MINUTES OF THE JOINT MEETING OF
	ASSEMBLY COMMITTEE ON WAYS AND MEANS
	AND
	SENATE COMMITTEE ON FINANCE

	Sixty-eighth Session
	February 15, 1995


The joint meeting of the Committee on Ways and Means and the Senate Committee 
on Finance was called to order at 8:16 a.m., on Wednesday, February 15, 1995, 
Chairman Morse Arberry, Jr. presiding in Room 119 of the Legislative Building, 
Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Attendance Roster.


ASSEMBLY COMMITTEE MEMBERS PRESENT:

Mr. Morse Arberry, Jr., Chairman
Mr. John W. Marvel, Chairman
Mrs. Jan Evans, Vice Chairman
Mrs. 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

SENATE COMMITTEE MEMBERS PRESENT:

Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Lawrence E. Jacobsen
Senator William R. O'Donnell
Senator Dean A. Rhoads
Senator Bernice Mathews
Senator Bob Coffin

COMMITTEE MEMBERS ABSENT:

Senator Bernice Mathews	(Excused)

STAFF MEMBERS PRESENT:

Mark Stevens, Fiscal Analyst
Dan Miles, Fiscal Analyst	
Gary Ghiggeri, Principal Deputy Fiscal Analyst
Bob Guernsey, Principal Fiscal Analyst
Steve Abba, Program Analyst
Debbra King, Program Analyst



Chairman Arberry recognized Mr. Close who indicated he wished to disclose for the 
 record he is a practicing physical therapist at a clinic which has been a provider for 
Medicaid and SIIS.  He indicated he would participate in discussion but would 
abstain from voting on budgets affecting these areas.  

Chairman Arberry requested committee members review two handouts provided by 
Parole and Probation and Prisons for hearings on Friday, February 17, 1995.  

DEPARTMENT OF HUMAN RESOURCES/HOSPITAL TAX ACCOUNT - PAGE 993

Myla Florence, Administrator, Welfare, explained the Hospital Tax Account is 
closely allied with the Medicaid budget.  A number of substantial modifications 
have been proposed to reflect the sunset of the hospital provider tax.  The 
department proposes changes in its disproportionate share program for FY 96 and 
FY 97 to comply with federal requirements.  Under the new program, participation 
will be limited to hospitals serving a percentage of Medicaid patients at least one 
standard deviation above the mean for all hospitals in the state and all public 
hospitals with 1 percent or more of patients covered by Medicaid.

Ms. Florence continued in order to fund the disproportionate share program, the 
Governor's budget recommends continued utilization of the intergovernmental 
transfer to generate approximately $28 million in net state benefit for the biennium; 
as a comparison, the existing provider tax earns over $50 million for this biennium. 
 In order to offset the significant reduction in provider tax, the recommended 
budget includes $45 million in unobligated provider tax revenues to be carried 
forward in the upcoming biennium.

Ms. Florence distributed a document entitled "Corrections to Hospital Tax Account 
101-3157" (Exhibit C).  Ms. Florence noted changes to the budget document 
itemized in Exhibit C are largely the result of rounding and line items involving 
changes are marked by an asterisk.  The transfer to the Director's office for 
administrative expense should be $358,640 rather than $400,000.  Non-state 
resources in the amount of $50,800,000 in the base budget are comprised of $48 
million in intergovernmental transfer funds in addition to $2.8 million in interest. 
 

Ms. Florence said major issues include:  elimination of the provider tax; the carry-
forward of unobligated provider tax to the upcoming biennium; and the design of 
an intergovernmental transfer program to provide some relief for the shortfall in the 
provider tax and to maximize federal participation in benefits to eligible entities.  

Mrs. Evans requested discussion regarding revisions on the intergovernmental 
transfer.  Ms. Florence distributed a document entitled "FY 96 Intergovernmental 
Transfer Program" (Exhibit D) which shows funds coming into the 
intergovernmental transfer account.  As an example, the University Medical Center 
(UMC) would be one of the eligible entities and one which has the capacity to earn 
the greatest disproportionate share based on the number of indigents receiving 
service.  Of the first $30 million UMC might earn in disproportionate share, five-
sixths or $25 million would come to the state.  The state would receive one-third 
of any disproportionate share earnings above $30 million.  The overall projected 
benefit to the state would be $13.1 million; the benefit to the hospital would be 
approximately $12 million; approximately $9 million in potential benefit remains to 
be determined and may benefit rural hospitals or be additional benefit to UMC. All 
details of the program are not yet finalized.  

Mrs. Evans expressed concern over the details yet to be finalized and inquired what 
other parties besides hospitals would participate.  Ms. Florence replied any entity 
defined as a local governmental unit is a potential participant.  Mrs. Evans 
confirmed that counties could participate.  

Mrs. Evans requested information regarding the status of negotiations be provided 
for subcommittee.  

Ms. Giunchigliani inquired what private sector groups had been approached.  Ms. 
Florence responded according to federal requirements, Lake Mead Hospital was 
probably eligible for disproportionate share payments as well as potentially West 
Hills Hospital.

Ms. Giunchigliani requested committee members receive copies of the federal 
requirements and Ms. Florence noted this would be done.

Mrs. Evans observed some disagreements had arisen between the federal 
government and some states regarding provider taxes with the possibility some pay 
backs would be required.  Ms. Florence stated Governor Miller had been assured 
it was very unlikely that Nevada would be subject to any pay backs.  Mrs. Evans 
asked if any confirming paperwork was available.  Ms. Florence responded 
negatively.  Mrs. Evans requested committee members be provided a copy of any 
confirming paperwork that might be received.

Mrs. Evans inquired about the health maintenance organization (HMO) arm of the 
provider tax.  Ms. Florence testified the E40 decision unit related to a proposed tax 
on health maintenance organizations which would become effective if Medicaid 
managed care is implemented.  This is an existing tax proposed on a new line of 
business, Medicaid managed care.  Revenues for this decision unit appear as a 
correction in Exhibit C.  Based on the 3.5 percent tax of capitated payments for 
Medicaid managed care, revenues of $1,328,728 and $5,129,740 are anticipated 
in the first and second years of the biennium respectively.  The state would receive 
approximately 50 percent of these amounts.  This is proposed as a source of 
revenue in the Medicaid budget.

Ms. Giunchigliani confirmed one or two HMO carriers would be contracted in the 
state to provide managed care based on a capitated rate and that the HMO carriers 
would be taxed 3.5 percent.  She asked how the distribution of the tax was made. 
 Ms. Florence responded the carriers would receive a share and the state would 
receive a share.  

Ms. Giunchigliani asked if carriers had already been contracted.  Ms. Florence said 
the Medicaid managed care program is not scheduled to go into effect until January 
of 1996.  The division is currently finalizing the waiver; requests for proposal for 
managed care should go out in the summer.  

Ms. Giunchigliani requested information be provided to the committee regarding 
 the requests for proposal before they went out, expressed concern regarding the 
capitated rate, and asked if the contracts would be willing provider contracts.  Ms. 
Florence responded the contracts would be put out to competitive bid.  Health Care 
Financing Administration (HCFA) requires proof that a mandatory managed care 
program will be less costly than the fee per service program.  Ms. Florence noted 
an actuary is working on the concept of managed care and if it is not cost effective 
it will not be pursued.

Senator Coffin requested clarification that whatever HMO is contracted would 
receive money back and that no costs would be shifted to other clients.  Ms. 
Florence responded affirmatively as far as the HMO premium tax.  


