MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session January 20, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:08 a.m., on Friday, January 20, 1995, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator William J. Raggio, Chairman Senator Lawrence E. Jacobsen Senator Bob Coffin Senator William R. O'Donnell Senator Dean A. Rhoads Senator Bernice Mathews COMMITTEE MEMBERS ABSENT: Senator Raymond D. Rawson, Vice Chairman (Excused) STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Larry Peri, Program Analyst Debbra J. King, Program Analyst Sue Parkhurst, Committee Secretary OTHERS PRESENT: John P. (Perry) Comeaux, Director, Department of Administration Barbara Willis, Director, Department of Personnel Judy Holt, Chief, Administrative Services Division, Department of Personnel Jim Manning, Budget Analyst, Budget Division, Department of Administration Karen Kavanau, Director, Department of Information Services Bob Gagnier, Executive Director, State of Nevada Employees Association (SNEA) Pat Eischeid, Chief, Internal Audit, Department of Administration Tracy Raxter, Chief, Administrative Services Division, Department of Administration Senator Raggio requested committee members to advise the chairman or Dan Miles of any unavoidable absence from or late arrival to a committee meeting. Department of Personnel - Page 653 Barbara Willis, Director, Department of Personnel, provided the committee with an overview of the functions and mission of the department, followed by a summary of the agency's budget (Exhibit C) and then a detailed review of the budget. Senator Raggio asked why the recommendation for the $10,000 adjustment for printing the State Personnel Rules is contained in the base budget. Jim Manning, Budget Analyst, Budget Division, Department of Administration, said this is a pass- through cost. The senator questioned whether this is an ongoing item in the budget request, and if not, why it is in the base budget. Judy Holt, Chief, Administrative Services, Department of Personnel, testified the personnel department attempts to print the NACs (those portions of the Nevada Administrative Code pertaining to the department) every other year, but they were not printed in the base year, in Fiscal Year (FY) 1994, and so are not in the actual base. However, it is an ongoing program, so the department is proposing the item be included in the adjusted base, since it is not new. Ms. Holt said the rules are printed every other year. Senator Raggio questioned the cost involved; Ms. Holt indicated it is an expensive procedure. Referring to page 655 of the Executive Budget (M-200, Demographics Caseload Changes), Senator Rhoads requested an explanation of the discrepancy between what the Governor recommended ($37,928) and what the agency requested ($8,558) for the Information Services expenditure. Ms. Holt explained the agency's Novell network communications system had previously been maintained by a private vendor; however, the agency was told it should request maintenance through the Department of Information Services. The item was initially put in the maintenance budget, but because it is an ongoing item it was included in the base budget and was dropped out of the maintenance budget. Senator Raggio noted the absence of Vacancy Savings in the base budget. He said a Vacancy Savings item is customary where there are 10 or more positions. John P. Comeaux, Director, Department of Administration, said he would research the matter and return to the committee with his findings. Senator Raggio suggested Mr. Comeaux reflect upon this situation with respect to all the budgets and, "if it's not the case," indicate why there was a policy change. Mr. Comeaux said he would do so. Regarding the requested Administrative Aid position in M-200, Senator Raggio asked if the agency considered the position necessary for the existing caseload. Ms. Willis replied yes. Under the enhancement component of the agency's budget, Ms. Willis said, the most significant item in this request is the proposal for business process reengineering (BPR). She explained the importance of this item to the department. Ms. Willis told the committee the agency regards improved automation as a primary key to improving service to its customers and providing a more efficient, accountable government. Ms. Willis stated there are three major areas in which significant improvement could be realized: job classification, recruitment and testing. Job classification is one of the department's most labor intensive functions, Ms. Willis said; a tremendous amount of resources are devoted to this function. There is now software available that would greatly reduce the expense of performing job classification reviews. With respect to recruitment, the agency would also like to see on-line job announcements for the public and the ability for applicants to file a single application with the agency. On-line testing is an additional goal of the agency, Ms. Willis stated. She indicated the current processes would not be adequate to implement the improvements efficiently and she concurred with the recommendation of the Department of Information Services (DIS) that the agency undergo BPR. She said the department also plans to evaluate civil service reform efforts in this regard; such efforts are being undertaken throughout the country. There is a direct link between BPR and the agency's ability to accommodate these reforms. At the same time, Ms. Willis continued, as BPR is accomplished the statutes and regulations that may be driving some of the processes currently in use could be reviewed. In further testimony on the importance of BPR for her agency, Ms. Willis said the department's goal is to contract with a BPR consultant with personnel expertise. Senator Raggio inquired who the proposed contractor would be. Ms. Willis replied there is no particular vendor in mind, but it is known there are BPR consultants with expertise in both personnel and the public sector, "so we think would be able to deal with both of the issues in one study." No increase to the personnel assessment would be required as the proposed funding would come from the agency's balance forward reserve. With reference to M-300, Occupation Studies and Fringe Benefits Adjustments, Senator Raggio inquired how the agency determines which occupational studies are to be performed. Ms. Willis said the process was begun in 1985, when a legislative study recommended this type of study be undertaken for the agency's various classified jobs. At the time, the department looked at those areas most in need of review, and since then three or four major occupations have been reviewed every year. In the beginning, the occupational studies were based on need. The agency is now just beginning to repeat the cycle, which takes about 10 years, of reviewing the major occupations. The groups being reviewed in the current year are those that were started in 1985. Senator Raggio requested further explanation of how it is determined which groups will undergo an occupational study. Ms. Willis said the department attempts to perform the studies on every group. The decision to study the groups most recently examined was based on input from agencies and the age of the class specifications. Some of the class specifications were over 20 years old when this process was started; the groups in question were not as old, and therefore the study was conducted toward the end of the cycle. Ms. Willis observed that the only group to have undergone an occupational study previously was electronic data processing, which was selected to be reviewed because it is a constantly evolving field. Senator Raggio asked Ms. Willis to explain the process and guidelines involved in an occupational study. Ms. Willis replied the process is very lengthy and includes an in- depth study of each position in which information is solicited from employees and manager as to the very finite details of the positions: i.e., the duties and responsibilities; the requisite knowledge, skills and abilities required to perform those duties, and the qualification requirements to perform those duties. In addition, employees are given training in how to prepare the forms, job audits are conducted, and interviews with supervisors and managers are held. In the analyses that are subsequently performed, comparisons are made to determine the relative difficulty and complexity of the job duties and responsibilities, and job descriptions (comprehensive class specifications) are prepared. Senator Raggio inquired if comparisons are made with other public or private sector positions. Ms. Willis replied no, not in the occupational studies; it is a separate function, a compensation issue primarily reserved for the Legislature, whereas the occupational study is an internal comparison and is based on the presumption that jobs are dynamic and should be reexamined every 10 years to determine the changes that have occurred during that time. The senator remarked that each time an occupational study is done it results in a significant fiscal impact to the state. He questioned why it