MINUTES OF THE ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session February 23, 1995 The Committee on Ways and Means was called to order at 8:05 a.m., on Thursday, February 23, 1995, Chairman Marvel presiding, in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Morse Arberry, Jr., Chairman Mr. John W. Marvel, Chairman Mrs. Jan Evans, Vice Chairman Mrs. Sandra Tiffany, Vice Chairman Mr. Dennis L. Allard Mrs. Maureen E. Brower Mrs. Vonne Chowning Mr. Jack D. Close Mr. Joseph E. Dini, Jr. Mr. Thomas A. Fettic Ms. Chris Giunchigliani Mr. Lynn Hettrick Mr. Bob Price Mr. Larry L. Spitler COMMITTEE MEMBERS ABSENT: None STAFF MEMBERS PRESENT: Mr. Mark Stevens, Fiscal Analyst Mr. Gary Ghiggeri, Deputy Fiscal Analyst Mr. Brian Burke, Program Analyst Chairman Marvel asked for a report from the Audit Division on its examination of the courts, particularly the administrative assessment fee. Mr. Gary Crews, Legislative Auditor, introduced Mr. Rocky Cooper, the auditor in charge of the Judicial Branch audit. Mr. Crews reported the court system was comprised of 85 courts: the Supreme Court, 9 district courts, 56 justice courts, and 19 municipal courts. In Fiscal Year 1993 the court system collected over $40 million in local and state fines, fees, and administrative assessments, and remitted $2.5 million in fines and $6.8 million in administrative assessments to the state. Mr. Crews stated the audit of the Judicial Branch included a review of activities related to processing, collecting, recording, and remitting state fines, and administrative assessments imposed on Highway Patrol citations issued during Fiscal Year 1993. The scope of the audit also included fines imposed and collected in various cases processed at three district courts during Fiscal Year 1993 and felony DUI convictions processed at one district court during Fiscal Years 1991 and 1992. Mr. Crews said the audit had found significant and widespread management weaknesses within the court system. He reported that due to poor financial administrative practices at many courts, millions of dollars in state fines and assessments had gone uncollected and millions of dollars more may have been improperly distributed to local governments instead of going to the state. In addition, many courts had not established adequate internal accounting controls to ensure money collected from fines was safeguarded against fraud and misuse. Mr. Crews reported the Administrative Office of the Courts, under the direction of the Supreme Court, had the authority to establish internal controls for the court system, periodically review those controls, and make recommendations for improvements to financial and administrative procedures. This authority could be used to establish internal control standards and monitor the financial and administrative practices of the courts. Mr. Crews asked Mr. Cooper to explain the principal findings of the audit. Mr. Cooper stated the way courts accounted for fines directly affected the distribution of the money. The audit found a variety of methods used to classify, record, and distribute payments received. As a result, of the $6.7 million in fines collected from Nevada Highway Patrol citations during 1993, local governments received approximately $5.5 million. Only $1.2 million went to the state. The Audit Division estimated approximately $4.2 million received by justice courts received from Nevada Highway Patrol citations in 1993 was classified as bail forfeitures, and therefore, went to the counties. In the opinion of the Legislative Counsel, those payments are more characteristic of a fine and should have gone to the state as required by the State Constitution and the laws of Nevada. The Audit Division estimated approximately $1.3 million in fines collected from Nevada Highway Patrol citations was retained by local governments because the citations were changed from violations of state laws to violations of local ordinances. The audit found several courts amended all Nevada Highway Patrol citations to violations of local ordinances, and therefore, remitted no fines to the state from Nevada Highway Patrol citations in 1993. According to the Legislative Counsel, certain requirements must be met when changing Nevada Highway Patrol citations from violations of the Nevada Revised Statutes (NRS) to violations of local ordinances, but many amendments may not have met these requirements. Improper accounting methods resulted in local governments receiving fines that should have gone to the state. Three justice courts recorded fines from NRS violations as local fines despite legal requirements that the money go to the state. During 1993, justice and municipal courts collected only 60 percent of the fines imposed on Nevada Highway Patrol citations. It was estimated approximately $2.4 million more could have been collected if effective collection procedures were in place. Poor collection procedures had allowed over $16 million in uncollected state fines, warrant fees, and assessments to accumulate in recent years. Collection efforts at most district courts were inadequate. As a result, district courts collected only $590,000 of an estimated $4 million in fines imposed during 1993. Almost none of the fines imposed for felony DUI convictions were collected at one court. Many courts have not established adequate internal controls for collecting, recording, and depositing fine payments. Of the 49 courts responding to the Audit Division survey, only 13 indicated they had developed written internal control procedures. Because of internal control weaknesses, instances of fraud and misuse of funds have occurred within the court system. Guidance and oversight of the court system is needed. Nearly two-thirds of the courts responding to the Audit Division survey indicated at least some improvement would be made if statewide accounting and administrative procedures were developed. Basic accounting and administrative procedures would help ensure fines were properly classified, recorded, and safeguarded, and should increase the amount of fines and administrative assessments collected for use by state and local governments. Mr. Cooper reported the Audit Division had made four recommendations for improving financial and administrative controls in use by Nevada's courts. Specifically, the Administrative Office of the Courts should: (1) establish minimum control standards, (2) develop uniform procedures to classify, record, and distribute fines and assessments, (3) develop collection procedures, and (4) perform periodic monitoring to ensure control objectives are achieved. The Chief Justice of the Supreme Court accepted all four recommendations. Ms. Giunchigliani inquired whether the Audit Division had looked at penal fines, which were to be directed to the Distributive School Fund. She questioned whether "penal fines" referred to court assessments. Mr. Crews responded a Legislative Counsel opinion on this matter stated fines from traffic citations should be directed into the Distributive School Fund. Chairman Marvel suggested the committee members review this audit since it was critical to making determinations regarding how to finance the activities of the Supreme Court and the Administrative Office of the Courts. JUDICIAL BRANCH - SUPREME COURT - PAGE 103 Chairman Marvel requested an overview of how administrative assessments had been estimated and how the need for new commissions had been determined. He requested a copy of the study addressing those