Senator Coffin questioned whether the Division of Insurance was involved in HMO 
regulation.  Ms. Florence said HMO's are subject to some degree of regulation by 
the Division of Insurance and the Health Division.  The HMO premium tax proposal 
has not yet been fully discussed with the Division of Insurance.  Ms. Florence noted 
it was proposed the HMO tax on Medicaid managed care business go into the 
intergovernmental transfer account.  Senator Coffin asked if there would be an 
administrative cost to those agencies.  Ms. Florence responded negatively.  

Ms. Tiffany questioned the origin of the proposed tax.  Ms. Florence responded this 
tax was not viewed as a new cost but as a way to access federal funding to go 
into the Medical budget to make up for the $22 million shortfall.  Ms. Tiffany 
inquired if Welfare staff had generated the idea of the tax.  Ms. Florence answered 
the idea came from the Department of Human Resources, the Director's office, and 
Health Care Financial Analysis Unit.  

Ms. Tiffany asked if HMO's had been involved in any of these discussions.  Ms. 
Florence responded they had been briefed.  

DEPARTMENT OF HUMAN RESOURCES/WELFARE DIVISION

Myla Florence, Welfare Administrator introduced Mike Willden, Deputy 
Administrator of Administrative Services.  Ms. Florence read introductory remarks 
from a prepared text (Exhibit E).  Chairman Arberry called for questions from the 
committee.  With no questions, he asked Ms. Florence to begin her budget 
presentation.

WELFARE ADMINISTRATION - PAGE 1181

Ms. Florence testified this budget supports division administrative activities as well 
as general eligibility functions.  Major programs administered by the division include 
Aid to Families with Dependent Children (AFDC), Employment and Training, the 
Food Stamp budget, Child Support Enforcement and Weatherization and Low 
Income Home Energy Assistance Programs.

Ms. Florence discussed measurement indicators.  Measurement indicator No. 1, 
referrals for investigative action, contains an error: actual FY 94 should be 2,639 
rather than 1,910.  FY 95 is projected at 3,390 referrals; FY 96 is projected  at 
4,065; and FY 97 is projected at 4,500.  This indicator includes all referrals to the 
Investigations and Recovery Unit.  

The AFDC quality control active error rate, measurement indicator No. 2, exceeded 
the projection for FY 94 at 5.6%; the goal was to be less than 3%.  Ms. Florence 
indicated this fiscal year has been at 9.14%, due in part to workers being trained 
in multiple programs along with an increasing caseload, making it difficult to 
process cases within desired time frames.

Mrs. Evans inquired if there was any real concern for sanctions as some programs 
are subject to sanctions when error rates are considered too high.  Some programs 
also include incentives for low error rates.  Ms. Florence responded only the Food 
Stamp Program incorporated incentives; sanctions have not been an issue since 
1991 as the Department error rate has been well below the national average.  Ms. 
Florence did express concern regarding the AFDC error rate, but noted for the last 
two fiscal years no national average has been calculated because of appeals by 
various states.  In response to the error rate, the department has developed 
"positive action committees" to study the rising error rates and explore solutions; 
however, sanction levels have not yet been reached.


Ms. Florence continued her discussion of performance indicators, noting 
measurement indicator No. 3, the Medicaid quality control rate, is less than the 
projected level of 3%.  Measurement indicator No. 4, AFDC overpayments 
collected, is slightly below the FY 94 projection.  The figures include grant 
reductions and approximately one-third are actual cash receipts.  Ms. Florence 
noted measurement indicator No. 5 shows one-fourth of AFDC debtors actually 
make reimbursement for aid received.  Measurement indicator No. 6, Medicaid post 
payment recovery, is in accord with the projection for FY 94 and projects slight 
increases for the biennium.  Ms. Florence noted recovery steps for the division 
involve paying AFDC obligations first, Medicaid recovery second and Food Stamp 
recovery third.  Measurement indicator No. 7 shows the percent of Medicaid 
debtors making reimbursement exceeded the 1.5% projected in FY 94 and projects 
slight incremental increases for the upcoming biennium.  Measurement indicator 
No. 8 shows 1,635 investigations were completed in FY 94 and projects increases 
of approximately 500 investigations per year for the biennium.

Ms. Florence pointed out a major change in the base budget in the NOMADS Data 
Processing expenditure line which shows zero amounts.  She explained NOMADS 
is contained in a separate decision unit.  The Information Services expenditure line 
reflects ongoing Department of Information Services (DIS) costs and is represented 
as a reduction in the M581 decision unit related to NOMADS.  The Welfare 
Administration budget currently contains 535 authorized positions; however, a later 
decision unit proposes the merger of food stamp workers into the Welfare 
Administration budget.

Ms. Florence said M200 reflects demographics and caseload changes.  Caseloads 
continue to grow significantly; however, growth is leveling off.  Growth for FY 96 
is projected at 29% over FY 94 while FY 97 is projected at 13% over FY 96.  New 
positions requested to handle caseload growth total 28 in 1996 and 61.5 in 1997. 
 
When Ms. Giunchigliani asked if this level of staffing would maintain the time it 
takes to process a case at 29 days, Ms. Florence responded affirmatively and 
expressed the goal of maintaining case processing time between 25 and 30 days.

Ms. Tiffany questioned whether new casinos had been considered when this 
leveling of caseload growth was projected.  Ms. Florence responded additional 
casinos had been taken into consideration; the department's projection module 
contains a variable which includes the possible impact of hotels, gaming and 
recreational activities.   

Ms. Tiffany asked at what point Welfare caseload is impacted during the lengthy 
process of opening a new casino.  Ms. Florence said the impact occurs before a 
casino opens because potential employees seek work; also, the construction phase 
normally attracts more job seekers than there are construction jobs available.

Chairman Arberry mentioned an interim staffing study which developed standards 
for caseload processing and served as the basis for the budget request; he asked 
if the division would be able to function with the Governor's recommendation of 
fewer positions than requested.  Ms. Florence indicated the additional positions 
requested would have allowed time to be spent on functions such as verification; 
the recommended number of positions would be sufficient for existing functions 
but would not allow additional efforts for "work not done."


Chairman Arberry noted the Executive Budget provides supervisory and clerical 
support only for the second year of the biennium.  Mr. Willden said ideal staffing 
levels are a ratio of one supervisor for eight employees and one clerical position for 
four professional staff.  He indicated several supervisory and clerical positions had 
been frozen in response to salary savings requirements; those positions have been 
funded for the upcoming biennium and will put the supervisory ratio at about 1:10 
or 1:11 and the clerical ratio at about 1:4 or 1:5.

Ms. Florence turned to a discussion of the M581 NOMADS decision unit and gave 
a brief history of the NOMADS project.  In August of 1992, the division entered 
into a contract with Integrated Systems Solutions Corporation (ISSC) for design 
and development of NOMADS.  NOMADS is a system intended to incorporate all 
eligibility functions including Food Stamps, AFDC, Medicaid, the Child Support 
Enforcement Program, Employment and Training and Child Care.  When completed, 
the fully integrated system will enable staff to determine eligibility for all programs 
based on information presented by a client and would eliminate considerable 
duplication of effort on the part of clients and staff.  The system would bring on 
line all program offices for Child Support Enforcement as well as the fifteen county 
district attorneys involved in the Child Support Enforcement Program.  The 
proposed budget supports completion of NOMADS.  Nevada is under a federal 
requirement to have the Child Support Enforcement portion of NOMADS completed 
by October 1, 1995.  The other portion of the program, Food Stamps, AFDC, 
Medicaid and Employment and Training (FAME), will not require certification until 
one year later and the division intends to request an extension.  Because the 
system is fully integrated, most of the FAME portion will also be operational by 
October 1995.  

