MINUTES OF THE ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session May 30, 1995 The Committee on Ways and Means was called to order at 9:08 a.m., on Tuesday, May 30, 1995, Chairman Arberry 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 Ms. 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. Steve Abba, Program Analyst BUDGET CLOSINGS Mr. Close asked to be allowed to recognize two members of the audience. He explained an elementary school in his district had held an essay contest regarding how a bill becomes a law. The contest resulted in a tie between two students. He noted one of the students, Miss Allison Kuhn, was present in the audience. WELFARE ADMINISTRATION - PAGE 1181 AID TO DEPENDENT CHILDREN - PAGE 1195 FOOD STAMP PROGRAM - PAGE 1209 EMPLOYMENT AND TRAINING - PAGE 1231 Chairman Arberry asked Mrs. Evans and Mr. Hettrick to present the report of the Subcommittee on Human Resources/K-12. Mrs. Evans reported the subcommittee had completed its review of the various Welfare Division budgets. She presented the closing actions recommended by the subcommittee. Mrs. Evans explained the Governor proposed to implement a Welfare reform demonstration project, effective January 1997. The Welfare reform proposals were developed during the interim as part of a joint effort between the Welfare Division and a select task force. The reform measures proposed will focus on Aid to Families With Dependent Children (AFDC) recipient employability, providing up-front assessment of client skills and training needs, case management, integrating employment and training activities with the eligibility process, expanding support services such as child care and vocational assessment, and allowing AFDC recipients to retain earned income from employment. The Governor's proposals are incorporated in three division budgets: Welfare Administration, Employment and Training, and Aid to Dependent Children. The subcommittee recommended approval of the Governor's Welfare reform proposals with some modifications. Further modifications may occur as the Legislature considers alternative Welfare reform legislation currently under discussion. Mrs. Evans stated the subcommittee was recommending approval of ten new Social Worker and six new Eligibility Certification Specialist positions as part of the case management, eligibility assessment, and marketing component of the Governor's Welfare reform demonstration project. The Social Worker positions will provide case management services for applicants seeking welfare assistance with problem barriers that may prohibit or delay employment. The Governor's proposal provided for five new Social Worker positions, one per large district office. The subcommittee recommended an additional five new Social Worker positions based on testimony which supported the need for additional staff and emphasized the importance of providing early and aggressive case management for recipients with employment barriers. This recommendation will double the division's capacity to provide case management services and target recipients with varied levels of employment barriers. The additional six Eligibility Certification Specialist positions recommended will allow the division's eligibility staff additional time during the initial eligibility interview to discuss employment issues and to assess the applicant's employability at the time of application. The subcommittee recommended the approval of significant increases in the Employment and Training budget which will allow 6,000 AFDC recipients to receive services from the JOBS program. The subcommittee's recommendations will also provide for proportionate increases in child care funding to support the expanded AFDC caseload participating in the JOBS program and increases in transitional child care funding once a recipient becomes employed. The subcommittee's recommendations provide for 15 new positions over the 1995-97 biennium which will support the division in its effort to comply with the Family Support Act requirements for statewideness and recipient participation rates for the JOBS program. The new staff recommended will be used to enhance existing service levels in the large urban district offices and to establish a presence in Fallon, Elko, Ely, and Winnemucca, where employment and training services were minimally provided or were non-existent. The Governor's Welfare reform proposal includes a provision to modify existing AFDC budgeting rules to allow eligible households to retain earned income for a specified period and to deduct actual child care expenses while employed and receiving AFDC benefits. The reform proposals will provide AFDC recipients the opportunity to retain earned income for longer periods of time without reductions made to their AFDC grant payment. The Governor's proposals will increase AFDC and Medicaid costs and will require a federal waiver. To ensure the Governor's proposals are cost neutral, which is a requirement of the federal waiver, it is anticipated the reform proposals which expand employment and training opportunities through the JOBS program, the emphasis on front end employability, assessment and marketing efforts, and the opportunity for AFDC recipients to retain earned income will encourage employment and slow AFDC caseload growth rates to offset any increased costs. AFDC caseload growth will have to be slowed by approximately 2 percent each fiscal year to ensure cost neutrality. The various Welfare caseload assumptions used in the Executive Budget were based on November 1994 caseload projections. Since then, projected AFDC, Child Health Assurance Program (CHAP), and Food Stamp caseload growth