would cost the state over $1 million to conduct the occupational studies of the five areas in the budget. Ms. Willis replied there should be a substantial lessening of the cost as the process continues. She reiterated that some of the jobs have not been reviewed for many years. It was noted the occupational studies of three groups cost the state $3.5 million in the previous biennium. Senator Raggio said he was seeking justification on the public's behalf as to the necessity for the studies. He asked if the rationale is that in cases where upgrades occur, people are being asked to perform functions that differ from what was first envisioned. Ms. Willis indicated this is basically the case, that jobs change. Senator Raggio stated the committee needs to understand why, in addition to merit increases and cost of living increases, something occurs in a given position, outside of comparisons with other salaries, that suddenly changes and always results in an increase. Ms. Willis replied, "Jobs do change," and cited the clerical field, on which an occupational study has been conducted, as a good example of this phenomenon. Senator Raggio asked why this results in more cost to the state. Ms. Willis replied there are increased skill requirements placed on the employees, increased training requirements and increased knowledge; the jobs are more complex. She pointed out the study is done on an entire occupation, not just an individual job. Senator O'Donnell questioned whether the occupational studies are cost-effective and provide significant benefits to the state. He asked why a study is needed, since when a job is designed, "someone has to know the information about the job that is already changed and know all the requirements of the new job." Senator Raggio requested the agency submit documentation to the committee that thoroughly explains the occupational study program and some examples of why upgrades occur within the various positions, along the lines previously discussed. Ms. Willis agreed to provide the information. Noting the lawsuits and out-of-court settlements arising from the discovery of pay inequities within or between departments have been expensive for the state, Senator Coffin asked if one of the underlying reasons for the occupational studies is to avoid potential litigation. Ms. Willis said the differences in pay for similar jobs within or between departments may occur because the duties of a particular job may change over the years to accommodate an incumbent's particular abilities. After a period of time the jobs are no longer what they were initially intended to be. When all of the jobs within an occupational group are examined, it is possible to ascertain what the changes and problems have been and then to remedy the inequities so the state can comply with the equal pay for equal work requirements. Senator Mathews inquired if an audit might not accomplish the same objectives as an occupational study, at a lesser cost. Ms. Willis replied the department performs desk audits and individual classification studies, which involve a position that has experienced significant change and now meets the requirements of a higher level of individual classification. The occupational studies are much broader in scope, cover a 2-year period and are subject to approval of the Legislature. Ms. Willis reiterated the fact the agency has now completed a 10-year cycle in which all of the job classifications have been studied. Senator Raggio asked Ms. Willis to include in the information to be provided the committee the total cost to the state of all of the occupational studies. Ms. Willis said the cost of doing the studies should decrease because they have been updated in recent years, whereas when the process was first begun many of the occupations had not been examined for 20 years. Senator Raggio remarked, "I keep hearing in my tenure here that everything we do is going to cost us less in the long run, but I don't know if I can wait any longer to get there!" He said it is of great concern that more than half of the recently surveyed positions required a financial upgrade, and 2 years ago there were 1,499 positions that required upgrades costing the state $3.5 million, above and beyond any raises, longevity pay or other costs. The senator stated this situation is not understood by this committee and probably not by the public. Inquiring about the Wage and Salary Survey conducted by the personnel department, Senator Raggio asked Ms. Willis to explain how the survey is done and how frequently. Ms. Willis answered it is done every 2 years. The results of the most recent survey were being printed and were to be available shortly. Senator Raggio requested the committee be provided with a copy of the survey results. He asked Ms. Willis to describe the parameters of this survey. Ms. Willis said the department surveys in-state public employers, in-state private employers, and western state governments. Job classes in state government that are reflective of each occupational group are selected; special classes, involving recruitment problems or turnover problems, are also surveyed. Responding to Senator Raggio's question as to what is done with the survey results, Ms. Willis said the results are tabulated; then the department looks at salary disparity at the minimum, mid-point and maximum levels and reports the information to the Legislature and to the Department of Administration. The results are broken down into the various categories of employers: local government, in-state public and private, and western states, and are also combined to provide a complete overview of the agency's standing in relation to the market. Senator Raggio asked Budget Director John P. Comeaux to what extent this survey is reflected in the recommendations of the Executive Budget. Mr. Comeaux said he had reviewed the initial draft of the survey to determine the range of salary adjustments that appeared to be reasonable based on the survey. Depending on which groups state salaries are compared to, the range in the initial draft he had reviewed was from about 3 percent to over 8 percent. Mr. Comeaux said he basically used the survey as a guide in setting parameters for making a recommendation to the Governor about the level of salary increases that would appear to be justified. In response to questioning from Senator Raggio regarding the cost and utility of the biennial survey, Ms. Willis said she would provide a cost breakdown to the committee. She further responded the survey allows the Department of Personnel and the Legislature to see where the department stands in relation to the marketplace in terms of competitiveness, thereby providing information to assist in determining the funding of salary increases. Senator O'Donnell inquired about a report published by the U.S. Department of Labor containing information regarding the salaries and classifications of various industries and positions. Ms. Willis said there is very comprehensive information available at the national level; however, the agency is required by statute to conduct a salary survey of western state government, in-state public employers and in-state private employers. As a source of information available at the state level, Senator O'Donnell referred to the document published by the Employment Security Division (ESD) and distributed to all employers in the state. Ms. Willis pointed out the ESD document deals with a very broad range of classifications, whereas the personnel department is focusing on state jobs. Senator O'Donnell said it has to be one way or the other: "We can't say we want to go out into the marketplace and see if we're competing, dollar for dollar, but our state jobs are different, so we can't really compare and use that particular document; it just seems incongruent." The senator suggested the state employees would be better served by giving them the money being spent on the occupational studies and wage surveys. Ms. Willis said the salary survey is separate and distinct from the occupational studies, and the costs can be easily broken out for the committee's use. In discussion on the proposed two new Training Officer II positions requested in decision unit E-175, Improved Work Environment (page 657), Ms. Willis said the agency proposes, as part of the enhanced statewide training program in the department's strategic plan, to employ a training officer in the Carson City office and the other in the Las Vegas office. Responding to questioning from Senator Raggio on the necessity for the two new positions requested for this category, Ms. Willis explained the department currently has a statewide management training program employing three trainers who provide basic management/supervisory training, drug testing, Equal Employment Opportunity (EEO), disciplinary procedures, employee evaluation and work performance standards. There are long waiting lists of employees who need to attend training of one kind or another. The department would like to develop and conduct training that focuses on new areas, such as strategic planning (which has become a major