MINUTES OF THE ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS Sixty-eighth Session June 20, 1995 The Committee on Government Affairs was called to order at 8:05 a.m., on Tuesday, June 20, 1995, Chairman Douglas A. Bache presiding in Room 119 of the Legislative Building, Carson City, Nevada. The meeting was teleconferenced to Room 4401 of the Grant Sawyer Office Building, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Douglas A. Bache, Chairman 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 Mr. Dennis Nolan Mrs. Gene Wines Segerblom Ms. Patricia A. Tripple Mr. Wendell P. Williams STAFF MEMBERS PRESENT: Ms. Denice Miller, Senior Research Analyst OTHERS PRESENT: Mr. Henry Etchemendy, Nevada Association of School Boards; Ms. Ande Engleman, Freedom of Information; Mr. Ken Lange, Executive Director, Nevada State Education Association; Mr. Andy Anderson, Las Vegas Police Protective Association and Nevada Conference of Police and Sheriffs; Mr. Dean Fletcher, President, Local 1285, Las Vegas Firefighters; Mr. Dave Howard, Reno-Sparks Chamber of Commerce; Mr. Todd Shipley, Peace Officers Research Association of Nevada; Mr. Dan Myers, President, Reno Police Protective Association; Mr. Tom Vassallo, Executive Director, Clark County Classroom Teachers Association; Mr. Ed Beaman, Vice President Local 1908, Clark County Firefighters; Ms. Stephanie Tyler, city of Sparks; Mr. Terry Reynolds, City Manager, city of Sparks; Mr. Bob Schreihans; Mr. Thomas J. Grady, Executive Director, Nevada League of Cities; Mr. Danny Thompson, Nevada State AFL-CIO; Mr. Mark Balen, Professional Firefighters of Nevada; Mr. Mark Smith, President and General Manager, Las Vegas Chamber of Commerce; Mr. Harry Donoian, Local 1107, Service Employees International Union; Ms. Kris Jensen, Nevada Concerned Citizens; Mr. Jim Andreas, Nevada Conference of Police and Sheriffs and Las Vegas Metropolitan Police Protective Association; Mr. Clay Holstein, City Manager, city of Reno; Mr. Al Bellister, Nevada State Education Association (See also Exhibit B attached hereto) SENATE BILL NO. 56 - Makes various changes related to negotiations with employee organizations. Mr. Henry Etchemendy, Nevada Association of School Boards, testified. He advised S.B. 56 was sponsored, jointly, by the Nevada Association of School Boards and "...the superintendents' association..." but was not so sponsored in its present form. He suggested, in its present form, S.B. 56 was nothing like it was originally. He discussed what occurred when S.B. 56 was heard in the Senate to cause it to be in its present form. Mr. Etchemendy pointed out, on page 1 at lines 5 through 7, S.B. 56 provided the notice an employee organization was required to give to a local government when that organization desired to negotiate must include a detailed description of each item which the employee organization desired to negotiate and the fiscal impact, if any, of each such item. He referred to subsections 2 and 3 of Section 1 and advised those subsections detailed the manner in which a local government employer's statement (made in response to a notice from an employee organization) would be made public. He indicated S.B. 56 went on to discuss how negotiations were to be conducted. He referred to lines 7 through 15 on page 2 and said the language in those lines "...stipulates...how the final agreement made by the parties appears, then, at a public meeting and is a public statement." At 8:10 a.m., Chairman Bache announced a quorum of the committee was present. Ms. Ande Engleman, Freedom of Information, testified. She declared S.B. 56 was one of the most significant "...sunshine bills..." to come before the legislature during the 10 years in which she had lobbied for open government. She said S.B. 56 would open to the public, for the first time, information which should always have been open to the public and would provide the public with information as to how 80 to 87 percent of local tax dollars were spent. Ms. Engleman said, as an expert on Nevada's open meeting law, she was asked to be involved with S.B. 56 and was asked her opinion of requiring the labor negotiations discussed in S.B. 56 to be made subject to the open meeting law. She advised, although she did not think Nevada's open meeting law, necessarily, could be applied to such labor negotiations, there were a number of states in which such negotiations were open to the public, however, that fact was not very popular with either the local governments or the unions involved. Ms. Engleman advised S.B. 56 was a compromise and explained, under its provisions, the beginning stage of labor negotiations would be open to the public and the public would know what offers were made initially. She said, thereafter, negotiations would be closed to the public. She pointed out (when an agreement had been reached) the contract which was to be ratified by a public body would be presented at a public meeting and copies of that contract would be made available to the public. She contended such contracts always should have been available to the public because no statute existed which exempted them from Nevada's public records law. She said, however, in the past, anyone who wished to see such a contract had to threaten to bring a lawsuit or had to hire an attorney in order to be permitted to do so. She pointed out S.B. 56 clarified such contracts were public information. Ms. Engleman suggested making available to the public that information S.B. 56 would make available to it would enable the public to better understand why local governments sometimes experienced budget shortfalls and how public taxes were spent. Ms. Engleman reminded the committee the State of Nevada Employees Association was required to conduct all its negotiations for salary increases publicly, before the legislature. She pointed out S.B. 56 did not make the entire negotiation process public, only the beginning and the end. Mr. Ken Lange, Executive Director, Nevada State Education Association (NSEA), testified by reading from prepared text (Exhibit C ). He said NSEA represented 17,000 employees who would be affected by S.B. 56. Mr. Lange advised NSEA believed the public should have access to information it deserved to have but said labor negotiations differed from public meetings. He contended the author of Nevada's open meeting law, Senator Dodge, clearly intended labor negotiations between local governments and their employees to be exempt from the open meeting law. He said Senator Dodge believed if such negotiations were closed to the public those negotiations would be less inhibited and both parties thereto would be more readily able to recede from their initial positions. Mr. Lange advised a school board received recommendations from its negotiators and discussed and voted upon those recommendations at a meeting which was open to the public and the final contract was adopted "...in full sunshine." Mr. Lange suggested S.B. 56 would create the situation Senator Dodge had attempted to avoid. He maintained requiring both parties to labor negotiations to make their initial positions public would make later compromise difficult. Mr. Lange declared S.B. 56 placed employees at a disadvantage. He pointed out S.B. 56 required an employee organization to furnish, by February 1st of a given year, both a detailed description of each item it wished to negotiate and the fiscal impact that item would have. He asserted the fiscal information an employee organization needed to comply with that requirement might not be available in time for it to do so. He said, also, S.B. 56 allowed a local government employer to refuse to negotiate certain items, which deprived employees of the opportunity to explain their positions on those items. Mr. Lange declared NSEA had great concerns about S.B. 56 and believed it would work to the public's detriment rather than to its advantage. Assemblyman Lambert asked when employee organizations presented negotiation demands at the present time. Mr. Lange advised, with respect to NSEA, negotiations began about the present time of year and concluded in September or October. Mrs. Lambert indicated she was confused because she was under the impression NRS 288 provided if no agreement was reached by April 10th, the parties to negotiations could "...go to fact finding." Mr. Lange replied he assumed April 10th referred to April 10th of the subsequent year. He advised NSEA did not commence negotiations until, approximately, the present time of year because the information it needed for those negotiations was not available sooner. Mrs. Lambert asked how a local government could close its budget if it had no idea what its costs would be for employees' salaries. Mr. Lange answered he understood, at the present time, local governments "...build in certain amounts that can be put in certain categories without revealing the amount to the employees, and to a certain degree they can't make a firm budget until after they know what their appropriation's going to be from the legislature." Mr. Andy Anderson, Las Vegas Police Protective Association and Nevada Conference of Police and Sheriffs, testified. He said the Las Vegas Police Protective Association (hereinafter referred to as the Protective Association) and the Nevada Conference of Police and Sheriffs (NCOPS) believed S.B. 56 would hinder the negotiation process. He indicated members of the Protective Association held a wide variety of assignments and had differing needs. He advised the Protective Association compiled the subjects for