has been significantly less than the caseload assumptions used to construct the AFDC, Food Stamp, Employment and Training, and Medicaid budgets. The subcommittee adopted the Welfare Division's revised caseload projections for Fiscal Year 1996 and Fiscal Year 1997 made on March 22, 1995. The revised caseload projections are supported by the Welfare Division and the Budget Division. Mrs. Evans stated the committee should note the primary assumptions used by the Welfare Division for the revised caseload projections are consistent with the assumptions used by the Economic Forum for developing revenue estimates for the 1995-97 biennium. The revised caseload projections recommended by the subcommittee allow for a significant reduction in AFDC and Medicaid costs for the 1995-97 biennium. In the AFDC budget, a reduction of approximately $3.8 million in state funds over the 1995-97 biennium is recommended. In the Medicaid budget, a reduction of approximately $7.2 million in state funds is recommended. The subcommittee approved the recommended merger of the Welfare Administration and Food Stamp budgets, which is necessary since NOMADS allows for a seamless worker concept and the Food Stamp budget does not lend itself to having positions cost allocated if they perform eligibility work in other federal programs. The Subcommittee recommended a letter of intent be transmitted to develop separate budget accounts for eligibility and administration for presentation to the 1997 Legislature. Separate budgets would be less cumbersome and would allow for easier identification of expenditures attributed to eligibility versus administrative activities. The Executive Budget recommended a total of 86 new Eligibility Certification Specialist positions for the 1995-97 biennium based on the AFDC, Medicaid, and Food Stamp caseload projections made in November 1994. Based on analysis of the reduced caseload projections, 19 of the recommended 86 new Eligibility Certification Specialist positions could be eliminated. The subcommittee determined there were several mitigating circumstances which needed to be considered before eliminating new Eligibility Certification Specialist positions based on reduced caseload projections. For example, the AFDC error rates have increased for the past two fiscal years and the state continues to be under court supervision for having violated the 45-day case processing timeframe for AFDC and CHAP. The subcommittee recommended the salary costs of 14 new eligibility worker positions be reduced over the 1995-97 biennium. The recommended reduction of approximately $800,000 over the 1995-97 biennium does not eliminate the 14 eligibility worker positions. This will allow the division flexibility to manage the salary category and, if necessary, hire the eligibility workers if caseload justifies the need. The subcommittee recommended several technical modifications to the NOMADS category which will provide for a General Fund savings of approximately $2 million over the 1995-97 biennium. The modifications are based on a re-analysis of the NOMADS implementation plan and a redistribution of costs based upon the most recent delivery schedule and a significant reduction in Department of Information Systems systems and programming and computer facility costs for the 1995-97 biennium, which were overstated. The recommended modifications also eliminate a duplication of costs which were already included within the Welfare Administration or Child Support Enforcement budgets for interface charges, conversion costs, and electronic mail insertion costs. ASSISTANCE TO AGED AND BLIND - PAGE 1205 Mrs. Evans reported the subcommittee concurs with the Executive Budget proposal to amend the Adult Group Care Waiver Program to include clients in the Community Home Based Initiatives Program and clients being discharged from hospitals who are at risk of being placed into a nursing facility. The subcommittee's recommendations include several technical modifications based on more recent information provided by the Welfare Division which will reduce supplement costs paid to adult group care facilities for clients in the waiver program by $120,804 for Fiscal Year 1996 and $149,964 for Fiscal Year 1997. The reductions are based on a reprojection of the number of clients likely to enter the program from 75 clients to 30 clients and the program's anticipated implementation of July 1995 versus January 1995. It is anticipated the amended program will generate savings in the Medicaid budget in the amount of $240,130 for Fiscal Year 1996 and $327,582 for Fiscal Year 1997 (50/50 state/federal). HOSPITAL TAX ACCOUNT - PAGE 993 Mr. Hettrick reported the subcommittee recommended approval of the Administration's most recent inter-governmental transfer proposal submitted April 13, 1995. The Administration's latest proposal does not include the HMO tax program initially recommended in the Executive Budget, which was determined to be administratively and legally inadvisable. The latest inter-governmental transfer proposal will provide for an estimated net state benefit of approximately $15.8 million each fiscal year, which is slightly higher than the original proposal included in the Executive Budget. The participating public entities will receive an estimated net benefit of approximately $21 million for each fiscal year. The Administration's latest proposal estimates the available unobligated provider tax revenues earned from previous fiscal years at the close of Fiscal Year 1995 will be approximately $49 million versus the $45 million level included in the Executive Budget. The increase in available unobligated provider tax carry