MINUTES OF THE ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session March 20, 1995 The Committee on Ways and Means was called to order at 8:09 a.m., on Monday, March 20, 1995, Chairman Morse Arberry, Jr., 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 Chair Ms. Sandra Tiffany, Vice Chair 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 STAFF MEMBERS PRESENT: Mark Stevens, Fiscal Analyst Gary L. Ghiggeri, Principal Deputy Fiscal Analyst ASSEMBLY BILL 147 Makes various changes to provisions governing license agents of division of wildlife of state department of conservation and natural resources. Albert E. Boardman, Chief of Administrative Services, Division of Wildlife, stated A.B. 147 concerned the license agent program. He explained agents were people throughout the state who sold hunting and fishing licenses and stamps. There were approximately 160 agents located throughout the state, from large sporting goods stores to small rural stores. The Division of Wildlife was attempting to put the division in a better management position. Mr. Boardman directed the committee members' attention to lines 2 and 3 of the bill where the language "the number of license agents to be designated in any locality, the" would be deleted. The division felt if the license agent met the regulation requirements, the number of agents serving in a particular locality should not be discriminated against. Lines 4 and 5 tied the performance of the license agent to standards established by the Board of Wildlife Commissioners. Line 6 established the requirement for a surety bond set by the Board of Wildlife Commissioners. Mr. Marvel inquired what the amount of the bond would be. Mr. Boardman stated the Division of Wildlife had a minimum $7,000 bond and would probably increase the bond to $10,000 when the change was implemented. When Mr. Close inquired if the language on page 2, lines 7 though 20, referred to the bonding that was previously required, Mr. Boardman replied yes. Mr. Close asked the rationale for the change in language. Mr. Boardman explained the same bonding requirements were in the Board of Wildlife Commission regulations as opposed to statute. Mr. Boardman continued with his presentation and stated the proposal was to remove the word "suspended" from line 10. It was felt if the license agent did not meet standards, their ability to sell hunting and fishing licenses would be revoked rather than go through a suspension period. License agents' reports were monitored every month to make sure the reports and money were submitted on time. As pointed out by Mr. Close, a major change was deleting paragraphs 3 and 4 relating to the language on the bond requirements. Mr. Marvel asked if the collections from field agents were timely. Mr. Boardman explained agents submitted a monthly batch report indicating their sale activity. If a check was not submitted within 10 days of the report, a letter of delinquency was issued, and the case would be followed until the money was received. Mr. Marvel inquired if collection losses was one of the findings in the audit report. Mr. Boardman stated it was a finding of the audit report in the late 1980's. Three staff had since been assigned to the program, and there had been no losses during the previous five years. All money had been collected either from the agents or their surety bonds. Mr. Boardman stated the last item in the proposed bill on page 2, line 21, referred to an increase of the fee received by the agent from $.50 to $1, which would be added to the cost of the license. Mr. Marvel inquired if the increase would result in an amendment to the Division of Wildlife budget. Mr. Molini stated the increase was built into the budget. Ms. Giunchigliani inquired if there was a time period after a revocation as referred to on page 1, line 10, when a license agent could be reinstated. Mr. Boardman stated there were no time limitations on reinstatement. If an agent was successful in an appeal to the Board of Wildlife Commissioners, the agent would be reinstated. Ms. Giunchigliani asked what would happen if the agent did not appeal to the board and waited a year after the revocation to reapply for a license. Mr. Boardman responded the agent would go through the normal investigative process. When Ms. Giunchigliani asked if the $1 fee increase would cover administrative costs, Mr. Boardman stated for the license agent that was correct. Ms. Giunchigliani inquired if the fee increase was a recommendation from the commission. Mr. Boardman indicated the fee increase was the result of requests from the license agents. When Ms. Giunchigliani asked when the fee was last raised, Mr. Boardman replied 1990. Mr. Hettrick inquired if the license agents would no longer be able to purchase inventory in advance of sales. Mr. Boardman responded advance purchase was being eliminated. No agent in recent history had requested to purchase inventory in advance. He explained purchasing inventory in advance was very expensive to the agent because the agent needed to purchase a book of licenses at full value; whereas license books could be used for juniors or seniors at a much reduced fee. Mr. Close inquired how Mr. Molini would respond to concerns expressed by the public regarding the manner in which fee increases would be spent by the administration of the Division of Wildlife. Mr. Molini pointed out the fee increase to $1 would go to the license agent. Mr. Close remarked the purchaser of the license would still see the $1 as a fee increase. Mr. Molini responded sportsmen would benefit by having more agents available from which to purchase licenses. He remarked the division had introduced nearly 3,500 big-game animals in the prior 14 years, constructed approximately 300 guzzler water developments for upland game and 28 guzzler water developments for big game, and the state had more bighorn sheep, elk, and antelope than 10 years previously. Mr. Close summarized by stating the fee