issues. He asked the Chief Justice to comment on proposed salary increases, the need for additional justices, the need for additional district court justices, need for a supplemental appropriation in review of reserve balances, and the legislative audit. Chief Justice Tom Steffen introduced Mr. Don Mello, Director of the Administrative Office of the Courts, Mr. Bill Maier, Deputy Director of the Administrative Office of the Courts, Ms. Janette Bloom, Clerk of the Supreme Court, Ms. Susan Southwick, Law Librarian, and Justice Bob Rose. Chief Justice Steffen commenced his testimony with an overview of the budget. He explained the total in the budget for the 1994-1995 biennium was $24,192,392. The proposed budget for the 1996-1997 biennium was $31,779,087. The difference ($7,586,695) was comprised of costs associated with the proposed addition of two supreme court justices and support staff ($2,514,967), increases in elected officials' salaries and progressive longevity increases ($1,538,589), seven additional district court judges ($1,486,272), six additional positions within the Supreme Court ($751,711), a new Division of Planning and Analysis within the Administrative Office of the Courts ($368,271), and matching funds for a United States Health and Human Services grant ($302,210). Chairman Marvel inquired how long the federal money would be available. Chief Justice Steffen responded he hoped the program would be completed within two years. It was not intended that the program would continue once federal funding was exhausted. Chief Justice Steffen continued with his testimony. He said the budget included a proposal for a new commission on racial and economic bias. Funds requested for the commission totaled $222,500. Estimated inflationary increases in the base operating budget totaled $220,808. Miscellaneous changes would cost $181,367. Chief Justice Steffen noted the first three items mentioned totaled approximately $5.5 million of the $7.5 million increase. He expressed his opinion the first item, the addition of two justices to the Supreme Court, would be a waste of money and would be counterproductive. He noted there was opposition on the court to his view. He explained expert opinion held that appellate court judges should not be able to handle more than 100 cases per year. Last year there were 1,370 case filings in the Supreme Court, which made the Nevada Supreme Court the busiest court among the 12 courts in the nation without intermediate appellate courts. The 1,370 case filings translated to 274 cases per each of the five justices. He reiterated experts set the benchmark at 100 cases. Chief Justice Steffen said if two justices were added to the Supreme Court, the caseload would still be 196 per judge. He said last year the backlog of cases was 1,334 cases and the backlog was continuing to build. Unless something was done to eliminate the backlog, justice was being delayed, and therefore, denied. Mrs. Evans questioned whether a constitutional amendment was required to add an intermediate court of appeals. Chief Justice Steffen responded affirmatively. Mrs. Evans asked if the addition of two justices would require such an amendment. Chief Justice Steffen replied an amendment would not be required. Mrs. Evans stated she was sympathetic to the justices' workload. She noted, however, while the Legislature had recently approved a constitutional amendment to add an appellate court, the voters had not. She questioned what would happen if the voters again failed to approve the constitutional amendment. She asked if it would be better to add the two justices or simply to pursue the issue of adding an appellate court. Chief Justice Steffen stated the constitutional amendment had been defeated by a small number of votes even though there had been no attempt to educate the public about the importance of the appellate court. If the issue were to come to a vote again, it would be essential to have in place a program for public education. He said hopefully funds would be available within the Administrative Office of the Courts budget to prepare such an education program. Chief Justice Steffen noted the Judicial Assessment Commission had recommended against adding the two justices. He explained there were problems with adding justices to the court. Some states which had added justices found the effort to be a failure. He said the reason adding justices was not effective was because, unless the larger court was split into panels, it became more difficult to reconcile conflicting decisions. The greater the number of justices, the greater the chance of dissenting opinions, more concurring opinions, greater argument and division in reaching a consensus, and vague decisions resulting in less predictable and less definite law. He stated all of these problems were counterproductive to the goal of improving efficiency. Mr. Allard asked if it would be a waste of taxpayers' money to add the two justices. Chief Justice Steffen said in his view it would be a waste of money. The end result would be that productivity would increase only minimally while clear advancement of the corpus juris of the State of Nevada would decrease. And given the fact that Supreme Court opinions affected the quality of life of all Nevadans, he did not believe the result would be a positive one. Chairman Marvel asked if adding seven district court justices would increase the workload of the Supreme Court justices. Chief Justice Steffen said the additional district court justices would increase the Supreme Court justices' workload. Chairman Marvel questioned the justification for the additional district court justices. Chief Justice Steffen responded the Judicial Assessment Commission had recommended six new family court judges for Clark County and two additional family court judges for Washoe County as an optimum. As a minimum the Commission recommended four new judges for Clark County and one for Washoe County. He explained the proposal in the budget for seven new judges represented an overlapping of the recommendation of the Commission and the results of a statewide survey of judges regarding their projected needs. Ms. Tiffany questioned whether the voters would ever approve an appellate court. She asked the Chief Justice if he had to decide between an appellate court not being approved and the additional two justices if he would choose the additional justices or some other choice. She said the backlog had to be addressed. Chief Justice Steffen acknowledged Ms. Tiffany had a good point. He stated, in view of public perception of the court, if the electorate believed it was simply doing the court a favor by approving an appellate court, the proposition would probably be doomed. However, an effective public educational campaign would show the people the issue was the rights of litigants and the quality of the judicial branch of government, not simply relieving the caseloads of five justices who thought they were overworked. Chief Justice Steffen said he feared the addition of two justices would make voters reluctant to approve an appellate court. He said if voter approval could not be obtained in the 1996 election, adding justices could be an option. He emphasized the opinion of all experts was the way to handle a burgeoning appellate caseload was not to increase the size of the Supreme Court but to implement an intermediate appellate court system. Chief Justice Steffen stated Utah had adopted an intermediate appellate court in 1984 