forward is a direct result of the slowing of the AFDC and CHAP caseload increases and lower Medicaid utilization rates. The subcommittee identified an additional $2.6 million in unobligated provider tax revenues the Welfare Division had reserved as a contingency for caseload fluctuations and/or underestimating Fiscal Year 1995 Medicaid expenditures. The $2.6 million contingency was initially created because the carry forward estimates in the latest Administration proposal were made in early April with several months left before the close of Fiscal Year 1995, and any unforeseen expenditure volatility could significantly change the estimates. Since the April projection, Medicaid expenditures have continued to be well within the division's estimates, which eliminates the need for the contingency. The subcommittee recommended the $2.6 million contingency be used to increase the unobligated provider tax carry forward transferred to the Medicaid budget, which will reduce the need for state General Fund appropriation in the same amount. Mr. Hettrick said the committee should note the Department of Human Resources has received formal notification from HCFA recommending a disallowance of $1,653,964 related to the hospital and noninstitutional tax program administered in Fiscal Year 1993. The formal disallowance notification was received in response to HCFA's audit of Nevada's program for periods of January 1, 1992, through June 30, 1993. Although the department feels strongly HCFA's disallowance is not appropriate, the Administration's proposed modifications to the hospital tax account budget includes a contingency reserve if the disallowance is upheld. The subcommittee concurs and recommends to set aside a contingency in the amount of the proposed disallowance in the event a final determination in the state's favor is not realized. NEVADA MEDICAID - PAGE 1215 Mr. Hettrick reported the subcommittee recommended the Welfare Division proceed with the proposed mandatory Medicaid managed care program for AFDC and CHAP recipients, effective January 1, 1996. The program is fashioned after the model recommended by the Interim Legislative Committee on Health Care. The Welfare Division submitted the 1915-B managed care waiver to HCFA on March 30, 1995. The division is striving to release the request for proposal by June 1, 1995. A 3 percent managed care savings assumption has been used to calculate savings in the Medicaid budget, which the division's actuary indicates is within range. Based on the 3 percent savings assumption, approximately $2.4 million in net state savings is projected over the 1995-97 biennium. The subcommittee heard testimony on May 26, 1995, regarding an alternative and more comprehensive Medicaid managed care proposal. The proposal had several attractive features such as expanding Medicaid services to the uninsured. However, the proposal was conceptual in nature and needs further work in regard to its funding assumptions and implementation time frames. The subcommittee believes it is much more prudent to continue moving forward with the Medicaid managed care proposal as recommended in the Executive Budget which was developed over the course of the past year and one-half. During the upcoming interim, the Legislative Committee on Health Care can further study alternative Medicaid managed care proposals and pursue modifications to the 1915-B waiver, if necessary. Further study during the interim will also allow for a clear understanding of the potential impact caps on Medicaid spending currently proposed in Congress will have on Nevada. To support the managed care effort, the subcommittee concurs with the Governor's recommendation to establish a three-person oversight unit. The subcommittee also recommends reappropriating $250,000 to continue a feasibility study of the Medicaid program's future data and information needs which was initiated during the current fiscal year. The subcommittee's recommendation to approve the Administration's latest inter- governmental transfer proposal and modifications to the amount of unobligated provider tax carry forward funding to be transferred to the Medicaid budget will reduce the state General Fund appropriation by approximately $5.2 million for Fiscal Year 1996 and an additional $5.3 million for Fiscal Year 1997. The subcommittee heard testimony that several of the small rural counties participating in the county match program are having difficulty providing county funds to be used as match to pay for the long-term care costs for Supplemental Social Security (SSI) recipients with incomes above $714 up to the 300 percent limit (currently $1,374). The Executive Budget recommends the state's responsibility for medical costs for Medicaid recipients residing in long term care institutions be retained at the $714 cap. Retaining the state's coverage requirements at the $714 threshold has shifted costs to the counties as recipients' income is adjusted and exceeds the cap. The subcommittee recommended the $714 cap be indexed upward by $36 to $750 to maintain pace with the increase the counties experienced over the past year as the upper threshold level was raised. Annually indexing the state cap upward in this manner will theoretically retain the current ratio of state and county responsibility for long term care costs. The additional costs for the recommendation is approximately $460,000 over the 1995- 97 biennium. On March 30, 1995, the Welfare Division received notification from HCFA that Nevada is responsible for providing Medicaid coverage for Title IV-E foster children who are placed in the Rite of Passage program, even though the placement was