increase would provide greater access to licenses throughout the state, and Mr. Molini agreed. Mr. Allard commented he had asked license agents how they were reimbursed by the state. Their response was the $1 fee was not sufficient reimbursement, but customers would spend money at their businesses for lures or ammunition. He felt ending the moratorium on the number of license agents and providing service to the sportsmen would make a bigger difference than increasing the license fee. Mr. Molini agreed license agents benefited from increased business from sportsmen and the $1 fee did not cover the costs of selling the license, but the fee increase was supported by the license agents. The $1 fee was the approximate average among western states. Chairman Arberry called for further testimony in support of or in opposition to A.B. 147. There being none, Chairman Arberry closed the hearing on A.B. 147 and opened the hearing on A.B. 161. ASSEMBLY BILL 161 Authorizes person to fish using second combination of hook, line and rod under certain circumstances. Jim Curran, Chief of the Fisheries Bureau, Division of Wildlife, spoke in support of A.B. 161. He stated the purpose of the bill was to allow anglers in the state of Nevada the option of purchasing a stamp or permit which would enable them to use a second combination of rod and reel. He explained the harvest rate was controlled by the daily in-possession limits established by the Wildlife Commission. The allowable harvest rate was far greater than what was being taken by anglers, and the change in statute would hopefully increase the harvest rate to the benefit of the anglers. The proposal had been taken to each of the 17 county wildlife boards several times, and it had received almost no opposition. Arizona had a similar regulation to that proposed by A.B. 161, and approximately 50% of the licensed anglers had purchased the second rod stamp. California had also enacted similar legislation, and during the first year of the regulation approximately 25% to 30% of the anglers had opted for the second rod stamp. If 25% of the Nevada anglers opted for the second rod stamp, approximately $325,000 in additional revenue would be raised based on 1994 fishing license sales of 130,000. When Mr. Marvel inquired if $325,000 had been built into the Division of Wildlife budget, Mr. Curran responded yes. Mr. Marvel asked if $325,000 was a conservative estimate of the additional revenue, and Mr. Curran stated he felt it was very conservative. Mr. Fettic requested the rationale for the effective date of the statute being March 1, 1996. Mr. Curran explained the effective date coincided with the next fishing license period. Mr. Close inquired for how long the second rod stamp would be valid. Mr. Curran indicated the stamp would be valid for the fishing license year, which was March 1 through February 28. Mrs. Brower inquired about the cost of a fishing license and the penalty for using a second hook without a stamp. Mr. Curran said a fishing license cost $15 per year, and the penalty for a violation of any statute carried a minimum fine of $50. He pointed out that Nevada anglers in bistate waters were at a disadvantage, and the proposed change would bring Nevada in line with the surrounding states. Mr. Allard inquired what the definition of "closely attended" would be in regards to the second rod. Mr. Curran explained the interpretation in Nevada was that the angler should be able to take care of the rod, which did not mean holding the rod in his or her hand. Regarding enforcement, the angler could be a hundred yards away from the rod if he was still able to take care of it. Mr. Price noted the legislature, without his vote, passed legislation which allowed a park ranger or a boat ranger on Lake Tahoe to cross the state line onto the California side to make an arrest or issue tickets for what would be a violation of Nevada law even if the person was on the California side of the lake. Mr. Molini assured Mr. Price it was not the practice of the Division of Wildlife to go into the waters of other states. If a ranger was in hot pursuit or there was a violation on the Nevada side, they would go into another state's water. He stated he had not received complaints regarding that issue. When Mr. Allard inquired if the limit laws would remain the same with the second rod stamp, Mr. Molini responded yes. Elsie Dupree submitted written testimony in support of A.B. 161 (Exhibit C). Chairman Arberry called for further testimony in support of or in opposition to A.B. 161. There being none, he closed the hearing on A.B. 161 and opened the hearing on A.B. 231. ASSEMBLY BILL 231 Makes appropriation to division of wildlife of state department of conservation and natural resources for construction of airplane hangar at Minden airport. Peter G. Morros, Director, Department of Conservation and Natural Resources, stated after the Department of Wildlife was brought into the Department of Conservation and Natural Resources as a division, staff looked at ways to consolidate, combine, or co-locate for the purpose of saving taxpayers' money by making the department more efficient. After looking at the advantages and disadvantages of co-location as depicted on Exhibit D, it was determined the air operations of the Divisions of Forestry and Wildlife could be co-located. The Division of Wildlife had a fixed-wing aircraft operation located in Reno which cost approximately $18,000 per year for the hangar. By relocating the Reno operation to Minden with the Division of Forestry, the costs could be reduced by approximately $16,700 per year. Approximately $1,300 a year would be paid to Douglas County, the lessor of the additional property, at a rate of 3 cents per square foot for the land which would be encumbered by the new hangar. There would also be a savings for fuel by the Division of Wildlife because the Forestry Division was able to acquire fuel through contracts with the federal government at