MINUTES OF THE ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session June 23, 1995 The Committee on Ways and Means was called to order at 8:12 a.m., on Friday, June 23, 1995, Vice Chairman 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: 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: Mr. Morse Arberry, Jr., Chairman (Excused) STAFF MEMBERS PRESENT: Mr. Mark Stevens, Fiscal Analyst Mr. Gary Ghiggeri, Deputy Fiscal Analyst SENATE BILL 78 Makes appropriation to Department of Training for school administrators. Mr. Henry Etchemendy, Executive Director, Nevada Association of School Boards, testified S.B. 78 was drafted to provide state funding to be used in conjunction with local funding to continue Project LEAD, a training program for school administrators. He noted school administrators statewide had expressed their support for S.B. 78 during the hearing before the Senate Finance Committee. He explained Project LEAD provided training for school teachers as well as administrators. Mr. Etchemendy stated Project LEAD is viewed as an example of the state-local partnership which has existed in the area of public education in Nevada since the mid-1950s. He noted all 17 public school districts as well as the Catholic Diocese have contributed financially toward the continuation of the program. He urged the committee to support S.B. 78. Dr. Judy Williams, Director, Nevada Project LEAD, explained this program had proven to be successful. She stated all education agencies statewide were involved in Project LEAD. She distributed to the committee copies of a fact sheet encapsulating the accomplishments of the project (see Exhibit C). She noted the most dramatic element of the project was the growth. Participants in the training program totaled 110 in the first year of the project. Currently there are over 2,500 participants. She noted the program is operated by a staff of 1.5 positions. Dr. Williams stated in addition to the participants in training activities, a resource library was available to school administrators and educators throughout the state for use in providing additional training in their schools and communities. Dr. Williams indicated the 17 school districts had made commitments to continue their financial support of this program. Ms. Dede Goodnight, President, Nevada Association of School Boards, noted reports from the schools indicated this program was very beneficial. All 17 school districts were in support of Project LEAD. She urged support for S.B. 78. Ms. Giunchigliani asked what the total budget of the program was. Dr. Williams distributed to the committee copies of the proposed 1995-96 budget (see Exhibit D). She noted project income accumulated over the past several years, along with financial support from the school districts, had served as operating revenue over the past biennium. She explained the budget was developed on the premise that the state would allocate $80,000 per year over the 1995-97 biennium and the school districts would provide $70,000 per year. Ms. Giunchigliani inquired how dues from school districts were determined. Dr. Williams answered dues were calculated using a base amount of $3,000 per school district plus $25 per administrator. She noted there had been no increase in dues over the past year. She added no dues were assessed to the Catholic Diocese, whose contribution was strictly voluntary. Ms. Giunchigliani questioned whether the White Pine County School District would be able to make its contribution to the project. Dr. Williams stated the acting superintendent of White Pine County School District had indicated how valuable the program has been in the past and the desire to continue participation in the program. Ms. Giunchigliani asked how participants for training programs were selected. Dr. Williams replied notices of training programs were mailed to every school administrator in the state. She noted the most effective means of implementing change at the school site was to involve teachers as well as administrators in the training programs. Mr. Close asked if the program would continue collecting tuition income. Dr. Williams responded affirmatively. She said projected income for the coming year was estimated at $25,000. Vice Chairman Evans asked if any federal grant funding would be forthcoming. Dr. Williams stated there was currently no known opportunity for federal grant funding. Dr. Keith Rheault, Deputy Superintendent of Public Administration, expressed support for S.B. 78 on behalf of State Board of Education and the Department of Education. Mr. Spitler inquired why this funding was not included in the Department of Education's budget. Dr. Rheault replied the funding was requested in the budget but was not recommended by the Governor. Vice Chairman Evans noted the importance of training. She suggested the state paid a price for cutting training money from the budget. SENATE BILL 214 Exempts certain health maintenance organizations from specified statutory requirements and makes appropriation to Welfare Division of Department of Human Resources for Nevada Medicaid managed care program. Ms. Myla Florence, Administrator, Welfare