MINUTES OF THE JOINT MEETING OF SENATE COMMITTEE ON FINANCE AND ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session January 30, 1995 The joint meeting of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman William J. Raggio, at 8:00 a.m., on Monday, January 30, 1995, in Room 119 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. SENATE COMMITTEE MEMBERS PRESENT: Senator William J. Raggio, Chairman Senator Raymond D. Rawson, Vice Chairman Senator Lawrence E. Jacobsen Senator Bob Coffin Senator William R. O'Donnell Senator Dean A. Rhoads Senator Bernice Mathews ASSEMBLY COMMITTEE MEMBERS PRESENT: Mr. Morse Arberry, Jr., Chairman Mr. John W. Marvel, Chairman Mrs. Jan Evans, Vice Chairman Ms. Sandra Tiffany, Vice Chairman Mr. Dennis L. Allard Mrs. Maureen E. Brower Mrs. Vonne Chowning Mr. Jack D. Close Mr. Joseph E. Dini, Jr. Mr. Thomas A. Fettic Ms. Chris Giunchigliani Mr. Lynn Hettrick Mr. Bob Price Mr. Larry L. Spitler STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Sue Parkhurst, Committee Secretary OTHERS PRESENT: Karen Kavanau, Director, Department of Information Services Pam Case, Deputy Director, Department of Information Services Donna Varin, Chief, Planning and Research, Department of Information Services Rose McKinney-James, Director, Department of Business and Industry Deb Erickson, Budget Analyst, Budget Division, Department of Administration Birgit K. Baker, Administrative Services Officer, Department of Business and Industry Constance L. Longero, Administrator, Unclaimed Property Division, Department of Business and Industry Jack Christopher, Unclaimed Property Division, Department of Business and Industry The first item on the agenda was the presentation of the Strategic Plan for Information Resources and Information Technology (SPIRIT), which was developed in response to 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. Karen Kavanau, Director, Department of Information Services (DIS), was requested by Chairman Raggio to address the following areas of interest to the committee in her presentation: (1) the directives provided for the study, (2) the reasons, if any, why these directives were not followed, (3) the net product of the study and (4) the plan's implementation into the Executive Budget. Prior to the presentation, Assemblyman Larry L. Spitler disclosed he is vice president of human resources and corporate communications for Sprint Central Telephone Company. Noting the discussion of the SPIRIT plan could include discussion of companies that provide voice and data transmission services, both competitors and non-competitors of Sprint, Mr. Spitler said he would participate in such discussion at this hearing since no decision-making would be involved at this time. Mrs. Kavanau provided an overview of the purpose, functions and operations of the Department of Information Services using prepared text (Exhibit C). Pam Case, Deputy Director, Department of Information Services, presented an overview of the SPIRIT plan that included the basis for the related decisions made by the department. (The overview/presentation material is referenced herein as Exhibit D. Original is on file in the Research Library.) Ms. Case told the committee the agency chose to use the strategic plan as the means of response to S.C.R. 5 of the Sixty- seventh Session because it was strongly felt the recommendations regarding consolidation must be based on something meaningful, such as where the state should be headed with regard to technology, and not just whether or not consolidation would save money or be efficient. Reviewing the contents of the plan presented in Exhibit D, Ms. Case began with a summary of Appendix A in Tab 12 of the report. She said the initial team assigned to the project consisted of 32 members who attended a session lasting several days to identify what a strategic plan is and what it should contain. After that the agency conducted three levels of interviews. The first level, or executive level, involved agency directors or elected officials; the mid-level interviews were conducted with all division heads in each agency, and the third level consisted of a full inventory of all technology assets and resources in the state. Ms. Case continued her review of the contents of Tab 12 in Exhibit D. Referring to the chart on page 3 of Tab 12, Ms. Case said that in the mid-level and executive interviews the interviewees were asked how technology is serving them, what their problems are and what their missions are. The results of the interviews indicate almost all of the agencies experience the same problems: not enough staff, paper intensive processes, the burden of federal mandates, the large number of manual processes, state law changes, the work load associated with performing duties and serving citizens (work load/resources), a cumbersome service arena, and the need for business process reengineering (BPR). Regarding the issues related specifically to technology (page 4, Tab 12, Exhibit D), Ms. Case said the interview results were rather alarming to the Department of Information Services. Most agencies either do not have enough computers or they have old, inadequate technology. Some computer applications throughout the state are more than 20 years old. Ms. Case said the largest complaint by far was the inability to share data and the fragmented data among systems. The interviews also elicited information from the agencies that are direct customers of the DIS regarding the quality of service they are receiving from the department and the areas that need improvement, Ms. Case continued (see page 5, Tab 12, Exhibit D.) She noted the DIS is a chargeback agency, which means an agency must be funded to pay for the information services. She said there were a significant number of complaints associated with the manner in which the costs are charged back and the way agencies are funded, as well as with the department's inability to provide more consulting expertise in such areas as training. Concerning the reengineering issue (see summary chart of agency interviews, page 6, Tab 12), Ms. Case said almost all agencies feel the processes in their own agencies have become so cumbersome they can no longer deal with them. They have also experienced severe problems in their dealings with the state agencies that service all other agencies, such as personnel, purchasing, and budget. Ms. Case said most agencies are very interested in emergency technology such as imaging, video and kiosks, which they believe can help them increase their efficiency. The summary of agency interviews pertaining to this area is on page 7, Tab 12, Exhibit D. Following are Ms. Case's summaries and comments on the various charts, tables and graphs contained in the balance of Tab 12, Exhibit D. Data Exchange Requests (page 8): The ability to exchange data is not just within and between state agencies, but is also within federal and local government, private business entities and the general public. Agency Interviews - Top Four Issues (page 9): The top four issues for most of the administrators and management personnel within the state agencies were reengineering, fragmented data, the sharing of data and not enough staff to get the job done. Senator Raggio requested further explanation of the interview findings related to reengineering as shown on the summary chart on page 9, Tab 12, Exhibit D. Ms. Case said 83.9 percent of the interview respondents considered reengineering to be absolutely necessary for their agencies. Eighty-one percent of respondents cited the need for improvement in data sharing, while 68.6 percent identified fragmented data as a problem and 55.5 percent said they lack sufficient staffing to handle their work load. Nevada State Government Systems (page 10): This graph pertains to the technology inventory. It was determined there were two mainframes, slightly less than 40 mid-range systems and almost 80 PC/LAN (personal computer/local area network) systems throughout the executive branch. Diverse System Platforms (page 11): This chart provides a breakdown of the vendor platforms associated with the data centers. The only ones shown on the chart are the data centers that have been defined as such in the past. The data shown does not include all PC/LANs and all mid-range systems, only those in the agencies that prior to the 1993 legislative session were named in the Nevada Revised Statutes (NRS) 242 as data centers. Systems by Geographical Location (page 12): The computer systems and data centers are primarily located in Carson City, with Las Vegas second in number of such facilities. Data Centers/Data Networks (page 13): For every data center that exists in the state there is also a data network consisting of the communications mediums that enable communications with remote locations. The graphic shown on this page is greatly simplified; there are actually offices all over the state and in numerous other towns, and the networks are "very much