arbitration and said, if it was to place a cost factor on its demands, its original proposal "...could be in excess of 20 or 30 percent..." He suggested, absent an explanation, that original proposal could appear to make excessive demands. He asserted S.B. 56 would make either labor or management appear to be "...bad guys." Mr. Anderson advised, when negotiations were completed, the Protective Association printed approximately 2,500 copies of the final contract. He said, although the Protective Association might not announce those copies were available to the public, he did not believe it had ever denied the public access to its contracts. Mr. Anderson contended, if the Protective Association made its original negotiating proposals available to the public, those proposals would be misleading and to make them available would be detrimental to the negotiation process. Mr. Dean Fletcher, President, Local 1285, Las Vegas Firefighters, testified. He declared Clark County's firefighters were very upset about S.B. 56 and numerous firefighters from Las Vegas, North Las Vegas, Henderson and Clark County were present to make that fact known to the committee. Mr. Dave Howard, Reno-Sparks Chamber of Commerce, testified. He stated the Reno-Sparks Chamber of Commerce supported S.B. 56 because it believed S.B. 56 would improve the negotiating process. Mr. Howard declared he took exception to Mr. Lange's testimony "...about the Board of Education would not be required to do the same jump through the hoop that the bargaining unit would." He contended S.B. 56 required management to respond to an employee organization's demands within 30 days of the time those demands were made. He stated the Reno-Sparks Chamber of Commerce believed S.B. 56 provided a balanced approach to labor negotiations. Mr. Howard advised, throughout Nevada, voters were expressing reluctance to pass issues which would "...override restraints that this body has put on them to pay for services..." He contended voters were aware of the nature of those issues because the law required the issues be explained to voters prior to being voted upon. He said, however, with respect to the negotiating process, the public was not permitted to know what subjects were being negotiated, but it would be permitted that knowledge if S.B. 56 was passed by the legislature. Assemblyman Williams suggested when two entities entered into negotiations there should be a "...level playing field..." He said, as he read Section 1 of S.B. 56, an employee organization was required to advise a local government employer of the items the organization wished to negotiate while the local government employer was required to advise the employee organization of those items about which the employer agreed to negotiate. He contended those two requirements were uneven. He pointed out a local government employer had the ability to either agree to negotiate an item or decline to do so while an employee organization had only the ability to express its desires. He pointed out, in addition, an employee organization was required to provide a local government employer with information regarding the fiscal impacts of the organization's requests while the employer was required only to advise the employee organization of those items the employer would negotiate and those it would not negotiate. Mr. Williams asked whether or not Mr. Howard believed that to be a fair situation. Mr. Howard replied there were various employee bargaining groups and those groups bargained at different times of the year. He said the Reno-Sparks Chamber of Commerce perceived S.B. 56 as requiring an employee organization to advise a local government employer when the organization was ready to commence negotiating an employment contract for the following year and to specify the amounts of money and the working conditions it wished to discuss and nothing more. He maintained S.B. 56 would make the negotiating process a more reasonable one for both parties to the process. He advised there were contentions some cities and counties did not negotiate fairly. He suggested the openness which S.B. 56 would provide with respect to the negotiating process should eliminate such unfairness because a local government's offers to its employees would be known to the public and the public would have an opportunity to provide input regarding what it believed, in fairness, a local government should do. He said, at present, the public had no such opportunity. Mr. Williams suggested in order for S.B. 56 to establish fairness it should impose identical requirements on employee organizations and local governments. He asked whether Mr. Howard would be in favor of S.B. 56 being amended to impose parallel requirements on both parties to negotiations. Mr. Howard responded he was not qualified to answer Mr. Williams' question. He said he did not perceive S.B. 56 as creating an inequitable situation. Assemblyman Bennett asked whether Mr. Howard believed passage of S.B. 56 would "...bring both sides together closer with each initial offer, in the first place, and actually shorten negotiations." Mr. Howard replied he absolutely believed it would. Mr. Bennett asked whether shortening the time required for negotiations would save tax dollars. Mr. Howard replied he believed it would. Assemblyman Nolan asked whether S.B. 56 would cause management to enter into negotiations with "...lower aspirations..." Mr. Howard responded he did not believe management would have any choice but to do so. Chairman Bache asked whether Mr. Howard believed S.B. 56 would cause both an employee organization and a local government to make vague and nonspecific offers so they would not feel bound by their initial offers. Mr. Howard replied that was a possibility. He contended employment negotiations had never been characterized by forthrightness on the part of either management or employee organizations. Mr. Todd Shipley, Peace Officers Research Association of Nevada, testified. He introduced Mr. Dan Myers of the Reno Police Protective Association and Mr. Steve Turner of the Reno Police Supervisors Association. He advised the organizations which he, Mr. Myers and Mr. Turner represented, in turn, represented 14 law enforcement, collective bargaining organizations throughout Nevada. He indicated Mr. Myers and Mr. Turner would testify regarding the issues raised by S.B. 56. Mr. Dan Myers, President, Reno Police Protective Association, testified. He advised he was a police officer for the city of Reno. He referred to those provisions of S.B. 56 which required an employee organization to provide a detailed description of the items it wished to negotiate and the fiscal impact of those items. He indicated those requirements had to be met prior to the time the Reno Police Protective Association could legally obtain information pertaining to the fiscal impact of the items it wished to negotiate. He contended subsection 4 of Section 1 precluded an employee organization from requesting the information it would need to complete its bargaining proposal until after it made that proposal. He indicated a second problem was that S.B. 56 required an employee organization to submit its bargaining proposal at a time of year which was only slightly later than the time of year at which a local government's budget for the previous year would have been completed. He said, historically, Reno did not complete its final budget and final fiscal accounting for a given year until sometime in October of the subsequent year. He pointed out S.B. 56 would require the Reno Police Protective Association to obtain the information needed to ascertain the fiscal impact of its bargaining items and to include information about such fiscal impact in its bargaining proposal by February 1st of a given year. Mr. Myers indicated salary was only one item governed by a police officers' employment contract. He advised there were also provisions which dealt with differing job specifications and qualifications and with compensations for specific abilities. He said if the Reno Police Protective Association was required to disclose all its bargaining items, initially, it would appear the association was making a horrendous request, which, he suggested, was not necessarily the case. He maintained the fact the city of Reno could determine which bargaining items it would negotiate constituted final negotiations and, in effect, the entire bargaining process would be conducted without face-to-face meetings of the parties and without the Reno Police Protective Association being able to conduct research regarding not only availability of funds but also regarding "...interests both for the city and the department of providing the services that are necessary and what those benefits for adding service might be." Mr. Myers maintained the purpose of making initial bargaining offers public was to provide citizens an opportunity to let local governments know what they believed those local governments should negotiate. He said S.B. 56 provided no funds for the Reno Police Protective Association to use to educate citizens of Reno about the reasons behind the association's bargaining requests. Mr. Myers referred to the provisions of S.B. 56 which required final employment contracts be made public and advised details about the Reno Police Protective Association's employment contracts were published in the Reno-Gazette Journal. He stated the same was true with respect to the employment contracts of other city employee groups. He contended those contracts were public