Division, testified S.B. 214 would provide for a one-time appropriation of $12,854,622 to the division's Medicaid budget to pay for the "managed care tail." She noted this amount was less than originally contemplated because of revised caseload and cost projections. Legislation was passed in 1993 which required the Welfare Division to establish a mandatory managed care program. Initially the division must enroll Aid to Families With Dependent Children (AFDC), Child Health Assurance Program (CHAP), and Child Welfare recipients and later phase in the aged, blind, and disabled populations. The costs associated with the conversion from a fee for service program to mandatory managed care are included in decision unit E-401 of the Executive Budget. Historically, the Medicaid program has paid for costs over a three-year period because providers have up to 120 days to bill for services provided after an eligibility decision is made and it sometimes takes many months after application to make an eligibility decision. Switching from a fee for service program to a capitated rate for mandated care does not eliminate the "trailing" costs to be paid for fee for service recipients. As recipients are enrolled, the state will continue to pay for care they received under fee for service, while simultaneously paying the monthly capitated rate for their managed care. The trailing fee for service bills (the tail) constitutes a one-time cost, while managed care savings will continue in following biennia. Ms. Florence noted S.B. 214 was amended in the Senate Finance Committee to include language to exempt health maintenance organizations that provide health care services through Medicaid managed care from certain provisions in NRS Chapter 695C. The exemptions apply only to Medicaid managed care contracts. The Insurance Division expressed some concern that the amendment would limit the number of prospective bidders for provider contractors and suggested a technical adjustment to remove that limitation. Mr. Spitler asked, for clarification, if this appropriation was to pay for encumbrances incurred under the current fee for service plan. Ms. Florence said Mr. Spitler was correct. Mr. Spitler questioned whether any portion of this appropriation could be diverted to residential internships or ongoing plans related to AHEC. Ms. Florence replied the funding was to pay for obligations already incurred under the fee for service plan. Vice Chairman Evans asked what percentage of fees was paid in each of the three years. Ms. Florence answered approximately 77 percent was paid the first year, approximately 22 percent was paid in the second year, and approximately 1 percent in the third year. Vice Chairman Evans inquired whether the tail would diminish over time. Ms. Florence stated the tail would increase as time passed. Vice Chairman Evans asked Ms. Florence to expand on the need to make technical adjustments to the bill. Ms. Florence responded NRS 695C.290 allowed insurance companies to establish or contract with health maintenance organizations (HMO). She said her understanding was most HMOs were owned totally or partially by insurance companies. If this language was excluded by S.B. 214, the number of HMOs which could potentially bid on managed care provider contracts would be limited. Mr. John Crawford, Division of Insurance, testified removing this provision from Medicaid managed care could be construed as prohibiting insurance companies owning HMOs from bidding on the Medicaid business. Leaving the provision in the statute would eliminate the possibility of this interpretation. He suggested the amendment to exempt HMOs from this provision of NRS Chapter 695C could impede the bidding process. Vice Chairman Evans stated the committee wanted to open the bidding process to as many bidders as possible. Ms. Giunchigliani asked how many bidders would ultimately be selected. Ms. Florence answered the intent was to have two HMOs in northern Nevada and two to three HMOs in southern Nevada. Ms. Giunchigliani inquired about the rural areas. Ms. Florence stated the rural areas would not be covered under Medicaid managed care initially due to limited coverage available in those areas. Ms. Giunchigliani asked how much of this appropriation would pay for administrative costs. Ms. Florence responded the appropriation is to cover direct medical payments. It does not include administrative costs. Ms. Giunchigliani questioned why only two HMOs were proposed in southern Nevada. Ms. Florence said capitated rates would improve if the HMOs had a greater volume of business. Ms. Giunchigliani asked how many companies would be bidding. Ms. Florence replied there are currently seven licensed HMOs. Ms. Giunchigliani questioned why an HMO structure was adopted. Ms. Florence stated the interim health care committee recommended a structure which could provide a full array of Medicaid services under one provider and shift the risk to the HMOs. Ms. Giunchigliani inquired whether the same HMO could have contracts in both northern and southern Nevada. Ms. Florence answered the same company could bid statewide. Mr. Spitler suggested amending the