MINUTES OF THE ASSEMBLY SUBCOMMITTEE ON HUMAN RESOURCES/K-12 ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session June 2, 1995 The Committee on Ways and Means was called to order at 3:15 p.m., on Friday, June 2, 1995, Chairman Jan Evans 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: Mrs. Jan Evans, Chairman Mrs. Sandra Tiffany Mr. Dennis L. Allard Mrs. Vonne Chowning Mr. Joseph E. Dini, Jr. Mr. Lynn Hettrick STAFF MEMBERS PRESENT: Mark Stevens, Fiscal Analyst Jeanne Botts, Program Analyst DISTRIBUTIVE SCHOOL ACCOUNT - PAGE 171 Chairman Evans stated the purpose of the meeting is to review remaining proposals relative to class size reduction and the distributive school account. There have been several changes to the proposal from previous hearings on these two accounts. Ms. Jeanne Botts, Program Analyst, Legislative Counsel Bureau, was asked to discuss the supplemental funding proposals (Exhibit C), revision sheets for class size reduction (Exhibit D) and budget closing sheets (Exhibit E). Ms. Botts reviewed Exhibit C outlining savings made up of additional revenues and expenditure savings. Revenue changes are reprojections of revenues based on estimates of the Economic Forum. Additional information from the forum included slot taxes have not increased as rapidly as originally thought and reflected in the Governor's Budget, leaving a $1.65 million reduction. Information received April 5, 1995 relating to estimates on statewide valuation from the Department of Taxation has also been incorporated. When these factors are combined, Ms. Botts stated revenue changes within the formula provide an additional $9.5 million in FY 1995-96 and $9.2 million in FY 1996-97. Ms. Botts continued indicating there are expenditure savings because funding for the expansion of the prison education program for Phase II of the Lovelock Prison in the second year of the biennium has been deleted due to a revised construction schedule. Revenue changes outside the formula, $0.50 increase in assessed valuation of property tax, have produced an additional $1.7 million over levels recommended in the Executive Budget. Additional savings include a reduction of salaries for one half the increase in the retirement rate, a total of $5.6 million. All savings combined to a total of $26.3 million savings over the biennium. Ms. Botts expressed the subcommittee is looking at options for not decreasing the general fund appropriation recommended by the Governor. Additions (see Exhibit C) reflect suggestions for how the subcommittee might reallocate the "savings" back into school funding. The subcommittee requested Ms. Botts to determine the actual starting salary of new teachers hired this school year and utilize this figure during the upcoming biennium. In addition non-licensed employee starting salaries was reevaluated based on concerns expressed by school district personnel. These changes in starting salaries for licensed and non-licensed personnel would require approximately $16 million in additional funds compared to the Governor's budget over the 1995-97 biennium. Ms. Botts indicated another option would be to increase funding for inflation of all items contained within the budget at a cost of $5.8 million over the biennium; the Governor's budget provided an increase for inflation for only five line items within the operating category. Additionally, a suggestion to include a onetime funding for computer hardware and software in the first year of the biennium has been included as an addition to the budget at a cost of $4.7 million in FY 1995-96 only. Ms. Botts summarized total additions of $26.5 million over the biennium which results in increasing the statewide average basic support per pupil by $37.25 in FY 95 and $34.59 in FY 96. Chairman Evans recollected that last week there was a motion to accept the revenue options ("savings") included in Exhibit C; however, the assembly subcommittee did not close expenditure options ("additions"). She stated if the subcommittee were to approve these recommendations, the subcommittee would be voting on the "additions" or expenditure portion of Exhibit C. She stated before taking a further motion on the distributive school account, she would accept questions or comments by members of the subcommittee. Mr. Dini stated the subcommittee has been looking for a way to increase funding for the distributive school account and feels the additional funding recommended would be of great assistance to the districts. Although he is not completely satisfied with this recommendation, he will support it because in reviewing the overall financial situation of the state there does not seem to be any additional money available for the distributive school account; however, Mr. Dini asked