documents and the information they contained was available to all members of the public. Mrs. Lambert used as an example a bilingual police officer and asked whether the Reno Police Protective Association's initial bargaining proposal would contain a request for such an officer to be paid more than an officer who was not bilingual. Mr. Myers explained the base pay for all police officers was the same and indicated additional compensation for additional qualifications or for differences in working conditions would be requested by asking for either an increase in salary consisting of a percentage of an officer's base pay or a specific sum of money. Mrs. Lambert said she understood Mr. Myers' explanation regarding such a specific negotiating request and suggested the public would understand it also. Mr. Myers indicated, if added altogether, the amount of money requested for specific bargaining items would be very large. He advised the Reno Police Protective Association did not anticipate all its bargaining requests would be met but, rather, expected those items would be discussed. He indicated it would require several months for the Reno Police Protective Association to obtain the information necessary to determine the amounts of money involved in its various requests. He suggested, under S.B. 56, that information would not be available to the Reno Police Protective Association but the association would still be required to provide cost information concerning its bargaining requests. Mr. Bennett referred to Mr. Myers' testimony S.B. 56 made no provision for funds for employee groups to use to educate the public about their bargaining requests and asked why Mr. Myers believed the legislature should provide for funds to be made available to employee groups for that purpose. Mr. Myers said he did not believe the legislature must provide such funds. He suggested, if the purpose of requiring initial bargaining requests to be made public was to allow citizens to put pressure on local governments to either approve or disapprove those bargaining requests, then it would be a disservice to the public not to educate citizens about the requests to which they were being asked to agree. He said, as an example, if citizens did not understand the basis for a request for certain pay incentives, those citizens would merely consider the cost involved in the request and then exert pressure on local government to deny those requests. He suggested citizens might wish such requests to be approved if they understood the basis for them. He asserted local governments wanted the provisions of S.B. 56 and suggested those local governments should be required to provide funds with which to educate the public about bargaining requests. Mr. Bennett said Mr. Myers had expressed objection to subsection 4 of Section 1 of S.B. 56. He pointed out subsection 4 of Section 1, in its entirety, was currently law. He asked what the Reno Police Protective Association had been doing about those matters discussed in subsection 4 of Section 1. Mr. Myers replied, at the present time, the Reno Police Protective Association sent a letter to the city of Reno, prior to February 1st of a given year, advising the association wished to open contract negotiations and, thereafter, arranged for initial meetings with the city and set ground rules for negotiations. He advised, after those things were done, the association made its requests for information pursuant to the provisions set forth in subsection 4 of Section 1 and, when it received the requested information, computed the costs of its bargaining requests. He contended S.B. 56 would require the Reno Police Protective Association to do prior to February 1st those things it presently did after February 1st and to do them without legal authority. Mr. Bennet asked whether if the provision a local government could refuse to negotiate certain issues was dealt with and if S.B. 56 was amended to make all negotiations between an employee group and a local government open to the public Mr. Myers felt "...your case could be made..." and there would be no need for funds with which to educate the public. Mr. Myers replied he did not believe making the changes to S.B. 56 which Mr. Bennett suggested would suffice. He said he did not believe requiring negotiations to be entirely open to the public would be in the best interests of the parties and believed doing so would lengthen the time required to arrive at a negotiated agreement. Mr. Tom Vassallo, Executive Director, Clark County Classroom Teachers Association, testified. He advised both he and the president-elect of the Clark County Classroom Teachers Association (hereinafter referred to as the Teachers Association) opposed S.B. 56. He said the Teachers Association believed S.B. 56 would inhibit negotiations and cause them to be nonproductive and unreasonable. Mr. Vassallo reiterated prior testimony about the difference in the requirements Section 1 of S.B. 56 imposed on an employee bargaining group and those it imposed on a local government and the inequity of those requirements. He discussed the difficulty his employee bargaining group would have in obtaining information related to the fiscal impact of its bargaining requests prior to February 1st of a given year and explained the time frames involved in his employee bargaining group's negotiations. He declared the Teachers Association opposed both S.B. 56 and S.B. 291. Chairman Bache asked whether Mr. Vassallo perceived the provisions of S.B. 56 which permitted a local government to refuse to negotiate certain items would have an impact on items which were mandatory subjects of bargaining. Mr. Vassallo replied he did. Mr. Ed Beaman, Vice President Local 1908, Clark County Firefighters, testified. He declared Clark County Firefighters opposed S.B. 56. He said Clark County Firefighters conducted its employment contract negotiations in the same manner as the police association and negotiated for approximately 44 different items. He gave testimony substantially the same as that given by Mr. Myers regarding the impression the public would receive if it was made aware of Clark County Firefighters' initial negotiating requests. Mr. Beaman contended there was nothing wrong with the way negotiations between employee organizations and local governments were conducted at the present time and maintained the final agreements which resulted from those negotiations were open to the public. He suggested, if public officials ratified employment contracts which were unsatisfactory to the public, the public had the power not to re-elect those officials. Mr. Beaman stated S.B. 56 provided "...an uneven playing field..." and advised there was much opposition to S.B. 56. Ms. Stephanie Tyler, city of Sparks, testified. She referred to previous testimony that the public of a school district was represented by that district's school board and contended if the public had no specific knowledge of "...what's going on with this large amount of dollars..." the fact the public was represented by the school board was moot. She suggested S.B. 56 did not deal, specifically, with negotiations being made open to the public but, rather, dealt with documents pertaining to those negotiations being made available to the public. She contended the purpose of S.B. 56 was to "...level the playing field." She suggested the public would speak just as loudly against a local government refusing to agree to any raises for its employees as it would against a union making outrageous requests at the onset of negotiations. She said the concept behind S.B. 56 was to cause both sides to enter into negotiations with more realistic proposals in order to speed up the negotiating process. Mr. Terry Reynolds, City Manager, city of Sparks, testified. He expressed support for S.B. 56. He suggested the intent of S.B. 56 was to cause the initial offers made by both parties to labor negotiations to be open to the public. He contended S.B. 56 did not change the collective bargaining process, did not change the subjects of mandatory bargaining and did not change the process through which information to be used in such bargaining was obtained. He described the current bargaining practices of the city of Sparks and its employee bargaining organizations. He asserted the city of Sparks could not refuse to bargain about the subjects described in NRS 288 as subjects of mandatory bargaining but could refuse to bargain about subjects which were reserved as management rights. Mr. Reynolds proposed S.B. 56 be amended, in line 12 of page 1, by changing the language "agrees to negotiate" to "proposes to negotiate" and also to add the words "which are not subjects of mandatory bargaining" immediately following the words "refuses to negotiate." He said he believed it would be appropriate, also, to require both parties to negotiations to provide information regarding the fiscal impact of their proposals. Mr. Reynolds said, at the present time, if both parties so agreed, labor negotiations could be made open to the public and advised, in some areas of Nevada, that had been done. He stated he had been involved in such negotiations and suggested there were no major ramifications from their being open to the public. He contended it was important for the public to have information about labor negotiations. Mr. Reynolds advised, at the present time, when the city of Sparks and its employees' organization arrived at an agreement for an employement contract that contract was presented to the city council and was