bill to require that this funding be directed specifically to the Medicaid managed care tail. Ms. Florence stated she had no objection to such an amendment as long as it did not impede processing of the bill. Mr. Spitler recommended changing the language to match the corresponding language in the Executive Budget. MS. TIFFANY MOVED AMEND AND DO PASS S.B. 214 TO LIMIT FUNDING TO ACCRUED COSTS OF MEDICAID SERVICES RENDERED BUT NOT PAID BEFORE THE COMMENCEMENT OF THE MEDICAID MANAGED CARE PROGRAM AND REMOVE EXEMPTION FROM NRS 695C.290. MR. SPITLER SECONDED THE MOTION. THE MOTION CARRIED. MS. GIUNCHIGLIANI WAS OPPOSED. MR. ALLARD, MRS. CHOWNING, AND MR. PRICE WERE ABSENT FOR THE VOTE. * * * * * SENATE BILL 526 Revises duties and authorized activities of Director of Office of Science, Engineering and Technology. Ms. Janet Johnson, Deputy Budget Administrator, Budget Division, explained S.B. 526 would revise the duties and authorized activities of the Director of the Office of Science, Engineering and Technology. She explained the purpose of this bill was to allow more flexibility in recruiting for this position. Currently individuals in this field are involved in separate research contracts. They could be subject to suit for breach of contract if they were required to stop their research as a condition of accepting this position. She noted the original salary proposed for this position was too low to attract qualified individuals. Mr. Spitler questioned why the person serving in this position would be required to serve as a member of the Board of Trustees of Nevada Industry, Science, Engineering and Technology, Inc. Ms. Johnson stated the position will be interacting with that organization but should not be a part of that organization, which is a private foundation. Mr. Spitler suggested that language be deleted from the bill. Ms. Johnson said she had no objection to such an amendment. Mr. Marvel asked if the position had been filled. Ms. Johnson stated the position had not been filled because of the low salary and restrictions on outside consulting work. Individuals qualified for this position would lose a great deal of money by accepting the position. Mr. Close noted the Committee on Economic Development recommended increasing the salary for this position. He stated, for the record, he is opposed to this position. Mrs. Chowning questioned approving a salary increase for a position which had never been filled. She expressed opposition to the position. Vice Chairman Evans noted revenue anticipated to fund this position never materialized. Ms. Johnson reiterated a reason the position had not been filled was the Governor was unable to fill it with a qualified individual at the current salary level. Qualified individuals were making significantly more as private consultants. Mr. Spitler explained no General Fund money was allocated to pay for this position. The federal grant which was to have funded the position disappeared. He said the arguments for the position were compelling and there should continue to be a strong commitment to filling the position. SENATE BILL 547 Repeals tax on hospitals. Mr. Chris Thompson, Chief, Health Care Financial Analysis Unit, Department of Human Resources, testified S.B. 547 represents the third iteration of Nevada's program of using provider taxes and intergovernmental transfers to secure additional federal funds for the Medicaid program. In 1991, the department was able to use taxes on both hospitals and other Medicaid providers to bring in over $100 million in federal money, of which over $25 million over and above taxes was returned to providers directly and $75 million was used to fund the expanding Medicaid program. Due to changes in federal law, Nevada changed its program in 1993 to reduce hospital taxes by over 50 percent and eliminate taxes on other Medicaid providers. Intergovernmental transfers from county social service programs were then used to secure $75 million in additional federal money. As a result of the improving economy and lower than anticipated Medicaid expenditures in the current biennium, much of that money is still available to be carried forward to the coming biennium. In 1995 Nevada was again forced to alter the program due to changes in federal law. Limitations on the amount of disproportionate share that can be paid to individual hospitals have made it impossible to ensure that some hospitals would not lose money. Therefore, it was proposed that the hospital tax be repealed and intergovernmental transfers from public hospitals be used as the revenue source for leveraging federal dollars. Under federal law, it is impossible for the state to receive money for other than public hospitals under this type of arrangement. Money from private hospitals would be considered a tax, which would have to be imposed uniformly on all hospitals. Therefore, in order to provide any benefit to Washoe County, which does not have a public hospital, it is necessary to receive funds from the county directly and make disproportionate share payments to Washoe Medical Center as the largest provider of indigent care in the county. In exchange for that