after substantial study. At that point in time, Nevada case filings were greater per year than those in the Utah Supreme Court notwithstanding Utah's larger population. After study, Utah rejected a proposal to add to the number of Supreme Court justices in favor of an intermediate appellate court. Chief Justice Steffen indicated he was aware of only two jurisdictions which were successfully handling their workload by having justices sit in panels. He said the Delaware Supreme Court consisted of five justices who sat in panels of three. He noted Delaware's total annual caseload was only 500. Ms. Tiffany suggested there could be another side to this issue which could be explored further in subcommittee. Chairman Marvel inquired whether legislation was being drafted to allow for an appellate court. Chief Justice Steffen said legislation would be proposed and hopefully the matter would go before the voters in the fall of 1996. Mr. Price noted he would be introducing legislation proposing the addition of the two justices. He suggested the scenario of justices sitting on panels rather than as a whole was not unlike the system used in the Legislative Branch, and there would be very few cases of any body coming to unanimous decisions on any subject matter. Mr. Close asked what the annual cost of an appellate court would be. Mr. Mello responded the cost of a three-member intermediate appellate court would be approximately $1.6 million per year. He noted this estimate presumed a shift of some Supreme Court staff to the intermediate court. Mr. Close asked what percentage of the total caseload was assigned to retired justices and if the work of retired justices could be expanded. Chief Justice Steffen indicated senior justices were only used when one or more members of the Supreme Court was disqualified or recused. Therefore, the use of senior justices did not result in increased productivity. Mr. Allard inquired whether the Supreme Court had a plan for educating the public about the need for an appellate court. Chief Justice Steffen said the education plan was only in its embryonic stage. He said a source of funds (generated by surplus peremptory challenge fees) was available to pay for a public education campaign. Mr. Allard questioned whether the Chief Justice could rally the support of the other Supreme Court justices behind the education campaign. Chief Justice Steffen stated he had no doubt the other justices would support the public education campaign. He said every justice was in agreement with the critical need for the intermediate court. Three justices, however, believed the addition of two justices would provide some relief from the backlog. Two justices did not share that belief, and believed, in fact, it would reduce the possibility of the voters approving an intermediate appellate court. Chairman Marvel questioned whether private funding would be obtained and if it would be appropriate to use state funds for this lobbying effort. Chief Justice Steffen said this was an issue which would have to be explored. He said the problem with private funding would be the possible appearance of impropriety since money would be sought from people, i.e., attorneys, who would be appearing before the court. He noted the Judicial Code of Conduct prevented the court from fundraising. Mr. Allard asked how much money was available for the education program. Mr. Mello explained the funds in the account were primarily to pay for the judges' travel expenses. He estimated approximately $30,000 each year would not be required to pay for travel expenses and could be used for the public education campaign. Mr. Price expressed the opinion that regardless of the source, once funds were in the state system, the money became "state" money, and it was inappropriate to use public money to attempt to convince the public to take a particular action such as voting on a question. He questioned whether there had been any determination regarding the ethics of a public education program such as that being proposed. Chief Justice Steffen replied as a general proposition it would be unethical to use state money to influence public opinion; however, this fund was different in that it was created by court order to enable lawyers to peremptorily challenge a judge. He said he hoped his colleagues would view this program as an effort to improve the administration of justice, which was originally the purpose of the administrative assessment fee. Chief Justice Steffen indicated he had not discussed this proposal with his colleagues and they would have to agree to it before it could be implemented. In any event, the justices would not be parties to any unethical or improper activity. He noted there was a critical need to improve the court system. He referred to the caseload statistics for the Supreme Court on page 103 of the Executive Budget. He noted in 1991 the case backlog began growing dramatically. Chairman Marvel inquired how cases were prioritized. Chief Justice Steffen replied priority was given to death cases, child custody cases, and some original writ cases where rights were in immediate jeopardy. He pointed out in Nevada appeals were granted as a matter of right, and court was inundated with frivolous appeals and inmate petitions. He reiterated his opinion that two additional justices would simply add further occasion for dispute and inefficiency. Mr. Mello suggested that when the ballot explanation language was drafted the court be allowed a reasonable amount of time to examine that language prior to approval. Chairman Marvel said the committee would make that recommendation. Mr. Fettic noted the estimated cost of adding two justices and support staff was approximately $1 million per year and the cost of an intermediate appellate court would be approximately $1.6 million so there was only a $600,000 difference between what the court wanted and what was being proposed. Chief Justice Steffen said the cost differential would actually be substantially less. Mr. Fettic asked for a detailed cost comparison. Mr. Mello agreed to provide the information. Chairman Marvel asked for an explanation of longevity pay and the judges' retirement system. Mr. Mello explained that beginning in the seventh year of service justices or district judges would accrue a longevity payment equal to 1 percent of their salary for each year up to a maximum of 22 percent. Justices or district judges on the judicial retirement system accrued credit at the rate of 2.5 percent per year during the first ten years. Beginning in the eleventh year the accrual rate escalates to 4.166 percent. The maximum accrual--over a period of 22 years--equates to 75 percent of salary. Chairman Marvel asked how the retirement plan was funded. Mr. Mello responded the retirement plan was funded by direct appropriation approved by the Legislature. He explained a comparison with the Public Employees Retirement System prepared in the 1993 legislative session reflected a cost savings as a result of allocating funds to pensions every two years rather than annually. Chairman Marvel indicated the subcommittee would look at this issue. Chairman Marvel noted the court requested a supplemental appropriation of $282,000. He questioned whether a portion of the reserve fund could be used to defray the supplemental appropriation. Mr. Mello stated the supplemental appropriation was in the Supreme Court budget, which is funded by administrative assessment fees and General fund money, not for any of