made by California. The division projected Medicaid costs could exceed $600,000 each fiscal year for these eligible children, which was not included in the Governor's recommended budget. Rite of Passage has provided information to the division which indicates approximately $75,000 per year on average is spent for medical costs for Title IV-E placements. Rite of Passage does not anticipate costs to Nevada Medicaid will be any higher. The subcommittee recommends the Medicaid budget be augmented by $75,000 each fiscal year for potential costs associated with the Rite of Passage Title IV-E eligibles. The subcommittee wished to emphasize if medical costs for Rite of Passage children exceed this amount, the modified capping language in the Appropriations Act would allow the division to request interim funding if there are no other resources to cover the additional Medicaid costs. The subcommittee recommended several technical modifications to the CPI rate increases included in the Executive Budget. The subcommittee recommended CPI rate increases for discretionary Medicaid providers be delayed by three months, which is when the division will actually be able to process the proposed increases and receive Welfare Board approval. The rate increases included in the Executive Budget are recommended effective July 1, 1995. The subcommittee also recommended a CPI rate increase be provided to the Medicaid fiscal agent, which was not included in the Executive Budget. The rate increase proposed is consistent with increases provided to other discretionary medical providers. The subcommittee also recommended the CPI increase for pharmacy providers--who by federal mandate must be reimbursed their costs--be adjusted based on historical trends. The technical modifications recommended will increase Medicaid costs for CPI increases by approximately $250,000 in state funds over the 1995-97 biennium. EMPLOYMENT AND TRAINING - PAGE 1231 Mr. Hettrick stated the subcommittee recommended several technical adjustments to the Employment and Training budget which will not impact the Governor's Welfare reform objective to provide services to 6,000 AFDC recipients. AFDC and Food Stamp caseload adjustments are recommended based on the Welfare Division's revised projections, which will reduce costs for the JOBS and ACE programs. The caseload adjustments recommended, in addition to correcting a budget error which overstated child care costs by $224,000, will reduce the Employment and Training budget by $315,156 for Fiscal Year 1996 and $687,185 for Fiscal Year 1997. Expenditures for child care represents the primary cost component within the JOBS category. The recommended budget was constructed without considering that child care costs differ between types of providers and the child's age. Further, CPI increases used were based solely on one age group of children versus a blending of ages, which overstated historical inflation increases for child care costs. In addition, the SIIS rate applied for CWEP participants was overstated based on current rates which will be used for Fiscal Year 1996 and Fiscal Year 1997. Adjusting the child care costs and SIIS rates will save $85,633 in Fiscal Year 1996 and $106,790 in Fiscal Year 1997. Mr. Hettrick stated the subcommittee concurs with the Executive Budget's proposal to provide funding to contract with the Department of Education, Training and Rehabilitation to provide in-depth assessment services for AFDC clients to identify barriers to employment. The funding recommended will provide services to 545 participants in Fiscal Year 1996 and 608 in Fiscal Year 1997. Overall, the subcommittee recommendation reduces General Fund appropriations by $12.2 million in Fiscal Year 1996 and $10.6 million in Fiscal Year 1997 compared to levels recommended in the Executive Budget. Ms. Giunchigliani asked if employability assessment would be done at the initial interview. Mr. Hettrick responded affirmatively. Intake interviews would be extended fifteen minutes to allow time for assessing whether there were barriers to employment. Presently, it takes up to 45 days to direct applicants to employment programs. Under Welfare reform, applicants would be directed to employment programs virtually immediately. Ms. Giunchigliani inquired whether funding for the 14 eligibility worker positions was salary savings which would be held in reserve or if the division would have to approach the Interim Finance Committee to fill the positions. Mrs. Evans said the division would not have to appear before the Interim Finance Committee to request authority to fill the positions. Mr. Abba said funding for the 14 positions would appear as vacancy savings. He pointed out approximately $2 million in merit salaries had been recommended in the budget which was previously not provided for because eligibility workers' merit increases have been frozen. With the additional merit salary funding, the division would have a great deal of flexibility relative to salaries and filling positions. Ms. Giunchigliani requested clarification on the state's relationship with Rite of Passage and why Nevada had to pay for Medicaid for California children. Mr. Hettrick explained the federal law required Medicaid for the children to be paid by the state of domicile. Ms. Giunchigliani questioned whether the children could be moved back to California. Mr. Hettrick stated Rite of Passage was a private business which operated out of Nevada. Mr. Hettrick stated the subcommittee had reviewed this issue extensively, and there was no way to avoid complying with the federal rules. He noted Rite of Passage had agreed to hold the costs to the $75,000 