duplicated" throughout the state. Nevada State Government IS Related Staffing (page 14): This chart represents the staffing associated with supporting technology in the state. There are two categories of information systems (IS) personnel in this chart (IS Classified and IS Non-Classified) because it was realized, as the inventory was being conducted, that while there are a large number of people in state service actually classified as information systems professionals, there are almost as many people working in this arena who are not classified in information systems, but who are supporting information systems throughout the state; that is, many people in the various state agencies who have a non-IS classification are actually spending some portion of their time supporting technology and performing information systems-related duties. This phenomenon applies to both the General IS and the Communications categories. Information Systems Concentration Points (page 15): The yearly costs of hardware and software are summarized in this table. These are ongoing maintenance costs. In many cases the information was not reported, and in such cases the information is not complete. The DIS was only able to obtain information that is formally tracked and easily available. There are a number of agencies throughout the state, predominantly in the PC arena, where the costs were unknown. Personal Computers by Manufacturer in Nevada State Government (page 16): The pie chart on this page shows the personal computers (and non-data center classified technology within the state) by manufacturer on a percentage basis. There is a substantial diversity of vendors. Inventory of "Other" PC Manufacturers (page 17): The "Other" in the heading refers to the pie slice labeled "Other, 20.8%," page 16 in Tab 12. Page 17 provides a list of the PC manufacturers represented in this category. Commenting on the above list, Ms. Case said the bottom line with respect to the pie chart and accompanying list is that the diversity existing in the PC arena is much more alarming than that which exists in data centers and represents a much bigger potential problem for the State of Nevada. Personal Computer Software in Nevada State Government Executive Branch (pages 18 and 19): These two pages contain tables showing the quantities of the various kinds of computer applications in use by state agencies in the executive branch throughout Nevada. Other Software and LANs in Nevada State Government Executive Branch (page 20): Tables showing the relative quantities of the software within "other applications" and of the LAN systems. Ms. Case noted the diversity of software for PCs. She said the particularly alarming figures, in terms of standardization of the state's software, are those showing relatively large numbers in the "Other" category. Costs Per End User (page 21): Graphs showing the costs per end user for mainframes and for PC/LANs. The average mainframe cost per end user is $2,282, while the cost for the PC/LANs is $6,445 per user. Noting this information was obtained from research throughout the industry, from peer groups, the Gartner Group and a number of different sources, Ms. Case said the DIS believes the above information reflects the situation that exists in the State of Nevada, as well. She said the department initially focused on data centers and the possibility of consolidating them to increase efficiency. In the process it was discovered the vast majority of problems for the State of Nevada are in the PC arena. Further, Ms. Case pointed out, the support and maintenance associated with each data center also exists for each PC/LAN system, and the state is therefore not realizing the economies that are possible in a larger system environment. Using the DIS as an example, Ms. Case said the department, which serves thousands of users, has implemented standardization of products. Department personnel use single database, a certain programming language and so forth. In the PC arena, by contrast, there are no such standards, and personnel are allowed to buy what they want. The state is therefore not achieving economies in the support and maintenance of those products. Ms. Case next discussed the statewide strategies DIS recommends to resolve the above issues. These are itemized on page 7 in Tab 14, Exhibit D, and are graphically depicted on pages 22 through 34 in Tab 12 of Exhibit D. STRATEGY #1: Single, Shared Communication Network (Nevada Information Infrastructure): Ms. Case told the committee the first statewide recommendation in the SPIRIT plan is to build a single communications infrastructure for everyone to use. There is currently a significant number of data centers all having the same "duplicate data types of network." Even more importantly, however, all of the other mid-range systems and PC/LANs that were inventoried and discussed are evolving into data centers as well and will one day become data centers. A data network is associated with each of the data centers. A single communications infrastructure will allow everyone to use the same communication mediums and reduce costs substantially; for example, each purchase of an individual communication line is very expensive compared to the purchase of a larger "pipe" that is shared. More importantly, the equipment necessary at each end of those lines to communicate with computers is also expensive and represents a good deal of redundant equipment as well as personnel to maintain the equipment. A single infrastructure will reduce the duplication that exists in communications and will also begin to eliminate the problems associated with fragmented data and the inability to share data. Ms. Case further said one of the current problems regarding fragmented data is that the data is only good to the people who have access to it, and at present there are some 70 PC/LANs that are not communicating with one another. Senator O'Donnell prefaced his comments by stating he is the chairman of the SPIRIT group and had not seen the SPIRIT plan prior to this meeting. Noting there are limitations on phone lines and communications links, Senator O'Donnell inquired if the DIS has analyzed how many data bits would be transmitted from locale to locale. He asked if it is true that if one part of the network fails, the entire system will also be out of commission. In discussion on these concerns, Ms. Case said the pipe that can be purchased is enormous in size and speed and is not really limited because multiple pipes can be added to the system. Economies are still achieved through having one piece of equipment at each end of the pipe instead of several. At some point multiple lines would be necessary. Addressing the downtime issue, Ms. Case said the proposed statewide infrastructure, which the department is recommending be built in phases, calls for a fully redundant loop around the state so that if, for example, there is a power outage in one area of the state, traffic could be rerouted. The infrastructure is designed to be redundant enough to prevent downtime. Senator O'Donnell expressed concern if one "leg of the Internet" or one piece of hardware were to fail, the computer operations of all state agencies might be brought to a halt as a result. Ms. Case replied the current situation is that if a power outage impacts one network, everyone else on the network will probably experience the outage as well because it involves a problem with a local provider. Having a redundant loop around the state would provide a means to reroute traffic for everyone, thereby minimizing the downtime. While there may be other reasons that cause an agency to be "down," a communications outage is not one of them, Ms. Case stated. STRATEGY #2: Data Administration/Repositories: Ms. Case explained the three categories of data within this recommendation, as listed on page 22 of Tab 12 in Exhibit D. These are: enterprise, functional and agency specific. In focusing on the interview findings, it was determined fragmented data and the inability to share data are two of the most significant issues. The DIS therefore examined the matter of data extensively and decided to attempt to categorize data for each agency into one of three categories. Ms. Case explained the categories as follows: ENTERPRISE: Data used by most state agencies, such as the data associated with personnel or budget. All agencies in the state rely on such data. FUNCTIONAL: One example of such data is data that is necessary to a group within a functional area, but not necessarily associated with the enterprise. Another example is those agencies associated with regulating business in the state or those agencies associated with law enforcement, public safety and the judicial system. AGENCY SPECIFIC: In this category the data is unique to a particular agency and is used only by that agency. Proceeding with her overview of the statewide recommendations, Ms. Case called attention to page 24 in Tab 12 of Exhibit D. State of