the budget accounts which had a reserve fund. The court was predicting a shortfall of $555,000 in administrative assessments. The supplemental appropriation was being requested to make the budget whole. Chairman Marvel asked for clarification about why reserve funds could not be used. Mr. Mello said there was no statutory authority to reclassify the reserve funds. He added the reserve funds constituted the ability to pay bills during the first month of the fiscal year when revenues have not yet been received. Chairman Marvel noted the reserve was $400,000. Mr. Mello stated that amount represented a budget surplus. He said there was a potential for using that money to offset the supplemental appropriation. Mr. Price said all other state employees and elected officials were required to make contributions to their retirement system, but this was not the case with the court. He asked why the court was treated differently. Mr. Mello answered the Constitution specified the salary of a district judge or supreme court justice could not be diminished. The Legislature considered a contribution to the retirement system to be a salary decrease. SUPREME COURT - PAGE 103 Mr. Mello stated this budget was funded from two primary sources: administrative assessment fees (approximately 37 percent to 40 percent) and appropriations from the General Fund. He pointed out there was an error in travel estimates. The committee would be provided with an explanation for the increase in travel expense. In addition, decision unit M-210 should reflect a request for funding for six positions rather than for five positions. Chairman Marvel inquired whether the costs reflected in decision unit M-210 were relevant to the six positions. Mr. Mello answered affirmatively. He explained the six new positions would allow the court to keep up with its current workload. He said three attorneys were requested for the central legal staff, one attorney was requested for the Clerk's Office, and one permanent judicial secretary was requested as an addition to the Chief Justice's clerical staff to replace a floating secretary. Chairman Marvel asked for an explanation of unallocated salary costs. Mr. Burke stated the line item detail in the Governor's recommended budget reflected $83,000 in the first year of the biennium and $84,000 in the second year. The courts have since submitted a corrected budget indicating unallocated salaries should be $52,853 in the first year and $53,164 in the second year. Mr. Mello noted those funds were allocated to cover the cost-of-living increases or any increases granted by the Legislature for unclassified personnel. Chairman Marvel questioned whether this item would supersede the unclassified pay bill. Mr. Mello stated this item constituted a recommendation for specific salaries in the unclassified pay bill. Ms. Giunchigliani inquired what policies had been established for the collection of fines, court assessments, etc., which lower courts would have to comply with. She noted if there was no current policy, the committee should pursue development of a policy. Mr. Mello responded the Audit Division had recommended development of a collection policy. That plan would be delivered to the audit committee within 60 days. There was currently no centralized policy. Mr. Mello referred to decision unit M-220. He explained this item pertained to the request for two additional justices and supporting staff. Mr. Mello noted decision units E-710 and E-720 needed to be restated. He explained $23,000 of total funding recommended in the first year of the biennium and $24,000 in the second year represented the costs of existing purchase contracts and should have been reflected in the base budget. The actual request for new equipment was $1,600 in the first year and $1,000 in the second year. Mr. Mello said in decision unit E-800, unclassified salary increases, the court was proposing that the Legislature consider increasing unclassified salaries. Chairman Marvel inquired what percentage increase was proposed. Mr. Mello said the increase had been determined by comparing the existing salaries set in 1991 to the merit salary schedule. A person on the merit salary schedule would have received four step increases, therefore, the unclassified salaries were increased by the equivalent of four steps. He said he did not know the percentage. Chairman Marvel indicated the subcommittee would look closely at this proposal. Mr. Mello noted if the court did not submit a recommendation for increasing salaries, in all likelihood the salaries would remain the same. Chief Justice Steffen stated the court believed the staff salaries should be increased, but understood the Legislature's responsibility with respect to the expenditure of public funds and would leave this decision to the Legislature. Mr. Spitler asked that a break out of proposed increases by position be provided to the subcommittee. He noted it was possible not all positions would have experienced four step increases. Mr. Mello agreed to provide the information. Mr. Close said he understood the percentage increase in decision unit E-800 to be 12.53 percent. He said he had a problem with that amount in comparison to the increases of other state employees. Mr. Mello stated, for clarification, that a person in classified service in the state personnel system would have received automatic step increases. The court was not asking for any more than what classified employees had received and would continue to receive. Mr. Stevens pointed out the classified salary schedule was comprised of a series of steps from 1 to 15. A two-step merit increase was granted for satisfactory performance annually up to step 15. He noted approximately 60 percent to 70 percent of state employees had reached step 15 and were no longer receiving step increases. Ms. Giunchigliani asked Mr. Mello to provide to the subcommittee a report on the status of the supplemental appropriation approved in 1991 for a computer network. Mr. Mello agreed to provide the information. He explained the computer system was funded in the Uniform Records budget account. BOARD OF PARDONS COMMISSIONERS - PAGE 111 Mr. Mello reported the traditional use of this account was to equalize the salaries of the justices. He explained two justices were receiving payments from this account, but the account was due to expire at the end of the coming biennium. Mr. Mello stated the proposal was to perpetuate the equalizing process in the event the Legislature approves increasing justices' salaries commensurate with the recommendation of the commission which studied elected officials' salaries. Chairman Marvel questioned whether legislation would be required to perpetuate this account. Mr. Mello said there was presently no legislation pending. He noted the study commission had recommended eliminating this account. The court did not want to eliminate the account by not budgeting for it. Chairman Marvel stated the voters had rejected any pay increases in mid-term. Mr. Mello said he did not want the responsibility for eliminating the account. It was the responsibility of the Legislature to set that policy. Chief Justice Steffen pointed out the committee had not questioned the court about the legality of salary increases. He explained the Constitution did refer to increasing salaries. In the past, the Legislature had taken the position that fairness dictated augmenting the salaries of justices who received lesser sums. Chairman Marvel asked if this