Thus, both entities are caught in a budget situation that does not promote solutions to the problem. Any agreement that could be worked out would have to be one that would not interfere with the separation of responsibility. No one has been able to come up with a solution to this problem as there are no excess funds available in either agency to supplant the allocation costs. Neither one will benefit if the NRHA is not separated out and operated independently. The citizens of Nevada will lose if they do not receive the funding and services to which they are entitled. Mr. Ernaut suggested on page nine to move the effective date to July 1, 1996 to make the adjustment in the second biennium keeping it in the fiscal year rather than another adjustment within the first six months of the calendar year. Mr. Hadfield stated the situation would not improve by changing the date. Mr. Ernaut was not certain why this was not concurrently referred to Ways and Means. Mr. Hadfield said there have been some cost allocations in the past that were normally a part of the budget, however, this biennium represents a substantial change in the level of participation required of the housing authority, creating a problem of much larger magnitude. Mrs. Freeman inquired if it would be possible to draft a memorandum of understanding between the state and the NRHA that would be flexible enough to allow the NRHA to respond to the concerns in the next two years in such a way that the committee could support what they were trying to do. Ms. McKinney James wanted the opportunity to review that possibility with her Deputy Attorney General and with Mr. Hadfield. Either a memorandum of understanding or a contract of some kind might provide some interim relief. The primary issue however, is to provide the independence necessary to secure the additional federal dollars. One of the questions to be raised is whether or not the federal officials would recognize an arrangement of that kind as independent. Mrs. Stockton has based her research on the formats of other housing authorities in the state and local regions and perhaps that could be explored as well. Mrs. Freeman concluded there was not much choice before the committee at this point. The concept was good, but the issues were not resolved. Ms. McKinney James proposed a few days were needed to give all suggestions some thought and explore other possibilities in order to return with another more specific proposal for the solution to the cost allocation problem. Mr. Bennett addressed Mr. Hadfield stating that HUD was a federal target and was there a "plan B" in place in case HUD was somehow eliminated. Mr. Hadfield indicated he and Mr. Regan attended a White House briefing last month on this very topic. Based on all the information provided at the time and later confirmed by meetings with some of their own delegation, he was very comfortable they were heading in the same direction as the federal government. The sole business of the NRHA was to provide housing opportunities. The changes spoken of in the meetings were to break down the rather large, jurisdictional agencies that deal with that. The NRHA is not among those larger agencies under federal attack. Their mission is exactly the mission of those in Washington, D.C. Mrs. Lambert briefly reiterated the $60,000.00 budgetary allocation and suggested it might be a new gimmick to balance the budget. She felt perhaps because Mr. Marvel is the sponsor of the bill and one of the co-chairmen of the budget committee he would be able to work this through somehow if given the opportunity. Carolyn Stockton, Executive Director of Nevada Rural Housing Authority, said she was appointed to the position in 1994. At that time she was working with the Controller's office to bring all of the certificate voucher and section 8 programs into the State Treasurer's office through the cash management information act of 1990. Prior to that time, the NRHA's budget consisted only of payroll and administrative services, postage, printing and that sort of thing. The budget was roughly $750,000.00 for 1994-1995. During July and August a work program was done to bring the full section 8 certificate voucher program into the state budget to comply with the Controller's office and the federal mandate. Prior to this time, the authority was not charged a state allocation cost. No allocation cost has been assessed through 1995. The LCB and personnel/payroll assessments are regular fees that have been paid to the state for oversight. When Mrs. Stockton took over the position as Director, she and the Board made plans to aggressively pursue housing for rural Nevada. This was to be done with the housing preservation grant within Farmer's Home Administration and with other programs such as private/public partnerships. Two positions were hired, a Development Officer and a technical person for the section 8 program. With the cost allocation and the duplication of services, two positions will have to be cut to fund the state's cost. At that time, they were told there would be a small allocation, perhaps $5,000.00 or $6,000.00 dollars. In order to fund the state and maintain the section 8 and certificate annual budget, two positions plus expenses will have to be cut. The employees have been fully informed as to their rights if the NRHA departs from state authority. From all indications, HUD will go forward with NRHA's number one priority, to achieve family self-sufficiency. This program was established in 1990 and has been adopted by most housing authorities. The program helps clients receive education