Nevada Enterprise Information Delivery System (page 24): Reflects the proposed infrastructure for technology after consolidation. Based upon the communications infrastructure and the categorizing of data, Ms. Case continued, the DIS examined all data centers in the state associated with S.C.R. 5 of the Sixty-seventh Session in terms of data categorization and for the purpose of considering other factors to determine whether or not the data centers should be consolidated. Ms. Case said the DIS believes the data centers already serving the enterprise should continue doing so, predicated on having statewide oversight by the department. In addition, the DIS already currently serves most of the agencies in the enterprise category, such as the budget, purchase and personnel departments. The DIS also determined it "should serve a functional category of those agencies dealing primarily with business," because they already comprise the department's primary customer base. It is felt that creating yet another data center would not be cost effective or efficient. With respect to the public safety agencies, Ms. Case stated, there are actually two data centers in the Department of Motor Vehicles and Public Safety (DMV), one associated with DMV and one associated with Public Safety. The DIS is recommending the data center associated with Public Safety, in terms of the technology resources, be combined with the Department of Prisons, and ultimately with the detention facilities under the Division of Child and Family Services, with Parole and Probation and with some of the other divisions currently under Public Safety. However, the DIS recommends the data center undergo a business process reengineering (BPR) study to outline how it would operate in serving multiple agencies and divisions. Currently, the data center serves only the Nevada Highway Patrol, which is its funding source. The DIS advocates modeling the data center after the department's system, enabling services to be provided uniformly for the multiple agencies. While this is for the executive branch, the department is also recommending a cooperative effort be made with the judicial system and local government. Ms. Case said there is a desperate need, in the criminal information and due process area, for all agencies involved to be able to share data. This has become a significant problem, nationally, and the DIS is therefore recommending one data repository be built for all of the public agencies. Ms. Case emphasized this would require a cooperative effort with the other branches of government. The DIS is also recommending the DMV side of the data center be consolidated into the information systems data center. Since the DMV merely collects the data and provides it to requesting agencies, it falls into the enterprise category. The Nevada Department of Transportation (NDOT) currently has a data center, Ms. Case stated. Primarily because the NDOT is classified as agency specific and most of what the NDOT generates in the way of information is not used by outside entities, and because of the current significant investment in the data center, the DIS recommends continuing this data center. Regarding the State Industrial Insurance System (SIIS), Ms. Case said it would not be cost effective to consolidate this agency because of the recent significant investment that has been made in the system. Also, most of the SIIS master files are stored in the state's mainframe system and therefore the sharing of data in the business functional area can happen fairly easily. Describing the Gaming Control Board as "rather agency specific," Ms. Case said a great portion of the agency's data is very confidential and sensitive, and consolidation is therefore not recommended. The Public Employees Retirement System (PERS) is also very autonomous and agency specific, Ms. Case continued. In fact, the agency serves all branches of Nevada state government. Also, there is an existing correlation between PERS and the related payroll information, and the DIS is recommending the data center remain in place. Ms. Case said the department is recommending that the controller's data center be consolidated into the information systems data center. It is not being recommended the consolidation occur immediately, but that it be phased in at the appropriate time; however, major systems currently being used by the Controller's Office are being replaced. The Department of Employment, Training and Rehabilitation (DETR) is also recommended for consolidation in terms of its mainframe operation, Ms. Case stated. She applauded the agency's initiative in requesting to proceed with the consolidation now rather than waiting for implementation of the strategic plan. Assemblywoman Giunchigliani requested clarification regarding Ms. Case's earlier statement pertaining to the SIIS files located on the state's mainframe computer system. Ms. Case responded these are master files that are archived. Ms. Giunchigliani asked if a business that had difficulty obtaining information from the SIIS could contact the DIS for the information. Ms. Case said the agency, by law, is only a custodian of the information, and the people who own it must authorize access to it. A request for such information would be referred back to the SIIS. Ms. Giunchigliani inquired if the department has examined whether or not the system is "user friendly" in this regard or whether the agency had been treated as a somewhat autonomous entity. Mrs. Kavanau responded to the question, stating the SIIS has expended so much on the new claims processing system that the DIS felt it would be 10 to 30 years before the state would realize a payback through consolidation, and therefore consolidation would not be worthwhile to the state. Assemblywoman Tiffany questioned the DIS representatives regarding the term "consolidation" as it relates to the strategic plan; the striving for balance between centralization and decentralization; and whether, in regard to the enterprise entities, the department is recommending some agencies retain their own systems, software, and so forth, with their data stored in the mainframe computer system. Ms. Case replied yes to the last question. In reply to the first two queries she said the state has gone from one extreme, which was total centralization, to the other extreme of total decentralization, and the DIS is attempting to strike a balance through the proposed strategic plan. The main data centers will serve as major data repositories in an attempt to eliminate duplication of data as well as the problems associated with accessing the information. For all other systems identified in the DIS inventory, the plan attempts to utilize those investments rather than abandon them, through strategies presented in the plan. Assemblywoman Tiffany said she would be very supportive of leaving some of the PC/LANs in place because "they belong there," and she would resist moving everything to the mainframe system. Ms. Case proceeded with her review of the statewide recommendations. STRATEGY #3: Business Process Reengineering: Ms. Case said Donna Varin, Chief, Planning and Research Division, Department of Information Services, would present this strategy following her own presentation. STRATEGY #4: Client/Server Technology: State of Nevada Enterprise Information Delivery System (page 25) This graph illustrates the strategy that utilizes a client/server approach. Ms. Case said the DIS is recommending a client/server approach for the remaining pieces of technology that are in the state system. In other words, she said, for all of the PC/LANs and smaller areas in the state, the DIS is recommending deployment of client/server technology whereby those PC/LANs can be attached to the data center that should be serving them, based on the categories within which they fall. Ms. Case said the next step is the attempt to achieve balance by deploying the desirable aspects of the mainframe environment while retaining the best features of the PC and PC/LAN environment. STRATEGY #5: Integrated Applications: Current Financial Environment (pages 26), Current Financial Routing Process (page 27), Proposed Integrated Financial Management System (page 28), Current Process vs. Integrated Process (page 29): The first two graphics illustrate the state's existing system with respect to the processing and routing of financial data between the various agencies involved, and the other two show the proposed integrated system and comparisons between the current and proposed processes. Ms. Case said the integrated applications strategy works with the client/server approach as well as with the communications infrastructure. Explaining the concept and benefits of "integrated applications," Ms. Case said the problem today is that almost all of the applications software has been developed based on a task; this situation is much of the cause of the fragmentation of data. An example is the state's personnel system, for which