Ms. Florence noted decision unit M581 does not demonstrate the complexity of 
what is incorporated within the budget category.  For FY 96, $12.6 million has 
been provided for NOMADS with a reduction in Department of Information Services 
charges of $774,968; for FY 97, $7.9 million is provided for NOMADS; this 
represents a $1.1 million reduction in Department of Information Services charges 
and $9.1 million for NOMADS.  

Chairman Arberry asked Ms. Florence to discuss the ISSC contract.  Ms. Florence 
 indicated ISSC had met most of the scheduled deliverables since the contract was 
renegotiated.  The most recent difficulty has been Phase 1 code, originally to have 
been delivered in November, 1994.  ISSC was requested to extend that deliverable 
to include a rework of Phase 1 and this was to have been delivered January 31, 
1995.  One week prior to that date, ISSC notified the division the quality of code 
from ISSC's subcontractor was not acceptable and a new delivery date for Phase 
1 code was set for March 1.  A complete analysis of the impact of the delay on the 
rest of the schedule is expected.  Ms. Florence said accepting substandard code 
caused Welfare and DIS staff a great deal of extra work so in the interest of 
expediency it was decided to work with ISSC regarding scheduled delivery dates 
in order to receive a quality product.

Ms. Florence expressed concern over the ten months remaining before the October 
deadline in that any further contractor delays will impact the amount of time 
division staff will have for review of deliverables, user acceptance, testing and 
training.  A full analysis will be completed by February 21 and October still remains 
the target completion date.  However, the renegotiated contract does provide for 
penalties and would require ISSC to pay for a new contractor should that become 
necessary.


Chairman Arberry asked if ISSC was aware of today's budget hearing.  Ms. 
Florence responded affirmatively and indicated the ISSC project manager was out 
of town.  Chairman Arberry requested that representatives from ISSC be in 
attendance at subcommittee hearings to answer questions from committee 
members and update them regarding the project.    

Chairman Arberry noted since the Phase I code had not yet been delivered, it was 
reasonable to assume the delivery date of February 28 for Phase II code would not 
be met either.  Ms. Florence confirmed this and reported each phase built on the 
previous phase.  When Chairman Arberry inquired how long Phases I and II would 
be delayed, Ms. Florence responded the projected delay would be part of the overall 
project analysis due February 21.  

Mr. Spitler asked what type of reasonable assurances ISSC had given that the  
October 1, 1995 deadline would be met and if it is not, what sanctions the state 
would be subject to.  Ms. Florence said it was not certain that the October 1 
deadline would be met; however, certification from the federal agencies will be 
requested at that time.  She added other states have been placed in a similar 
position with the rapidly approaching federally mandated deadline, substantial 
financial investments and contractor delays.

In response to Mr. Spitler's question regarding sanctions, Ms. Florence indicated 
the federal government would work with states to bring them into compliance.  
Funding which is subject to sanctions includes the Child Support Enforcement 
Program, quarterly AFDC payments and other enhanced funding.  Ms. Florence said 
calculations on the funding subject to sanctions were available and these 
calculations would be provided to the subcommittee.

Mr. Close inquired if the federal government had expressed any empathy for the 
difficulties states have encountered and requested a report itemizing dollar amounts 
spent on the project by the state and the federal government.   In response, Ms. 
Florence said a report of project expenditures would be provided.  The federal 
government now appears to recognize the position states are in and also recognizes 
that requiring transfer of an existing system from another state was a poor method 
for system design.  In addition, she noted the Director of the Office of Child 
Support had recently visited Nevada and appeared sympathetic to the states' 
situation.   Proposed child support legislation may include an extension of the 
October 1, 1995 deadline based on major changes being proposed in the overall 
Child Support Enforcement Program.

Senator Coffin asked for additional information about ISSC and its officers.  Ms. 
Florence noted ISSC stood for Integrated System Solution Corporation.  The 
company is a subsidiary of IBM and has its home office in Maryland.  Senator 
Coffin then inquired if ISSC is wholly owned by IBM and if IBM is responsible for 
ISSC's actions.  Ms. Florence noted an officer of IBM signed the renegotiated 
contract and Senator Coffin asked if that officer is in any way personally 
responsible or signed for IBM.  Ms. Florence said he signed on behalf of IBM in 
regard to its relationship to ISSC.  

Senator Coffin observed at this point it might be advisable to take legal action.  Ms. 
Florence stated entering into litigation would in effect bring the entire system to a 
halt and the state would still be required to implement a system.  She added the 
state has an obligation to the staff and their ability to function in a very complex 
environment.  The staff is paper-laden and doing manual calculations.  She stressed 
the system is needed, which is why the division agreed to negotiate. 


When Senator Coffin asked if the contract contained a provision for legal action in 
the event ISSC does not honor its obligation, Ms. Florence responded affirmatively. 
 Senator Coffin indicated he wished to know if the full faith and credit of IBM is 
behind ISSC. 

Senator Raggio inquired if the $500 per day penalty for missing deadlines had been 
fully imposed.  He observed ISSC assured the joint committees that the deadlines 
were realistic.  Upon firm commitments from ISSC, renegotiation had been agreed 
to rather than litigation and the committee had required that any sanctions would 
be fully reimbursed.  In response, Ms. Florence noted penalties had not yet been 
imposed but would be.  Senator Raggio expressed the opinion there should be no 
relaxing of deadlines or penalties as unacceptable work by a subcontractor was 
ISSC's responsibility.  In addition, Senator Raggio noted ISSC had promised to have 
a project manager on site full time to insure the contract was fully performed.

Ms. Florence said ISSC did have a full time project director to keep the project on 
track.  Senator Raggio inquired why the project director was not aware a 
subcontractor was performing poorly.  Ms. Florence responded the project manager 
recognized quality needed to be improved before delivery.  She further noted there 
was no interest on the part of the department or the state to compromise the 
sanctions; deadlines for certain deliverables have been extended with the 
agreement that liquidated damages would not be imposed in order to insure 
deliverables of sufficient quality were received.  Senator Raggio inquired what 
incentive for timely performance remained if penalties were waived.  Ms. Florence 
 said penalties were not waived in advance; Phase I required significant rework in 
the detailed system design so the code was delayed until the detailed system 
design was satisfactory.  

Senator Raggio noted ISSC was a separate company even though a wholly owned 
subsidiary and there is no recourse against the parent company.  Senator Raggio 
confirmed it was doubtful the October 1 deadline would be met and that application 
for extension would be necessary in Nevada and other states.  

Senator Raggio noted the pilot test phase originally scheduled to go into effect 
June 1 would be delayed and asked what the department was doing with respect 
to the conversion phase.  Ms. Florence testified a number of conversion options 
had been reviewed but a conversion design has not been finalized.  The department 
is working closely with the Department of Information Services (DIS) and hopes to 
have a conversion plan finalized by early March.  Senator Raggio inquired if the 
conversion had to be in place before there could be certification.  Ms. Florence 
responded affirmatively and noted the major difficulty for conversion was the Child 
Support Enforcement component.

Senator Coffin explained to the committee he had very little confidence in computer 
service companies and wished the committee to initiate an investigation into the 
quality and credit of ISSC and its financial stability.

Ms. Giunchigliani asked the name and address of the subcontractor.   Ms. Florence 
responded CBSI is the subcontractor; the address would be located and forwarded 
to the committee.  

Ms. Giunchigliani asked if ISSC was engaged in a NOMADS type project for any 
other state.  Ms. Florence indicated NOMADS was unique to Nevada; ISSC 
contracted for various components of NOMADS type projects in other states.  

Ms. Giunchigliani inquired if the Washoe County pilot test was intended to include 
all deliverables or one particular component.  Ms. Florence answered Washoe 
County would serve as the pilot site for all system testing.