a lower cost. Ms. Tiffany inquired if anyone looked at renting space at a private hangar in Minden. Mr. Morros stated there were no hangars available in Minden of the size required by the Divisions of Forestry and Wildlife. Ms. Tiffany asked if there was space available in Carson City. Mr. Morros said there would be no advantage in moving to Carson City. The advantage would be in having a pilot pool available in one location during the fire season. Ms. Tiffany asked if the relocation to Minden was because the pilots lived in the area. Mr. Morros explained the Division of Wildlife operation would be co-located with the Division of Forestry operation located in Minden. Ms. Tiffany commented she was concerned about spending $250,000 for another building which would require maintenance. Mr. Morros stated the recovery of the costs was shown on Exhibit D. Ms. Tiffany remarked she had read Exhibit D and was not convinced there would be a cost recovery. Mr. Marvel asked if the anticipated savings as a result of A.B. 231 had been built into the divisions's budget. Mr. Morros stated the figures as set forth in Exhibit D were reflected in the budget. He also pointed out there would be a possible reduction of one pilot position within the Division of Wildlife. Mr. Marvel inquired if there was a savings for fuel expenses reflected in the budget. Mr. Morros indicated approximately $24,000 in fuel expenses would be saved annually by the Division of Wildlife with the co-location, but that amount was not reflected as a direct reduction in costs. It was anticipated the Division of Wildlife would experience some fiscal problems during the 1995-97 biennium, and Mr. Morros did not know what adjustments would need to be made. Mr. Allard inquired what the total cost of the maintenance and utilities would be as a result of the co-location. Mr. Morros indicated there would be a savings of approximately $10,000 because the Division of Wildlife would be able to obtain replacement parts for their helicopters through military procurement channels. In the past the Division of Forestry had spent as much as $36,000 contracting for additional seasonal pilots, and further savings would be realized if the Division of Wildlife pilots were cross trained as fire suppression pilots. The Division of Wildlife had three pilot positions and the Division of Forestry had two pilot positions. One position could be eliminated if the fifth position were utilized as a pilot mechanic for use as a backup pilot. If the position were eliminated entirely, the cost savings would be $55,000 yearly. The cost recovery for the hanger could still be attained without eliminating the fifth pilot position, but it would take longer. The new hangar would eliminate the need for a storage container used for federal excess property parts, which would save $2,052 per year in rental fees. There would be reduced maintenance and replacement costs because of the elimination of duplicated support equipment and vehicles between the Divisions of Wildlife and Forestry. Mr. Price inquired if any of the five pilots held mechanics' certificates. Mr. Morros stated four of the five pilots were mechanic rated. Mr. Price requested Mr. Morros to check on the division's excess parts because of the proliferation of bogus parts being manufactured around the country. He asked if the division had considered using a manufactured building for the hangar. Mr. Morros offered to look into that possibility. Mr. Marvel asked how the division arrived at $250,000 for the cost of the hangar. Mr. Morros stated the figure came through discussions with a hangar company in Carson City. The figure was based on $30 per square foot, for a total of $192,000 in construction costs, and the remainder was for engineering, preparation, site survey, grading, asphalt, surfacing and utilities to the hangar. When Mr. Marvel inquired if the Public Works Board had been asked to look at the project, Mr. Morros responded no. Mr. Marvel requested written documentation for the project. Mr. Morros commented if the Public Works Board was responsible for the project, the price would need to be adjusted upwards, and the division planned on using inmate labor. Mr. Spitler requested more detailed information be provided to the committee regarding square footage, the types of materials to be used, and engineering and architectural design. Mr. Morros remarked much of the engineering work could be accomplished in-house by the division's registered professional engineers. Mr. Spitler asked what the price difference would be if the project were done as a CIP. Mr. Morros estimated the project would cost approximately $400,000. When Ms. Giunchigliani asked how many aircraft would be housed at the Minden site, Mr. Morris responded seven. Ms. Giunchigliani inquired why the Minden site was chosen for the hangar. Mr. Morros replied the Division of Forestry hangar and interagency operation were located in Minden. Ms. Giunchigliani queried if there would be a need to purchase property in Minden. Mr. Morros stated property would be leased at 3 cents per square foot for a cost of approximately $1,300 per year versus $18,000 for the Reno property. Mr. Allard asked if the previously mentioned hangar company was going to provide a formal bid for the project and was inmate labor also going to be used. Mr. Morros indicated inmate labor had been used in the past to construct buildings, and inmate labor would be used where possible on the hangar. Mr. Price commented prison labor was set up so as not to be in competition with Nevada employers. He requested a list of buildings which were constructed using inmate labor. Mrs. Brower requested estimates be sought from a building manufacturer and at least one more contractor besides the Carson City firm. Mr. Morros agreed to provide the estimates. Mr. Molini pointed out the division had received approximately $40,000 from an insurance payoff as the result of an airplane crash, and the funds