several applications have been created (including payroll and applicant tracking), none of which are integrated to the point that a single database can be used. This makes it very expensive for the agency to extract information. The integrated applications strategy allows for the examination of data first, with applications that use this data as "subfunctions," Ms. Case stated. Referring the committee to page 29, Tab 12, Exhibit D, she said the integrated process would provide a single database in contrast to the current system wherein there are many individual databases and applications. Ms. Case said the considerations involved relate to cost and efficiency. STRATEGY #6: Centralized PC/PC-LAN Management: Ms. Case discussed the items listed on page 30, Tab 12, Exhibit D, which are the components of the PC/LAN centralized maintenance strategy (personnel, hardware maintenance and software/licensing). Through the client/server approach, the department proposes consolidating any staff associated with the PC/LAN environment into the appropriate data center with which they are linked, and then beginning to apply to the PC arena some of the functions the larger systems environment does well so the state can begin to get a return on its investment. Ms. Case cited the installation of new software as an example of something that could be better handled with the new communications infrastructure and the client/server approach. The software could be downloaded from a data center and automatically updated onto every PC, eliminating the need to individually install software on the computers. There are many other things that can be done in a centralized environment that are less expensive than what is currently being done, Ms. Case continued. As a further example of this she described the current situation with regard to backing up data. She said people are either not backing up their data, which exposes them to the possible loss of data in the event of a serious problem affecting the computer; or they are having to "take the system down" during business hours to perform data backup, or they are paying someone overtime to back up the data after hours. Ms. Case reiterated that a centralized environment, with the larger systems, is very conducive to data backup, and automatic backups of all PC/LAN environments can be performed without the intervention currently required. In addition to software installation and data backup, Ms. Case suggested computer personnel is a third area in which the centralized aspect of the information infrastructure can benefit the state. Because the microcomputer specialist positions have frequently evolved out of another function (through reclassification as a result of performing computer-related functions), the persons holding these positions often do not have the background, training and skills necessary to perform the microcomputer specialist functions efficiently. The following results can be accomplished by pooling the computer personnel: (1) consistency and standards in systems maintenance and support can be obtained; (2) a certain level of support can be ensured; and (3) a career path for the employees can be built. Ms. Case said the Department of Information Services considers the plan a win-win-win situation, for the agency, for the staffing and for the support they need. STRATEGY #7: Statewide Hardware Maintenance Program: Noting that master maintenance was one of the areas mandated for study by S.C.R. 5 of the Sixty-seventh Session, Ms. Case said the department believes it can accomplish a statewide master maintenance contract that would include not only the entire PC arena, but the data centers "to the largest extent," as well. It is not proposed this be done immediately but beginning within a year or so. Ms. Case highlighted the problems with hardware maintenance in the PC arena that currently exist in state government. Indicating there is much inconsistency and diversity with regard to maintenance contracts, she said the maintenance problems are being dealt with in a number of ways. These include mailing in PCs to be repaired, maintenance of parts inventories and staffing to repair the computers, and even, in some cases, state personnel building PCs themselves. Ms. Case said none of this is cost effective and is one reason PC costs for end users are so high (see page 21, Tab 12, Exhibit D). STRATEGY #8: Statewide PC Software Licensing Program: Ms. Case said the DIS believes some economies can be achieved through implementing a master software licensing program, particularly in the PC arena. Standards for PC software must be established and followed, and statewide licensing obtained with software purchases. Ms. Case pointed out the WordPerfect word processing application is currently purchased as individually licensed packages, a very expensive practice. A single statewide contract would provide a cost savings to the state, she said. STRATEGY #9: Common Distributed Systems Support: Ms. Case told the committee the department has found that with technology and staff deployed all over the state, "no agency really has much of a presence anywhere." It is recommended systems support be established in the Las Vegas and Elko areas at some point in the implementation of the SPIRIT plan over the next several years. DIS is not proposing to distribute staff from each of the data centers or in each agency, but to create a small pool of staff with the capabilities to provide service throughout the infrastructure in the Las Vegas and Elko areas. STRATEGY #10: Emerging Technologies: Ms. Case stated there are a number of emerging technologies in a number of areas, and the department holds the view they should be treated in the same manner as any other technology discussed in this plan; that is, they should mesh with the other statewide strategies with respect to standardization and direction. With regard to the other communications arena, Ms. Case continued, the statewide communications infrastructure is proposed to ultimately handle all communications media: data, voice, video, radio and any other communications media. Commenting it would be a big task to create a single infrastructure into which the existing systems are consolidated, Ms. Case said it is being proposed the areas involving 800 megahertz (MHz) and the state microwave system be studied over the next biennium. The DIS intends to provide recommendations regarding these areas to the next Legislature. One state agency began deploying 800 MHz in 1991, but it is not something to which all agencies can immediately convert. If such deployment proves to be the plan recommended after study, there will be a very long implementation time and it will need to be phased in as appropriate. Senator Coffin requested confirmation the intention of the DIS is to not proceed with the shared communications aspects of the plan, whether it be 800 MHz, the microwave system or other technology, during the current session and through the interim. Mrs. Kavanau addressed the senator's question, stating the Governor is recommending in the Executive Budget the consolidation of communications specialists into the Department of Information Services, at the department's request; this represents the first step. One of the larger agencies began deploying 800 MHz in 1991, and there is at least one other major user of mobile communications evaluating the feasibility of 800 MHz at the same time. What members of the DIS staff, along with members of staff from those two agencies, have done thus far is contact jurisdictions within the state regarding the viability of one single statewide infrastructure for 800 MHz, the value being reduced costs. In fact, Mrs. Kavanau continued, the DIS has also been discussing the matter with two Nevada utility companies and has applied to the Federal Communications Commission (FCC), as well, for a waiver to allow DIS to share expenses with utility companies. There is a great deal of activity going on along these lines, Mrs. Kavanau stated. Specifically what has been deferred is the so-called microwave portion of the 800 MHz deployment; the microwave system is the basis for the 800 MHz. Mrs. Kavanau further stated there has been much discussion over the years over whether the state needs its own microwave system or whether, instead, the capabilities it would provide could be purchased from private providers. Because the DIS does not have adequate time nor the outside-of-Nevada experience to make a fully apprised and qualified evaluation, it is requesting in its budget the funds to pay a consultant that would be hired through the RFP process to help the DIS arrive at a decision as to the best way to proceed on this issue. Restating his question, Senator Coffin said he has received the impression, from correspondence he has seen and from other sources, there has been a rush to complete some kind of 800 MHz system and the DIS has been browbeating other agencies to accomplish this. Noting