Ms. Giunchigliani asked what components other than the Child Support 
Enforcement Program required certification by the federal government.  Ms. 
Florence answered the Child Support Enforcement portion needed to be certified 
October 1.  The Food Stamp, AFDC and Medicaid portion was originally scheduled 
to be certified by April of 1996, but an extension will be requested and federal 
agencies have already indicated an extension will be granted.  Ms. Giunchigliani 
confirmed the state may not face sanctions as long as progress can be shown. 

Ms. Giunchigliani urged caution in resorting to litigation as long as Ms. Florence 
feels the contractor is not stalling the project.  She asked what was scheduled to 
be delivered March 1.  Ms. Florence said March 1 is now the projected date for 
delivery of fully reworked Phase I.  Ms. Giunchigliani asked if Phase II would then 
begin.  Ms. Florence noted Phase II components not dependent on Phase I are 
already underway.

Senator O'Donnell asked if Welfare staff had seen any coding.  Ms. Florence 
responded both Welfare and DIS staff had seen some code and deferred to Pam 
Case, Deputy Director, Department of Information Services.  Ms. Case stated staff 
had seen code.  

Senator O'Donnell inquired whether all of the Phase I code was finished and not up 
to quality assurance standards or whether the code really was not finished.  Ms. 
Case responded she believed the code was done and the issue was quality.  She 
further noted since the contract was renegotiated and ISSC added staff and a new 
project manager, there has been a noticeable improvement in quality.  Senator 
O'Donnell requested confirmation that the code is completed be provided.

Senator O'Donnell noted ISSC appeared before the Interim Finance Committee and 
testified the project could be finished by October 1 but doing so would require an 
additional investment.  As a result, $7.1 million was paid to ISSC and it is now 
apparent the October 1 date will not be met.  Ms. Florence responded the 
contractor is still operating with an October 1, 1995 deadline.  The contractor has 
asked for relief from that deadline and relief has not been provided.  Ms. Florence 
went on to say she had concerns about ISSC's ability and the department's ability 
to meet that deadline, but she did not want to notify the federal government the 
deadline will not be met because the federal government is participating with 77% 
of the cost of the project.

Senator O'Donnell indicated if the project will not be finished, the state's money 
should be returned.  Ms. Florence concurred and indicated the renegotiated contract 
states in the event of a sanction, the state will be indemnified to the total cost of 
the project plus whatever costs are necessary to complete the project.  Senator 
O'Donnell said the problem is that in order to receive indemnity sanctions must first 
be imposed.  Ms. Florence noted the additional $7.1 million was also to provide for 
the increased size of the project (four times the original estimate) in addition to 
meeting the deadline.

Ms. Giunchigliani requested confirmation that even though the project would not 
meet projected time lines, it would effectively do what it was intended to.  Ms. 
Florence concurred.  Ms. Giunchigliani went on to say time lines should serve as 
guide lines; October 1 has become an issue only because of mandated certification 
of the Child Support Enforcement portion; she shared the concerns of the 
committee but felt the committee should not lose sight of how much has already 
been invested.


Mr. Hettrick asked if there was any direct contact with CBSI to know if they 
believe the next deadline will be accomplished.  Ms. Florence responded there has 
been telephone contact with CBSI in the past at which time the company's 
commitment to the project was evident.

Mr. Hettrick inquired whether subcontractors could be notified of their obligation 
to complete work in a timely fashion at the time a commitment is made by ISSC. 
 Ms. Case responded subcontractors are responsible to ISSC and the state has no 
jurisdiction over the subcontractors.

Mr. Hettrick then inquired if the contractor could be asked to provide a letter from 
CBSI stating the reworked code will be provided by a specific date.  Ms. Florence 
indicated the subcontractor has met its deliverables schedule and that the issue has 
been the quality of work which was rejected by the contractor.  Mr. Hettrick added 
even though delivery was on time, unacceptable code still meant the subcontractor 
did not meet the deadline.

Chairman Arberry expressed his confidence that Ms. Florence and her staff would 
insure that the project would be completed and would work.  Ms. Florence said her 
agency and DIS staff are fully committed to make the project work.  

Chairman Arberry requested Ms. Florence discuss voter registration on page 1184 
of the Executive Budget where five new program assistant positions are requested. 
 Ms. Florence testified the new positions were to implement the National Voter 
Registration Act which the federal government mandated to be implemented in 
January of 1995.  The Act requires all public Welfare offices and Women, Infants 
and Children (WIC) offices to register voters and inform them of their right to 
register.  In order to minimally comply with the requirements of the program, five 
program assistants have been requested to facilitate registration in urban offices.

Senator Raggio noted a number of larger states refused to comply with the program 
because of the cost.  He asked why it was necessary for each office to have a staff 
member to hand out registration forms.  Ms. Florence responded many applicants 
require assistance in completing the forms.  Senator Raggio inquired if in order to 
receive federal funding, staff needed to be provided and half of the cost paid, and 
questioned whether Nevada should also refuse to comply.  Ms. Florence noted the 
program is not a priority and the agency is attempting to minimally comply while 
interfering as little as possible with the agency's mission.

Ms. Giunchigliani suggested compliance could be as simple as staff handing clients 
a mail-in form and suggested obtaining assistance through volunteers from local 
voter registrars.  

Chairman Arberry requested Ms. Florence discuss the E400 decision unit.  Ms. 
Florence explained this decision unit relates to one component of Welfare Reform 
initiatives and provides funding for six additional eligibility certification specialists. 
 Also requested are five social workers to begin in January of 1997 to provide case 
management as part of the overall Welfare Reform Demonstration Project.  This will 
give eligibility workers more time in the initial applicant interview to discuss what 
brought them to require public assistance and what can be done to direct them to 
employment, education and training in order to enable them to become self-
sufficient.  The current interview process only determines eligibility.  


Mr. Dini indicated he saw no need for the demonstration project and recalled a 
version of Welfare Reform attempted in Nevada in 1987 which included training 
and employment.   Ms. Florence said this previous effort is being used as a base 
on which to build the new reforms.  Past investments in employment and training 
were beneficial but need to be expanded.

Ms. Tiffany inquired what private sector employment programs are currently in 
place in Clark County.  Ms. Florence said the program called "Nevada Partners" 
involves Welfare and the Department of Employment, Training and Rehabilitation 
working closely with private industry, such as the MGM in Las Vegas, and 
identifies low income individuals for employment.  It is hoped to begin this program 
in northern Nevada as well.  

Ms. Tiffany concurred with Mr. Dini that a demonstration project is not necessary 
and voiced her support of private sector involvement.  Ms. Florence clarified the 
term "demonstration project" indicates that a program requires waivers from the 
federal government.  The proposed program would disregard a portion of an 
employee's income for a specific period of time to allow the employee to attain 
greater financial stability.  She noted earnings disregards, conformance of eligibility 
between AFDC and food stamps would require federal waivers.

Ms. Giunchigliani inquired if existing programs such as Family Resource Centers 
and the Collocation Program were utilized and questioned how successful Welfare's 
job training program was compared to JOIN and JTPA.  Ms. Florence responded the 
issue was studied during the interim and agreements to combine resources have 
been made with the  Department of Employment, Training and Rehabilitation, 
Vocational Rehabilitation and JTPA.  

Ms. Giunchigliani asked if any interlocal agreements have been made.  Ms. Florence 
noted some interlocal agreements for the provision of training are in effect and have 
been for some time.  She indicated a list of interagency and interlocal agreements 
would be provided.  