if the subcommittee is able to come up with additional funding from the savings made by the legislature that the distributive school account be reopened to improve funding beyond this motion. Ms. Tiffany requested that the onetime funding for computers be put in a separate one-shot bill rather than including it in the distributive school account funding. Chairman Evans questioned why the subcommittee would need to do this. Mr. Mark Stevens, Fiscal Analyst, stated if the concern is that these funds would be expended for ongoing operational costs rather than computer equipment, this funding does not exist in the second year of the biennium and therefore would not be available for ongoing operational costs. Clarification can be put in the school funding bill that a specific amount of money exists for this purpose only. Ms. Tiffany stated this was her exact concern and she does not want to see this onetime funding for computers used for salaries. She stated she was unsure how these funds could be tracked to ensure these funds are earmarked. Mr. Stevens responded that language could be included in the school funding bill to indicate the subcommittee's intent for this onetime purchase and that the money should not be placed into the base budget. Ms. Tiffany asked if this funding is distributed by district. Mr. Stevens answered these funds would be distributed as all other funding to school districts is allocated. The recommended funding increases the statewide basic support per pupil to $3,725 in FY 1995-96 and $3,459 in FY 1996-97. Ms. Tiffany reiterated her desire to have the conditions of this onetime funding specific in the school funding bill. Mrs. Chowning expressed her concerns that funding is not adequate in the distributive school account and no additional funding has been directed for special education. She stated she would scrutinize all remaining budgets for any possible funding which could be added to the distributive school account and requested the subcommittee to leave the door open and if additional money becomes available that this account be reopened for further funding. Mrs. Chowning asked Mr. Mike Alastuey, Associate Superintendent, Business and Finance Service of the Clark County School District, if the recommendation in inflation costs would keep the district whole in operating expenses. Mr. Mike Alastuey responded there is a shortfall in inflation based on calculations made by the Clark County School District because they included more items which were student driven. Additionally, he stated there is a shortfall in addressing group insurance needs. Mrs. Chowning asked Mr. Alastuey to illustrate his concerns with numbers. Mr. Alastuey stated to meet the needs of Clark County School District a total $7.8 million is needed for inflation and $16.2 million for insurance, a total of $24 million over the 1995-97 biennium. Mrs. Chowning indicated the shortfall being $17 million over the biennium. She expressed concern of how the school district will meet the needs of children with this shortfall. Mr. Alastuey replied he believes the overall K-12 budget is short, even with the full flexibility provided in the $29 million one-shot bill, A.B. 224. He said he was unsure what items will have to be reduced, what costs will have to be deferred, or what services will have to be reconfigured or denied in order to balance the budget. Mrs. Chowning expressed her disappointment at the $17 million shortfall. Mr. Hettrick stated that based on the budget presented in January, the statewide basic support was to be $3,460 in FY 1995-96 and $3,587 in FY 1996-97. In this motion, the subcommittee is raising statewide basic support in FY 1995-96 to $3,497 and $3,621 in FY 1996-97. MR. DINI MOVED TO CLOSE THE DISTRIBUTIVE SCHOOL BUDGET ACCOUNTS IN ACCORDANCE WITH STAFF RECOMMENDATIONS FROM EXHIBIT C WITH ADDITIONAL LANGUAGE IN THE SCHOOL FUNDING BILL TO INDICATE THE $4.7 MILLION TO BE APPROPRIATED SPECIFICALLY FOR COMPUTER HARDWARE AND SOFTWARE PURCHASES IN FY 1995-96. MR. HETTRICK SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. * * * * * CLASS SIZE REDUCTION - PAGE 177 Ms. Botts pointed out that funding for the 23 « kindergarten teachers employed since the class size reduction began in 1990-91 school year for at-risk kindergartens was inadvertently left out of the Governor's budget and the adjustment has been made as depicted in Exhibit E. Increased funding in the second year of the biennium reflects an increase in revenue from estate taxes. Ms. Botts continued explaining Exhibit D, proposed distribution of 195 class size reduction positions for FY 97 initial allocation and amended language for the 1995 Class-size Reduction bill. Adjustments in Exhibit D would provide $7.3 million for