the high cost and voicing the opinion the system would not be appropriate for all agencies, the senator indicated he was seeking assurances the matter could be addressed during the session, the "browbeating" has stopped, and no one is under pressure to make any moves in any direction until the Legislature has had the opportunity to examine the DIS budget and the one-shot appropriation request pertaining to this issue. In reply Ms. Case indicated that, rather than attempting to rush deployment of 800 MHz, DIS has been attempting to slow down the process to allow for adequate examination and consideration of what action is appropriate. She said the department is not in a hurry for 800 MHz and would like to study and evaluate it prior to proceeding with its possible deployment. Ms. Case reviewed pages 31 through 33, Tab 12, Exhibit D, containing the proposed implementation schedule for the SPIRIT plan. She said DIS has chosen the steps most logical to start with to implement the 8-year plan. Ms. Case said the only costs for the implementation in the Governor's budget are the steps that fall within the current biennium. Ms. Case drew attention to page 34, Tab 12, Exhibit D, which illustrates how each of the agencies are affected by the recommendations. For more detail on the specific recommendations for each agency with respect to the plan, Ms. Case referred the committee to the SPIRIT document entitled "Strategic Plan for Information Resources and Information Technology (SPIRIT) in response to Senate Concurrent Resolution 5." The document is referenced herein as Exhibit E. (Original is on file in the Research Library.) Assemblywoman Giunchigliani asked how Assembly Bill (A.B.) 153 of the Sixty- seventh Session relates to the SPIRIT plan. ASSEMBLY BILL 153 OF THE SIXTY-SEVENTH SESSION: Directs coordination of governmental collection of money and information from business. Ms. Case replied that A.B. 153 of the Sixty-seventh Session was one of the areas in which DIS recommended business process reengineering (BPR) be accomplished. She explained that with respect to the committee assignments for A.B. 153 of the Sixty- seventh Session, to really make a significant difference in the way business is treated would require all of the agencies to undergo an evaluation of their current processes, because there are so many and each area is so complex, and then "coming back with some set of brainstorming processes that is substantially less complex and more simplistic." Ms. Giunchigliani asked if it is the intention of the DIS to "take one area that might be most effective for businesses to be able to access, like taxation, and focus on that." Ms. Case answered the department had proposed first examining in detail all of the agencies "in an umbrella-type process" with respect to their business functions. She said it is important to understand how each state agency deals with business, what the agency requires and what goes on. From the "umbrella process" the DIS was recommending "some specific ones in some different agencies." Ms. Giunchigliani inquired if this is built into the long-range plan delineated on page 34 (Tab 12, Exhibit D). Ms. Case replied yes. Assemblyman Allard inquired if the plan will require an annual fee for each work station in the applicable agencies. Ms. Case replied this will occur at some point in the future, ideally. She said ultimately what the DIS would propose in the PC/LAN area, as a way to fund the centralized pool of personnel supporting PCs, is to charge by the work station. Mr. Allard asked if this is reflected in the Executive Budget in the budgets for each of the agencies. Mrs. Kavanau replied no. She explained the DIS had run out of time and was unable to review the numerous funding methodologies with the Department of Administration during the budget-building process; therefore, in the budget for the coming biennium only, the actual costs for the personnel will remain in the applicable agency's budget. However, it is the intention of the DIS to return to the next Legislature with all proposed changes in funding methodology along with the recommendations from the 800 MHz study. Mr. Allard inquired what the amount of the fee might be. Mrs. Kavanau replied it will be the cost of the centralized pool divided by the number of work stations in state government. Senator O'Donnell requested an explanation of "IFS." Ms. Case said the IFS (Integrated Financial System) project is a business process reengineering project involving several agencies, and what distinguishes it as a BPR is that the process involved is one of identifying how all of the agencies are currently conducting business as it relates to expenditures and finances within the state, then outlining how the processes might be changed and what kind of technology or tools could help them accomplish the new processes recommended. Senator O'Donnell asked if a gentleman from IBM conducted the study. Ms. Case answered the DIS wrote an RFP and followed the competitive bid process. There were a number of respondents, and the person selected was a woman from IBM Consulting Services Group in Sacramento. This person's job was merely to facilitate the process. Senator O'Donnell inquired as to whether any of the BPR recommendations require constitutional amendments or statutory changes. Ms. Case replied a number of radical changes have been proposed. Donna Varin, Chief, Planning and Research Division, Department of Information Services, provided an overview of business process reengineering that she said was intended to answer such questions as what BPR is, what it entails, how it can be successfully implemented in Nevada and what benefits will be derived from it. A copy of Ms. Varin's written testimony is attached to these minutes as Exhibit F. Her testimony elaborated on the information contained in Tab 13, Exhibit D, referenced earlier in these minutes. In the interest of saving time, Senator Raggio instructed the fiscal analysis staff to prepare a list of questions from the committee to be submitted to the Department of Information Services. Mrs. Kavanau and her associates in the DIS were requested to return to the Senate Committee on Finance and the Assembly Committee on Ways and Means with their responses. For members of the joint committee wanting to know specifically how the plan responded to S.C.R. 5 of the Sixty-seventh Session, Mrs. Kavanau called attention to Tab 14 of Exhibit D, containing the summary of recommendations made by the Department of Information Services. Assemblyman Spitler listed some questions for the Department of Information Services representatives, the answers to which were to be provided the committees. Mr. Spitler requested in-depth information beyond that outlined in the SPIRIT report with regard to all costs and savings associated with the plan. His second question was in reference to the 800 MHz issue; he required clarification of the department's intentions with respect to postponing action on this issue. Mr. Spitler suggested the DIS might be at cross purposes with the NDOT, which he understood will be continuing with the 800 MHz project. He expressed concern some of the information in SPIRIT regarding 800 MHz contains inaccuracies, based on his knowledge of the technology. Another question he had on this issue pertained to the bidding process, which he said should be carefully examined. Mr. Spitler also requested that the Department of Information Services address the issue of the Nevada Operations Multi Automated Data Systems (NOMADS) with respect to the expense incurred thus far and the costs the project is continuing to incur. Regarding the BPR process, Mr. Spitler said that while the DIS is on the right track with this issue, he is concerned about the possibility of the state incurring multi- million dollar costs in consultant fees. He questioned whether the plan's proposed use of the consultants, whose fees range from $200 to $215 per hour, would be cost effective over the long term. He suggested the work could be done in-house, instead. The last question presented by Mr. Spitler is twofold: (1) What legislation is being proposed as part of the SPIRIT plan and (2) How the agencies' responses to the challenges put forth by the plan are reflected in their budgets. Senator Raggio requested that the DIS representatives address the issue of NOMADS and the reason it is being included in the BPR when implementation of that multimillion-dollar system is already underway. Mrs. Kavanau said NOMADS represents an application of software, and specific applications were not addressed in the SPIRIT plan. What is being recommended in SPIRIT is strategies on how to approach technology at the enterprise level. Supposedly, Mrs. Kavanau continued, there will be changes over the years that will ensure consistent steps are taken from application to application in the future. NOMADS, as with several applications the state has been involved in developing over