consideration, Washoe Medical Center will serve indigent patients without any direct compensation from the county over the coming biennium. The overall impact of the program is to collect approximately $73.5 million in additional federal funds over the biennium, of which $21 million per year will go directly to hospitals. The state will keep $31.5 million over the biennium. The money retained by the state will be used to fund continuing increases in the Medicaid program. University Medical Center, which provides the largest amount of indigent care, will receive the largest benefit (approximately $15.2 million per year). Generally, public hospitals will receive disproportionate share payments based on their uncompensated costs. The hospitals will then transfer back to the state 75 percent of the disproportionate share payment. Essentially, this formula will allow each hospital participating in this program to keep the first $100,000 in benefit, which was particularly important for rural hospitals. The benefit remaining after the first $100,000 will be shared equally by the hospital and the state. Because of the unique circumstances in Washoe County, Washoe Medical Center will receive a disproportionate share payment of $4.8 million per year and Washoe County will make a transfer to the state of $1.55 million as set forth in Sections 8 and 9 of the bill. These amounts were used in order to achieve reasonable equity with other counties based on the funding available. Mr. Spitler asked what the relationship of this formula is to the property tax formula for indigent care in Clark County. Mr. Thompson said property tax formulas were not looked at in establishing this formula. It was felt it was more important to look at Medicaid costs and indigent care costs from the various counties in developing this formula. Mr. Spitler asked if there is any relationship between this funding and property tax revenue for indigent care. Mr. Thompson said there is no relationship between this funding and the up to $.10 of county property taxes assessed to fund indigent care. Property tax payments and corresponding county social services programs will not be affected by S.B. 547 with the exception of Washoe County as it relates to its dealings with Washoe Medical Center. Mr. Spitler inquired whether Washoe County assessed property taxes for indigent medical care. Mr. Thompson responded affirmatively. The transfer to be made from Washoe County to the state under S.B. 547 would come from that indigent care tax base. Ms. Giunchigliani asked if Washoe Medical Center was the only private hospital included in this program. Mr. Thompson responded two other private hospitals-- Lake Mead Hospital and West Hills Hospital--would be receiving disproportionate share payments pursuant to federal law by virtue of the number of Medicaid recipients which they serve, but there would be no intergovernmental transfers to the state on behalf of those hospitals. Ms. Giunchigliani asked for clarification regarding how the formula for the distribution to Washoe Medical Center was determined. Mr. Thompson explained the largest portion of the $3.25 million benefit to Washoe Medical Center would inure to Washoe County to offset requirements of the general taxing authority. He noted in determining equity among the hospitals, if the same formula had been used for Washoe Medical Center as was used for all public hospitals, Washoe Medical Center would have received a significantly larger disproportionate share payment (as much as $17 million) based on a percentage of its uncompensated costs. It was necessary to develop a formula for Washoe Medical Center which would fit equitably within the overall program. Ms. Giunchigliani suggested disproportionate share payments could be directed only to public hospitals, giving nothing to Washoe Medical Center. Mr. Thompson stated it was deemed not to be appropriate public policy to exclude the second largest county in the state from any benefit from this formula. Ms. Giunchigliani asked what would keep other private hospitals from requesting to participate in this program. Mr. Thompson explained the program was limited to hospitals with the largest amount of indigent care in a county which does not have a public hospital. Ms. Giunchigliani questioned whether University Medical Center was subsidizing Washoe Medical Center. Mr. Thompson stated University Medical Center would receive the largest disproportionate share payment of any of the hospitals. It is treated the same as all other public hospitals, i.e., it receives a disproportionate share payment equivalent to a percentage of uncompensated costs. He noted in no case were hospitals subsidizing this program. The program was designed to access federal money which will then be divided among the hospitals and the state. University Medical Center will receive nearly 70 percent of the entire total hospital benefit. Mr. Thompson pointed out without this type of program there would be a need to cut $15.8 million plus an equal federal match from the Medicaid budget or provide $15.8 in General Fund revenue. Ms. Giunchigliani asked how long this program would be