focus of the department's role) and new management and leadership methodologies (e.g., team building and employee development). In further justification of the need for the two new training officer positions, Ms. Willis pointed out that last year the agency's three trainers provided training for 3,000 employees in 199 classes statewide, and there are currently 14,000 classified employees. The number of supervisors and managers is growing approximately 5 percent per year. There are waiting lists for the training necessary to train people to be supervisors and managers. The agency hopes to increase the number of classes and train about 5,000 employees by FY 1997. Senator Raggio asked Mr. Comeaux if the TQM (total quality management) process has been included in the budget. Mr. Comeaux responded there is not a specific item in the budget tied to the TQM (that is, a central request to support that program); there are some requests for training that are related to the TQM. Senator Raggio noted there had been some indication, particularly from the employees' groups, this was being looked at and might be in the budget. He was particularly interested in what he had heard about the adaptation of TQM into the state employment system to the extent that it encourages idea development from employees; he asked if this is being considered. Mr. Comeaux replied yes. He said the administration has started with three pilot-type TQM programs and has been able to obtain some support from private industry in that area, which involved a small cost and much time donated by trainers in private industry that specializes in TQM. The programs have been started at the State Printing Office, the Department of Employment, Training and Rehabilitation and in the Department of Business and Industry, and the plan is to continue the program on "some kind of a manageable basis," Mr. Comeaux said. TQM has been used to help solve a number of problems at the Printing Division; it involves using teams of employees who are involved in the problem area to help develop solutions to the problem. Senator Raggio suggested the concept could be implemented even in the absence of an all-out TQM program. Mr. Comeaux agreed. Ms. Willis said the department's trainers are currently using the TQM techniques in their training classes. Returning to E-125, Accessible, Flexible Responsive Government (page 656), the committee heard testimony from Karen Kavanau, Director, Department of Information Services, on the budget item Business Process Reengineering (BPR). In a background summary, Ms. Kavanau reminded the committee the 1993 Legislature passed Senate Concurrent Resolution (S.C.R.) 5 of the Sixty-seventh Session. SENATE CONCURRENT RESOLUTION 5 OF THE SIXTY-SEVENTH SESSION: Requiring the Department of Information Services to conduct a study of the feasibility of consolidating the state centers for data processing. Ms. Kavanau said S.C.R. 5 of the Sixty-seventh Session mandated the Department of Information Services (DIS) to review opportunities for improvements in technology and consolidations and to produce its results in a plan which was to be incorporated into the Governor's budget and approved by the Information and Technology Advisory Board. All of this has happened, Ms. Kavanau said, and one of the 10 strategies being recommended in the plan is BPR. She read the following definition of BPR: It is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service and speed. Ms. Kavanau further explained BPR and the rationale for its implemention. She said most departments in the executive branch of state government have not reviewed the manner in which they conduct their business, whether the processes used are manual or automated, for years or decades and possibly since the agencies were first organized. BPR steps back and takes a look at those processes, and makes appropriate changes before proceeding any further. Information systems organizations across the country, both in public and private sectors, are becoming involved as they are recognizing the value of using BPR before automating, or deploying technology. In other words, automating an inefficient process or a group of them will not improve the process but will simply automate an inefficient process. As a result of the activities in S.C.R. 5 of the Sixty-seventh Session, it has been discovered that much of the automation being deployed in state government is not getting the returns on investment, the productivity gains, that were anticipated; the same thing has been occurring in the private sector. The reason is premature deployment of new technology prior to a comprehensive examination of how the agencies are currently conducting their business. In her estimation, Ms. Kavanau continued, BPR is a good management technique which many individuals are probably employing in their own environments at present. However, because the investment in technology involves millions of taxpayer dollars, the Department of Information Services has recommended to the Governor, and the recommendation has been accepted, that agencies be required to undergo BPR on a gradual basis. Senator Raggio inquired if BPR is a modern term for "efficiency experts" whose function is to tell the agencies how they can better manage their business. Ms. Kavanau indicated the functions of such experts are part of BPR, which is "very large" and all-encompassing within an agency. The senator asked if Ms. Kavanau was saying that it does no good to start using (automated) information services and the new technology available if the basic system is inefficient, which merely builds the inefficiency into the information system. Ms. Kavanau said the gains that could otherwise be expected would not be realized in such a situation. Senator Raggio asked if BPR is to be done on a statewide basis. Ms. Kavanau replied it has been recommended in her agency's strategic plan, SPIRIT (Strategic Plan for Information Resources and Information Technology), for 10 state agencies, some of which the Governor accepted. Some of the project would be totally federally funded, and what is in the Governor's budget is what would come from the General Fund. Senator Raggio inquired as to the total cost of the BPR project for the state system. Ms. Kavanau responded that when the Department of Information Services first recommended BPR, it was determined a minimum of $4 million worth of BPR should occur before major deployment of technology occurs; about half of this can be federally funded. Senator Raggio remarked, "This isn't going to be a NOMADS [Nevada Operations Multi-Automated Data Systems] project, is it?" Ms. Kavanau said no, the federal government is not involved in BPR in Nevada state government, therefore the same hurdles encountered in that project would be avoided. Referencing a question asked earlier of Ms. Willis regarding how a vendor would be selected, Ms. Kavanau said DIS does not have the expertise to conduct BPR. Senator Raggio asked who would be preparing the request for proposal (RAP) for this project. Ms. Kavanau said the BPR is a joint project between three partners: the Department of Information Services, because of its past experience; the Department of Administration, because that is where the function will be administered; and the requesting agency or agencies. Ms. Kavanau offered the following as an example of the benefits offered by BPR in addition to what was previously described by the personnel department: One of the questions posed in S.C.R. 5 of the Sixty-seventh Session was whether the data centers should be consolidated. One recommendation that has resulted is that the data center currently operating in the Department of Motor Vehicles and Public Safety (DMV&PS) consider doing a BPR, which it is believed would be completely federally funded and which would include the Department of Prisons, the Office of the Attorney General and the Division of Emergency Management. These entities were selected on the basis of what kind and percentage of data they need to share. In order to consolidate the data centers as recommended it would be necessary to "step back and look at the processes," which would probably reveal much duplication that could be eliminated. Senator Raggio asked if one major contract would be required to implement the BPR or if a number of contracts would be entailed. Ms. Kavanau indicated the latter would be the case because different types of expertise would be involved. In response to the senator's query as to how many different groups would undergo BPR at one time, Ms. Kavanau said the Governor has recommended three, including the Department of Human Resources and the Department of Personnel. Senator Raggio asked what percentage of state government this group would cover. Ms. Kavanau noted the human resources department has approximately 3,600 employees, so the group would represent "a huge amount." Observing that none of the state agencies have undergone BPR to date and are therefore all likely candidates, Ms. Kavanau explained that to determine which agencies should undergo BPR first, DIS had interviewed the