funding of class size reduction in third grade and would fund 195 positions in the second year of the biennium. Additional provisions have been made so that districts which currently participate in the class size reduction program would receive at least one teacher position. Ms. Botts summarized stating the Governor's Budget recommended $20.7 million for third grade class size reduction and this proposal reduces the funding to $7.3 million. Mrs. Chowning requested clarification that these funds are not to be used for kindergarten and should be used only for third grade class size reduction funding. Ms. Botts responded that this proposal provides flexibility for districts, but the flexibility does not extend to kindergarten. Chairman Evans asked Ms. Botts to provide for the subcommittee a full explanation of the proposed language changes in the 1995 Class-size Reduction bill. Ms. Botts began stating that the format used to bring this proposal forward to the subcommittee was to amend the Governor's recommendations, reflected in Exhibit D with proposed changes in bold print and bracketed areas to be deleted from the Governor's recommendation. She delineated proposed changes in the preamble which states the program goal of class size reduction. Ms. Botts stated Section 1 of the bill provides funding for the first year of the biennium. Subsection 1 appropriates $27.7 million from the state general fund to fund the at-risk kindergarten (23 « positions) and also grades 1 and 2. Subsection 2 clarifies that in addition to the appropriation, there is $15.8 million authorized to be spent for class size reduction from estate tax funding. The additional $15.8 million provides for the continuation of the scholarship program which has been funded for several years from the estate tax. Ms. Botts continued stating Section 2 of the bill provides funding for the second year of the biennium. Subsection 1 revised the state general fund appropriation from $53.3 million to $31.8 million and provides that this funding is provided for grades 1 and 2 and at-risk kindergartens. Subsection 2 authorizes an additional $16.7 million of the estate tax funding. Ms. Botts indicated that Section 3 of the bill is proposed new language. Subsection 1 provides $7.3 million to employ 195 teachers to reduce pupil/teacher ratio in third grade in FY 1996-97. Subsection 2 provides for a reversion of any unused funds in that fiscal year. Subsection 3 states that remaining monies from subsection 4 are to be used to pay the salaries and benefits of teachers employed by school districts to reduce the pupil/teacher ratio in third grade. Subsection 4 allows flexibility, with approval from the superintendent of public instruction, to use the funds provided in subsection 1 ($7.3 million) to implement an alternative program for reducing pupil/teacher ratio or improving pupil achievement in grades 1, 2, and 3. Ms. Botts reminded the subcommittee of testimony received from the Lyon County School District wherein a Reading Recovery Program has been implemented. Ms. Botts stated this is the type of program which could be funded based on the language included in Subsection 4(b). Ms. Botts clarified that the $7.3 million is for funding class size reduction in the third grade and school districts must submit a plan to the state superintendent delineating their use of the funding. Additionally, districts may submit an alternative program for grades 1, 2 or 3 and is subject to approval by the state superintendent, but must maintain the overall pupil/teacher ratio in kindergarten through third grade in order to apply for the alternative program. Ms. Botts finalized explaining that Section 4 is similar to previous class size reduction bills in that it states in subsection 1(a), "Must be used to meet, to the extent possible, pupil-teacher ratios required by NRS 388.700." MR. HETTRICK MOVED TO ADOPT THE PROPOSED LANGUAGE FOR THE 1995 CLASS SIZE REDUCTION BILL AND CLOSE THE BUDGET ACCOUNT IN ACCORDANCE WITH STAFF RECOMMENDATIONS. MR. ALLARD SECONDED THE MOTION. Mrs. Chowning asked if the additional $7.3 million will be used for class size reduction in third grade and if there are any ratio caps associated with this funding. Ms. Botts responded that Mrs. Chowning's understanding of the bill was correct. Mr. Dini commented that the preamble provides that Nevada will begin to reduce the pupil-teacher ratio in third grade. He remarked there is a real problem of adequate buildings in some school districts to accommodate full level funding. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. * * * * * The meeting was adjourned at 4:20 p.m. RESPECTFULLY SUBMITTED: Marcelene Wehry, Committee Secretary Assembly Committee on Ways and Means June 2, 1995 Page