Chairman Arberry requested Ms. Florence discuss decision unit E900.  Ms. Florence 
noted this decision unit recommends the Food Stamp budget be merged into the 
Welfare Administration budget, primarily to enable cost allocation among positions 
rather than direct charging positions to the Food Stamp budget as is currently done. 
 This change is necessitated by the move toward seamless case processing in 
which a client can apply for all programs with one worker.  

AID TO DEPENDENT CHILDREN - PAGE 1195

Ms. Florence distributed a volume entitled "Aid to Families with Dependent 
Children, FY 1994 Characteristic Study," a copy of which is available in the 
Research Library of the Legislative Counsel Bureau.  The Aid to Families with 
Dependent Children program provides for the care of dependent children in their 
home or in the home of a relative by providing financial and medical assistance. 
 Measurement indicators demonstrate how long individuals remain as active cases 
and demonstrate the difference between those in public housing and those living 
independently.  Ms. Florence noted caseload growth has stabilized somewhat; 
however, the M200 decision unit does reflect additional funding required for the 
increase in caseload. 

Mr. Close compared projected recipients in M200 to measurement indicators and 
noted the figures did not match.  Ms. Florence said on page 1197, projected 
recipients for FY 97 should be 52,665 rather than 53,665.  


Ms. Giunchigliani asked why measurement indicator No. 1 projected "Been on rolls 
before" to increase.  Ms. Florence answered that indicator reflected individuals who 
had been on Welfare at some time in the Nevada system alone.  National trends 
indicated approximately one-third recidivism in the first five years.  

Ms. Giunchigliani asked if those who had been on Welfare in other states were 
tracked in Nevada.  Ms. Florence responded the current computer system does not 
have the capability to do this.

Ms. Florence said decision unit E400 is a component of the overall Welfare Reform 
package.  A slowing of caseload growth is projected in the second year of the 
biennium as a result of the reform initiatives.  Slowing of growth from 11.2% to 
9.5% results in an overall savings of slightly more than $1 million for the second 
half of the biennium.  

At this time, Chairman Arberry called for public testimony.

Jan Gilbert of the League of Women Voters of Nevada and representing the ADC 
Coalition testified the Coalition was comprised of a large number of groups 
representing the legal community, childrens' advocates, religious groups, 
nonprofits, womens' advocates, social workers and PTA.  She distributed a card 
(Exhibit F) listing another coalition of groups interested in Aid to Dependent 
Children issues.  Ms. Gilbert indicated she was a member of the Welfare Reform 
Task Force during the interim and distributed a copy of the Task Force 
recommendations (Exhibit G).  She explained the 15 person committee met with 
the division to formulate a welfare reform proposal agreeable to all parties.  Ms. 
Gilbert noted the ADC Coalition planned to support the Welfare Reform Task Force 
proposals and to ask for an increase in the grant for Aid to Dependent Children. 
 Ms. Gilbert distributed a sheet entitled "Aid to Dependent Children Grant Levels 
" (Exhibit H) and explained the levels shown were for a woman with two children. 
 The percent of need has gone down and will continue to do so.  The standard of 
need is a formula based on the federal poverty level less the maximum food stamp 
benefit.  The current standard of need is $699 per month and the current percent 
of need is 48.5%.  Ms. Gilbert spoke in favor of using some of the "rainy day fund" 
to increase the grant level.  

Ms. Gilbert testified a poll done by CBS and the New York Times in December of 
1994 showed 71% of the public believe that recipients should continue to receive 
benefits as long as they work for them; 72% felt it was better for children of 
unmarried mothers under 21 years of age who have no income to remain with their 
mothers on Welfare; 70% opposed denying benefits to any woman who has a child 
outside of wedlock.  

Sheila Leslie representing Action for Nevada's Children distributed and read 
prepared testimony entitled "Action for Nevada's Children" (Exhibit I).  

Alicia Smalley of the National Association of Social Workers distributed and read 
from prepared testimony (Exhibit J).

Carolyn Wilson, Carson City Branch Manager of Job Opportunities in Nevada, 
distributed and read from prepared testimony (Exhibit K).

Ms. Giunchigliani requested preparation of a document showing where in the 
Executive Budget the recommendations discussed by Ms. Wilson are funded.  She 
expressed her support of incentive-based programs.


Ms. Tiffany questioned the effectiveness of teaching job skills.  Ms. Wilson 
responded that although not all Welfare clients would benefit, the effort was very 
helpful to many clients.

Mr. Allard stated measurement indicator No. 9, the number of cases closed due to 
employment, seemed very small compared to the number of monthly recipients. 
 Ms. Wilson responded the Job Opportunities and Basic Skills Training (JOBS) 
program addresses only a very small proportion of clients.  Ms. Florence added the 
number of clients eligible is limited by funding; also, clients typically do not report 
when they do find a job.  

Mr. Allard asked if data were available showing how many clients had achieved 
self-sufficiency.  Ms. Florence said that data was not available, but approximately 
6% of the caseload does have earnings.  

Mr. Allard asked whether the possibility of training Welfare mothers to be child care 
givers had been explored.  This would enable a larger portion of Welfare mothers 
to work and would avoid the necessity of paying child care for as many working 
mothers.  Ms. Florence replied in 1989, a pilot project to train Welfare mothers to 
be child care providers was initiated with CSA in northern Nevada.  This program 
was not successful because there were not enough interested individuals to make 
it cost effective.

Ms. Giunchigliani observed efforts should be directed at reducing recidivism and 
providing a safety net.  The way to do this is to address the needs of the entire 
person as the major source of Welfare clients is working poor who live paycheck 
to paycheck and are vulnerable to any reduction in financial status.

Senator Rawson commented on findings in "Aid to Families With Dependent 
Children, FY 1994 Characteristic Study," noting 70% of AFDC recipients are less 
than 21 years of age.  He also noted 46% of AFDC recipients have come to 
Nevada from California with the majority of those having lived in the state less than 
six months.  There is no history on this group to show whether they came to 
Nevada for a job that did not materialize.  He observed the characteristics of this 
group need to be determined and programs then tailored to fit the group specifics.

Jon Sasser, Coordinator of Litigation and Training, Nevada Legal Services, Inc., 
distributed and read from prepared testimony (Exhibit L).  

Denell Hahn, Director of Clark County Social Service, spoke regarding Clark 
County's partnership with the Welfare Division.  Ms. Hahn encouraged favorable 
consideration of the social work positions and eligibility positions requested in the 
state Welfare budget.  She indicated social workers are usually the first contact 
with families in need.   ADC eligibility can be determined in one day and families 
can be given an emergency grant until they get into the AFDC program; being 
accepted into the AFDC program can take as long as two months.  Clark County 
Social Service employs more licensed social workers than any agency in the state. 
 In many cases, money will not solve a family's problems and social workers would 
be able to determine how best to handle a situation.  Many of the questions asked 
by Social Service and Welfare are the same and combining forces would eliminate 
some degree of duplication of effort.


Mr. Spitler asked how the general public is able to know there are two different 
entities providing services.  He suggested contracting with Clark County to provide 
services rather than duplicating efforts.  Ms. Hahn responded in many states 
counties do handle public welfare business; she added people learn of the two 
types of services because Clark County Social Service is located at many different 
sites and refers clients to the various appropriate programs.

Mr. Spitler observed it is important to have single points of contact and it is 
important to move away from stopgap measures.  He noted two systems working 
side by side might result in duplication of services which ultimately costs citizens 
more money and minimizes what becomes available to a recipient.

Mrs. Evans expressed her appreciation to all of the ADC Coalition participants for 
their work and to Ms. Florence for her leadership and urged them to continue in 
their efforts to make suggestions and generate ideas for Welfare reform.  

Mrs. Brower complimented the ADC Coalition participants for their efforts at 
generating cooperation between state, county and city agencies.  She expressed 
her support of designing a single application form for all agencies.