viable. Mr. Thompson noted this program had been changed each biennium to comply with federal law. He said while the state was currently in compliance with federal law, he would be surprised if the program could be maintained in its current form in the 1997-99 biennium. Vice Chairman Evans asked if all counties were required to make intergovernmental transfers. Mr. Thompson said the state was not looking to the counties directly for the payments. The payments will generally come from the public hospital itself. Vice Chairman Evans inquired whether the public hospitals had agreed to participate in this program and were financially capable of making the required payments. Mr. Thompson replied in all cases the amount of the payment to the state would be less than the disproportionate share to the hospitals. The intergovernmental transfer payments will be made from the proceeds of the disproportionate share payments. Vice Chairman Evans called for public testimony. Ms. Michelle Gamble, Nevada Association of Counties, expressed support for S.B. 547. Ms. May Shelton, Director, Washoe County Social Services, expressed support for S.B. 547 on behalf of Washoe County and Clark County. She noted the county's indigent tax levy referred to by Mr. Spitler was capped at $.10. Costs for indigent care were growing at the rate of approximately 7 percent per year. The number of people in the program is increasing at the rate of approximately 13 percent. Revenues are increasing approximately 6 percent. In Fiscal Year 1995-96 indigent care costs are projected to be $13 million. Funds available to pay those costs are projected to be $11 million. If the intergovernmental transfer program is not approved, Washoe County will have a shortfall of $1.7 million. If the program is approved the shortfall will be $31,742. She asked for the committee's help in approving S.B. 547. Mr. Fettic asked when the gap between increases in costs and revenues would become narrower. Ms. Shelton said the gap between revenues and demand for services and costs of services would continue to grow wider. She estimated in three years, without help from the state, the gap would be $5 million. She suggested the whole issue of indigent health care and Medicaid should be studied jointly by the Legislature, the state, and the counties. Mr. Close asked if hospitals could develop other funding sources, i.e., other patients. Ms. Shelton explained with managed care programs in place, hospitals were unable to increase revenues from other patients. She questioned who, other than taxpayers, would shoulder this burden. Ms. Giunchigliani stated she was sensitive to the shortfalls in Washoe County but expressed concern that Washoe County was being subsidized by funds which should be directed to Clark County. Ms. Shelton noted with the advent of block grants from the federal government, more responsibility would be assumed by the counties. Vice Chairman Evans asked what obligation private hospitals have to provide indigent care. Ms. Shelton stated in Washoe County the free care obligation of St. Mary's Hospital is estimated to be approximately $620,000 over the next fiscal year. The county will process bills for indigent care from St. Mary's but will not pay those bills until the total exceeds $620,000. It is estimated St. Mary's total indigent care costs will be approximately $915,084. In Clark County all the private hospitals and University Medical Center have similar free care obligations which total approximately $4 million. Mr. Bob Barengo, representing Sunrise Hospital, stated he was not appearing in opposition to S.B. 547. He noted current federal rules do not prohibit private hospitals from receiving disproportionate share payments. He explained Sunrise Hospital is the second largest Medicaid provider (approximately 3,200 patients), but it receives no disproportionate share payments. He suggested this issue should be reviewed. Mr. Price asked how many Medicaid patients Washoe Medical Center served. Mr. Chris Thompson stated in terms of days, University Medical Center provides approximately 35,000 days of inpatient medical care. Sunrise Hospital provides approximately 19,000 days of care, and Washoe Medical Center provides approximately 17,000 days of care. He noted the percentage of indigent care patients to total number of patients is higher for Washoe Medical Center. Mr. Price inquired whether the purpose of the program was to provide equal payments to counties. Mr. Thompson explained disproportionate share was a means of allowing states to pay for uncompensated indigent care as opposed to Medicaid care. Medicaid care is paid on a basis which is competitive with other preferred provider and HMO arrangements in the state. Disproportionate share payments are directed at the cost of care provided to patients without resources who are ineligible for public assistance. He agreed Sunrise Hospital served a number of Medicaid patients, but the hospitals being reimbursed through the disproportionate share program are the ones with the highest percentage of uncompensated indigent care. Legally, that responsibility falls to public hospitals. Private hospitals