maximum. Legislation was being proposed to place Nevada children in Rite of Passage, but there was objection on the part of some judges to the Rite of Passage programs. Mr. Dini explained Rite of Passage was located on an Indian reservation over which the Legislature had no control. The youths in the program were adjudicated by the California courts. Nevada originally refused to pay for Medicaid for those youths but Rite of Passage appealed the refusal to HCFA, and HCFA ruled Nevada was responsible for the Medicaid payments. Ms. Giunchigliani stated cost of long term care was still being shifted to local governments, which represented an unfunded mandate from the state. Mr. Stevens explained prior to 1991 the counties were responsible for 100 percent of the cost for any individuals with an income above $714. In 1991 all 17 counties agreed to participate in a program whereby they received a 50 percent federal match. The counties were required to comply with Medicaid regulations. He stated this was a voluntary program on the part of the counties to leverage federal dollars. Ms. Giunchigliani pointed out the program could be jeopardized if any of the counties did not participate. She argued this plan was a compromise between the state and the counties. She expressed the opinion long term care was a state responsibility rather than a local government responsibility. Ms. Giunchigliani questioned how the caseload projections were reduced. Mr. Abba stated the forecasting factors used in projecting caseloads were faulty. He pointed out the caseload projections for April 1995 were actually lower by over 2,000 cases than the December 1994 projections. He noted applications were at the lowest level since July 1994. Ms. Giunchigliani asked for an explanation about the Hospital Tax Account. She questioned whether the waiver was still in process. Mr. Hettrick stated the division had applied for a 1915-B waiver for the Welfare reform program, not for the health care program. The Welfare reform program assumed managed care would reduce costs by approximately 2 percent to 3 percent. The proposal was aimed at moving recipients into employment sooner. He noted the waiver required a demonstration group and a control group so only a portion of recipients would be involved in the demonstration program. Mr. Price noted some youths had been injured at Rite of Passage. He stated he was opposed to providing funding to Rite of Passage. He suggested the committee should do further research into this matter. Mr. Hettrick stated he would research the issue. He pointed out there had been a change in management at Rite of Passage since the incidents Mr. Price referred to had occurred. He reiterated Nevada was not choosing to put money into the Rite of Passage program. It was a federal government requirement that Nevada pay for Medicaid for the youths in the Rite of Passage program. Mr. Price stated he would spend state money to fight the federal government to keep Nevada money from going to a program which was unsafe for youths. Mr. Hettrick noted Nevada was paying one-half of the actual medical costs of the youths in the Rite of Passage program. Rite of Passage was not making money from either the state or the federal government. Mr. Dini stated Rite of Passage had developed an impressive program over the past several years. He offered to take Mr. Price on a tour of the facility. Mr. Close noted the hospital association had expressed opposition to implementing a waiver. He inquired about the rationale for pursuing the waiver. Mrs. Evans stated a special hearing was held to hear the hospital association's proposal for an alternative Medicaid managed care program. The hospital association was suggesting a program similar to one implemented in Tennessee. Mrs. Evans stated the hospital association asserted it could include most of the uninsured in its program. A problem with implementing the program is that it would disrupt the current disproportionate share program. The largest portion of the funding for the new program would come from the allocation to University Medical Center. Mrs. Evans noted no one was rejecting the hospital association's suggestion. In fact, it included many attractive features. She explained the Welfare Division was well into the 1915-B waiver process. The intention was to move on a parallel track, using both the 1915-B and 1115 waivers. She noted obtaining the 1115 waiver required a much longer process. Mrs. Evans explained the alternative program had been proposed very late in the process, and while it had merit and the committee did not wish to reject it, it was prudent to continue to pursue the 1915-B waiver. She noted other states had followed the same process successfully. Ms. Tiffany said she was not confident the 1915-B waiver would be approved prior to the end of the legislative session. She questioned how the budget could be closed if the federal approval was not received prior to the end of the session. Mrs. Evans suggested the committee give the division the authority to move ahead, following the recommendations of the Interim Health Care Committee to pursue the 1915-B waiver. She explained that authorization was included in the subcommittee recommendations for closing the budgets. Ms. Tiffany questioned what would happen if the waiver was not approved. She noted legislation was being held in the Senate relative to this issue. Mr. Hettrick responded the effective date of the program change was January 1, 1996. He reminded the committee only half of the recipients would be participating in the demonstration program. The current program would continue to operate as a control. If the