Ronald M. Rentner, Pastor of Lord of Mercy Lutheran Church in Sparks, Nevada and 
Director of Advocacy, Lutheran Advocacy Ministry in Nevada, distributed and read 
from a prepared statement (Exhibit M).

Elizabeth Livingston of the Nevada Women's Lobby testified the Nevada Women's 
Lobby is in full support of the proposal submitted by the Welfare Reform Task 
Force and urged the committee to help improve the lives of Nevada's poor women 
and children.

Robin Williamson representing the Nevada State PTA distributed a document 
entitled "Fill-the-Gap" (Exhibit N).  Ms. Williams indicated the Nevada PTA 
recognizes the need to address the general welfare of the whole child; that the 
impact of poverty on public education is great; and that the relationship between 
good nutrition, health and well-being is vital to a successful school experience.  In 
April of 1993, the Nevada PTA passed two emergency resolutions relating to 
Welfare which urge an increase in ADC benefits and oppose any Welfare reforms 
using sanctions and/or other punitive measures.  At the 1994 Nevada PTA 
Legislative Convention, delegates adopted resolutions supporting "Fill-the-Gap" and 
presumptive Medicaid eligibility for pregnant women.  This attention to Welfare 
issues by Nevada PTA members represents broad-based support for dollars spent 
helping children.  The Nevada PTA urges the Nevada Legislature to increase Aid to 
Dependent Children benefits to at least 60% of the current standard of need; to 
support "Fill-the-Gap" and presumptive Medicaid eligibility for pregnant women; and 
to oppose any Welfare reforms which incorporate grant reductions or other punitive 
measures.  

Senator Rawson asked for clarification on the definition of 60% of need.  Ms. 
Williamson responded it was 60% of the $699 threshold, or $420.  

CHILD SUPPORT ENFORCEMENT PROGRAM - PAGE 1199


Ms. Florence introduced Mike Willden, Deputy Welfare Administrator.  Chairman 
Arberry requested Ms. Florence discuss decision unit E125 regarding funding for 
utilization of a collection agency and that she indicate whether this approach is 
proving to be effective.  Ms. Florence testified the division's contract with GC 
Services became effective in August of 1994.  She indicated the program has been 
very successful in terms of dollars returned for state costs; for example, for every 
dollar spent out of the State's share of collections, $62.50 is earned.  Collections 
have been approximately $7,000 per month.  When the program was begun, it was 
planned to send those accounts to collection which were over three years old and 
without collection activity; however, in January of 1995, the threshold was 
changed to two years and no collection activity.  An unanticipated side benefit of 
the program has been that through GC services, other location information is being 
received which assists with other active cases.  Ms. Florence said overall the 
program has demonstrated favorable results; however, the authority requested in 
the budget is probably optimistic and the division will review it further in 
subcommittee.  

Chairman Arberry stated research showed approximately $35,000 was collected 
while the division projects $900,000 for FY 96 and $1.1 million for FY 97.  Ms. 
Florence responded the program was slow in being initiated and the projected 
collections should probably be revised downward.  She added this budget account 
contains no General Fund revenue and any collections would ultimately become 
reversions after program expenses.  

Mr. Close requested explanation of the "Incentive to Counties" line item.  Ms. 
Florence explained the federal government provides a 6% incentive on collections 
which is returned to county district attorney offices that operate in partnership with 
the division for the non-AFDC caseload.  The federal participation money is returned 
to the counties for their collection efforts and the division also receives a portion 
of incentive.  

Chairman Raggio asked whether the transfers to General Fund of $2,087,266 and 
$2,656,344 were realistic figures.  Ms. Florence responded affirmatively.

ASSISTANCE TO AGED AND BLIND - PAGE 1205

Ms. Florence testified this budget provides supplemental payments to low income 
aged and blind individuals; it also supports individuals in adult group care facilities. 
 The state has provided supplements to the SSI program since 1974, but has never 
opted to provide supplements to individuals on SSI disability.  This budget is driven 
by caseload costs, and the M200 decision unit reflects caseload increases of 
approximately 7% per year.  The E400 decision unit  relates to the adult group care 
facility waiver which the division attempted to implement during the last biennium 
in conjunction with the Division for Aging Services; the objective was to move 
individuals from long term care facilities into  group care facilities at a lower cost 
with supportive services.  The program was not successful as those individuals in 
long term care facilities did not wish to be moved into another environment.  The 
program is being revised in collaboration with the Division of Aging Services to 
provide services to people in the Community Home Based Initiatives Program (CHIP) 
who become hospitalized.  Based on the level of care required, those clients will be 
moved into group care facilities.  A waiver has been prepared and is currently under 
review.  It is anticipated to move approximately five people a month into group care 
facilities.  

Chairman Arberry inquired what savings would be generated by the program and 
if that was built into the budget.  Mr. Willden responded savings were not built into 
the Medicaid budget; he noted this change should be made to the Medicaid line 
item.  Chairman Arberry asked what dollar amount was involved.  Mr. Willden said 
that amount was not yet calculated.  Ms. Florence noted during the last biennium 
$300,000 in savings was projected the first year of the program.


Mrs. Evans observed one difficulty with the program was that aged individuals did 
not like to enter long term care and then leave it.  She asked if the waiver could be 
rewritten.  Ms. Florence responded the waiver would only require the division to 
demonstrate that community based care is less expensive than institutional care. 
 Structuring the program is difficult as eligibility requirements must be carefully set 
to avoid excessive numbers of eligible people.  Ms. Florence noted the state of 
Oregon has a large home and community based program that essentially opened up 
an entirely new category of eligible individuals.  The division has attempted to avoid 
that by placing stringent requirements on level of care needs and has put checks 
into the system to insure the program remains controllable.  

Ms. Tiffany inquired whether those blind individuals served by the program are 
living in institutions.  Ms. Florence said this is not necessarily the case for those 
receiving supplementary payments; however; those individuals affected by the  
group care waiver proposal, decision unit E400, are aged, blind or disabled and do 
require assistance with the activities of daily living.  

Ms. Tiffany referred to the Assistance to the Blind Business Enterprise Program 
which specifically employs the blind.  She asked whether any of these individuals 
could be directed towards employment in that business enterprise.  Ms. Florence 
said it was possible for those individuals receiving supplemental payments but was 
not likely as the clients were typically long term recipients who were aged as well 
as blind.  

Mr. Close referred to the administrative charge for SSI payments and asked if an 
alternative to the fee was available.  Ms. Florence explained the administrative fee 
has increased over the last two years and whether it would be more cost efficient 
for the state to administer and determine eligibility locally needs to be explored. 
 Ms. Florence added it would  be better to wait until NOMADS is fully operational 
as major programming changes to the existing computer system would be required 
to make that determination.

FOOD STAMP PROGRAM - PAGE 1209 

Discussion of this budget was deferred to subcommittee.

NEVADA MEDICAID - PAGE 1215

Ms. Florence explained the Medicaid budget provides for medical services to 
families and individuals eligible for various programs under the Social Security Act. 
 The budget receives federal funds at the levels of 50 percent for medical services; 
90 percent for family planning services; 50 percent for staffing costs; and 75 
percent for professional medical staffing.  The program has undergone changes and 
now provides for care of uninsured individuals, prenatal care and preventative 
health care.  SB 559 will require the agency to implement a mandatory managed 
care program which is proposed to begin in January 1996.  This will require a 
statutory change since SB 559 requires that a program be implemented by July 
1995.