discussed in an open meeting. He pointed out some employees of the city of Sparks, such as department heads, mid-management personnel and professional and technical personnel, were not subject to collective bargaining and information about their wages and any negotiations concerning those wages were entirely open to the public. He asserted those employees had good wages and benefits. Assemblyman Krenzer referred to the language "following the notification provided for in subsection 1, the employee organization or the local government employer may request reasonable information," in subsection 4 of Section 1, and asked how an employee organization was to obtain the information necessary to ascertain the fiscal impact of the items the organization wished to negotiate. Mr. Reynolds replied an employee organization could request audits (of the city's financial information) and said the auditors of such organizations regularly reviewed the city of Spark's financial reports and its detailed budget documents. Mrs. Krenzer pointed out S.B. 56 required an employee organization to file the notice required by subsection 1 of Section 1 before it could request information from the local government involved. Mr. Reynolds responded the financial documents to which he referred were public documents and were available to the city employees' employee organization "...even prior to this..." He contended the employees' organization had reviewed the city's financial reports even prior to providing a formal notice of the organization's desire to negotiate. Mrs. Krenzer asked why, then, current law specified an employee organization could request such information after it gave notice of its desire to negotiate and asked how such an organization formulated a fiscal note. Mr. Reynolds replied, "Because it's a process that is outlined in detail, and I think what this does is really help clarify when that stops and starts. However, it does not preclude anybody from getting information as to the fiscal health of the city or an organization under Nevada state law." Mr. Bob Schreihans testified. He advised he was a paramedic firefighter, employed by Carson City, and was president of the local chapter of the firefighters' union. He discussed the bargaining procedure involved in negotiations between the firefighters' union and Carson City. He advised, on or before February 1st of a given year, the union submitted a letter to Carson City requesting negotiations be commenced. He said, thereafter, a meeting was held to establish the rules for such negotiations. He advised the city's attorney had established the ground rules for the prior year's negotiations and one of those rules was that the press would be excluded from the negotiations. He stated the firefighters' union wanted the negotiations to be open to the press. Mr. Schreihans pointed out, under S.B. 56, an employee organization was required to submit its negotiation proposal first and the local government employer could then determine which items it would negotiate and which items it would not. He advised, in the previous year, the firefighters' union found it necessary to bring Carson City before the Local Government Employee-Management Relations Board (EMRB) because of the city's refusal to negotiate an item which was clearly subject to mandatory bargaining. He said the EMRB ruled in favor of the firefighters and found the city was bargaining in bad faith. He reiterated S.B. 56 would permit the city to refuse to negotiate certain items and indicated if the city refused to negotiate any items which were subject to mandatory bargaining the firefighters' union would immediately submit the matter to EMRB. He contended such a situation would totally eliminate the negotiating process. He advised, because the negotiating process had been so drawn out, the firefighters' union, currently, was engaged in labor negotiations for the fiscal year 1994-1995. Mr. Schreihans declared he opposed S.B. 56 as presently written. He indicated the firefighters' union did not object to its negotiations being made public but the provisions of S.B. 56, as written, were disadvantageous to the union. He contended S.B. 56 should require a local government employer and an employee organization to make their initial proposal for negotiations simultaneously. He stated the firefighters' union believed, as written, S.B. 56 would protract the negotiating process. Mr. Bennett asked how soon before February 1st of a given year the firefighters' union commenced assembling information for its initial proposal for negotiations. Mr. Schreihans replied the union commenced assembling such information in the preceding month. Discussions ensued between Mr. Bennett and Mr. Schreihans. Assemblyman Freeman asked whether Mr. Schreihans had received any training regarding handling of hazardous materials. Mr. Schreihans replied he had. Mrs. Freeman indicated if handling of hazardous materials was an item subject to negotiations she wished to satisfy herself firefighters were receiving training in the handling of those materials. Mr. Schreihans discussed what occurred when the firefighters' union attempted to negotiate regarding staffing of the firefighters' hazardous materials unit. Assemblyman Harrington asked whether Mr. Schreihans would be in favor of those provisions of S.B. 56 which required the beginning and ending of the negotiating process be made public if S.B. 56 was amended to impose equal requirements on employee organizations and local government employers. Mr. Schreihans replied, "I, personally, feel that...if they're on an equal playing field, it narrows the scope, but by having them open, both at the same time, will delay the process." He reiterated previous testimony regarding the openness of the negotiations conducted between the firefighters' union and Carson City. Chairman Bache asked for a show of hands of those present in Las Vegas who were in favor of S.B. 56. He then asked for a show of hands of those present in Las Vegas who opposed S.B. 56. Chairman Bache closed the hearing on S.B. 56. SENATE BILL NO. 291 - Requires termination of negotiations between local government employer and employee organization concerning issues with fiscal impact under certain circumstances. Mr. Thomas J. Grady, Executive Director, Nevada League of Cities, testified. He provided a history of the origin of S.B. 291 and the role of the Nevada League of Cities with regard to S.B. 291. Mr. Grady advised nothing in S.B. 291 would prevent government employees from engaging in collective bargaining. Mr. Grady cited examples of decisions rendered by arbitrators in connection with collective bargaining proceedings. Mr. Grady reviewed S.B. 291 for the committee. He advised the changes in line 12 on page 1 and in line 17 on page 2 would merely change the numerical designation of a subsection from that of "9" to that of "10." He read the language set forth in lines 6 through 23 on page 3 of S.B. 291. He pointed out that language was repeated in Sections 2 and 3 and constituted the entire bill. He explained the purpose of that language was to provide certain revenues, such as trust funds, with a protected status. He said such funds must be established by resolution, in an open meeting, and would be identified in the final budget adopted by a local government. He suggested such funds could easily be distinguished from other funds and could be traced. He asserted the budget process was open to all citizens and said many cities solicited community input to that process. Mr. Grady stated local government faced increasing demands for services but had limited ability to raise additional revenues. He provided a document setting forth examples of the manner in which local governments' operating budgets were distributed (Exhibit D). He declared the purpose of S.B. 291 was to assist "...all players in creating responsible fiscal matters of providing the best service with limited revenues." He maintained local governments had numerous things to consider when preparing their budgets, such as the needs of their constituents, the welfare of their employees, the need to supply and maintain their infrastructures and the betterment of their communities as a whole. Mr. Grady said present with him were Mr. Gary Cordia, City Clerk of the city of Fallon, who was a certified public accountant and would answer any questions the committee might have regarding technical terms, and also Mr. Terry Reynolds, City Manager of the city of Sparks, representing Ms. Cindy Cook-Henderson, a member of the board of directors of the Nevada League of Cities. Mr. Bennett asked whether decisions to place monies in those funds which S.B. 291 specified could not be considered for the purpose of negotiations were made "...in the open..." to the extent labor unions would have the ability to have input into those decisions. Mr. Grady replied affirmatively. Assemblyman de Braga asked what kinds of revenue were subject to a local government's discretion with respect to in what fund or account such revenues would be placed. Mr. Terry Reynolds, City Manager, city of Sparks, testified in response to Mrs. de Braga's question. He said most of the funds being discussed were established by a resolution of the city council. He used a self-supporting recreation fund as an example of a special revenue fund. He explained an individual who paid a fee for a particular recreational activity expected that fee to be used to support that activity and not to be used for some other purpose. He advised the resolution (establishing a self-supporting recreation fund) would specify that fee must be used for that purpose. He referred to what occurred when the city took money from its general fund to replace vehicles and said, "Those policy decisions, those amounts of money that are set, are set by the council, with recommendations by the staff, and are open in terms the scrutiny of that. They're audited, not only to see that those funds are being spent in the areas that they're designated for under that resolution but also the sufficiency of those funds to carry out the activities for which it is warranted." He indicated if there were excess monies in a particular fund the auditors would call attention to that fact. Mrs. de Braga indicated Mr. Reynolds' testimony was not responsive to her question. She explained her question was whether there were any revenues received by a local government which "...might not already be earmarked for a specific purpose that can be put in any of these funds or accounts." Mr. Reynolds replied there were not. Mrs. de Braga asked whether there was no discretionary money. Mr. Reynolds replied with, respect to the manner in which the city of Sparks budgeted its revenues, there was not. Mrs. de Braga pointed out the current draft of S.B. 291 was considerably different from the original bill. She commented "education" was not included in the original bill and asked why it was not. Mr. Grady responded. He advised, originally, there were two purposes behind S.B. 291, one which pertained to people and one which pertained to accounts. He said S.B. 291 was altered to address only accounts. He said the League of Cities did not address teachers in S.B. 291 because it did not deal with their budgets. He indicated S.B. 291 was amended by the Senate Committee on Government Affairs to cause it to also address teachers. Mr. Harrington asked what safeguards were in place to prevent a local government, during the course of labor negotiations, from transferring money from another source into one of the funds S.B. 291 designated as not being subject to negotiations in order protect that money. Mr. Reynolds responded. He suggested a local government could only determine to make such a transfer of funds during the course of a noticed public meeting. He indicated such a shift of funds would be apparent in an audit and would be prima facie evidence of bad faith bargaining on the part of the local government. Mr. Harrington asked whether, if a local government attempted to make such a transfer, the money it attempted to transfer would still be available "...to the union." Mr. Reynolds indicated it would be. Assemblyman Segerblom asked whether local governments often received more revenues than they anticipated through sales taxes and property taxes. Mr. Reynolds replied affirmatively. He said general fund revenues were not the revenues being discussed. Mrs. Segerblom asked whether a local government's general fund revenues were available (for consideration during labor negotiations). Mr. Reynolds replied they were. Mr. Danny Thompson, Nevada State AFL-CIO, testified. He said the Nevada State AFL-CIO represented 120,000 union members throughout the state of Nevada, including firemen, police, teamsters, the city employees of Henderson and the employees of Clark County, Carson City and Reno. Mr. Thompson implied no problem existed which needed to be corrected through S.B. 291. He suggested, in recognition of the importance of teachers, firefighters and police officers, the legislature had passed legislation, which created Chapter 288 of NRS, to provide a means by which to reconcile those problems which would inevitably arise when a party to labor negotiations lacked the ability to take action, such as engaging in a strike, to affect the outcome of those negotiations. Mr. Thompson interrupted his testimony on S.B. 291 and said, "For the record, I do want to oppose S.B. 56, and I appreciate your time restraints, but--and I was asked to clarify a comment that--there was a comment made earlier that bargaining in the legislature works because SNEA does it. Well, I was told to tell you that they don't like it. It doesn't work and they are seeking a remedy and that is a collective bargaining bill." Mr. Thompson resumed his testimony on S.B. 291. He contended there was a history of local governments hiding money in various funds to preclude that money from being subject to the collective bargaining process. He declared if the legislature made the change to the law which was provided for in S.B. 291 it would open the door to a variety of problems which, ultimately, it would have to resolve. He urged the committee to exercise care in its consideration of both S.B. 56 and S.B. 291 and suggested if the legislature passed S.B. 56 and S.B. 291 it would create more problems than it would solve. Mr. Mark Balen, Professional Firefighters of Nevada, testified. He advised he and the group he represented were adamantly opposed to both S.B. 56 and S.B. 291. He declared, "S.B. 291 simply creates a legalized shell game for the public entities." He contended public entities would be able to place money in various accounts and characterize those accounts in any manner they wished and as having a specific purpose and the funds in such accounts would not be available for use for salary increases. He suggested, by so doing, a public entity could eliminate any general fund which might have had an ending balance. He explained, under current law, a general fund had to have an ending balance of 8.3 percent. He maintained everyone who had anything to do with government knew that was unrealistic. He suggested public entities could hide funds in order to demonstrate a lower general fund ending balance, thereby making their general funds unavailable for use for salary increases. Mr. Balen contended testimony that public entities would not hide money and that employee organizations could have their problems resolved by EMRB was ridiculous. He stated, under current law, if an entity was found guilty of bargaining in bad faith or of engaging in an unfair labor practice, whether it was found guilty of doing so once or of doing so several times, the entity was merely scolded and exhorted not to do so again and no other sanctions were imposed on it. He advised if a union bargained in bad faith or did not comply with the provisions of Chapter 288 of NRS the union might lose its charter and its right to negotiate. He declared those differing penalties did not constitute a level playing field and said, for that reason, the Professional Firefighters of Nevada opposed S.B. 291. Mr. Bob Schreihans testified. He declared firefighters were adamantly opposed to S.B. 291. Mr. Schreihans said he became a firefighter paramedic because he wanted to help people and to provide a public service. He suggested firefighters knew they would not become rich being firemen but wished to be compensated for their work and to have the right to salary increases and to make a decent living. He contended S.B. 291 would eliminate firefighters' negotiating processes because it denied access to available funds. Mr. Schreihans advised, in the previous year, Carson City had said it did not have the ability to pay (for salary increases). He advised the matter was presented to a fact finder who found Carson City had the ability to pay and awarded a 2.5 percent increase in salaries. Mr. Schreihans discussed the present salaries of firefighter-paramedics. He asked the committee to allow firefighters a fair opportunity to pursue collective bargaining and "...have a right to make a decent living." Mr. Mark Smith, President and General Manager, Las Vegas Chamber of Commerce, testified by reading from prepared text. He provided copies of his written testimony and attachments thereto (Exhibit E). He stated the Las Vegas Chamber of Commerce believed fiscal responsibility was the basis for S.B. 291. He advised local governments and school districts in Nevada spent between 82 percent and 92 percent of their operating budgets for salaries and benefits. He said it required people, equipment and supplies to provide services and the intent of S.B. 291 was to balance those three things and to ensure local governments and school districts provided all of them. He maintained the suggestion made by S.B. 291 was that government should set aside sufficient funds to appropriately and adequately meet its obligations to citizens while maintaining the necessary balance between people, equipment and supplies. Mr. Smith explained the funds which S.B. 291 would exclude from consideration in collective bargaining were either dedicated funds or enterprise funds and contended those funds must be so excluded if government was to meet its obligations to citizens. He said government also had an obligation to its employees and asserted S.B. 291 did nothing to weaken that obligation. Mr. Smith pointed out the statutory definitions of the first three kinds of funds which S.B. 291 would exclude from collective bargaining, enterprise funds, internal service funds and trust and agency funds, were set forth on page 7 of the materials he provided (Exhibit E). Ms. Smith discussed enterprise funds and advised such funds were established by a local government to enable its departments which charged "user fees" to provide goods and services to the public. He explained such funds were generally self- supporting. He asserted when people paid for a specific service the money they paid should be set aside to provide that service. Mr. Smith explained