and job training as well as other services to assist in the goal of self- sufficiency. She then referred to ( Exhibit C), page four, showing current authority figures in various counties. If A.B. 35 is passed, an annual report would also be submitted of the year's activities in all counties of NRHA's areas of operation. She also pointed out the Board of Commissioners will be a full charge policy setting board and would have the statutory responsibility to the units of local government. The NRHA will be fully accountable to Nevada's rural cities and counties. She urged support and passage of A.B. 35. Mr. Ernaut questioned how often the authority was assessed for the state cost allocation. Mrs. Stockton said it was an annual assessment for the coming year. Mrs. Krenzer wanted to know how long the waiting period was in Carson City. Mrs. Stockton mentioned the waiting period in all rural counties is about two years. Mrs. Krenzer then queried if the current funding was adequate. Mrs. Stockton replied no, it was not. More units will have to be applied for. Antoinette Jacobs, an employee of NRHA, was previously opposed to this type of legislation as she felt the agency could operate just as efficiently under the state system at that time. Since then there have been many operational policy changes at the request of the State Treasurer and Controller's office. These changes have now begun to hinder the process by which the agency functions in terms of supplying rental systems to landlords for clients. For example, to pay a landlord rent for a client, the NRHA has to go through four computer systems and four state agencies. Previously everything had been taken care of in-house. The turn around was two check runs per week for landlords to get their checks, keeping all parties happy. Now, with the four computers and state agencies, the turn around time is sometimes a week and a half to two weeks and the landlords will not wait. Threats of eviction are given to tenants because checks are not received on time or are lost. Expansion of management of the agency and rental assistance services could be achieved outside of state authority and therefore serve the low income residents of Nevada more efficiently. The demands of the people cannot be met unless the structure of the agency is changed. Mrs. Segerblom wondered if the agency becomes privatized rather than state-run, will it be able to handle more people. She noticed that there were already 200 elderly waiting on the list. She also asked if the NRHA would become more efficient and have more funds available if they were out of the state system. Ms. Jacobs felt that if they were out of the state system, it would be easier to apply for funding in other areas. Facility operations would be smoother too, as has already been explained. Jim Regan referred to the White House briefing he and Mr. Hadfield had attended and reflected that housing authorities that have good, aggressive programs are the ones who will receive the funding. Jim Demme, Development Officer for the NRHA, spoke regarding grants. One of the big problems for the NRHA being a state agency is the inability to qualify for many types of grants. Other methodology has been examined for different ways of approaching this problem and an aggressive plan has been organized but cannot be attempted while under state guidelines. As a private, nonprofit agency, all of rural Nevada could be pursued without constraints. Bob Gagnier, Executive Director, State of Nevada Employees Association, spoke against A.B. 35. He questioned the whereabouts of the cost savings of state reorganization. At that time, there was insufficient documentation to warrant reorganization. There were a lot of unanswered questions. Even before the NRHA was required to pay a state allocation, they still wanted to pass an identical piece of legislation last session. He did not recall hearing how this was going to improve services. He indicated that most of the things they want to do can be accomplished at the present time. He said it would put the employees of the NRHA in limbo as they would no longer be under the state personnel, payroll or purchasing systems. They would be neither public nor private, not a local government, would not come under the authority of NRS 288, the local government collective bargaining law and they do not fall under the state personnel act; they would just be sitting out there in limbo. Yes, they could still be in the state retirement system and perhaps qualify for state medical care, but as far as the employees themselves are concerned, their only protection is NRS 281 which says all appointments must be based upon merit and fitness, which applies to every local government in the state and means nothing. The employees are going to have very few rights. They cannot engage in collective bargaining and they do not have the protection of state laws such as NRS 284. The ambiguous position of the agency was a real concern of Mr. Gagnier's. He felt that if the bill would be processed, the very least consideration would be to amend section 21, subsection two, line 36, by substituting ... "on the effective date of this bill..." for ..."until January 1, 1996" to protect the employees from possible layoffs. Mr. Neighbors closed the hearing on A.B. 35. He reiterated that A.B. 204 would be rescheduled. The meeting was adjourned at 10:35 a.m. RESPECTFULLY SUBMITTED: Denise Sins, Committee Secretary APPROVED BY: Assemblyman Douglas A. Bache, Chairman Assemblyman Joan A. Lambert, Chairman Assembly Committee on Government Affairs February 27, 1995 Page