Ms. Florence noted many of the measurement indicators were derived from points 
raised by legislative audits.  Measurement indicator No. 1 relates to claims 
processing by the fiscal agent, Blue Cross/Blue Shield.   The contract requires Blue 
Cross/Blue Shield to process 80 percent of claims within 30 days and 90 percent 
within 60 days.  The 30 day projected level was exceeded in 1994, while the 60 
day projected level was somewhat below projection.  Measurement indicator No. 
2, edit overrides, exceeded the goal for FY 94.  Third party payment collections, 
measurement indicator No. 3, have consistently been approximately 23 percent of 
overall claims paid, primarily due to Medicare.  Measurement indicator No. 4 
reflects the success of the MOMS program.  Measurement indicator No. 5, percent 
participation in EPSDT, is close to 50 percent for FY 95 and was 41 percent in FY

94.  

Chairman Arberry noted in FY 94, approximately $898,000 was collected in fines 
and penalties through the Attorney General's Medicaid Fraud Unit and was used to 
offset Medicaid costs; the Executive Budget includes $750,000 in fines and 
penalties for FY 96 and FY 97.  He questioned why fines and penalties have been 
reduced when Medicaid fraud investigations are being increased.  Mike Willden 
responded the amount reflected in the budget was an estimate and probably more 
revenue should be budgeted.  Chairman Arberry requested this be done and 
revisions be submitted to fiscal staff.

Ms. Florence continued with an explanation of measurement indicator No. 6.  The 
division is required to screen every patient who may enter into long term care to 
determine whether active mental health treatment would be required.  She 
indicated revised numbers would be submitted to the subcommittee as the rate of 
growth for the number of screenings is not as dramatic as reflected in the budget.

Ms. Florence noted legislation for the Medicaid Estate Recovery Program was 
implemented last session; however, no staff was provided.  That program, reflected 
in measurement indicator No. 7, is being pursued with existing staff and it is 
expected to exceed the projection for this fiscal year.

Mr. Close referred to measurement indicator No. 8 and inquired if there appears to 
be a difference in costs between fee-for-service and managed care.  Ms. Florence 
clarified that in these indicators, managed care relates to the existing primary care 
case management program and not to the proposed managed care program.  
Physician, laboratory, x-ray and pharmacy services are included in the comparisons. 
 

Chairman Arberry requested Ms. Florence move to a discussion of the budget.  Ms. 
Florence explained the base budget includes a number of changes, primarily due to 
the change in caseload projections.  The original request was based on May 
caseloads; however, the Governor's recommended budget is based on November 
caseloads as well as the September Medicaid payment projection.  Adjustments are 
also the result of changes in the disproportionate share program and 
intergovernmental transfers.

Senator Jacobsen requested that information regarding the location and square 
footage of Welfare offices be provided to the committee in order to determine 
whether enough space exists to house new equipment and personnel.  Ms. 
Florence noted office locations are listed in the document entitled "Overview of 
Programs, Nevada State Welfare Division" (Exhibit O).  

Senator Rawson referred to the budget summary on page 1226 and inquired what 
comprised the differences between the agency request and the Governor's 
recommendation in total expenditures.  Ms. Florence responded factors involved 
include:  the change in caseload projections; the tax program and disproportionate 
share payments; CPI rate changes from 5 percent to 2.5 percent in the Governor's 
budget; changes in the Medicaid projection module; and adjustments to the base 
budget.  

Senator Rawson asked if the budget recommended by the Governor represents the 
agency's request.  Ms. Florence responded affirmatively.  


Mrs. Chowning inquired if conditions at the rented Belrose facility have improved. 
 Ms.  Florence responded no, but reported extensive remodeling is scheduled to 
begin in a few days.  The roof has already been repaired and file space has been 
expanded.  

Chairman Arberry questioned whether there were any plans to move agencies 
located on Shadow Lane closer to the county offices and thereby reduce travel time 
for applicants.  He noted a five-story building on Shadow Lane has several 
vacancies.  Ms. Florence responded relocating approximately two hundred staff 
members would be very costly and finding appropriate space has always been 
difficult.  

Senator Raggio inquired if the figures in the M100 decision unit were based on CPI 
increases of 3.75 percent for hospital providers in both years and 4 percent for long 
term care providers in the first year and 5 percent in the second year.  He 
questioned the rationale for the difference between hospital providers and long term 
care providers and the 2.5 percent CPI increase for providers not mandated under 
the Boren Amendment.  Ms. Florence explained the Boren Amendment applies to 
long term care and acute care facilities and that the rate increases are based on 
information provided by the Health Care Financial Analysis Unit which  audits their 
cost reports and provides appropriate rate increases for hospitals and long term 
care.  The 2.5 percent increase was projected in an attempt to try to maintain 
providers who are currently in the fee-for-service system.  

Senator Raggio inquired what percentage of the M100 decision unit pertains to 
discretionary providers.  Mr. Willden indicated this information would be provided 
at a later date.

Ms. Tiffany requested explanation of the Med Pay amounts on page 1217 and 
those on page 1226, and asked what revenue is being used to pick up the tail 
which results from initiating managed care.  Ms. Florence said the Med Pay 
categories relate to tail payments.  The tail is not incorporated as a figure per se, 
but is proposed to be funded as a one time appropriation of $13.4 million for the 
biennium, separate from this budget.  

Ms. Tiffany confirmed the $13.4 million would resolve all existing claims up until 
such time as transition is made to managed care.  Ms. Florence responded all 
claims for the AFDC, CHAP and Child Welfare population will be resolved over a 
three year payment schedule.  The managed care program will first impact only 
urban areas.  

Ms. Tiffany inquired where the funding source for the $13.4 million appears in the 
budget.  Ms. Florence responded the $13.4 million is the state's share from the 
General Fund and is reflected on page A39.  This is an unfunded liability and with 
the move to managed care, this liability needs to be addressed.  At the same time, 
monthly capitated payments are being implemented. 

Ms. Tiffany asked why the Med Pay numbers at the beginning of the budget match 
the Med Pay numbers at the back of the budget.  Mr. Willden explained  page 1226 
is a summary of all decision units including the base budget, enhancements and 
managed care adjustments.

Ms. Giunchigliani referred to Transfer to Medicaid on page 993 and questioned 
where that appears on page 1217 and page 1222.  Ms. Florence said the $71 
million in Agency Transfer under Governor Recommends on page 1217 is the $71

million from page 993 transferred to Medicaid.  Ms. Giunchigliani confirmed the 
hospital provider tax had been $46 million and asked how the amount came to $71 
million.  Ms. Florence explained $34.5 million for disproportionate share payments, 
$22.1 million in carry forward, and $14.4 million from intergovernmental transfers 
make up the $71 million.  

Ms. Giunchigliani confirmed disproportionate share relates to indigent services 
provided by public entities in the upcoming programs and asked what institutions 
are being considered to provide services.  Ms. Florence responded discussions have 
been held with University Medical Center, Washoe Medical Center and some rural 
hospitals.  

Ms. Florence explained the M200 decision unit relates to caseload growth.  The 
caseload projection for FY 96 is an increase of approximately 31 percent over FY 
94; FY 97 is projected to increase approximately 13 percent over FY 96.  This 
module provides four additional staff members including two Medicaid specialists, 
one management analyst and one program assistant in the first year of the 
biennium and two Medicaid specialists in the second year of the biennium.  
Expenses in this decision unit are personnel related except for Fiscal Agent Charge 
and Med Pay Current, Second and Third Years and County Indigent Program which 
are related to caseload increases.  

Chairman Arberry requested discussion of decision unit E175.  Ms. Florence  
explained this decision unit relates to funding for staff to attend various training 
courses, both in-state and out-of-state.  In-state courses include Personal Care 
Training and PASSAR Training for screening of residents who may be discharged 
to long term care facilities.  Out-of-state conferences include national conferences 
for state Medicaid directors, home and community based waiver conferences, 
meetings related to drug utilization and review functions, and the American Public 
Welfare Association.  