would revert to the general fund to help offset some of the costs of the hangar. Chairman Arberry called for further testimony in favor of or in opposition to A.B. 231. There being none, he closed the hearing on A.B. 231 and opened the hearing on A.B. 219. ASSEMBLY BILL 219 Makes appropriation to department of museums, library and arts for enhancement of computer system and improvement of various functions of state library. Joan G. Kerschner, Director, Department of Museums, Library & Arts, provided to the committee members a four-page document entitled "A.B. 219 Itemized Detail" (Exhibit E), a one-page document entitled "One-Shot Appropriations" (Exhibit F), and a ten-page document entitled "Basement Expansion Plans State Records Center" (Exhibit G) and explained A.B. 219 was the accumulation of several appropriations for all the divisions and sections in the new Department of Museums, Library & Arts. She stated Exhibit F provided information for improving automation and computerization throughout the department and showed how $203,721 was applied to each division and section for the biennium. The Department of Museums, Library & Arts had access to federal funding which allowed for the development of extensive computer networks with all other libraries in the state, plus universities, community colleges and other institutions. However, other members of the department did not have access to local area networks. Two goals were formed: 1) Administratively, because staff was small and at different locations, the department needed to be tied together through a computer system to share information. One area of overlap was in mailing lists, which were reduced by half by combining each agency's mailing list. Mr. Spitler asked if 100% of the maintenance and all other aspects of the request were included in the budget. Ms. Kerschner explained warranty costs were included in the budget because most of the equipment would be under warranty. Mr. Spitler inquired what percentage of $881,000 was dedicated to warranties. Ms. Kerschner stated most of the equipment came with a one-year warranty, but she would provide a cost breakdown of the warranties. Ms. Kerschner explained the second goal was the professional side of providing catalogued information from the Historical Society, the Railroad Museum, the State Museum, the Arts Council and the Historical Preservation Office. A request was made for archives bar coding and software to help provide the quick and efficient retrieval of information. Ms. Tiffany inquired if the department was moving to CD ROM technology. Ms. Kerschner stated the department had many CD ROM products and plans were being made to include CD ROM data bases for magazines and periodicals. Part of the federal money was being used to tie the department's CD ROM to the network so information could be accessed on a menu. Ms. Tiffany asked how many work stations were available to the public as opposed to the administration of the department. Ms. Kerschner remarked all the work stations in other agencies were for administrative use. The work stations at libraries would provide access to information from the Railroad Museum, the Historical Society, and the State Museum. It was the department's goal to use federal money to upgrade the computer system to the point where the public could dial a library from home to access information, thereby reducing the need for public workstations. Ms. Tiffany commented the requests seemed to be heavily loaded to administration as opposed to public information. Ms. Kerschner explained the information provided through libraries was usually purchased from vendors in the form of books and CD ROMs. The information from the other agencies in the department was original information collected in Nevada. The original information had not been organized or collected anywhere else and needed administrative personnel to organize it for the system. When Ms. Tiffany asked if the administration was the front end of organizing the data, Ms. Kerschner replied yes. Ms. Tiffany inquired if the organizing efforts would take away from personnel's existing duties. Ms. Kerschner explained staff needed to balance their time between research and the organization of data through an index system. Ms. Tiffany asked who would be developing the data base software. Ms. Kerschner replied the department would not develop a data base. The focus was to develop local networks from off-the-shelf software packages. The state library and archives had the necessary software, but some software was included in the request for upgrades. Ms. Tiffany stated she did not see an imaging system included in the request. Ms. Kerschner explained the request was for physical materials and the scanner for the bar codes, not a scanner for imaging. Ms. Tiffany inquired if the Department of Museums, Library & Arts would be the focal point to public access for government information. Ms. Kerschner pointed out it was the State Library and Archives' duty to provide government information to state government and the public. The State Library and Archives was the depository for the Federal Printing Office on the federal level and the data center for census information on the state level. The department was going to provide access to online information from Federal Printing Office data bases for the Federal Register, the Congressional Record, and Public General Bills. Mrs. Brower inquired if there were training costs included in the budget. Ms. Kerschner responded the department had an automation committee available to each member of the department, and training would be shared through the committee. Mr. Spitler requested information on the library basement storage CIP in the amount of $316,000. Ms. Kerschner explained the records management system needed to be expanded. Mr. Spitler noted there was in excess of $300,000 remaining from the 1989 CIP project and inquired why $300,000 was not charged against existing