internal service funds were established "...to account for internal transactions within a locality." He said those funds also consisted of monies from fees paid for a service and should be reserved to provide that service. Mr. Smith stated a trust and agency fund consisted of monies provided to an entity for a specific purpose and should be used only for that purpose. He advised the Clark County School District used such a fund to account for monies which were privately donated to assist a specific school. Mr. Smith contended none of the three funds he discussed should be available for collective bargaining purposes. Mr. Smith said one concern opponents of S.B. 291 had was that S.B. 291 would allow local governments to hide money from consideration during labor negotiations. He advised any allocations to the funds specified in S.B. 291 were made as a part of the budgeting process of a local government or school district. He maintained that budgeting process was completely open to the public and asserted, historically, employee groups were very active participants in that process. He called the committee's attention to excerpts from the budgets of Henderson's Convention Center Enterprise Fund and of the City of Las Vegas (pages 8 through 16 of Exhibit E) which he said reflected the manner in which an enterprise fund was accounted for. Mr. Smith stated a second argument used against S.B. 291 was it would remove money from the bargaining table for local government employee organizations. He suggested it might do so but contended general fund monies would be excluded from consideration in collective bargaining only if those monies were needed to subsidize those funds specifically excluded from consideration in collective bargaining. Mr. Smith discussed the remaining monies which would be excluded from collective bargaining. He contended "nonrecurring revenue" should be excluded because salary increases represented an ongoing monetary outlay and should not be funded with "...one time money..." He pointed out self-insurance funds were required to be used for their stated purpose and said they should not be considered for salary purposes. He advised monies in the last two funds which S.B. 291 would exclude from consideration for collective bargaining purposes were required by law either to be used for a specific purpose or to be "...carried forward by the governing body." Mr. Smith stated S.B. 291 clarified how a local government's ability to pay (for wages and benefits) would be determined and the obligation of local governments and school districts to the public. He said it also clarified for employee organizations how much money was realistically available for consideration in negotiations. Mr. Smith declared S.B. 291 constituted sound fiscal public policy and encouraged the committee to support it. Mrs. de Braga asked whether Mr. Smith was saying dedicated funds were not excluded from consideration in collective bargaining at the present time. Mr. Smith said it was his understanding they were not. Mrs. de Braga asked whether there were no funds excluded from collective bargaining at the present time. Mr. Smith replied he was not aware of any which were. Mrs. Segerblom asked whether any union had ever attempted to have dedicated funds considered in collective bargaining negotiations. Mr. Smith said he understood that had occurred in Reno and in Washoe County. Mr. Harry Donoian, Local 1107, Service Employees International Union, testified. He indicated the Service Employees International Union opposed S.B. 56 and said he would make a brief statement concerning S.B. 291. Mr. Donoian contended S.B. 291 encouraged government employees to commit fraud by excluding a host of revenue sources and budget accounts from consideration in determining a local government's ability to pay for increases in salaries and benefits. He declared S.B. 291 virtually mandated those accounts be over-budgeted and over-appropriated in order to shelter local government revenues from the collective bargaining process. He maintained a local government could either over budget or over appropriate accounts, thereby reducing its ability to pay for wage increases, and could then, in the subsequent year, either under fund those same accounts or declare it had a surplus of funds because its costs had been less than anticipated. Ms. Kris Jensen, Nevada Concerned Citizens, testified. She stated Nevada Concerned Citizens supported both S.B. 56 and S.B. 291. She said Nevada Concerned Citizens represented a large number of citizens who were concerned about collective bargaining between local governments and their employees and who believed that process should be made open to the public. She declared, "What we see, at this point, are those who benefit by the take being involved in the process and those who do the giving are not involved." She contended the process was unfair, was not open to the public and did not encourage either honesty or openness in government. Ms. Jensen indicated Nevada Concerned Citizens perceived attempts by both sides to collective bargaining to "...redirect funds or to identify things or not identify things..." She stated Nevada Concerned Citizens believed S.B. 56 and S.B. 291 were intertwined with respect to the need for openness in collective bargaining. She contended it was not in the best interest of citizens for collective bargaining negotiations to be closed to the public. Ms. Jensen advised she had been involved with the Clark County School District for the past three years and had attended all meetings of its board. She indicated when she attempted to obtain copies of Clark County School District's employment contracts she was met with hesitancy and excuses. She suggested most members of the public would not persevere in attempts to obtain copies of local government employment contracts but they had every right to have such copies because they were directly affected by the provisions of those contracts. Mrs. de Braga asked Ms. Jensen whom she viewed as "takers." Ms. Jensen replied she viewed public employees as takers. She explained, in the private business sector, salary increases were directly related to the state of the economy and said there were years in which employees of the private business sector did not receive large cost of living increases. She suggested public employees made tremendous demands for increased salaries which would be paid with "...public dollars..." Mrs. de Braga observed when the public paid a firefighter to lay his life on the line for the public good that firefighter was at least entitled to have some input regarding his education, his compensation and his benefits. Ms. Jensen concurred in Mrs. de Braga's observation but said those who paid taxes also needed to have input in those matters. Mrs. de Braga said, "I just feel that the word `taking' is an unfair characterization." Mr. Jim Andreas, Nevada Conference of Police and Sheriffs and Las Vegas Metropolitan Police Protective Association, testified. He declared the law enforcement officers of the state of Nevada opposed S.B. 291. Mr. Andy Anderson, Las Vegas Metropolitan Police Protective Association and Nevada Conference of Police and Sheriffs, testified. He contended S.B. 291 had nothing to do with fairness. He said "...the collective bargaining bill..." had evolved to replace public employees' inability to strike and declared collective bargaining was fair. Mr. Anderson reiterated testimony S.B. 291 would allow local government entities to conceal monies and stated S.B. 291 would make the collective bargaining process unfair (to government employees). He said the groups he represented believed S.B. 291 was a major step backwards in the collective bargaining process. He asserted S.B. 291 would cause more harm than good and declared it would place public employees at a tremendous disadvantage. Mr. Anderson asked, rhetorically, what was left for government employees after local governmental entities established all the funds S.B. 291 would exclude from the collective bargaining process. Mr. Harrington asked whether Mr. Anderson believed any local government funds should be exempt from consideration in collective bargaining or rather believed all government monies should be available for consideration. Mr. Anderson responded if the funds discussed in S.B. 291 were made unavailable for consideration by a fact finder or arbitrator to whom collective bargaining issues were submitted for resolution it would be difficult for such a fact finder or arbitrator to make a prudent decision as to what was and was not fair. He suggested the issue was not the ability of public employees to attach funds budgeted for other purposes but, rather, was the inability of public employees to access information about those funds to determine whether they contained excess monies. He contended if a local government entity could justify the amount of money it budgeted for such a fund an arbitrator would not award the monies in that fund to public employees. Mrs. Segerblom asked, if local governments conducted their budgeting processes in the open, how Mr. Anderson believed they could hide funds. Mr. Anderson replied if a local government budgeted money for a workmen's compensation fund or a self-insured insurance fund and government employees had "...no access to that fund -- we can't look in to see what they've budgeted or... we don't have any access to pull any of that out, it makes it unattachable for us." He suggested if local government entities could place all