agencies and then made a list of those agencies considered to be prime candidates, either because of reorganization, their inability to communicate internally or with the public, or for other reasons. Ideally, if the funding is available and operations could come to a standstill (which Ms. Kavanau said is of course unrealistic), BPR should be conducted within all 10 agencies recommended by DIS. The Governor selected three or four candidates from the list based on the priorities provided by DIS and on what the benefits would be to the taxpayer: that is, which selection(s) for BPR would result in immediate improvements that would be felt by the taxpayers. The latter consideration is very much a driving force, Ms. Kavanau emphasized. Senator Raggio asked how the taxpayers would experience and measure an improvement from, for example, the Department of Human Resources. Ms. Kavanau said she is not familiar with that department's function other than that it deals extensively with the public. Senator Raggio indicated he is troubled by the prospect of added problems with the NOMADS project, which has experienced significant cost overruns and delays, as a result of implementing a BPR in the human resources department. He asked how the BPR would interface with the NOMADS project and whether it would delay the NOMADS system "that we are spending a small fortune on and getting not many results." Ms. Kavanau explained the NOMADS project is an application of technology, while a BPR is not technology-driven. The senator said this is understood, but Ms. Kavanau had indicated the system must be designed to function properly before the information services could be efficiently utilized. Ms. Kavanau responded the Welfare Division's NOMADS system is defined in an agreement between the federal government and the Welfare Division, and any change would have to be approved by the Governor, the Legislature and the federal government. The BPR would take this into consideration when the assessment of the business processes occurs in the human resources agency. Senator Raggio asked if the BPR would examine the various divisions of the agency to determine whether they are operating efficiently. Ms. Kavanau said she believed much of this was done in the Welfare Division prior to initiation of the NOMADS project. She pointed out she is not an expert in BPR in terms of welfare operations. Senator O'Donnell said BPR, a term that has come about in the last 5 to 7 years, allows a corporation to reassess its operations and then to answer the question, "Why do you do that?" BPR uses the information provided by technology to discover better, more efficient ways of doing business. The senator maintained that applications technology will require some law changes, which translates into technology driving law to some extent. He indicated care must be taken that the Department of Information Services not be in the position of telling the Legislature what laws need to be changed instead of the Legislature telling DIS what it wants. "There is a very delicate balance here," the senator said. "We can't have technology driving the state; but we have to listen, as a committee, to the information and technology that is available to apply in its best form to make government more efficient." Ms. Kavanau responded as follows: Senator, with all due respect, technology may or may not be a solution to the BPR. First of all the Department of Information Services is not, again, not, the coordinating agency. What we happened to do was suggest it. Its rightful home is in the Department of Administration, within the Governor's purview, so that the processes of the people he has appointed in the departments that work for him are operating at maximum efficiency. Technology may or may not be the solution. I would venture to say that if you made the condition that no new technology were to be applied, you could still realize massive improvements by going through the business process reengineering activity. So technology may be one solution, and the point I evidently did not make very well is that organizations such as the Department of Information Services across the nation, in public and private sector, are discovering that they're the ones that just happen to be recommending this because it's something we see as of tremendous value. But whether or not an agency wishes to deploy technology, I believe that as a good manager, business process reengineering is critical at this point in government. We have agencies, as you mentioned, who have not reviewed, not taken the time, not been forced (because they don't have the resources, in most cases)...but [which] have never taken the time to take a look at what each one of them is doing, why they're doing it [or whether it duplicates] what is being done in another agency. In the 1993 session we talked a lot about data repositories. How we will ever find out who is collecting what data, why they are collecting it, do they all need to collect it? Why are 17 agencies asking the taxpayer for the same information, over and over and over again? That is the benefit of business process reengineering. If, then, we decide that technology is a solution, we decide who needs to collect the information... For example, name, address, social security number, telephone number, all the things that are or are not on your driver's license: Why do 17 agencies ask for that same information? Is it necessary? [Could we not] create a data repository, centrally located, that would distribute that core information from the Department of Motor Vehicles [and Public Safety] out to all the other departments to use, and then they use it in their fashion; they manipulate the data their way. You will never find those answers out, you will never know, without something like business process reengineering. Then, once you find those answers and you want to make improvements, very definitely technology would probably be one of the answers. Acknowledging her point, Senator O'Donnell commented that DIS, which recognizes that technology is the key to efficiency, is the driving force. Ms. Kavanau said that while she appreciated this, her agency has discovered that without BPR, the state is deploying technology without necessarily realizing gain. DIS is not suggesting the application of technology is "the answer to everything," Ms. Kavanau continued, because it is not, and it can be a waste of money; that is the whole reason for BPR. Senator Raggio was reassured by Ms. Kavanau that the state would not contract with someone to do the study who also sells the technology. Remarking that he had been playing devil's advocate to some extent, the senator said no one could argue with efficiency, "if it is truly that," but what he found troubling was the problems encountered in the past with the RAP process. He asked if DIS is working on this. Ms. Kavanau replied her agency has done many RFPs and has a standard template for them, and DIS has in fact been working with "a couple of agencies" who have indicated they could proceed with their own BPRs before next July. She said DIS personnel are experts at doing RFPs. Senator Raggio said the committee would not want to find, a year from now, that the agency must "let an RAP out to get someone to do an RAP." Ms. Kavanau agreed this must not occur. Responding to Senator Raggio's queries as to whether this project can be done on a timely basis and can produce results within a reasonable time, Ms. Kavanau replied, "Absolutely." Further, she stated, the Department of Administration and the Department of Information Services have agreed that any requests for technology in the interim would be weighed with respect to whether or not the requesting agency should wait to deploy that technology until after having gone through the BPR, if it is possible for the agency to survive and meet its mission. Because of fears that technology will continue to be deployed without realizing the gains that should be realized, Ms. Kavanau continued, not only is DIS creating an efficient process to administer BPR, but it is also considering what should be done about technology and technology expenditures in the interim. Senator Raggio said he could envision a scenario in which an objective study might find that a reduction in force (RIF) within the agency involved is warranted. Ms. Kavanau concurred, citing as an example of one such occurrence the RIF within the motor vehicles department of the state of Oregon after a BPR was conducted; the staff for that agency was reduced from over 1,100 employees to approximately 700. Senator Raggio inquired if there are any plans to revisit the reclassification of state personnel in view of the concerns that arose during the past two legislative sessions regarding overtime pay and those classifications entitled to it under the federal law. In the previous legislative session, the senator noted, the Department of Personnel had championed a measure to reclassify personnel in order to avoid the requirement under the Fair Labor Standards Act (FSLA) for overtime pay; "the department receded from that." It was one