funds. Ms. Kerschner stated a large portion of the money was held for furniture. The furniture plans needed to be revised, and the Public Works Board wanted the money held until the process was completed, at which time the final bills would be applied against those funds. Mr. Spitler asked where the library basement storage CIP was on the priority list. Ms. Kerschner explained the furnishings bill of approximately $200,000 had not been paid, so very little of the $300,000 would be left. Mr. Spitler requested that Ms. Kerschner talk with the Public Works Board and let committee staff know where the basement storage CIP would rank on the priority list. Ms. Kerschner stated the allocation was originally requested as a CIP, and staff ranked it very high. When the Public Works Board reviewed it, they felt it was a remodel that could be done through Buildings and Grounds as opposed to a CIP. Mr. Spitler requested staff to review the process by which contracts were changed by the Public Works Board. Mrs. Evans commented the CIP balance needed to be sorted out. She asked if any amount of money had been budgeted in FY 1989 beyond the CIP for equipment technology. Ms. Kerschner responded no. Mrs. Evans concluded the present equipment was from the old library or supplied through federal grants. Ms. Kerschner stated that was true. The Public Works Board indicated computing equipment was not eligible for CIP funding but office furnishings were, and the other agencies of the department were not eligible for federal library money. Ms. Giunchigliani asked if there were guidelines for the types of projects which could be funded through CIP and could budgets be modified by adding money back in at the time of closing rather than voting for one-shot money. Mark Stevens, Fiscal Analyst, explained the one-shot could be denied and the money could be returned to individual budgets. The reason equipment was put into one-shot bills was because surplus money was available and there was very little on-going money available. Since equipment was a one-time expense, it was appropriate to use surplus funds. Ms. Giunchigliani inquired what were the definitions of a one-shot dollar and an on-going dollar. Mr. Stevens stated the current base budget definitions indicated that any equipment expenditures would be pulled out of the base and would not be a base expense in the following biennium. Any replacement equipment would be shown in the enhancement budget or in a one-shot area. If the equipment expenditure was approved, it would not show up in any of the Department of Museums, Library & Arts budgets as a base expense. Ms. Giunchigliani asked if expenses like staffing, additional hookups to the equipment, or maintenance contracts would show up in the base budget. Mr. Stevens stated maintenance contracts may be included in the base budget, but the purchase price of a PC would not be in a base budget. Chairman Arberry asked Ms. Kerschner to continue with her presentation. Ms. Kerschner indicated other appropriations included in A.B. 219 were for state museum ADA equipment and paint in the amount of $6,480, the Historical Society completion of compact shelving in the amount of $280,000, the Las Vegas museum replacement pickup in the amount of $13,183, and the Comstock Historic District camera and fax in the amount of $1,350. Mr. Hettrick requested written documentation regarding telecommunications, the modems, and the 486 boards be provided to the committee members. Chairman Arberry called for further testimony in support of or in opposition to A.B. 219. There being none, he closed the hearing on A.B. 219 and opened the hearing on A.B. 184. ASSEMBLY BILL 184 Makes appropriation to division of water resources of state department of conservation and natural resources for certain costs of litigation involving stream systems of Truckee, Carson and Walker rivers. Peter G. Morros, Director, Department of Conservation and Natural Resources, supplied a copy of the Division of Water Resources litigation expenditures (Exhibit H) to the committee and explained A.B. 184 was a requested appropriation for the division's litigation fund. The fund was set up to offset the costs of litigation, including appearances before the United States Supreme Court, transcript costs for depositions and the retention of consultants and expert witnesses in water litigation. The fund had received appropriations since 1973 with the exception of the 1993 and 1989 legislative sessions. There were 14 lawsuits pending, three on the Carson River, seven on the Truckee River and four on the Walker River, all relating to interstate stream systems. An attempt was made to settle many of the issues on the Truckee River lawsuit through negotiation and mediation. The federal government agreed to provide the state of Nevada with storage in Lahontan Reservoir and water quality benefits on the Truckee River. To protect the state's interest, the level of the fund should kept at $300,000. The balance as of January 1995 was approximately $148,000, with approximately $15,000 in expenses left to be paid. Mr. Marvel inquired why the appropriation was not included in the Executive Budget. Mr. Morros stated the appropriation was submitted but fell through a cracks at the Budget Office. Mr. Marvel asked if any of the money had reverted to the general fund. Mr. Morros stated a reversion was included in the 1987 appropriation in the amount of $28,000. Mr. Marvel requested an estimated cost of litigation for the next biennium. Mr. Morros remarked he hoped the costs would not use the entire $300,000 fund. The expenditures depended a great deal on the number of appealed cases and appearances before the Supreme Court. Mr. Marvel asked if the division used outside counsel as opposed to the Attorney General. Mr. Morros stated the division had contracted with one law firm for the Truckee River litigation, and the remainder of the lawsuits were handled by the Attorney General. When Mr. Dini inquired