are only required to provide emergency care. That legal responsibility also applies to Washoe Medical Center, which was formerly a public hospital. Ms. Tiffany asked how it was determined to exclude private hospitals from this program. Mr. Thompson answered federal law precluded the state from collecting monies individually from hospitals unless it is done pursuant to a tax which applies equally to all hospitals in the state. Inclusion of private hospitals in the disproportionate share calculation would preclude the state from receiving money back through intergovernmental transfers. Mr. Barengo noted a policy decision was made not to collect tax revenue to be matched with federal funds which would then be returned, along with the original tax, to the taxpayer. He pointed out in the past Sunrise Hospital was allowed to participate in the disproportionate share program. Under the current policy the state is the beneficiary of the federal match, which it distributes as it sees fit. Mr. Dini noted rural hospitals received no benefit from the disproportionate share program and had to rely on Washoe Medical Center to provide indigent care. Washoe Medical was, in effect, subsidizing indigent care in the rural counties. He suggested the overall issue of indigent care statewide needed to be addressed. Mr. Thompson added another part of the indigent care issue is long-term care, whereby counties are required to pay the nonfederal share match. Currently three rural counties have expressed concern about their ability to pay that match. Separate legislation is pending to provide support for that program. Ms. Giunchigliani inquired whether the state retained a portion of the federal match to operate state programs. Mr. Thompson stated disproportionate share payments were capped pursuant to federal requirements. The formula was based on equity. By retaining one-half of the money in the state Medicaid program, the state is able to maintain Medicaid rates to all hospitals and physicians. At the same time, more money can be distributed to public hospitals which are serving large numbers of indigent care patients for which they would otherwise be uncompensated. Ms. Giunchigliani asked if the state was required to retain a portion of the federal match. Mr. Thompson replied the state could have passed on all of the money to the hospitals or it could have retained all of the money. Ms. Giunchigliani suggested this policy be reviewed. ASSEMBLY BILL 616 Makes various changes to provisions governing consumer reporting. Ms. Paula Treat, representing the Associated Credit Bureaus, testified A.B. 616 was introduced by Chairman Arberry. She noted the bill had been amended extensively in the Commerce Committee, including removing the responsibility of the Consumer Affairs Division. As a result, the fiscal impact of the bill was removed. She introduced Ms. Gina McAdam of TRW. Ms. McAdam explained A.B. 616 would require employers to notify employees prior to accessing their credit reports for purposes of employment and hiring practices and would allow employees to receive a report of their credit file at no charge. In addition, the bill would allow consumers to choose not to have their names placed on direct marketing mailing lists. The bill also clarifies what notices must be provided to the consumer at the completion of a reinvestigation period. Vice Chairman Evans called for public testimony. Mr. Ray Trease, Consumer Affairs Division, expressed support for A.B. 616. He noted the Consumer Affairs Division administers complaints on credit reports. Mr. Spitler asked if the Consumer Affairs Division agreed there was no longer any fiscal impact associated with A.B. 616. Mr. Trease responded an additional clerical position had been requested, but the division was prepared to process complaints without that position. He noted the additional position would allow for more timely processing of complaints. Mr. Spitler inquired whether the additional position was needed. Mr. Trease stated the division was prepared to relinquish the request for a new position rather than have A.B. 616 be defeated. Ms. Rose McKinney-James, Director, Department of Business and Industry, noted the Consumer Affairs Division would be able to absorb the responsibilities associated with A. B. 616, as amended, without additional staffing. Mr. Fettic asked how long it would take to process complaints if the additional position was not provided. Mr. Trease stated the division was prepared to process complaints within a day or two. Mr. Ken Scruggs, Household Financial Group Ltd., expressed concern about passage of A.B. 616. He noted credit reporting was regulated by Congress. From a creditor's standpoint, the reason for credit reporting agencies is to provide accurate information about the payment habits of consumers in order to make determinations about who should be extended credit. Problems associated with incorrect reporting have been addressed at the federal level. It is the feeling of creditors this issue is better left to Congress so one standard can be maintained throughout all states. He noted reporting mistakes could be eliminated if creditors