of the recommendations of the interim committee that the department revisit those proposals, Senator Raggio recalled. Ms. Willis said the personnel department is following the recommendations of the interim committee, but she was not aware that the recommendation referred to by the senator was one the committee had made. The senator said he believed there was an understanding the Department of Personnel would revisit this issue. Ms. Willis replied there had been discussion on revisiting the issue through civil service reform efforts and through some technique that would involve the Legislature; however, as mentioned in her earlier testimony on the BPR, it is the department's intention to link the two because since they are so closely aligned the same issues can be evaluated, and the results obtained, through BPR. Senator Raggio asked the budget director, Mr. Comeaux, if the matter of whether or not it is economically advisable to hire new personnel rather than pay overtime has entered into any budget considerations. Mr. Comeaux replied it has, on a department- by-department basis. For example, the Department of Prisons budget contains some recommendations for staff in the area of transportation and several other areas; these recommendations directly resulted from the Budget Division's review of the overtime being consumed in those areas. Senator Jacobsen queried Ms. Willis regarding the adequacy of the personnel department's quarters in Carson City and Las Vegas, and to what extent prison industry furniture is utilized by the agency. Ms. Willis responded the offices are very adequate. She said the department utilizes the state prison industries program extensively and has virtually recovered and redone all of its furniture over the last 7 years. The program has been wonderful, Ms. Willis stated, in terms of providing various kinds of desks and cabinets and reupholstering furniture, and the refurnishing has been completed. Bob Gagnier, Executive Director, State of Nevada Employees Association (SNEA), testified in support of the Wage and Salary Survey and Occupation Study items. Noting the salary survey has existed for over 40 years, he read from the Nevada Revised Statutes (NRS 284.175) which requires the Department of Personnel to make a biennial salary survey. Mr. Gagnier stated his organization believes the salary survey is very valuable. Responding to earlier questions and comments by Senator O'Donnell, Mr. Gagnier said the comprehensive survey prepared and distributed by the Employment Security Division is aimed primarily at private industry and not government; it includes jobs peculiar to private industry. Many of the jobs in state government are peculiar to state government, Mr. Gagnier continued, and the only way to obtain an adequate study of those jobs is to study them in other governmental jurisdictions. In past years the Department of Personnel and the Employment Security Division research personnel have worked together on the salary surveys. Mr. Gagnier reminded the committee that in its surveys the personnel department also studies fringe benefits, which he said is very important and enlightening and which the Legislature has not made full use of in the past. He recommended the committee study this point. Concerning the occupational studies, Mr. Gagnier stated, "I think we lose sight, sometimes, of history and why things are done the way they are, and maybe we have to revisit them." An interim study of the Department of Personnel and the personnel system that was done 8 to 10 years ago found that many of the job descriptions of positions in state government no longer suited those positions. Because they were so outdated, some of them dating back to the sixties, they did not reflect the actual duties. The interim study was critical of the personnel department for not updating studies of jobs in state government and recommended instituting occupational studies of all jobs in state government over a period of time. The original recommendation was for every 4 years, later changed to 6 years. Mr. Gagnier stressed that occupational studies actually grew out of a legislative directive and were not created arbitrarily. He said they continue to be necessary in order to determine what positions are doing and how they are changing in a dynamic world, because jobs do change. Currently, there are job descriptions for positions in state government that are totally outdated and no longer reflect what the people in those jobs are doing, and therefore they may not be properly compensated, "either up or down." Mr. Gagnier said SNEA supports the occupational studies and considers them very valuable. Because all of the job classes have been studied since the occupational studies were instituted by the Legislature in 1985, it may be less expensive to do the studies on a periodic basis in the future. Senator Raggio remarked that questions asked by individual members of the committee do not necessarily reflect how they feel about an issue; the committee members are asked to obtain and elicit information. Mr. Gagnier replied it is good to periodically ask these questions, "otherwise people will forget." Child Care - Page 661 Although the request for funding of this budget was not recommended by the Governor, Senator Raggio requested Ms. Willis explain the reason for the agency's request for $1.8 million. Ms. Willis told the committee the Child Care Program was initiated by the Governor's Office; as the budget process developed it became apparent there is insufficient funding for the program and it was therefore not included in the recommended budget. Senator Raggio asked if the child care program would have been limited to Las Vegas and Carson City. Ms. Willis replied the agency's original proposal was to start with Carson City and Las Vegas. The senator inquired if the program would have involved contract services. Ms. Willis said yes. She explained the agency had originally proposed an advisory board or a controlling board to be made up of a member from each of several departments (education, human resources, administration and personnel) and two parents of children in the program. The board would have consisted of six board members in addition to counsel from the attorney general's office. Senator Raggio inquired how this would provide child care. Ms. Willis replied this would be just the advisory board; the actual facilities would be run by a contractor or vendor. The department had hoped to enter into an interlocal agreement with the community college system. Senator Raggio asked if, in making this request, the agency had made some determination as to the number of children that conceivably would be served by the two programs. Ms. Willis answered yes and provided figures showing the facilities would have accommodated 80 children in Carson City and 100 children in Las Vegas. Regarding the source of non-state funds for the program, Ms. Willis indicated the state employees participating in the program would pay a competitive cost for the service. Queried by Senator Raggio as to why the Governor is not recommending this program, Mr. Comeaux said the Governor's Office was initially extremely interested in this program and had encouraged the personnel department to submit a request; however, as the budget process progressed it became obvious the program was not affordable at this time. The senator said he assumed that once the program was implemented it would have to quickly become a statewide program. Mr. Comeaux concurred. State Unemployment Compensation - Page 663 Ms. Willis said the agency had annualized the costs for unemployment over the last 5 years. The costs were estimated at about $600,000 per year, and the assessments on gross payroll were assessed accordingly. These assessments can fluctuate during the biennium and can be adjusted as necessary. Senator Raggio asked how the rate indicated in the budget compares to the previous rate. Ms. Willis replied that in years past the rate was .0011. This was increased to .0022; then, during the hiring freeze and layoffs, the rate went to .0038. Currently the rate is .0017 (.17 percent). The current rates are lower; the agency has developed a small reserve and is anticipating using it to lower the rates. Senator Raggio inquired if the lower rates reflect the fact that fewer people are seeking unemployment compensation because the state employment force is not experiencing the kind of reduction in force it had in recent years. Ms. Willis answered that last year the department's expenditures were less than in previous years. Budget and Planning - Page 462 Mr. Comeaux said the primary responsibilities of this agency include budget review and management, consisting of the Executive Budget preparation, participation in the legislative review of that budget, development of annual agency work program documents based on the approved budget, review of all modifications to approved work programs, review of various accounting documents where necessary, and the fiscal year-end closing and budget reconciliation process. The division also serves as support staff for