if the Snake River lawsuit had been adjudicated, Mr. Morros replied the lawsuit was continuing primarily because there were in excess of 100,000 claimants. Ms. Giunchigliani requested information regarding the cost of the private law firm. She asked if the Attorney General's litigation fund could be utilized for pending lawsuits. Mr. Morros stated not on the litigations of the Walker, Truckee or Carson Rivers. There was language that allowed consultants to be used for statewide litigation. Ms. Giunchigliani inquired if a projection could be made for the consultant portion of the bill. Mr. Morros remarked that would be almost impossible to project. Ms. Giunchigliani asked if the expenditures listed on Exhibit H could be further broken down. Mr. Morros agreed to provide the information. Mr. Close requested documentation regarding expenditures since 1991 regarding litigation. He asked if any of the expenses could be recovered through the courts. Mr. Morros commented the state had successfully recovered fees one time in the approximate amount of $2,000. Mr. Morros requested the reversion language in the bill be deleted and the appropriation be allowed to carry over into the next biennium, which might preclude a request by the division during the next biennium for additional funds. Chairman Arberry called for further testimony in favor of or in opposition to A.B. 184. There being none, he closed the hearing on A.B. 184 and opened the hearing on A.B. 224. ASSEMBLY BILL 224 Makes appropriation to department of education for distribution to local school districts. Mary Nebgen, Superintendent of the Washoe County School District, stated the needs of schools today were expensive. In 1992 Washoe County passed a bond issue in the amount of $13 million for technology expenditures. The computer equipment had some software, but it did not include funding for all the software needs. The district needed technology support in the area of occupational education, magnet programs, automotive repair, welding, computer-assisted drafting, printing and graphics. The district also needed supplies and materials. The results of a survey indicated teachers spent on average $1,000 per year for additional supplies and materials. The bulk of the appropriation in A.B. 224 would provide much needed supplies and materials. The schools in the district would be given site- level decision authority in terms of how the money would be spent. The school district also needed support for textbooks and staff development. The one-shot appropriation would not allow the district to hire additional personnel, but present teachers with expertise in certain areas would be paid to enhance staff development. Mr. Marvel inquired if the enhanced staff development would be built into the base budget. Dr. Nebgen stated since it was a one-shot appropriation, the district would make good use of the funds in staff development for a two-year period. Chairman Arberry asked how the funds would be distributed. Dr. Nebgen replied the Washoe County School Board would make the decision on distribution of the funds. However, they had developed priorities in the area of technology, textbooks, instructional supplies and staff development. Chairman Arberry inquired if any portion of the $29 million would be allocated to Eureka County. Dr. Nebgen stated the distribution would be made based on the same formula as the distributive school account. Mrs. Evans inquired if staff development efforts would cease after two years. Dr. Nebgen replied staff development would cease after two years unless there was an increase in the distributive school account. Mrs. Evans requested an explanation of the language "staffing and operating" as used in A.B. 224. Dr. Nebgen remarked that was the language in the bill, but if the funding was provided through a one-shot appropriation, it would not be wise to provide staffing which would be eliminated after a two-year period, and the same applied to operations. Chairman Arberry inquired if the language referred to by Mrs. Evans would be amended. Dr. Nebgen remarked as far as Washoe County School District was concerned, yes. Ms. Giunchigliani disclosed she was a school teacher on an unpaid leave of absence and would not be affected differently by the passage of A.B. 224 or A.B. 225. She inquired how much was lost by the Washoe County School District as a result of budget reduction of the last legislative session. Dr. Nebgen replied the school district cut $3 million from their budget. Ms. Giunchigliani asked how much money was being allocated per book for library books. Dr. Nebgen stated the amount allocated for library books was approximately $1 per student, which was not sufficient funding for library books. It was proposed a certain amount of funding be allocated to each school, and the school would decide how to spend the money. Ms. Giunchigliani inquired if Dr. Nebgen supported site-based decision making to enhance the needs of each school. Dr. Nebgen remarked A.B. 224 was an excellent vehicle to implement site-based decision making for the entire school district. Mr. Marvel asked Mr. Hataway the basis for the $29 million appropriation in A.B. 224. Don W. Hataway, Chief Assistant Budget Administrator, Budget Division, explained the figure was arrived at as the result of combining individual projects which were proposed by the Department of Education. Mr. Marvel inquired how much input local school districts had regarding the decisions made by the Department of Education. Mr. Hataway remarked the local school districts had considerable input regarding the flexibility issue. The Governor made the wording as flexible as possible so each school district could make their own determination on how the money would be spent. Mr. Marvel inquired if the Budget Office had backup material from each of the 17 school districts. Mr. Hataway responded no. He commented that the intent of the language was the allocation would be the same as the