their monies in funds which could not be considered in collective bargaining there was no purpose in having a collective bargaining law. Mrs. Lambert asked whether Mr. Anderson was assuming, if S.B. 291 was passed by the legislature, a local government would put all its monies, other than those budgeted to pay salaries, in one of the funds S.B. 291 would exempt from consideration during collective bargaining. Mr. Anderson replied he believed if a local governmental entity was provided the opportunity to place money in those accounts it would be inclined to do so. Mr. Ed Beaman, Vice President, Local 1908, Clark County Firefighters, testified. He advised he could add little to Mr. Anderson's testimony and stated the group he represented opposed S.B. 291. Mr. Harrington asked whether either Mr. Anderson or Mr. Beaman were aware of any local government funds which were protected under current law and could not be considered during collective bargaining negotiations. Mr. Anderson replied, "We have your reoccurring funds, as I said, your federal monies and you've also got an ending fund balance that -- of 8.3 percent -- that we can't attach." Mr. Harrington asked whether the funds Mr. Anderson enumerated were the only ones protected under current law. Mr. Anderson responded he could not say with certainty which funds could not be attached. He reiterated S.B. 291 would prevent employee organizations from ascertaining whether public agencies were able to justify the need for the monies they placed in the accounts discussed in S.B. 291. Mr. Dave Howard, Reno-Sparks Chamber of Commerce, testified. Mr. Howard said the business sector was concerned about the total community of northern Nevada. He asserted the business sector recognized the importance of Nevada's firefighters, policemen and teachers but also recognized there were "...other needs in the community that are not being attended to." He pointed out there were streets and highways in need of repair and recreational, art and safety programs which were being ignored due to lack of funds. He contended the legislature had "hamstrung" local governments and their citizens by establishing a tax structure which "...holds firm the ability to raise revenues..." while expanding the need for local government to expend revenues. He contended the purpose of S.B. 291 was to establish a degree of control over local government expenditures. Mrs. de Braga commented she construed Mr. Howard's testimony to mean he believed local governments would have more money available for "...other community needs..." if S.B. 291 was passed by the legislature. Mr. Howard indicated Mrs. de Braga's understanding of his testimony was correct. Discussions ensued between Mrs. de Braga and Mr. Howard. Mr. Howard commented the legislature had imposed a cap on taxes and local governments did not have a lot of money available to them. Mrs. Segerblom asked whether Mr. Howard was suggesting the legislature should raise property taxes. Mr. Howard replied he was not. Mr. Nolan asked Mr. Howard to clarify whether or not, pursuant to the language of S.B. 291, an employee organization would be able to review the funds discussed in S.B. 291 and determine whether or not those funds had been inflated. Mr. Howard said he would like Reno's city manager to answer Mr. Nolan's question. Mr. Clay Holstein, City Manager, City of Reno, testified. Mr. Holstein said he understood Mr. Nolan's question to be whether there would be an itemization of potential transfers of monies into the funds discussed by S.B. 291 which would be available for review by anyone, including employee bargaining units. He said the answer to that question was "yes." Assemblyman Neighbors referred to Mr. Howard's testimony regarding the need for road repairs and asked whether revenues from gas taxes, which were "...earmarked for road...," were subject to consideration for collective bargaining purposes. Mr. Holstein replied they were not. Mr. Neighbors asked, "Do you set a property tax rate for taxes for roads?" Mr. Holstein replied in the negative. Assemblyman Ernaut referred to a list of capital projects funds set forth on the last page of a packet of information submitted on behalf of the city of Sparks (Exhibit F) and asked whether, under current practices, the monies in such funds were available for consideration during collective bargaining negotiations. Mr. Holstein replied, generally speaking, they were not. Mr. Enaut asked which of those funds which would be protected under S.B. 291 were available for consideration in collective bargaining negotiations at the present time. Mr. Holstein replied, potentially, any of the funds identified in S.B. 291 could become the subject of discussion or contention during collective bargaining negotiations. He said he was aware a dispute had arisen between the city of Sparks and one of its employee organizations about the city's motor vehicle replacement fund. He suggested the issue regarding that fund would be clarified by S.B. 291. Mr. Ernaut asked whether Mr. Holstein's testimony was, historically, the funds discussed in S.B. 291 had not been subject to collective bargaining negotiations. Mr. Holstein replied affirmatively. Mr. Holstein said he wished to provide some clarification and cited enterprise funds for use as an example in making his clarification. He advised the city of Reno had a building permit enterprise fund and a sewer enterprise fund. He said, "Insofar as we hire people to do those services, when we negotiate with those collective bargaining units, clearly, the raises that are negotiated come out of those particular funds. What we're talking about here is assuring the payers into those funds that we're not going to use sewer funds, for example, to go hire people to pave streets or that we're not going to use building enterprise funds to pay for a salary increase in public safety." He said, through S.B. 291, the legislature would provide an arbitrator in a collective bargaining dispute a clear understanding such funds were not to be attached for use for any purpose other than the purpose for which they were established. Mr. Ernaut asked whether he correctly understood from Mr. Holstein's testimony that the city could hire people to do a job and pay those people out of an enterprise fund. Mr. Holstein replied the city could pay people hired to do a particular job from the enterprise fund established for the purpose to which that job pertained. Mr. Ernaut asked whether S.B. 291 would alter that situation. Mr. Holstein replied it would not. Mr. Ernaut asked whether it was Mr. Holstein's opinion that no fund currently available for consideration in salary negotiations would be removed from such consideration by S.B. 291. Mr. Holstein replied affirmatively. Mr. Ken Lange, Executive Director, Nevada State Education Association (NSEA), testified by providing both written testimony (Exhibit G) and oral testimony. He said NSEA would prefer the legislature allow current statute to remain unchanged rather than codify something which could provide an opportunity for abuse by management. He advised, since binding arbitration had been available to them, education employees had been involved in only three arbitrations and those arbitrations had created no hardships. He contended NRS 288.200 clearly established what an arbitrator was to consider. Mr. Lange asserted S.B. 291 would permit a local government to hide monies and prevent them from being considered in determining the local government's ability to pay (for increased salaries and benefits). He stated, in 1993, an arbitrator found the city of Sparks had placed nearly $300,000 in its motor vehicle fund and "...later included that as part of his rationale for the city's ability to pay." Mr. Lange indicated the arbitrator found those monies were generated by excess interest. Mr. Lange stated, if the provisions of S.B. 291 were implemented, an employee organization would have no opportunity to argue such monies should be considered in negotiations. Mr. Lange indicated a question had been raised as to how employees whose salaries were paid from enterprise funds would obtain a raise in pay. He suggested, at present, funding for such employees' salaries was included in the enterprise fund and contended S.B. 291 would preclude such employees from obtaining raises in pay. Mr. Lange said a question was raised as to whether or not the funds discussed in S.B. 291 could be used to pay monetary benefits. He read the language of subsection 8(b) of Section 1 of S.B. 291 which said "The following sources of revenue must not be counted in determining the financial ability of a local government employer and must not be used to pay any monetary benefits recommended or awarded by the fact finder." He contended employees who performed services related to the subjects of the funds listed thereafter could not be paid from monies in those funds. Mr. Lange pointed out S.B. 291 provided collective bargaining be terminated if an arbitrator determined a local government had no ability to pay. He said current statute provided the parties continue to make efforts to arrive at an agreement if the arbitrator so recommended. He contended a good collective bargaining process was one which allowed a resolution to be reached at any point and maintained S.B. 291 would not allow that. Mr. Lange said S.B. 291 raised a number of questions but there were three primary questions to which NSEA believed the committee could answer "no." He said the first question was whether S.B. 291 was designed