the years, has for a variety of reasons followed different paths, not just those related to state policies or procedures. Mrs. Kavanau said the federal government plays a large role in what goes into producing a federally funded system. NOMADS is a specific application that did not belong in the SPIRIT plan. Assemblyman Marvel asked if a cost analysis on the BPR program has been performed. Ms. Varin replied there are various costs throughout many of the budgets on business process reengineering and suggested the actual figures should be obtained from the Budget Division. She said her agency could provide further information regarding the costs of BPR that have been found through the RFPs and could also perform a cost benefit analysis on the issue of using outside consultants versus using in-house personnel. Mrs. Kavanau addressed the question as well, stating there is a good possibility a major portion, approximately 50 percent, of the amount recommended by the department to be spent on the BPR project could be available from the federal government, which is very interested in and supportive of this process if it is done correctly. Assemblywoman Giunchigliani inquired as to training of personnel. She suggested the department could "cross train" some of its own personnel to provide the services that would otherwise require the hiring of an outside consultant. Ms. Case said one of the reasons for an outside consultant versus in-house staff is the objectivity factor. She said it is very important that the person orchestrating the process be an objective player, and it has generally been the department's experience an outsider is much more successful in bringing together the parties involved and facilitating the process than is someone who may be perceived as having a bias or some "preconceived interest." Ms. Giunchigliani said she would agree, if the issue is simply one of facilitation; however, she was speaking literally about the training level that is done or not done with regard to staff, and she was hopeful there would be additional provisions for such training. She voiced the opinion it would be possible to put a cadre together at some point, possibly using the university system, that could save money and still accomplish the required tasks. Senator Jacobsen inquired if the DIS is proposing there be one location at which the consolidated facilities would be housed. Mrs. Kavanau replied no. She noted the consolidation of data does not require additional space, and the requirements for more physical space exist regardless of the proposed consolidation. There are no major construction plans in the strategic plan. The senator said his concern is the need for adequate space around the mainframe. Mrs. Kavanau replied the DIS is examining alternatives for acquiring space. Senator Mathews requested clarification on whether the DIS does or does not need space. Mrs. Kavanau said the answer is yes, space is needed; however, the agency has no plans for additional space at the moment. Senator Raggio commented the DIS representatives had indicated in their presentation on the SPIRIT plan what the risks are in not embarking on the plan and not performing the BPR, but the public needs to know: (1) Whether the costs might be so prohibitive over the years ahead that it becomes counterproductive, and (2) What can be expected in terms of cost benefits such as reductions in force. The senator observed there is ongoing resistance to reductions in force. Mrs. Kavanau said one of the difficulties in the information technology arena is that a large portion of the costs are not tracked, and it would therefore be virtually impossible to say what monies would be spent if the changes are not made. The point is, she said, the Legislature created S.C.R. 5 of the Sixty-seventh Session, and the Governor recommended some major changes, because it was obvious the current system is not working well, and "that is the tack the department has taken with this plan." Some numbers can be provided, such as those relating to savings resulting from consolidation of one or more of the data centers. However, in terms of controlling runaway costs, there is no way of knowing what that amount would be since the costs are not tracked. What is known is that changes are needed to improve the system, Mrs. Kavanau emphasized. Assemblyman Spitler noted there is $20,000 recommended in the Capital Improvements Program (CIP) budget for advanced planning that would lead to construction of a $5.5 million facility for the Department of Information Services. Mr. Spitler inquired if the DIS had utilized consultants in developing the SPIRIT project. Mrs. Kavanau indicated consultants had not been used, per se; however, a great deal of assistance of all kinds, both paid and unpaid, was obtained, including help provided by a number of professional organizations. One consultant was hired to assist with the interviews because the department could not get to them all. Mr. Spitler said the committees believe other state agencies could handle projects similar to the SPIRIT plan, and the state should rely on the talent of its own personnel. He acknowledged some outside expertise might be required in some areas. Mr. Spitler stated his belief the SPIRIT plan is 4 years behind because the DIS knew in 1991 what has been presented in the strategic plan. Business and Industry Administration - Page 693 Rose McKinney-James, Director, Department of Business and Industry, provided an overview of the department's functions, operations and status and then proceeded with a review of the Executive Budget recommendations for the administration of this agency. The department is composed of 29 units and has 61 budget accounts. In the efforts to organize the department a variety of measures were examined, including the statutory provisions set forth in the state government reorganization legislation during the 1993 legislative session and models of other commerce departments throughout the U.S. The Department of Business and Industry (DBI) is almost three times the size of the former commerce department and consolidates most of the regulatory functions into a single agency, emphasizing consumer protection, industrial relations and finance. Mrs. McKinney-James told the joint committee the department has attempted to address, internally, some "organizational weaknesses" in the areas of budgeting, accounting, personnel and data processing. Assemblyman Marvel questioned Mrs. McKinney-James as to the number of financing applications processed for industrial development revenue bonds versus the number of businesses actually financed. Mrs. McKinney-James said four businesses were financed, some applications are pending and one application has been withdrawn. Mr. Marvel suggested the agency show in its performance indicators the number of applications that actually resulted in financing for the applicants. Senator Rhoads requested that the committees be provided a list of federal funds received by the department with reference to the Other/Non-State resources in the base budget (page 694) and any mandates tied to those funds. Mrs. McKinney-James agreed to provide such a list and also verbally listed the DBI agencies that receive substantial federal funding. These are the divisions of industrial relations, agriculture, and insurance, the Office of Protection and Advocacy (OPA) and the Nevada Rural Housing Authority (NRHA). The agency with the clearest federal mandate is the OPA. Regarding the department's request for a Program Assistant III position in E-126, Accessible, Flexible Responsive Government, Mrs. McKinney-James testified the impetus for this position was to provide the support necessary for a planned "one-stop shop" that would provide a single point of inquiry. The one-stop shop concept was created to reduce the number of contacts required by DBI customers to obtain information and answers, given the diversity of agencies within the department and the tremendous regulatory oversight responsibilities of the DBI. Additionally, the program assistant position would provide assistance to the agency's administrative services officer (ASO) in dealings with centralized approval for out-of-state travel, leases, contracts and work programs and would also assist with some of the accounting for the Industrial Development Bond (IDB) program. The decision unit E-325, Business/Government Environment, would provide authority for the department to receive revenue from the Business and Industry Industrial Development Bond account. The general program expense is paid by the Director's Office, and this recommendation would reduce the General Fund and agency transfers reflected in the E-325 unit. Mrs. McKinney-James said the request in E-720, New Equipment, is necessary to support the functions of the Director's Office. Concerning E-850, Special Projects (page 697), Mrs. McKinney-James discussed the agency's funding request for contractual services to