distributive school account allocation, and Eureka County would receive zero dollars because they do not receive distributive school account funding. Mr. Marvel requested information on how each school district planned to spend their allocation. Mr. Hataway stated he would request the school districts to provide the information. Mr. Marvel queried if it had been determined how much each school district would be allocated. Chairman Arberry reiterated Mr. Marvel's request and stated the committee needed to know what the spending plan would be, and then the bill could be amended to include a report from the school districts in 1997 as to how the money was actually spent. Mr. Hataway indicated it was intended that the money be put into the school improvement fund, budget account 2707, and the proposal for a report could be handled through a letter of intent. Ms. Tiffany inquired if a 2% pay raise for the Clark County School District was included in A.B. 224. Mr. Hataway replied no. Ms. Tiffany asked if a pay raise was included in another bill. Mr. Hataway said no and stated a pay raise would have to be handled through the distributive school account considerations. Mrs. Brower commented it would be helpful to freshmen legislators to have a breakdown of where the funds would be allocated. Mr. Hataway felt sure the school districts could outline their proposals for spending and provide a follow-up report of how the money was spent. Mr. Dini suggested the committee look at a similar bill passed several years prior in which schools could apply to the school board for funds based on the distributive school formula and were accountable to the board on how the funds were spent. Chairman Arberry asked if there was anyone else who wished to speak on behalf of A.B. 224. Brian Cram, Superintendent of Schools, Clark County School District, stated education was not funded equally when compared with other departments within the Executive Budget. Nevada per- pupil funding was significantly below the national average and K-12 per-pupil funding had declined in real terms since 1991. Nevada school funding had not kept pace with inflation as a result of flat funding, and local school sales tax revenue was being used to fund other state programs. Nevada's rainy day fund was overflowing because money was diverted from the school sales tax to the rainy day fund. He commented schools needed to be run in a business-like manner and preventative maintenance in the form of education would decrease the costs of prisons, police, welfare, and crisis management. He requested the committee to approve and increase the funding of A.B. 224. Mr. Marvel asked what inflation factor Dr. Cram was referring to. Dr. Cram responded he used the CPI at 2.6 for FY 1994-95, 3.1 for FY 1995-96, and 3.1 for FY 1996-97. Mr. Marvel inquired if an increase was reflected in the education budget. Dr. Cram indicated the education budget reflected no increase, and actually reflected a $4 loss per pupil after the removal of salaries. Mr. Marvel asked if the flat funding also applied to higher education. Dr. Cram did not feel he was qualified to address questions regarding higher education. Ms. Giunchigliani noted in 1989 59.6% of the overall state budget went to K-12 and higher education, which had declined to approximately 54% in 1995. Dr. Cram remarked K-12 dropped from 36% to 34% at a time when costs were increasing. Ms. Giunchigliani asked what the per-pupil expenditure was in Clark County. Michael Alastuey, Chief Financial Officer, Clark County School District, responded state support was $3,223 per pupil. With estimated local taxes, the per-pupil rate would be approximately $4,066, which would remain flat with the exclusion of salary increases for the subsequent two years. Ms. Giunchigliani requested a definition of the term roll-up. Mr. Alastuey explained roll-up was defined as the cost of providing the same level of service and commitment in the subsequent year as in the current year. In other words, the current programs and costs would be duplicated in the subsequent year, adjusting for cost and enrollment increases. When Ms. Giunchigliani asked if the Governor's budget was based on FY 1993-94 as opposed to FY 1994-95, Dr. Cram responded yes. Ms. Giunchigliani inquired if the funding as a result of A.B. 224 went through the school improvement program, had the Clark County School Board determined a priority list for spending or would a determination be made regarding the needs of individual school sites. Dr. Cram stated both were true, and there were general priorities which needed to be met. Chairman Arberry asked how the legislature could fix the problems addressed by Dr. Cram so schools could be run in a more business-like manner. Dr. Cram stated he was presenting a plan to the legislature on Wednesday, March 22, 1995. Part of the plan included reserving for education more sales tax funding, which had been under figured. The proposed budget did not increase funding for schools as a result of the increased sales tax revenue. The students in Nevada were some of the most challenging in the United States because Nevada had the largest percentage of juveniles in jail in the United States, the largest percentage of children living outside of their home, and the largest percentage of children suffering from violent deaths. School funding for Nevada was modest in that two-thirds of the states spent more for education than Nevada, and the national average of per-pupil expenditures was $5,300 while Clark County was at $4,500. Mr. Marvel asked if any portion of the $17.5 million received by the Clark County School District would be used for pay increases. Dr. Cram indicated the problem with salaries was a separate issue. Historically, salary increases had always been rolled up. Since there was no indication that would not occur again, salary increases were given based on the historical assumption. When Mr. Marvel inquired what percentage of the