waiver was not approved all recipients would continue to participate in the current program. Mr. Abba stated legislation was pending in the Senate Finance Committee which would appropriate one-time funding of $13.5 million for the Medicaid "tail" (i.e., the costs incurred on a fee for service basis that have to be paid simultaneously as recipients enter the managed care system). He explained the appropriation would be modified to $12.8 million. Ms. Tiffany asked what would happen if the 1915-B waiver was not approved. Mr. Abba replied if the waiver was not approved the division would not have to use those monies. The Welfare Division would continue to operate on a fee for service basis as it did currently. He explained there was money in the budget to operate either system, although the budget had been reduced $2.4 million based on an assumption there would be savings from managed care. Mr. Stevens noted there was a potential for a $2.4 million shortfall in the Medicaid program if the waiver was not approved and the fee for service program continued. Ms. Tiffany asked if legislation was required in association with the waiver. Mr. Abba said there was no need for legislation in conjunction with the 1915-B waiver. Mrs. Evans pointed out the committee was dealing with a number of uncertainties related to possible federal government actions. She said the subcommittee closed the budgets based on the best information currently available. Adjustments would have to be dealt with if they arose. Mr. Spitler asked if legislation was drafted for a one-time appropriation for the Medicaid tail as a contingency fund. Mr. Abba stated there was no contingency funding in the appropriation for the Medicaid tail. Mr. Spitler questioned whether a contingency fund should be set aside. Mr. Hettrick noted the projected savings represented approximately 3 percent of the budget, and there should be that much flexibility in the budget to cover contingencies. Mrs. Evans noted the subcommittee had also discussed problems with the Welfare cap. While the cap remained, there would be flexibility for the division to approach the Interim Finance Committee should the need arise. Mr. Stevens explained the subcommittee recommended allowing the division to approach the Interim Finance Committee for additional funding in the event of changes in federal rules. Ms. Giunchigliani asked who would be providing the Medicaid managed care. Mrs. Evans responded the Welfare Division would issue a request for proposal for managed care services. Ms. Giunchigliani asked if there would be several managed care providers. Mrs. Evans stated the division was precluded from limiting the program to a sole provider. A choice of providers was required. Ms. Giunchigliani inquired whether the providers had to be health maintenance organizations (HMOs). Mrs. Evans responded affirmatively. Ms. Giunchigliani questioned whether a portion of the projected cost savings included the administrative costs of the HMOs. Ms. Giunchigliani asked if any action was being taken on the 1115 waiver. Mr. Hettrick said no action was currently being taken on the 1115 waiver. He explained attempts to obtain a 1115 waiver had proven unsuccessful so the division then pursued the 1915-B waiver. Mrs. Evans explained a 1115 waiver required implementation of a program which was somehow innovative. The division was unable to develop a program which was innovative enough to qualify for a 1115 waiver. Ms. Tiffany asked if legislation was needed to define the role of the Interim Health Care Committee. Mrs. Evans stated appropriate language could be amended into the pending Senate bill. Alternatively, direction from the committee could be issued in the form of a letter of intent. Mr. Hettrick stated the Interim Health Care Committee felt alternative programs such as the Tennessee program should be explored along with the possibility of obtaining a 1115 waiver. Ms. Tiffany suggested expanding the program to include indigent care. MR. MARVEL MOVED TO ACCEPT THE SUBCOMMITTEE RECOMMENDATION AND TO ISSUE A LETTER OF INTENT TO THE INTERIM HEALTH CARE COMMITTEE. MR. FETTIC SECONDED THE MOTION. THE MOTION CARRIED. MR. PRICE WAS OPPOSED. BUDGETS CLOSED. * * * * * Mrs. Evans and Mr. Hettrick expressed thanks to Mr. Abba for his assistance. UNIVERSITY AND COMMUNITY COLLEGE SYSTEM Co-Chairmen Arberry and Marvel presented the report of the Joint Subcommittee on Higher Education. Chairman Arberry testified a number of technical adjustments are recommended which reduce the amounts recommended in the Executive Budget. In addition, some areas of the Governor's budgets are recommended for additional funds. The major technical adjustments include: 1. Adjusting the Instruction Component on Each Campus Technical adjustments reduced the amount required to fully fund the instruction component at each campus. For example, merit was double funded for instruction at UNR and UNLV, graduate assistants were overfunded by $1 million at UNLV in Fiscal Year 1997, and fringe benefits were overfunded at each community college. 2. Increase Operating at UNLV, CCSN and System Computing Center To determine correct base budget levels, equipment purchased in Fiscal Year 1994 by the University System was not recommended in the base budget in Fiscal Year 1996. However, at UNLV and CCSN, instructional equipment was eliminated twice from the base budget, resulting in a shortfall of over $800,000 per year. In addition, equipment lease payments at the System Computing Center were incorrectly eliminated from the base budget. The subcommittee increased funding by over $1 million per year to these three budgets to correct this problem. 