the State Board of Examiners; they review and provide a recommendation to the board on most items presented to the board and also perform a variety of procedures the board has delegated to the clerk of the board. This includes such responsibilities as approving moving and interview expenses, purchases of state vehicles, contracts under $2,000, requests for refunds under $1,000 and various other items delegated to the division. In addition, Mr. Comeaux continued, the division's planning section prepares forecasts of future state revenues. Mr. Comeaux noted the new economist approved by the 1993 Legislature has now developed an econometric model for Nevada that was used to prepare the Budget Division's forecasts of future state revenues provided to the Economic Forum. He said this model should prove very helpful to the state in the coming years. Budget and Planning also operates the State Clearinghouse Program, Mr. Comeaux said. He explained the function of the program, which has a program analyst who serves as a "single point of contact" person for interaction with federal agencies involved in environmental assessment reports pertaining to such federal activities in Nevada. In reviewing the budget requests for his agency, Mr. Comeaux noted that a few fairly significant adjustments have been made to the base budget. Two previous revenue sources for the division will no longer go directly to the division. In the past the division received an authorization from the Highway Fund and a transfer from the Department of Industrial Relations. Those cost recoveries are now handled by the Cost Allocation Plan, and those funds are going directly into the General Fund instead of the budget for this division. The other change is the request to fund the economist position from the General Fund since the previous funding, consisting of a SLIAG (State Legislation Impact Assistance Grant) from the Department of Human Resources, is no longer available. Mr. Comeaux said the only other significant adjustment made to the base budget is the request for the two Budget Analyst IV positions that the Interim Finance Committee approved adding to the division in June 1994. Regarding the maintenance budget, Senator Raggio inquired if the 15 percent over the adjusted base for the EDP System Program Charge would be reflected in other budgets. Mr. Comeaux said the increases for other divisions might not be 15 percent, but increases for this item are included in other budgets of the department. Senator O'Donnell called attention to the significant differences in the amounts requested by the agency and those recommended by the Governor for information services in the M-100 Inflation budget category. Mr. Comeaux explained the $3,087 requested by the agency is for operating supplies only; at the time the agency requests were being prepared for the budget, the information needed to estimate the charges for the services provided by the Department of Information Services was not available. The figures recommended by the Governor include the estimated charges for DIS services. Senator Raggio asked if Mr. Comeaux was representing to the committee that "that is the base cost of existing services." Mr. Comeaux said this is correct and that one of the adjustments made in that area was adjustment of the base budget for the Department of Information Services' estimate of what the division's cost would be for the current year. In response to questioning from Senator O'Donnell regarding the cost for information services last year, Mr. Comeaux said the 1994 actual cost was about $325,000, which included some enhancements. The senator commented on the percentage of the agency's 1993-1994 expenditures for information services (approximately 25 percent). Mr. Comeaux reiterated the $325,000 included enhancements as well as normal operations. He pointed out the amount of funding recommended by the Governor for 1995-1996 is lower than for 1996-1997 because the costs associated with preparing the Executive Budget "pile up" in the second year of the biennium. Senator O'Donnell asked if the division is billed by the data processing center for the time it uses on that department's mainframe computer. Mr. Comeaux replied, "Not only that, but we basically have a program that...practically lives with us through the whole process, because we will experience little glitches in the system here and there, and we have to have somebody available to fix whatever the problem is immediately." Mr. Comeaux said the M-200 decision unit, Demographics Caseload Changes, simply represents the budget and planning division's share, through the internal cost allocation, of additional office space being requested in the Administrative Services Division. He pointed out that if the enhancement item (pertaining to office space) in the administrative services budget is approved, this decision unit should be approved as well; if that item is not approved, this one would be eliminated. Regarding M-300, Occupation Studies/Fringe Benefit Adjustments, Mr. Comeaux said the amounts reflect an adjustment in the merit salaries that affected a management analyst position, a class that had previously been frozen for merit salary increases and is now being recommended to be unfrozen, adding a cost of $1,450 the first year and about $3,000 the second year. A decrease in the fringe benefit costs results in a net decrease in the first year and a small increase in the second year. Mr. Comeaux said E-125, Accessible, Flexible Responsive Government, simply represents some additional travel costs being requested for the Management Analyst I position that operates the state clearinghouse. In the past, the clearinghouse activities have not been given much emphasis; the position has been used primarily as a budget analyst. Mr. Comeaux said the position should concentrate on the clearinghouse because of the significant federal impact on Nevada lands. One way to make the person in that position much more effective is to allow the person to attend meetings held by federal agencies on various issues (for example, land planning) to keep apprised of what is going on there. An amount has also been included in E-125 for out-of-state travel which would provide the funding for one trip to Washington for the meeting attended by the "single point of contact" persons from the various states to discuss common issues. The meetings are attended by representatives from many of the federal agencies involved, and they can be very informative, said Mr. Comeaux. Senator Raggio inquired why it was necessary to put the new Grants and Projects Analyst position into decision unit E-127 of the Accessible, Flexible Responsive Government category when the various agencies are handling their own grant applications. Mr. Comeaux replied the division has grants people in many different agencies doing many different things. The idea behind this request is to have one central position whose main focus would be the researching of grants to make certain the state is taking advantage of all federal and even private grants that might be available to the state. The individual state agencies are attempting to do that, but there is some doubt as to whether the state is taking advantage of everything that is available. The grants position would be dedicated to researching those grant opportunities. Senator Raggio asked if someone could be transferred from another agency for this purpose rather than having a net position increase. Mr. Comeaux responded this might be a possibility; other state personnel have not been solicited to volunteer for this position. However, he said, it would be a good idea to have someone concentrating in this area, one way or another. Referring to testimony heard by the committee the previous day on sales tax revenues, Senator O'Donnell suggested it might be more beneficial to the state to apply the funding toward additional staff in sales tax collection than toward the review of grants. Mr. Comeaux replied there are recommendations in the budgets of the Department of Taxation for some positions to keep them "current with their growth." He reiterated the idea behind the proposed position is to better take advantage of any non-state grants that might be available if they can be located and processed. Senator Coffin was of the opinion the grants position might be useful to help cope with the situation that he anticipated will occur over the next few years as grants shrink when Congress attempts to balance the budget. Mr. Comeaux said the administration is certainly aware of the increased chances of federal funding beginning to decrease dramatically, but it is very difficult to plan when the specifics are unknown. The situation will be monitored and the planning will occur as more detail becomes available. Senator Coffin stressed the need to plan ahead because federal funding will definitely "disappear," and since the Legislature meets only every 2 years it would be more difficult to react quickly to the changing situation. He said it is fairly obvious where the cuts in federal funding for state programs would