education budget was devoted to salaries and what percentage was devoted to support personnel, Dr. Cram replied approximately 89% was devoted to salaries and approximately 25% was devoted to support personnel. Mr. Spitler remarked he would support legislation which would stop penalizing education for saving. Education should be held accountable for skill development and not be micro managed dollarwise. Mr. Allard inquired if there was empirical data to support the hypothesis that increased funding per student would decrease juvenile delinquency, school dropouts and other problems. Dr. Cram remarked studies stating dollars do not make a difference were interesting because of the narrow data used. Costly impediments to education included children coming to school while ill with major untreated diseases, homes with absent parents, children not being read to at home, and education funds used for campus police officers. Dr. Cram requested the opportunity to fully fund a couple of schools to demonstrate what the result would be. Studies of decentralized schools in Chicago and New York demonstrated scores dropped at schools whose funding was reduced. Ms. Giunchigliani inquired if the education plan considered changing the distributive school account funding or alternative policy decisions regarding funding. Mr. Alastuey remarked he hoped the committee would discuss philosophically and conceptually the state-local funding partnership. Ms. Tiffany asked if education was provided with increased funding, could the funding which directly benefited students be increased. Dr. Cram stated he felt the percentage of funds to students could increase. Ms. Tiffany inquired if the $29 million provided in the bill changed the 11%:89% ratio. Dr. Cram responded yes. Chairman Arberry called for further testimony in support of A.B. 224. Harold Ridgway, Deputy Superintendent of Elko County School District, spoke in support of A.B. 224. He stated the money provided in the one-shot appropriation would provide the tools needed to supply education for technology, which was one of the greatest needs of students. In 1993 a committee was formed to develop an overall general technology plan for the Elko County School District, but the plan could not be implemented because of lack of funding. The one-shot appropriation would provide a starting point for implementation of the plan. Wade Johnson, Lyon County School District, provided a handout (Exhibit I) to the committee members and agreed technology was an important issue. Lyon County devised a plan, and the costs of the plan were described in Exhibit I. He requested the committee members' support in approving A.B. 224. Debbie Cahill, Nevada State Education Association, spoke in favor of A.B. 224. She stated teachers were subsidizing technology in the classroom and requested the committee members' support of the bill. Howard Barrett, Nevada Taxpayers Association, spoke in opposition to A.B. 224. He recommending deleting funding for staffing and operating costs as addressed in the bill. Chairman Arberry called for further testimony in support of or in opposition to A.B. 224. There being none, he closed the hearing on A.B. 224 and opened the hearing on A.B. 225. ASSEMBLY BILL 225 Makes appropriation to department of education for development and implementation of computer system for licensing of teachers. Mary Peterson, Superintendent of Public Instruction, read from prepared testimony (Exhibit J). Mr. Marvel inquired if A.B. 225 could be amended to include $50,000 for a Business Process Re-Engineering (BPR) study and $100,000 to implement the recommendations of the study. Ms. Peterson stated she thought the bill could be amended as recommended by Mr. Marvel. Chairman Arberry asked if the bill was passed, would the system be in operation by the end of the 1995-97 legislative session. Ms. Peterson responded it was anticipated the BPR study would be initiated in July 1995, the study would be completed in April 1996, and the resulting plan would be implemented in April 1997. Chairman Arberry inquired how much the Department of Information Services was being paid for their services. Ms. Peterson indicated the initial estimate for the BPR study of $50,000 would be paid directly to a contractor. Ms. Tiffany queried how the Professional Standards Commission would look at the BPR study since the commission dealt with policy and regulations for licensing. Ms. Peterson stated it was her understanding the BPR study would look at all phases of teacher licensing, from the way the regulations were actually established and implemented to the way licenses were actually issued, and recommendations would be made on the whole process. Ms. Tiffany concluded the issue really dealt with records management, and Ms. Peterson agreed. Chairman Arberry inquired if all schools would be networked with the program. Ms. Peterson indicated that was the ultimate goal of the Department of Education. Chairman Arberry called for further testimony in support of or in opposition to A.B. 225. There being none, he closed the hearing on A.B. 225. Mr. Stevens called attention to A.B. 128 and stated it was a supplemental appropriation for the Department of Taxation in the amount of $1,513,097 which represented a revenue shortfall of $1,264,000 and an expenditure overrun of approximately $250,000. The latest projection by the Department of Taxation was approximately $2,874 less than the bill amount of $1,513,097, and the bill could be amended by that amount. The committee members needed to make a decision on the bill quickly or the department would be out of money. * * * * * MR. MARVEL MOVED TO AMEND AND DO PASS A.B. 128. MS. GIUNCHIGLIANI SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY BY VOICE VOTE. * * * * * There being no further business, Chairman Arberry adjourned the hearing at 10:55 a.m. RESPECTFULLY SUBMITTED: Jonnie Sue Hansen, Committee Secretary Assembly Committee on Ways and Means March 20, 1995 Page