develop a comprehensive cost allocation plan for the department. She said the cost allocation plan in place when the department was created was based on full-time equivalence (FTE) for the positions in the department, and it had become clear to her in discussions with the Budget Division this mechanism was used as an interim measure. Rather than reinventing the wheel, the department would subcontract with an entity that currently has a contract with the Department of Administration. This consulting firm has worked with other state agencies, including the Department of Employment, Training and Rehabilitation (DETR), to assist them in this regard. Given the variety of fees and other revenue structures within the constituent agencies of DBI, it was believed the objective view and expertise of a consultant would be helpful. Noting concerns of the joint committee with regard to the necessity for state agencies to use outside contractual services for projects such as the proposed cost allocation plan, Senator Rawson said there have been many cost allocation plans conducted by state fiscal personnel who understand the process. He asked for an explanation of the department's rationale for seeking contractual services. Mrs. McKinney-James answered it would presumably be beneficial to take advantage of the extensive information and knowledge the proposed consulting firm (Griffith and Associates) has acquired in similar interaction with various departments in state government. She further stated she was unaware of any other existing mechanism to achieve the same results but would be willing to explore such a possibility. She stressed the need for assistance in determining how the department is currently allocating its resources, noting as an example of this need the disparity and possible inequity in staffing of agencies within the department. Senator Rawson acknowledged the use of the proposed consulting firm might make sense in this instance. Assemblyman Spitler inquired if the cost allocation plans are not in fact mandated by the federal government, "and there is some circular number that [must be followed]." Mrs. McKinney-James replied yes, this is true in some instances. While the DBI does not have the degree of federal activity experienced by other departments, there are some such requirements, particularly with regard to the Division of Industrial Relations. Mr. Spitler asked if it would be the department's intention to request legislative approval of the completed cost allocation plan. Mrs. McKinney-James said yes, she would hope to bring the plan to this body for review and approval and for modification to the extent deemed necessary. Returning to E-325 on page 696, Mr. Spitler questioned Mrs. McKinney-James regarding the IDB program and the allocation of associated administrative costs. Mrs. McKinney-James verified the department has been doing IDBs for some time and administrative costs have not been "taken off the top" for managing the program. She explained the program has been structured in a rather unusual way, in that most of the accounting and other responsibilities associated with the IDB program have been absorbed by the housing division, which also handles bonds for their first mortgage program. With the request in this decision unit, the department is simply attempting to correct the situation by placing the responsibility within the Director's Office. Mrs. McKinney-James concurred with Mr. Spitler's observation the request in this module would be a "wash" and would not result in financial gain for the state. Proceeding with her review of the Business and Industry Administration budget, Mrs. McKinney-James discussed the recommendations and budget requests in E-900, Program Transfers (page 697). She said this decision module, which recommends transfer of three personnel from the Consumer Affairs Division, represents what she considers reconciliation of the structure inherited by the new department. The position of Chief, Consumer Services was held by the former director of the former business and industry department and was supported by one Management Analyst and one Management Assistant. There was no job description for the chief of consumer services, and Mrs. McKinney-James took steps to identify certain assignments for that individual, primarily in what she refers to as the Office of Industrial Development and Planning. This entity houses the IDB program and will house whatever administrative services will be necessary in facilitating the Nevada Development Capital Fund and a variety of other activities, if the proposed transfer of personnel from the Commission on Economic Development to DBI (E-901, page 901) occurs. The managerial position in the program transfer request would also have supervisory responsibility. Mrs. McKinney-James reiterated the recommended program transfers simply reconcile and correct the manner in which the budgets were previously displayed. The positions involved had previously been paid from another budget account; the transfer request would consolidate the account and transfer the positions into the Director's Office, where their duties are performed. Assemblywoman Giunchigliani requested that the department create and provide to the committees a "flow chart" showing the functions and responsibilities of the various administrative, managerial and supervisory positions. She inquired if the intent of the transfer request was to transfer three "chiefs" to an agency of only seven employees, a high management-to-employee ratio. Mrs. McKinney-James responded this is not the intent. She explained that her position holds the primary supervisory responsibility for administrators in DBI, while the budgetary and personnel responsibilities for the department rest with the administrative services officer (ASO) under the direct supervision of Mrs. McKinney-James. The department has substantial activity and special projects related to the IDB program, which are the responsibilities of the consumer services chief. Mrs. McKinney-James said she has accorded this position the title of Chief of Industrial Development and Planning. The other two positions proposed for transfer are support staff that would be shared within the Director's Office. Ms. Giunchigliani reiterated her request for a chart showing how the various titles of administrative and managerial positions actually relate to their responsibilities. Mrs. McKinney-James reemphasized the program transfer request is an attempt to correct the situation that exists because the positions were left in the consumer affairs budget. She stated the positions had no programmatic responsibility, "at least as it was defined." Mrs. McKinney-James said she did not consider it necessary or appropriate to have both the chief of consumers position and the commissioner of consumer affairs position that previously existed, although she has requested that Larry Struve, Chief of Industrial Planning/Chief of Consumer Services, serve in a liaison capacity for legal assistance and regulatory assistance for the Division of Consumer Affairs. Assemblywoman Evans requested that clarification and explanation be provided (subsequent to the meeting) regarding the cost for the development of a computer- based resource center for small business (the "One-Stop Shop" in E-900), the interface between DBI and the Commission on Economic Development (CED) in assisting small businesses, and the statement regarding "information with other departments in the state." Mrs. McKinney-James replied the module referenced by Mrs. Evans, E-900, is primarily related to the regulatory services provided by DBI. It would provide a database to assist the CED in that agency's more comprehensive efforts to track and provide information for business in general. Mrs. McKinney-James further responded she has, in discussions with the executive director of the CED, sought to identify the areas in which the two agencies can work together in a complementary fashion. There is a tremendous amount of overlap in the areas of responsibility of the DBI and the CED, which Mrs. McKinney-James surmised was intended to ensure some cooperative activity and which the department has attempted to achieve on an administrative level. She said it was clear, in reviewing the structure of the department and some of the recommendations made during discussions related to state government reorganization, there was some desire to have the DBI take an active role with respect to business development. The Commission on Economic Development and the Department of Business and Industry have attempted, through reviewing the statutes, to create a line of demarcation between the two agencies. It is the department's view the CED has a principal responsibility, as the lead agency for economic development in the state, for marketing and promotion, primarily for new business. The Department of Business and Industry, on the other hand, has responsibility for providing a