equalization process applied to district court judges' salaries as well. Chief Justice Steffen said it did apply to the district court judges' salaries and the family court judges' salaries. RETIRED JUSTICE DUTY FUND - PAGE 113 Mr. Mello stated this budget was funded 100 percent from administrative assessment fees. The purpose was to provide funds for retired district judges and retired Supreme Court justices to be recalled to duty to assist with the various courts' caselogs. He indicated there were surplus funds in this account from prior years that could be used to reduce the A.B. 182 supplemental appropriation request. SUPREME COURT JUSTICES' AND WIDOWS' PENSIONS - PAGE 115 Mr. Mello explained this account provided funds for the pensions of retired Supreme Court justices, their widows, and minor children. He said there were presently seven recipients. He noted a similar account funded the pensions of retired district judges and their widows. Chairman Marvel said it had been brought to the committee's attention that State Industrial Insurance System (SIIS) payments were budgeted in this account. Mr. Mello stated the payroll system was not conducive to making adjustments. The system automatically factored the SIIS rate into payment calculations. The SIIS rate needed to be deleted from the budget. Mr. Price asked how many of the seven recipients were widows and how many were children. Mr. Mello answered the recipients were comprised of one widow, one child, and five retired justices. LAW LIBRARY - PAGE 117 Ms. Susan Southwick, Law Librarian, noted a discrepancy in operating expenses between the agency request and the Governor's recommendation in the base budget. She said it appeared the Law Library's portion of the Supreme Court rent expense had been reduced by the Budget Division. She noted the new figure was acceptable to the Law Library. Ms. Southwick referred to decision unit M-100, which included funding for acquisition of law books. She explained the rate of inflation for law books was recently over 19 percent. The Law Library projected a conservative 6 percent inflationary increase based on actual Fiscal Year 1994 expenditures. She said although the amount was greater than the Governor's recommendation, it was a more realistic amount than the Governor was recommending. She added the increased contractual costs of Westlaw were also included in decision unit M-100. Ms. Southwick then reported on decision unit M-200. She indicated one significant request was included in this item. The Law Library requested elimination of a one- half time student position and reconstitution of the position as a full-time beginning library assistant. This would create a total position count of six, not six and one- half, as indicated in the budget. She said the actual anticipated expenditure should be less than it appeared (approximately $11,000 in the first year of the biennium and $12,000 in the second year over the cost of maintaining the student position). Chairman Marvel asked for an explanation of decision unit E-800. Ms. Southwick said decision unit E-800 was a request to increase the Law Librarian's salary in accordance with the court's policy regarding unclassified salary increases. Chairman Marvel indicated this item would be reviewed by the subcommittee. Ms. Southwick stated the only other significant enhancement in the budget was decision unit E-125. She noted the Law Library had for some time participated in the statewide union catalog on CD-ROM. That system was being phased out in favor of a larger on-line system. In order for the Law Library to participate in the Cooperative Libraries Automated Network (CLAN), funding was required for startup costs ($10,000) and maintenance costs ($5,000). The CLAN system would allow for on-line cataloging, participation in the Internet, and provide access to library holdings to other network users. Mr. Close commended Ms. Southwick on the measurement indicators provided in the budget. He encouraged her to include the results of a customer satisfaction survey in the next biennium's budget. Ms. Southwick noted she looked at that data cautiously since it was quite subjective. ADMINISTRATIVE OFFICE OF THE COURTS - PAGE 123 Chairman Marvel asked Mr. Mello to edify the committee regarding compliance with NRS 1.360 insofar as setting standards for collecting administrative assessments. Mr. Mello commented his office was willing and able to create internal control policies for distribution to the courts defining division of duties in an attempt to eliminate fraud, misuse of funds, misapplication of funds, thievery, etc. Chairman Marvel noted there had been some allusion to fraud in the audit report which disturbed him. Mr. Mello stated there were two instances of a clerk embezzling funds and a justice of the peace failing to deposit checks totaling $13,000. Chairman Marvel asked what standard procedures the office was planning to institute throughout the court system. Mr. Mello said his office planned to write a policy and guidelines for local courts and to provide assistance to the local courts in implementing those policies. He said the issue of collections would be researched and recommendations would be made to the local courts for improving their collections procedures. Mr. Mello noted one issue affecting local courts was the transfer of money to the state. He explained this would have a significant impact, especially in the rural areas. Local elected officials tended to view the courts as revenue producers and would no longer have those monies to show in their budgets. He suggested justice should not be dispensed according to how much revenue could be raised for the local government. Mr. Mello stated if additional staff was required to handle collections, the local governments would have to fund those positions. If the money collected would then be turned over to the state, the local governments might be unwilling to fund those positions. Judge Nancy Becker, Clark County District Court, testified she had no problem acknowledging the need for uniform systems and the general recommendations of the audit. She noted, however, the audit failed to address several issues since it was not prepared by people who clearly understand the operation of the judicial system. She noted she had requested some court administrators to prepare a response to the audit. Judge Becker explained a Legislative Counsel opinion regarding bail forfeitures and Highway Patrol citations was contrary to opinions from the Clark County District Attorney and the Las Vegas City Attorney. The contrary opinions on bail forfeitures held that bail forfeitures should remain in the local jurisdiction rather than be transferred to the state. Judge Becker pointed out there was no unified state court system in Nevada, which would provide the Administrative Office of the Courts with total control over administration of all courts and all funding for state courts would come from the state budget. She noted the only funding for local courts which came from the state budget was the district judges' salaries. All other salaries and costs were funded by the local entities. Chairman Marvel inquired whether legislative refinement was required. Judge Becker said she could not speak to this issue since her local government authority is opposed to transferring funds to the state. She suggested the Legislature, the Administrative Office of the Courts, and the local governments needed to resolve this issue. Judge Becker noted