3. The Governor's Recommendation for Non-General Fund Support for Campus Budgets Was Not Approved The Governor recommended that the percentage of General Fund support provided for each budget in Fiscal Year 1994 be continued in each year of the 1995-97 biennium. This created a situation where some campuses generated student fees in excess of the amount required to fund expenses recommended in the Executive Budget while other campuses could not generate sufficient student fee revenues based on the per credit fee currently charged. The subcommittee reprojected all non-General Fund revenues in each budget account and balanced any over or underfunding to General Fund. This will allow UCCSN to apply uniform student fees to University and Community College campuses throughout the state. 4. Student Fee Increase The Board of Regents increased student fees by $3 per credit in Fiscal Year 1996 and an additional $3 per credit in Fiscal Year 1997. The subcommittee included the additional student fee revenue for each campus and allowed the UCCSN to expend these funds for additional support services to students without any offset to the state General Fund. 5. Instruction Funds Were Reduced at TMCC and NNCC Student enrollment at Truckee Meadows and Northern Nevada Community College did not reach anticipated levels in Fiscal Year 1995. Therefore, the projected number of full time equivalent students at each of these campuses during the upcoming biennium was lowered, resulting in reduced amounts allocated for instructional-related costs in each year of the biennium. The two major expense items in additional funding recommended by the subcommittee include funding the University System for the group insurance increase recommended by the Governor. These funds were not included in the Executive Budget. In addition, testimony indicated the community colleges were experiencing difficulty in recruiting and retaining qualified part-time instructors. Therefore, the subcommittee included $450,000 per year in additional funds to increase part-time instructor compensation. Increased funding was also recommended to add a Data Processing Auditor to the System's Internal Audit staff, provide funds required to finance family practice residents, increase state matching funds for the National Student Loan Program, and provide $200,000 to the Desert Research Institute to support operating costs over the 1995-97 biennium. Funding recommended to DRI for this purpose is a one-time appropriation without future obligation for continued support by the state. Mr. Marvel expressed thanks for the work done by Mr. Stevens in assisting the subcommittee. Mrs. Chowning noted there was inequity between the salaries of full-time and part- time staff. She pointed out $1.5 million had been requested to increase compensation to part-time instructors and the subcommittee recommended $450,000. She explained the pay per hour for part-time instructors was $4.90, which was the reason it was so difficult to recruit staff. Mr. Marvel explained the University System had suffered substantially from budget cuts over the past two biennia. He expressed the hope the subcommittee recommendations would help the University System recapture lost ground. He agreed with Mrs. Chowning there was an inequity in compensation for part-time and full-time instructors. Mr. Dini noted the $450,000 recommended represented a supplement to the amount recommended by the Governor in the Executive Budget. Ms. Giunchigliani asked how much the group insurance increase per employee was. Mr. Stevens replied the increase was approximately $10 per month in the first year and an additional $10 per month approximately in the second year. Ms. Giunchigliani questioned why the funding was not recommended in the Executive Budget. Mr. Stevens stated he did not know why it was not recommended in the Executive Budget. The subcommittee heard testimony that the Budget Division felt the University had not utilized all of its fringe benefit costs budgeted in the past. Therefore, it was unnecessary to fund this increase, assuming the University would not be utilizing all of the funding budgeted. Ms. Giunchigliani pointed out group insurance was not properly funded in the K-12 budget either. She suggested since the committee had now made a policy decision to correct deficient funding for higher education, it consider doing the same in the K-12 budgets as well. MR. MARVEL MOVED TO APPROVE THE SUBCOMMITTEE RECOMMENDATION. MR. ARBERRY SECONDED THE MOTION. Vice Chairman Evans disclosed she is an employee of the University System, and she would be abstaining from the vote. THE MOTION CARRIED UNANIMOUSLY. MRS. EVANS ABSTAINED. MS. GIUNCHIGLIANI AND MR. PRICE WERE ABSENT. BUDGETS CLOSED. * * * * * Mr. Fettic and Mr. Spitler reported the recommendations of the Joint Subcommittee on Public Safety, Natural Resources and Transportation relative to the Highway Patrol. HIGHWAY PATROL - PAGE 1755 HIGHWAY PATROL SPECIAL - PAGE 1763 Mr. Fettic reported in accordance with testimony from the Nevada Highway Patrol Association representative, the subcommittee recommended eliminating the vacancy savings in this budget account and the Highway Patrol Special budget account, merging the two accounts and eliminating the dedicated fees for the Highway Patrol Special budget account. The subcommittee also recommended the Enhanced Dignitary Protection Program be funded with five Troopers and one Lieutenant. The upgrade of one Trooper position to a Lieutenant Colonel position (decision unit E-805) to assist in management of the day-to-day responsibilities is also recommended. The subcommittee also recommended