network of services for existing businesses regulated by the department. Mrs. McKinney-James said the department is receptive to legislative guidance in this area, but based on the conclusions regarding areas of responsibility of the DBI and the CED, it was believed the department's responsibilities could be facilitated by transferring the office of small business from CED to the DBI to be part of the Office of Industrial Development and Planning. Mrs. Evans said businesses relocating to Nevada also require some of the same services. She said the committee was concerned about possible redundancy and duplication of effort. Mrs. McKinney-James said the DBI wishes to do "one-stop shopping" for the agencies within the department, with respect to its regulatory responsibilities. This is somewhat distinguished from the more comprehensive effort being pursued by the Commission on Economic Development. The Department of Business and Industry wants to provide a basis of information that can then be shared with the CED to the extent it needs information regarding how business is regulated. Assemblyman Spitler said he had examined the budget for the Housing Division and was unable to locate the funds in decision unit E-25. He requested the committees be provided this information. He also noted the federal government must approve the transfer of federal funds and requested the committees be provided a copy of the applicable regulations. Mrs. McKinney-James said the information would be provided. She deferred to Deb Erickson, Budget Analyst, Budget Division, Department of Administration to address Mr. Spitler's questions. Ms. Erickson stated that when she had built the decision unit referred to by Mr. Spitler (E-325), the authority to do the IDBs was in the Director's Office, but the budget authority was not built in as a separate entity. To correct this, during the interim approval was given for the Housing Division to manage the bond program with its existing authority. Ms. Erickson further stated: Given the instructions on separating actual costs from FY [19]94 as base and then other new costs into the maintenance and enhancement decision units, because we did not separate that out and there were ... [only] about $3,000 worth of actual costs and not the $40,000 that was the original authority... Because those were not separated out I thought that it was better to build this as an enhancement unit and to show that as new revenue. And that also refers to page 701 in your budgets. That is the separate budget that does the development bond program. So this money that is reflected in [M-]325 is only the earned income that comes from that budget. Regarding E-901, Program Transfers (page 698) containing the previously discussed transfer of three positions from the Small Business and Procurement Outreach program in the Commission on Economic Development, Mrs. McKinney-James said the transfer request relates only to positions responsible for small business development and does not include the positions for procurement outreach that are in this budget. Assemblyman Marvel questioned the agency's budget requests pertaining to travel, which indicate a relatively small increase for travel although the number of Full Time Equivalency (FTE) positions would be increased from 5 to 12 in the proposed budget. He requested that the committee be provided with information regarding how the travel request amounts were determined. B&I Industrial Development Bond - Page 701 Mrs. McKinney-James told the joint committee the decision unit E-325, Business/Government Environment, recommends creation of a budget to administer a cost of issuance account. This function has been handled in the past by the Housing Division, to some degree. The department views the proposal for the new account as an extremely important measure that is an attempt to correct a situation inherited by DBI when state government reorganization was implemented. This is also an area of concern that was raised during an audit of the bond program. While the audit is not yet complete, the auditors have indicated support for the cost of issuance account in discussions with the department. Unclaimed Property - Page 703 Constance L. Longero, Administrator, Unclaimed Property Division, Department of Business and Industry, presented an overview on this budget. She referred to the unclaimed property statute adopted by the Legislature in the 1979 session, NRS 120a, which provides that financial assets abandoned or left unclaimed over a period of 1 to 5 years must be turned over to the Unclaimed Property Division. It is the division's primary responsibility to attempt to locate the owners of this property, or their heirs. The division primarily has responsibility for intangible property including cash, stocks, bonds, utility deposits, wages, and so forth. Some tangible property is also received from safety deposit boxes and from hospital patients who leave behind unclaimed valuables. The intangible (sic) property is auctioned after 1 year if the owners have not been located. Until the owners are found, the division maintains custody of the property and collects any benefit accrued, on behalf of the state. Ms. Longero called upon Jack Christopher, Accountant, Unclaimed Property Division, Department of Business and Industry, to present the division's budget. Mr. Christopher drew attention to decision unit M-200, Demographics Caseload Changes (page 704), which recommends funding two new positions. The Management Assistant position would be utilitized to expand and maintain the existing database, facilitating the agency's attempts to seek the holders of unclaimed property and to more actively seek to locate the unclaimed property owners. The auditor position was recently recommended by the Legislative Counsel Bureau (LCB) auditor. It is believed the expanded audit capabilities would generate additional revenue. Senator Raggio requested explanation of why the division believes an enhanced effort is warranted to determine which businesses might be holding unclaimed property. Ms. Longero stated there are many businesses within Nevada alone that are not filling out and returning the report forms sent to them by the Unclaimed Property Division, and some may be returning the reports indicating there is no property being held when perhaps there is. She voiced the opinion businesses do not take the unclaimed property reports as seriously as they do other state reports, such as tax reports. She said the public should be alerted, and some in-service training should be done with regard to how to fill out the forms and the information the forms are designed to obtain. At this time Senator Raggio announced the joint committees would be unable to hear all of the budgets on the agenda. There was discussion among the committees regarding scheduling an afternoon meeting to finish the agenda. The hearings on the balance of the budgets were rescheduled for 4:00 p.m. in the afternoon for the Senate Committee on Finance. The Assembly Committee on Ways and Means chairmen were to reschedule the budget hearings for their committee. Returning to the budget review, Assemblyman Marvel asked why the division's forecast collections are $1 million less than what the actual collections were in Fiscal Year (FY) 1994. Ms. Erickson indicated the division had received an unexpected windfall in FY 1994. Traditionally the forecast figure for this item has always been $3.75 million, and the division has chosen to keep it at that level as a minimum amount. She estimated the amount of actual collections as much as $1 million above the forecast figure. Assemblyman Marvel inquired if the Unclaimed Property Division believes it is now in compliance with the recommendations of the audit report for this agency. Ms. Longero said yes. Senator Raggio instructed staff to prepare specific questions to the agency representatives which were to be returned to the committees, because time did not allow further extensive questioning. With reference to the measurement indicators for this budget, Assemblywoman Giunchigliani requested greater detail regarding the unclaimed property fund, in terms of interest projections and receipts. Ms. Giunchigliani inquired if the State of Nevada has a reciprocal agreement with other states regarding unclaimed property. Ms. Longero replied yes, there are official, written agreements with approximately 26 states; however, the state actually reciprocates with almost every other state. The meeting of the joint committees was adjourned at 10:38 a.m. RESPECTFULLY SUBMITTED: ______________________________ Sue Parkhurst, Committee Secretary APPROVED BY: __________________________________ Senator William J. Raggio, Chairman DATE:____________________________ _________________________________________ Assemblyman Morse Arberry, Jr., Chairman DATE:___________________________________ Senate Committee on Finance Assembly Committee on Ways and Means January 30, 1995 Page