fines under $5.00 generated no administrative assessment and the audit did not deal with this concept. Additionally, some misdemeanants were allowed to work in lieu of paying cash fines. Further, in cases of non-payment, hearings were required to be brought by the prosecutor to enforce payment or impose punishment. She suggested hearings were not a cost effective means of collecting minimal fines although the matter needed further study. Judge Becker pointed out according to statute Highway Patrol fines went to the geographical jurisdiction where the citation was written. She noted all traffic violations were also violations of city ordinances. Therefore, citations written in local government jurisdictions were handled by the local courts and were no longer citations for state violations but for local government ordinances. The municipalities would take a strong position on retaining fines for violations of local government ordinances. Ms. Giunchigliani requested copies of the local government legal opinions referenced by Judge Becker. Judge Becker agreed to provide the information to the subcommittee. Ms. Giunchigliani noted constitutionally the fines should be deposited into the Distributive School Account rather than the court system. Ms. Giunchigliani questioned the right of local governments to argue that their ordinances superseded state law. Judge Becker explained the municipal courts must hear the citations as violations of municipal ordinances because they have no jurisdiction over state law violations. Ms. Giunchigliani suggested statutory changes might be required to clarify the jurisdiction of the courts. Judge Becker responded this was not an easy question to answer since there were differences of opinion and interpretations with regard to what constitutes a local fine and what does not. Judge Becker reiterated there were several issues not addressed by the audit. Ms. Giunchigliani questioned whether the issue of a uniform court system had been reviewed. Judge Becker indicated Justice Rose could provide information on that issue. Chief Justice Steffen noted this was a more complex problem than it appeared on the surface. He explained the constitutional provision making the Chief Justice the administrative head of the court system was unclear, and it was uncertain whether the Chief Justice--with the approval of the other justices--had the authority to dictate to the lower courts. The Supreme Court intended to do everything possible to achieve the cooperation of all of the entities necessary to enhance the effectiveness of collection procedures. He said he did not envision the judges becoming collection agents. He agreed with Judge Becker that clearly would not be an effective use of judicial time. He noted, however, the municipalities should appreciate the fact that monies not collected were not helping anyone. Chief Justice Steffen reiterated the Supreme Court intended to do everything possible to move the local courts into a more effective posture in collecting assessment fees. Chairman Marvel said the committee appreciated the court's efforts. Mr. Mello next discussed the court's revenue forecasts. He explained projections had been decreased $500,000 in the Executive Budget. He distributed to the committee copies of graphs explaining the revenue forecasts (see Exhibit C and Exhibit D). He noted Exhibit C reflected the adjusted forecast. Exhibit D reflected the forecast without the $500,000 decrease. Exhibit D reflected a very steep increase in revenue which the court did not believe was achievable. Page 2 of Exhibit D further indicated that revenue trends from the state courts appeared to be heading downward or leveling off. Therefore, the court chose to maintain a conservative position with regard to revenue projections. Chairman Marvel noted fiscal staff would also be preparing revenue forecasts. Mr. Mello noted the court had previously been in a position where others had projected unrealistic revenues which did not materialize, and he was concerned at the lack of a mechanism for the Administrative Office of the Courts to approach the Interim Finance Committee for supplemental operating money. Chairman Marvel said he had been informed the court's revenue estimates had been used in approving the 1993-95 budget. Mr. Mello said he had cautioned the committee in 1993 that the projections were too high and later provided revised numbers which were not used. Mr. Mello explained the Administrative Office of the Courts had requested a General Fund appropriation. To offset the need for funding, the agency was requesting the transfer of the Judicial Education Coordinator position to the Judicial Education budget. Chairman Marvel inquired why the agency was requesting General Fund money when there was a substantial reserve in the budget. Mr. Mello stated this budget was allowed to carry forward surpluses from prior years. The surplus funds were used to make grants back to the courts, not to augment operating expenses. He explained one recent grant project had been the remodeling of the Hawthorne Justice Court. The current surplus would be used to offset the shortfall in the current year's budget, and only the reserve would be carried forward. Chairman Marvel asked if the reserve could be reduced. Mr. Mello said it could be reduced somewhat. He said it comprised one-twelfth of the budget and provided the initial working capital to pay July's bills and included cost-of-living salary increases for staff that would not be provided by the appropriation to the budget office and unclassified salary increases. There would be surplus funds available once the actual appropriations were determined. Mr. Mello stated decision unit E-710 was for funding to replace a photocopier and other small equipment items. He explained the photocopier currently in use could not keep up with the workload and was nine years old. The agency was requesting funding to purchase a hole driller, paper shaker, transcription equipment, an audio- visual cart, and folding chairs for public events. Mr. Mello reported decision unit E-800 reflected a proposed salary increase for the two unclassified positions in the office commensurate with the formulation previously noted. Chairman Marvel indicated the subcommittee would be reviewing this item. Mr. Mello stated decision unit E-802 represented funds which the office would not receive from the Budget Division when the Legislature appropriated funds for cost- of-living increases. He explained these funds could be overstated, depending on the amount the Legislature agrees to appropriate. Chairman Marvel inquired what percentage was used in calculating the proposed increases. Mr. Mello stated 12 percent was used to formulate this estimate. He explained this was not a request for a 12 percent increase but merely for funds to be available once the Legislature determines what the increase will be. Mr. Arberry asked for the amounts of the salary increases being proposed for the Court Administrator and the Deputy Court Administrator. Mr. Mello stated the proposal was to increase the Court Administrator's salary from $63,000 to $76,000. The Deputy Court Administrator's salary would increase from $55,000 to $61,000. Mr. Arberry inquired what percentage increases those figures represented. Mr. Mello said the increases were 20 percent and approximately 9 percent, respectively. He reiterated these numbers were strictly recommendations. DIVISION OF PLANNING AND ANALYSIS - PAGE 129 Mr. Mello