occur. The senator further stated he would be more favorable toward the requested Grants and Projects Analyst position if he knew the position would also be working on not only "squeezing the federal dollar for everything it has, but also to prepare us for when the federal dollars begin to disappear." Mr. Comeaux expressed the opinion the grants personnel of the individual agencies would be very instrumental in developing the kinds of plans referred to by Senator Coffin. He pointed out that one of the advantages of having grants personnel within the various agencies is that they are not only grants experts, but they also have program expertise, and they would be a very good resource in helping the state develop plans for coping within the diminishing level of federal funding. The senator noted it would be Mr. Comeaux's office that "has to do the dirty work" of telling people they are out of a job or telling agencies they do not have the funding. Senator Jacobsen asked Mr. Comeaux who currently coordinates the grants research activity between the state and local entities. Mr. Comeaux indicated there is no such coordination at this time, to his knowledge. Moving to decision unit M-128 (page 464), Senator Raggio inquired if the two new Data Processing Planning Analysts requested as part of what was to eventually become an in-house BPR consulting team represented "the tip of the iceberg," that is, if BPR would result in the need for many more BPR-related personnel and requests for such personnel in the budgets of the various agencies involved. Mr. Comeaux replied no and explained as follows: The idea here was that the information that the Department of Information Services provided us with indicated that there were a fairly large number of departments that sometime in the fairly near future should have a business process reengineering conducted. We were initially given a list of about the first ten, and I asked the department to resubmit that list to me, reprioritized in an order that reflected those departments that were in the most trouble in terms of now not being able to manage their information, where there was probably some significant automation expense that was going to be required and that badly needed a business process reengineering before we did that. They supplied me with that list, and I believe Karen [Kavanau] was right this morning in that the total overall cost of that list was estimated to be about $4 million. Included in the Governor's budget is somewhere between $1 million and $2 million...in General Fund cost for some of those business process reengineerings. The plan is to contract for all of those. The thinking behind this E-128 decision unit is, if we get a couple of people on board and include as part of those contracts for the BPRs a skill transfer, let these individuals participate in those BPRs that we have to contract for, acquire the skill to do them for us in the future to cut down on the necessity of having to contract for that. This would give us the central in-house capability to do it ourselves. Now, two staff would [probably] not be able to undertake a very large business process reengineering, but they could certainly do smaller ones for us. Senator O'Donnell said he could not support the E-128 new positions request because he believes (1) it does represent the tip of the iceberg and funding for more and more BPR-related personnel would be requested every session, and (2) the objectivity of an out-of-house evaluator would be lost if it is done in-house, with politics becoming involved in the interaction between department heads and the administration. Mr. Comeaux responded the senator's second point had not occurred to him, but the administration's thinking on his first point was that the state would be much better off if there were some in-house ability to participate in the process, even if it is necessary to continue contracting for the larger BPRs in the future. Regarding the proposed new Management Assistant position in decision unit E-129 (page 465), Mr. Comeaux said this request is contingent upon approval of the positions request in the preceding decision unit, E-128, and would provide clerical support for those positions. Senator Raggio requested Mr. Comeaux to explain the proposed Commission to Establish Suggested Sentences for Felonies in decision unit E-425, Safety of Citizens and Visitors, and the rationale for including it within the administration's budget rather than in an agency such as public safety. Mr. Comeaux said the first proposal from the Governor with respect to this commission would address the perception on sentencing that convicted offenders do not actually serve the full amount of the sentence imposed. The Governor is proposing the sentences be restructured "to a basis of a mandatory minimum and then a maximum" that can be served if the inmate does not "program" properly while in prison. The second feature of the Governor's recommendation is that the sentencing commission would look at developing a points system for certain violent crimes. Under this system, when an individual is convicted of such a crime a certain number of points would be assigned against the person. Mr. Comeaux said the commission would also develop a level of points that, once reached, would result in the inmate being sentenced to life in prison with no possibility of parole. The two positions being recommended in E-425 would serve as staff to the proposed sentencing commission. They would have the primary function of gathering national and in-state statistics on time served on various sentences, on the sentences in place for various kinds of crimes both in-state and nationally, and so forth. Senator Raggio asked how the proposed commission is to be constituted. Mr. Comeaux indicated uncertainty about this but said such a commission is already provided for in the statutes; the enabling legislation is forthcoming shortly. Internal Audit - Page 473 Senator Raggio welcomed Pat Eischeid to her new position as chief of Internal Audit. Ms. Eischeid referenced materials she had provided the committee: Exhibit D, containing a report to the Governor through June 30, 1994 with an update that was sent to the reorganization committee and which Ms. Eischeid said she could now update to the present; and Exhibit E, Internal Audit's new list of proposed audits for 1995-1996. Ms. Eischeid proceeded with her update. She stated that as of November 22 (1994), the investigation for the Nevada Department of Transportation was provided to the director of that department for his review and answer. He provided those answers to Ms. Eischeid by December 5, and it was then, inclusive of those answers, provided to the Governor's Office. The agricultural division's audit was recently completed; there was to be a meeting between the agricultural division and Internal Audit that afternoon "to give them the benefit of what we have viewed to be the problems there and anything we can do to assist and help them." On December 8, Ms. Eischeid continued, a seminar provided by Internal Audit was attended by 74 people, 48 of whom answered their evaluation. Ms. Eischeid said the event was "very positive," and that Internal Audit is educating people and giving them an opportunity to understand the direction that internal control will take on an overall basis and what they can do to make contributions in their own departments. Toward that end they were provided with division and agency guidelines for internal control so they can examine and assess their own operations with respect to areas in need of improvement. Internal Audit is available to help personnel at any point, to provide advice or consultation, Ms. Eischeid continued. The audit division's services have been utilized by the Dairy Commission, which has had new personnel changes and had been "totally at a loss." Internal Audit personnel helped the commission to develop the internal control procedures now being used and have offered further assistance as needed. Ms. Eischeid said her agency is attempting to be a legislative resource, enabling state agencies to understand and develop their own internal control guidelines and then follow them as closely as possible. The reason there is no base budget in the new Executive Budget and that everything in the budget for Internal Audit is in the enhancements budget, Ms. Eischeid pointed out, is that the division did not come into existence until 1993. Senator O'Donnell called attention to the mission of Internal Audit as outlined in the introduction to the agency's Annual Report (Exhibit D, page 1) and said the statements contained therein constitute business process reengineering. He suggested a duplication of efforts is involved and inquired if there is some way for the two agencies involved to get together. Ms. Eischeid replied that if there is such a duplication of effort, her agency would want to address that; however, at this time the division is concentrating on providing the various state agencies and entities the means of assessing their own internal controls. She said the problem areas could then