did not have to comply with different rules in different states. Mr. Scruggs added one element used for rating states for desirability of locating credit card operations is the existence of a local credit reporting act, which indicates a certain regulatory climate within the state. Mr. Allard asked how often employers requested credit reports on employees. Mr. Scruggs stated he could not answer for other employers. His company requests a credit report on all applicants for employment as a routine part of the hiring process. Mr. Marvel asked how lending institutions had testified on this bill in the Commerce Committee. Mr. Spitler replied the lending institutions expressed concerns with the bill in its original form. He noted businesses involved in multi-state operations have to look carefully at changes in state regulations which may drive up their costs of doing business. Mr. Marvel agreed in this case it may be more beneficial to leave regulation to Congress. He also expressed concern this legislation could slow processing of credit approvals and underwriting loans. Mr. Scruggs stated this legislation would not delay loan processing unless an error occurred. He reiterated the likelihood of mistakes increased when dealing with state regulations which differed from the federal standard. Ms. Mary Santina Lau, Executive Director, Retail Association of Nevada, expressed opposition to A.B. 616. She noted she had not had the opportunity to review the amendments to the bill. She expressed support for the federal pre-emption in legislation. Ms. Santina stated, in response to Mr. Allard's question, a credit report is traditionally requested for applicants for employment in the gaming industry. ASSEMBLY BILL 581 Makes various changes concerning Department of Business and Industry. Vice Chairman Evans noted A.B. 581 had been heard previously. Ms. Giunchigliani noted the Attorney for Injured Workers had suggested an amendment to this bill. Mr. Hettrick noted he had discussed the proposed amendment with the Attorney for Injured Workers. Her concern was how she could ethically represent injured workers against the state when she is under the control of a state agency director. Mr. Hettrick suggested the bill be amended to provide that supervision of the Attorney for State Workers would be limited to those areas which did not create a conflict and that she be allowed the necessary autonomy to represent injured workers in cases against the state. Ms. Rose McKinney-James, Director, Department of Business and Industry, stated she had not spoken with the Attorney for Injured Workers. She suggested proposed technical amendments which had been submitted by the department adequately addressed the Attorney for Injured Workers' concerns. She explained language had been included in the proposed amendment which stated no functions or actions may be undertaken in violation of court rules or statutes (e.g., attorney- client privilege). Ms. McKinney-James stated she felt strongly that administrative supervision and uniformity relative to management control and fiscal responsibility should rest with the director of the department. Mr. Close questioned whether the director could maintain supervisory responsibility over agencies without serving as a member of the agency staff. Ms. McKinney- James stated the director has supervisory responsibility. She noted in many agencies there was a potential for a challenge of that responsibility. The purpose of this bill was to avoid such a challenge and to allow the director of the department to travel on behalf of an agency using agency funds, to function as a member of an agency to perform necessary tasks, and to serve as a hearings officer. Mr. Marvel asked if the Dairy Commission would be exempt from the provisions of A.B. 581. Ms. McKinney-James answered affirmatively. Vice Chairman Evans noted the committee is still troubled by the accountability factor associated with this bill. It appears the director has responsibility without authority. MR. FETTIC MOVED AMEND AND DO PASS A.B. 581 TO EXCLUDE THE DAIRY COMMISSION AND THE RURAL HOUSING AUTHORITY FROM THE DEPARTMENT OF BUSINESS AND INDUSTRY. MS. TIFFANY SECONDED THE MOTION. THE MOTION CARRIED. MR. PRICE WAS OPPOSED. MRS. CHOWNING WAS ABSENT FOR THE VOTE. * * * * * Mr. Close stated he did not want to limit the director's opportunity to work with agencies in her department to improve their operations. He expressed concern, however, about the extent of her involvement in agency operations. He suggested a letter of intent be issued to the director requiring her to report back to the committee regarding her involvement in agency operations. Ms. Giunchigliani agreed with Mr. Close's statement. MR. CLOSE MOVED TO ISSUE A LETTER OF INTENT TO THE DIRECTOR OF BUSINESS AND INDUSTRY PURSUANT TO A.B. 581 REQUIRING THE DIRECTOR TO REPORT TO THE COMMITTEE REGARDING HER INVOLVEMENT IN AGENCY OPERATIONS. MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * There being no further business, the meeting was adjourned at 10:29 a.m. RESPECTFULLY SUBMITTED: Dale Gray, Committee Secretary Assembly Committee on Ways and Means June 23, 1995 Page