the Telecommunications Technicians not be transferred to the Department of Information Services. CAPITOL POLICE - PAGE 1769 Mr. Fettic stated the subcommittee recommended moving the Capitol Police from the Buildings and Grounds Division to the Department of Motor Vehicles and Public Safety. The subcommittee also recommended a letter of intent be issued to ensure that the Capitol Police Force remain a separate and distinct law enforcement entity and that it not be incorporated into the Nevada Highway Patrol. NARCOTICS CONTROL - PAGE 1791 Mr. Fettic said in the revised budget prepared to reflect the decreased federal funding available in Fiscal Year 1997, the agency proposed to operate with full staffing in Fiscal Year 1996 and decrease the activity of Fiscal Year 1997 to respond to the decreased funding. The subcommittee recommended decreasing the level of activity in Fiscal Year 1996 by not filling the four positions currently vacant, budgeting the vacancy savings in Fiscal Year 1996 and carrying forward the additional unused funds to Fiscal Year 1997. In addition, the subcommittee recommended budgeting the anticipated grant award for Fiscal Year 1997 with the related match from the forfeiture account. These adjusments are in response to the projected reduction in federal funding from the Byrne Memorial Law Enforcement grant. SALVAGE WRECKERS/BODY SHOPS - PAGE 1717 COMMISSIONER FOR VETERANS AFFAIRS - PAGE 1737 Mr. Fettic reported these budgets were closed with technical adjustments only. BICYCLE SAFETY PROGRAM - PAGE 1809 Mr. Spitler reported the subcommittee recommended elimination of the Bicycle Safety position in the Department of Motor Vehicles and Public Safety. In addition, the subcommittee recommended reversing the allocation of the $.50 surcharge on drivers licenses which is used to support bicycle safety positions in the Department of Transportation and Department of Motor Vehicles and Public Safety. The Department of Transportation is recommended to receive 35 percent of the surcharge and the Department of Motor Vehicles and Public Safety is recommended to receive 65 percent of the surcharge. The subcommittee recommends the funds received by the Department of Motor Vehicles and Public Safety be used to provide grants to local entities involved in bicycle safety. The subcommittee also recommended the reserve which is currently in the Department of Transportation from their share of the surcharge be transferred to the Department of Motor Vehicles and Public Safety. The subcommittee recommended 50 percent of the reserve be used for public service announcements on all traffic safety issues (pedestrian, bicycle, and motor vehicle). The subcommittee's action will require amendment of NRS 483.415 (allocation of surcharge) and NRS 483.203 (creation of DMV bicycle safety position). In addition, the statutes may have to be changed to authorize the transfer of the reserve from the Department of Transportation to the Department of Motor Vehicles and Public Safety. DEPARTMENT OF TRANSPORTATION ADMINISTRATION - PAGE 2021 Mr. Fettic reported the subcommittee recommended approval of 63 of the 68 positions requested by the agency. The subcommittee recommended decreases in consulting costs and overtime in response to the addition of the new staff. Savings from the decrease in consultant costs and overtime will be budgeted in state-only contract payments to fund additional maintenance costs. The subcommittee also recommended increasing the budget for the Washington consultant by $50,000 each year of the biennium in response to increasing federal scrutiny of the Federal Highway Administration budget. A letter of intent was recommended by the subcommittee to direct the agency to evaluate the feasibility of preparing two budgets--one for construction and maintenance costs and one for administration. If feasible, the agency should prepare two budgets for the next biennium. The subcommittee recommended segregating the costs for consultants and pass through programs not directly related to construction be put into a separate category to improve budgetary control. Mr. Fettic noted the Bicycle Safety account shares a portion of the $.50 surcharge on drivers licenses with this account. Fiscal staff has requested authority to adjust this account, if necessary, to reflect actions taken on the Bicycle Safety Program. Mr. Close requested a letter of intent be issued directing the department to investigate the possibility of implementing an "adopt an interchange" program. He pointed out a number of freeway interchanges in the state required attention. MR. MARVEL MOVED TO ACCEPT THE SUBCOMMITTEE RECOMMENDATIONS AND TO ISSUE A LETTER OF INTENT. MR. ALLARD SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. MR. DINI WAS ABSENT. BUDGETS CLOSED. * * * * * ASSEMBLY BILL 317 Makes various changes related to juvenile courts, sentencing, crimes and punishments. Ms. Giunchigliani noted language had been left out of A.B. 317. MS. GIUNCHIGLIANI MOVED TO RESCIND THE COMMITTEE'S PREVIOUS ACTION ON A.B. 317. MR. SPITLER SECONDED THE MOTION. Ms. Giunchigliani explained language authorizing the Governor to designate one member of the Commission on Sentencing to serve as chair had inadvertently been left out of the bill. Mr. Marvel noted the Co-Chairmen of the Judiciary Committee had both indicated they wished the Legislature to have that responsibility. MS. GIUNCHIGLIANI WITHDREW THE MOTION. MR. SPITLER WITHDREW THE SECOND TO THE MOTION. There being no further business, the meeting was adjourned at 10:43 a.m. RESPECTFULLY SUBMITTED: Dale Gray, Committee Secretary Assembly Committee on Ways and Means May 30, 1995 Page