be "filtered into" the BPR and the duplications thereby eliminated. "Somebody has to bring them up," she stated. Senator O'Donnell said his point was that the BPR is the duplication of what Internal Audit is already doing. Ms. Eischeid indicated she does not have sufficient information to answer the senator's questions on this issue. Requested by Senator Raggio to address this issue, Mr. Comeaux said the focus of what the Internal Audit Division does is different from what a BPR does, as he understands it. Internal Audit's focus is mainly on internal control, which deals heavily with the accounting processes of an agency. Mr. Comeaux agreed there is a possibility of duplication of efforts. Senator O'Donnell suggested the state would benefit by having the division responsible for BPR and the audit division work together to avoid duplication of efforts. Mr. Comeaux replied there would certainly need to be coordination of some kind. Senator Raggio asked Ms. Eischeid how her agency would coordinate with the Legislative Counsel Bureau (LCB) audits being performed. Ms. Eischeid said LCB is provided with the division's audit listings. She further explained as follows: I am in constant contact with Gary Crews. Anything that comes out of one of our audits, we give them a copy of that report, telling them exactly what kind of deficiencies we recognize, what we recommended to be a solution to anything there that is feasible. Now, if we run into a situation...and we did run into one in an investigation: There was an uncontrolled stockroom, but in order to control that stockroom we would need a position of about $36,000, whereas they were only losing $400 a year, and we felt that that was overkill. Therefore, we backed off and said no; to put someone in here to do this is not feasible under your budget, nor under the kind of losses that you are experiencing. And we have left it status quo. In further questioning of Ms. Eischeid, Senator Jacobsen expressed concern with regard to the audit of the Division of Forestry. He has read the report and is disturbed that to his knowledge the audit has never been released. He voiced the opinion certain accusations by some of the volunteers were somewhat false, and the audit report should have been released "to clear the air." Ms. Eischeid responded the report had been released, through Richard Urey in the Governor's Office to the Nevada Appeal, and an article had been written for that newspaper by Sue Morrow which included interviews of several legislators. The Internal Audit Division was given 10 allegations to prove or disprove, all of which were found to be without basis. Ms. Eischeid said newsman Cy Ryan, who had been the one to initially request the report, had received it. Senator Jacobsen noted the current Executive Budget contains a request for one or two audit positions in the Division of Forestry's budget and expressed concern this would lead to unnecessary duplication. He said it would be better to increase the frequency of LCB's audits. Ms. Eischeid stated her belief the audit position required by the forestry division is to be an adjunct to the agency's current accounting section, in order to properly handle all of the problems that have developed there. Senator Jacobsen said he appreciated the audit itself which he said commended the Division of Forestry, although that was not the impression conveyed [to the public]. Ms. Eischeid said the problem was that many people were given half-truths, and when the allegations surfaced "it was sort of a form of embarrassment to them that they had created the situation [for which] they were not vindicated..." She stated it is her responsibility to present the findings based on the documented facts, which she has done. The senator commented, "I thought that was perfect." He said he had heard one of the accusers say he hoped the audit was not to be published for the public, because the accusations were false. Ms. Eischeid said she had never seen the report itself published (for public consumption), "just opinions" that were taken from it. Merit Award Board - Page 479 Mr. Comeaux stated the purpose of the Merit Award Board is to recognize and reward state employees who submit suggestions that increase efficiency or productivity or that reduce costs for the state. Historically, the board has been funded a small amount (recently $5,000 per year) from the General Fund. In the difficult economic times experienced recently, the normal appropriation to this board was not recommended. Mr. Comeaux said that during the interim SNEA (State of Nevada Employees Association) donated some funds to enable the program to continue. In the current budget the Governor is recommending restoring the $5,000 per year appropriation. Senator Raggio invited comment from SNEA's executive director, Bob Gagnier. Mr. Gagnier reminded the committee that in the last session his organization had very much opposed the "unfunding" of this agency, which was created in 1969 and has generated hundreds of thousands of dollars in savings to the State of Nevada, because eliminating it was counterproductive. Mr. Gagnier stated, "We're talking about a very small amount of money here, and we just could not see terminating an agency whose primary purpose is to generate savings to the State of Nevada." SNEA had therefore offered to fund half of the budget for the current biennium, and the Nevada Resort Association contributed funding for the other half. Mr. Gagnier told the committee that one of the problems with the Merit Award Board is that state employees do not know about it. There has never been any funding for communications; $200 is budgeted for expenses, and the rest goes toward the awards. SNEA offered, and the offer was accepted, to print a professional quality brochure that the Merit Award Board could use to distribute to employees, thereby increasing awareness of the program and enabling employees to generate more savings for the state. While the Governor's Office did accept SNEA's suggestion, the advisor from the Department of Personnel had told the Merit Award Board not to use the brochure, 5,000 of which had been printed upon agreement with the Governor's Office. Mr. Gagnier said the brochures are now sitting unused in boxes in his office, simply because they are not imprinted with the International Typographical Union (ITU) insignia and the personnel department was advised that all printed materials distributed by the state must have the ITU emblem printed on them. He described the situation as the "height of bureaucracy." Mr. Comeaux said the only requirement he knew of is that materials printed by the state must have the ITU symbol. Mr. Gagnier said the second reason the brochure could not be distributed to state employees is that the words "printed by [SNEA]" were printed in tiny print at the bottom of the form that is used to submit ideas, and the personnel department representative objected to this on the grounds it was advertising. A third reason the Department of Personnel had objected to the brochure is that even though SNEA had received advice from the then-chairman of the Merit Award Board in designing the brochure, the representative from personnel said the form in SNEA's brochure was not exactly the same as the one the department is using. Mr. Gagnier complained that SNEA's two members on the Merit Award Board were not asked, but told they could not use the form for the reasons given by the personnel department. Senator Raggio inquired as to the cost of postage for mailing the brochures. Mr. Gagnier said SNEA has suggested the brochure be included with paychecks to eliminate the need for postage. An employee wishing to submit an idea would pay the postage to mail the form. The senator suggested Mr. Gagnier meet with Mr. Comeaux's office to facilitate implementation of the brochure's distribution. Mr. Gagnier stated his support for committee approval of the requested budget, at a minimum, and preferably the addition of some funds for advertising or other expenses. He said if the Department of Personnel does not intend to use SNEA's brochure, the association would like to see the department print one. The budget hearings were closed at this time. Dan Miles distributed to committee members an update on the sales and gaming collections for December 1994 (Exhibit H). Senator Raggio noted the increase in sales tax revenues for December represent a significant change. Mr. Miles discussed the highlights of the new data. He noted the 18.3% increase in December's gaming tax collections was somewhat misleading in that the net collections are adjusted each month based upon recalculation of the advance fee portion of the collections. There had been some negative adjustments in previous months, but there was a large positive adjustment in the December collections. Mr. Miles noted that both the gaming win and the collections were currently above the Economic Forum forecast of 7.7% for the year. The meeting was adjourned at 10:43 a.m. RESPECTFULLY SUBMITTED: Sue Parkhurst, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance January 20, 1995 Page