to remedy problems which affected most local government employees. He advised the second question was whether S.B. 291 provided a reasonable response to frustrations caused by inadequate local government funding and said NSEA perceived a continual "flattening" of employee salaries because employees had been unable to "...make the argument that more services cost more money." He stated the third question was whether there was anything wrong with current statute governing collective bargaining; he asserted the answer to that question was "no." Mr. Al Bellister, Nevada State Education Association, testified. (At the direction of Chairman Bache, Mr. Bellister's initial testimony is set forth verbatim.) He said, "We've provided you with a packet (Exhibit H) which is a series of excerpts from a publication prepared by the LCB and it dispels, we hope, certain myths that are being perpetrated around collective bargaining. The first series of graphs, I think, illustrate pretty clearly that collective bargaining is not having a detrimental impact on local government employers, whether it be city, county or school district. If you measure the health, the financial health, of the governmental entity by looking at its ending fund balance as an indicator of excess revenues over expenditures, those first three graphs illustrate pretty clearly that, from the time they build the budget to the time they audit the budget, the ending fund balance grows, not only in total size of dollars but it grows after all expenses have been made, including collective bargaining, and, if you notice, the swing is pretty substantial. For city government, between the time they budget and the time they close the budget with the audit, there's a $26 million dollar swing, for county, there's a $50 million swing and, for school districts, there's a $22 million swing. So, they have substantial revenues over expenditures after collective bargaining has been concluded. So, there isn't a detrimental impact on the overall health of the entity from that perspective. "The next yellow sheet we put in there dispels the myth that salaries and benefits are eating up an ever-increasing proportion of the budget. And we've heard often times this morning that salaries and benefits are eating up (in) excess of 80 percent of the budget. According to this LCB document, that's not the case. If you look at page 123, that looks at city, general fund expenditures for salaries and benefits, back in `83-'84, they spent 64.5 percent for salaries and benefits, `94-'95 they budgeted only 66.3. That's less than a two percent increase, over a ten year period of time, going to salaries and benefits, not 80 percent plus. The same holds true of county, with a slight distinction, and that is the salaries and benefits portion of that budget actually decreases over that same ten year period of time, from 57 percent of budget to 53 percent of budget, and that's looking only at general fund. "You go to the next series of sheets after the yellow, you'll notice that we include all fund groups, like enterprise funds and internal services funds. When you include all fund groups, the proportion of the budget that goes to salaries and benefits is substantially reduced. In the case of city government, it's reduced to about 35 percent of budget. So, there seems to be funds that are available to do things like the pot holes, and we've heard about fire trucks this morning. There seems to be funds that might even be available to increase the pay of public employees, whether it be city, county or school districts. "Last, but not least, the yellow sheet at the end looks at the state of Virginia, and the reason I included that as an indicator of the effect of collective bargaining in the state of Nevada -- certain states specifically permit collective bargaining, certain state's it's silent, you can bargain if you can. Virginia, on the other hand, is unique in that they specifically prohibit collective bargaining. It's an illegal activity by statute. And yet, if you'll look at the state of Virginia, for public school employees -- this is a state without collective bargaining -- over 80 percent of the budget in the state of Virginia goes to salaries and benefits for public school employees. So, the point is it's a labor-intensive business. We have to put teachers, counselors, custodians, bus drivers, secretaries, aids in front of kids. It costs money. It's not because of collective bargaining. "This bill, we believe, is totally and absolutely unnecessary. It will do nothing but dampen salaries and benefits for public employees, again, whether it be city, county or public schools. Thank you." Mr. Ernaut asked which of the funds discussed in S.B. 291 were used to pay employee salaries at the present time but would be precluded from being used for that purpose by S.B. 291. Mr. Bellister referred to page 5 of S.B. 291 and pointed out "nonrecurring revenue" was not defined and said, therefore, he was not certain what that term referred to in the context of public schools. He said he suspected, with respect to public schools, the term could refer to monies obtained from federal grants. He advised salaries and benefits were paid from such monies. Mr. Ernaut asked whether Mr. Bellister was saying "...one shot federal money..." was used for salaries. Mr. Bellister replied affirmatively. He suggested S.B. 291 would not permit that to be done. Mr. Ernaut suggested the committee needed to ascertain from the Legislative Counsel Bureau "...whether that is exactly the intent..." Chairman Bache asked Ms. Denice Miller to obtain information addressing Mr. Ernaut's concern. Mr. Bellister said, with respect to Clark County School District, there were approximately 700 employees, primarily food service employees, whose salaries and benefits were paid from the district's enterprise fund. He suggested NSEA could not adequately represent such employees if S.B. 291 prohibited an arbitrator from considering that fund in determining the school district's ability to pay salary increases. Mr. Bellister advised, in the Clark County School District, salaries and benefits for employees involved in graphic arts programs were paid from the district's internal service fund, which would be specifically protected under S.B. 291. Mr. Bellister stated, in school districts, a trust and agency fund pertained to private donations such as those intended to create scholarships. He said, however, NSEA had discovered that, in preparation for an arbitration proceeding, in the Mineral County School District a sizable transfer of general fund money had been placed in a trust and agency fund which, he contended, was a slush fund. He suggested S.B. 291 offered an invitation to local government to place money in a fund which would be protected from "...the review of the arbitrator." He gave another example of the way in which a local government could protect its general fund monies. Mr. Ernaut commented he understood what Mr. Bellister had described was current practice. He indicated he was having difficulty understanding Mr. Bellister's argument and said, "...you're saying that's wrong, but, if we do this, we will do away with that wrong practice that pays your people." Mr. Bellister responded NSEA was concerned the legislature (through passing S.B. 291) would compound the wrong. Further discussions ensued between Mr. Ernaut and Mr. Bellister regarding the moving of general fund monies into other types of funds and the effect of S.B. 291 on that practice. Mr. Ernaut said he understood an enterprise fund and an internal service were funds which replenished themselves and asked Mr. Bellister to discuss that. Mr. Bellister replied an enterprise fund was a fund generated by fees and said, with respect to school districts, such a fund was used to provide food services and the salaries and benefits of the workers involved in those services were paid from that fund. He advised, if fees were inadequate to provide the monies needed for the purposes of an enterprise fund, general fund monies might be used to subsidize that enterprise fund. He said the Clark County School District had approximately $5 of "retained earnings" from fees paid into its enterprise fund. He contended the Clark County School District was realizing a profit from those fees and suggested, if the fees were too high, they should be lowered and, if that was not the case, those retained earnings should be made available for other purposes. Mr. Ernaut asked whether Mr. Bellister did not think it would make more sense to have those employees who relied on a specific fund for salaries to be "...transferred back to the general fund." Mr. Bellister indicated he would be reluctant to answer Mr. Ernaut's question on behalf of all those whom NSEA represented. Mr. Ernaut asked Chairman Bache whether it would be possible for the committee to obtain from the Clark County School District a breakdown of exactly which of its employees were paid out of its enterprise fund and its internal service fund. Chairman Bache asked Ms. Denice Miller to obtain the information Mr. Ernaut desired. Chairman Bache asked for a show of hands of those in Las Vegas who supported S.B. 291. He then asked for a show of hands of those who opposed S.B. 291. Chairman Bache closed the hearing on S.B. 291. There being no further business to come before the committee, Chairman Bache adjourned the hearing at 10:50 a.m. RESPECTFULLY SUBMITTED: Sara Kaufman, Committee Secretary Assembly Committee on Government Affairs June 20, 1995 Page