stated this account was the result of a recommendation from the Judicial Assessment Commission. Funding was requested for three positions: one deputy director for the Administrative Office of the Courts, one management analyst, and one management assistant. The goal was to make the operation of the lower courts more uniform and more efficient. He said in order for more revenue to shift to the state, it was incumbent on the state to provide certain services to promote uniformity and efficiency in the lower courts. Mr. Mello explained this division would coordinate the collection of comparable statewide caseload statistics, create standardized forms for the collection of court- related information, implement and update the weighted caseload system, provide caseload forecasts and projections, assist courts with budget proposals, facility planning and determining staff needs, conduct periodic case management studies, and provide court personnel with case management. He noted most of these services would be useful to the Legislature in compiling statistics to determine judicial needs. The division would also implement a uniform statewide computer system for the trial courts, work with other justice system-related agencies to enhance the sharing of reliable information, and facilitate overall communications. Mr. Mello reported the courts were under pressure resulting from federal legislation (i.e., the Brady bill and the Violence Against Women Act) to coordinate efforts with the state criminal repository and police agencies to collect accurate dispositional records. It was, therefore, incumbent on the courts to work with the other agencies to ensure the data is transferred and the mechanisms exist to improve the information sharing system for the benefit of the public. Chairman Marvel inquired whether this was a General Fund budget. Mr. Mello responded current law did not allow allocation to this program, therefore, the proposal was for General Fund money. He suggested the allocation could be redistributed. Mr. Mello stated the courts attempted to obtain federal and private grant funds and this proposal was to centralize the grant writing process. Justice Bob Rose, stated he had served as chairman of the Urban Court Workload Assessment Commission funded by the Legislature, Clark County, and Washoe County. He noted the recommendations of the commission had been provided to the Legislature (see Exhibit E). Those recommendations included a variety of themes. Justice Rose explained the commission had repeatedly asked the question: "Who's in charge." In many cases, the answer was: "no one." The commission, therefore, made a number of recommendations to improve the court structure, including the creation of a Nevada Judicial Council comprised of representatives of all levels of the courts to act as the board of directors to manage the court system, i.e., by setting policy. In addition, the commission recommended a strong chief judge at every level with the authority to carry out the tasks assigned. Justice Rose said the third recommendation regarding court structure entailed compiling more comprehensive statistics on the judiciary in order to manage the court system and plan for the future. He stated caseload statistics could reveal discrepancies in the workloads of the courts as well as individual judges. Justice Rose stated the Division of Planning & Analysis was proposed to gather the necessary statistical data and to support the local courts in obtaining grant funds and developing an information sharing network. He noted most other states had such a division within the Administrative Office of the Courts, but the Court Administrator had indicated his office could not assume the additional duties associated with this division. Justice Rose added part of the duties of the division would be to analyze collection of administrative assessment fees and determining where and why fee revenue was coming in or not coming in as well as whether or not it was being assessed appropriately by the courts throughout the state. Chairman Marvel inquired whether division staff would be involved in collection of the administrative assessment fees. Justice Rose replied the division staff would be more active in supervising the accounting and collection activities of the local courts. Justice Rose stated the commission had also recommended the "Nevada Plan," a judicial selection-election plan, which would provide for one general election and then retention of judges; and creation of the Nevada Judicial Performance Commission. He noted the Supreme Court was in favor of both measures. Justice Rose indicated the goal of the commission was to make the court system run more efficiently and effectively and to follow good management procedures. He noted Exhibit E included an explanation of the fiscal impacts of the recommendations on the Supreme Court budget and on state and local government. Justice Rose expressed the hope the work of the commission would serve as a guide and plan for the judiciary, the Legislature, and the local governments to help the judiciary now and in the future. Ms. Giunchigliani inquired whether any legislation would be introduced to implement any of the recommendations. Justice Rose responded creation of the Nevada Plan and the Nevada Judicial Performance Commission would require constitutional amendment. He said he expected additional legislation would be forthcoming. Ms. Giunchigliani questioned whether there was currently a statewide computer network in place. Justice Rose said a system was being put into place piece by piece. Ms. Tiffany asked where planning and analysis fit in conjunction with policy, internal controls, and business process reengineering. Justice Rose said there was no overall policy and direction for the court system. Each level operated independently. The Supreme Court did not supervise or monitor the collection of the administrative assessment fees, but only accounted for the fees it received. The recommendation of the commission was that policy be set, and if the Nevada Judicial Council was not established, the Supreme Court would assume that responsibility. He added that even if policy was set, without planning and analysis it would be difficult to carry out the policy. Ms. Tiffany questioned whether the court envisioned policy, internal control, and policy planning as being carried out by three separate bodies. Justice Rose said the general policy would be set by either the Supreme Court or the Nevada Judicial Council. Fiscal responsibility would be carried out by every level of the court, with general oversight by the Council. Planning would be done by the Planning Division, which would also assist the Council in setting policy and analyzing actions on each court level. Ms. Tiffany asked if business process reengineering was part of planning and analysis. Justice Rose said business process reengineering would be an outgrowth of planning and analysis. Chief Justice Steffen noted business process reengineering had to take into consideration the court's goal to dispense justice effectively, efficiently, and fairly. The committee was analyzing the budgets from a cost-benefit standpoint, and one of the greatest potential benefits of the proposed Division of Planning & Analysis would be to implement a system which would be helpful to criminal and family court judges who needed to access current information about individuals appearing before them. He noted frequently the information contained in pre-sentence investigation reports was not current, and it was helpful to sentencing judges to have access to current information about individuals. Ms. Tiffany noted the court was proposing the beginning of a "paperless office" which would require additional tools and funding to become complete and successful. Justice Rose commented that the Chief Justice had articulated the minority view on the question of adding two justices to the Supreme Court. The majority of the court agreed the time had come to add justices to the Supreme Court. He noted the ideal situation would be to have the intermediate appellate court, but the issue had been to the voters twice and had not been approved. He indicated three of the justices were less optimistic about the possibility of receiving voter approval for an intermediate appellate court than the Chief Justice was. Justice Rose reiterated the justices' caseloads were overwhelming, and if the perfect solution was not achievable, the court should find a good solution. The majority of the justices felt the addition of two justices was a workable solution. He pointed out all federal appellate courts, except the United States Supreme Court, sat in panels, and they functioned well and efficiently. Justice Rose noted of the 1,000 cases decided by the Supreme Court, less than 100 cases had significant precedential value. He submitted that a seven-justice court could hear those 100 cases in two months. During the remainder of the year, the court could break into panels--one in the north and one in the south. Chairman Marvel inquired whether a new Supreme Court building would be required. Justice Rose said an additional building would not be required. He noted none of the justices in favor of adding justices were consulted about the cost projections. He said he considered the cost projections excessive. He suggested $700,000 in the first year of the biennium and $600,000 in the second year were more realistic numbers. He said adding justices was the most inexpensive way to get immediate help for the court. COMMISSION ON RACIAL AND ECONOMIC BIAS - PAGE 147 Mr. Mello introduced Mr. Kevin Kelly of the Supreme Court task force to inquire into racial and economic injustice in the court system. Mr. Kelly stated the task force was comprised of 33 members, including the head of the FBI, two high ranking members of Metro, the Reno and North Las Vegas Chiefs of Police, several academic members from UNR and UNLV, and community and civic leaders. He said this group of individuals was truly interested in achieving racial and economic fairness in the court system. Mr. Kelly indicated he would be providing a policy statement to the committee within the next few days. Chairman Marvel noted the subcommittee would be reviewing this budget. Mrs. Evans noted there had been a study of gender bias in the court system in the past. She inquired about the cost of that study. Mr. Mello said he would research the question and provide the information to the subcommittee. Mr. Kelly explained the task force was assembled at the petition of Justice Springer following his attendance at a community meeting at which a great deal of frustration was displayed. He said the National Center of State Courts had produced a manual for organizing and operating task forces and commissions. He explained it was key to determine whether the perception of bias was, in fact realistic or invalid. The State of Washington found no racial bias in their justice system. The State of Oregon found racial bias in virtually every aspect of the administration of justice. Mr. Kelly said one task force member had suggested assuming the presence of racial bias at the outset. He said the problem with that assumption was that in order to project costs of implementing recommendations it was necessary to base those recommendations on empirical data. Mr. Kelly offered, as a hypothetical case, the lack of training of court interpreters who assist non-English speaking clients in communication skills. The task force would look at this area and make recommendations to the Supreme Court. He noted some recommendations could be implemented with little or no cost. Mr. Arberry asked how long the task force had been in existence. Mr. Kelly replied formation of the task force was ordered by the Supreme Court in December 1992. The official membership of the task force was not published until July 1993, at which time it was too late to introduce legislation for funding to the 1993 Legislature. As a result the task force had been fairly inactive. He noted he had attended a meeting of the National Consortium of State Task Forces in Washington, at his own expense. Four members of the task force had received a grant to attend a conference of the National Center for State Courts to obtain information. Mr. Kelly said the task force would be active for approximately three to four years. He noted similar task forces had been in existence since 1988; others had rendered their final reports within two years. Mr. Arberry asked how the commission had been funded formerly. Mr. Kelly said the commission had not been funded. His office had been paying commission costs. Mr. Arberry questioned what would happen if the commission was not funded. Mr. Kelly replied the project was important enough that alternate funding would be sought. Mr. Arberry asked Mr. Kelly to provide a breakdown of expenses to the subcommittee. Mr. Kelly agreed to do so. Ms. Giunchigliani asked if gender bias would be looked at by this commission. Mr. Kelly said this commission would not study gender bias. The gender bias study had been completed. Ms. Giunchigliani inquired whether there was an intent to have this commission sunset, and if so, in what time frame. Mr. Kelly stated he had been ordered to present a report to the Supreme Court in October of 1996. He said that report would be an interim report, not a final report. Ms. Giunchigliani asked if the budget assumed the existence of the commission through 1997. Mr. Kelly answered affirmatively. Mr. Mello said one of the proposed revisions to the budget was to divide the total budget amount in half and place one-half in each fiscal year and to provide a mechanism for carrying forward any surplus. Ms. Giunchigliani asked Mr. Mello to address the issue of a contractor. Mr. Mello responded the temporary executive director position would be filled by an independent contractor. Chief Justice Steffen added this was an "equal justice under law" commission. The concern of the court was that justice was meted out evenhandedly without discrimination against minorities or the economically disadvantaged. He stated it was the function of the courts to ensure that justice was dispensed fairly to all citizens. He noted there was a perception that there was some unfairness in the system with regard to sentencing, admittance to bail, plea negotiations, and number of crimes charged. The court needed to know if there was any basis in fact to that perception, and if so, to take proper action to resolve the problem. Mr. Kelly explained the task force would only study historically recognized minority groups, i.e., groups protected by the United States Supreme Court. Chairman Marvel indicated the remainder of the agenda would be heard Monday, February 27, 1995. There being no further business, the meeting was adjourned at 11:00 a.m. RESPECTFULLY SUBMITTED: Dale Gray, Committee Secretary Assembly Committee on Ways and Means February 23, 1995 Page