Ms. Florence testified the E401 decision unit recommends funding for the Medicaid 
Managed Care Program.  This decision unit reflects reductions in claims as a result 
of the AFDC, CHAP and Child Welfare population that would move into managed 
care and the associated reduction in fiscal agent charges and utilization review.  It 
also incorporates capitated payments for those entering into managed care and 
contractual costs associated with implementing the program.  Ms. Florence noted 
the interim committee on health care made a number of recommendations to the 
agency with respect to program implementation and what functions would be best 
handled by the Welfare Division and what functions should be contracted out, such 
as external quality review and actuarial services.  Contracting costs are a primary 
element of the operating expense line.  Decision unit E401 also provides for three 
staff within the managed care unit.  As recommended by the interim health care 
committee, the program will require a full time manager, a Social Welfare Program 
Chief, a Management Analyst II to monitor the program as well as to handle policy 
issues associated with managed care, and a Management Assistant II to provide 
clerical support for the unit.

Ms. Giunchigliani confirmed AFDC and CHAP would move into the managed care 
program and asked what caseload that would involve.  Ms. Florence responded for 
FY 97 the AFDC caseload is estimated to be 40,669, CHAP is estimated at 16,852 
and Child Welfare at 1,824.  Ms. Giunchigliani asked what the capitated payments 
would be.  Ms. Florence answered it is projected capitated payments would total 
$38,933,319 in FY 96 and $150,255,287 in FY 97.  She pointed out capitation 
is based on assumptions that may change dramatically by information received 
from the actuary.


Ms. Giunchigliani requested a definition of the term "capitated."  Ms. Florence 
responded she understood capitated to mean a per person cost to be paid monthly 
to a provider for the full range of services as defined in a contract.  Ms. 
Giunchigliani asked if administrative costs are rolled into the capitated cost.  Ms. 
Florence responded affirmatively.  When Ms. Giunchigliani asked if a cost per 
person is available, Ms. Florence responded it is not.  Ms. Giunchigliani then asked 
how the projection was made for the estimated $38 million cost.  Ms. Florence 
responded per person costs are based on an assumption of a 3 percent savings 
from the cost in a fee-for-service environment.  That cost, medical services only, 
assumes administrative costs would be included.

Ms. Giunchigliani asked how utilization review costs are incorporated.  Ms. Florence 
indicated a savings is projected in utilization review costs because of the reduction 
from the fee-for-service environment and noted providers would be expected to do 
utilization review.  Ms. Giunchigliani expressed concern that outside entities should 
also perform utilization review and asked if actual numbers could be monitored 
monthly to assure clients are receiving appropriate quality care.  Ms. Florence 
explained external quality review is contained within the program and new staff 
members will perform some monitoring functions as well.

Ms. Giunchigliani commented there is no reduction in staff as a result of moving 
into a managed care program.  Ms. Florence stated ultimately staffing numbers will 
be reduced.  Ms. Giunchigliani asked what the total sum was for contractual costs. 
 Ms. Florence responded contractual costs are reflected in Operating Expenses on 
page 1222. Ms. Giunchigliani confirmed an agency to perform utilization review has 
not been selected and the selection process will involve a request for proposal.  
Senator Raggio emphasized funding for the managed care program will come from 
intergovernmental transfers and that a major portion, $45 million, will be funded 
by the balance forward reflected in the Hospital Tax Account.  He asked, assuming 
 the program continues as projected, if General Fund money will be required to 
replace the $45 million in the next biennium.  Ms. Florence responded affirmatively. 
 
Senator Raggio emphasized to the committee that in the next biennium there will 
be no balance forward and the $45 million will have to be made up by the General 
Fund.

Ms. Giunchigliani requested Ms. Florence report back to the subcommittee 
regarding presumptive eligibility for pregnant women.

HOMEMAKING SERVICES - PAGE 1227

Discussion of this budget was deferred to subcommittee.  

EMPLOYMENT AND TRAINING - PAGE 1231

Ms. Florence explained the Interim Welfare Reform Task Force studied how best 
to design a program to meet the needs of all concerned agencies.  The Welfare 
Reform Initiative is aimed at getting people to work and enabling them to make a 
successful transition to self-sufficiency.  To that end, clients would be allowed to 
retain earnings longer as grants would not be reduced immediately upon going to 
work; child care and Medicaid coverage benefits would be continued; and 
counseling would be provided in conjunction with the Department of Employment, 
Training and Rehabilitation to target jobs.  


Ms. Florence explained the overall budget is driven by caseload and federal 
requirements for increasing participation rates.  Decision unit M200 shows $1.5 
million related to caseload increases and staffing required as a result of those 
increases.  Ms. Florence noted the participation rate has increased from 15 percent 
to 20 percent for the AFDC basic program and the participation rate for the AFDC 
unemployed parents' program is expected to increase from 40 percent to 75 
percent by the end of FY 97.  Decision unit M593 proposes six additional 
employment and training specialists and one management assistant in FY 96 and 
one additional employment and training specialist in FY 97.  When M200 and 
M593 are taken in conjunction, the result is a doubling of staff in Employment and 
Training.

Chairman Arberry inquired how long it would take under the Governor's proposed 
Welfare Reform Demonstration Project to expand employment and training services 
to slow the AFDC caseload growth.  Ms. Florence answered the caseload is 
projected to slow approximately 2 percent in the second year of the biennium and 
this projection includes employment and training and also changing eligibility rules. 
 
Ms. Giunchigliani asked whether the JOBS program could be transferred to another 
agency or shared with DETR without jeopardizing federal funds.  Ms. Florence 
responded it could be done; however, assurance would be required that services 
go only to those eligible for AFDC.  Ms. Giunchigliani indicated the job training 
function should be transferred to whatever agency handled it best and inquired how 
this would be done.  Ms. Florence responded job training was being handled very 
well through interagency agreements but that ultimately moving employment and 
training to DETR might be beneficial.

Ms. Giunchigliani asked whether a system was in place with the ability to track 
clients to ensure they were not utilizing several agencies for the same function.  
Ms. Florence responded that a common referral and data base which will be shared 
among the various agencies is being developed.

Senator Raggio cited cost figures generated by fiscal staff and expressed concern 
whether the waiver requirements of federal cost neutrality could be met, indicating 
if it was not certain, the request should not be made.  In addition, he stressed that 
whatever costs the state might be committed to beyond the current biennium need 
to be considered.  Ms. Florence questioned whether the figures provided by fiscal 
staff took into consideration the test and control groups for the change in 
budgeting rules, one of the federal government's requirements.  She indicated 
preliminary estimates showed the total cost of Welfare Reform in five years to be 
approximately $9.8 million in state funds.  When the two percent slowing of 
caseload growth is taken into consideration, the total cost of Welfare Reform to the 
state is $8.6 million.  Consideration of a waiver would necessitate looking at a 
more cumulative savings or slowing of caseload growth.

Ms. Florence agreed to work on providing projections of dollar commitments for the 
future and Senator Raggio requested fiscal staff work with the Division to generate 
this information.  

Ms. Tiffany observed the 34 people who work in the JOBS program placed 887 
people which worked out to 28 people per employee or approximately 2 people per 
employee per month.  Ms. Florence responded the numbers are often under 
reported because people do not notify Welfare when they do find work.  

GAMING CONTROL BOARD - PAGE 669


William Bible, Chairman of the State Gaming Control Board, introduced Harlan 
Elges, Chief of the Administration Division of the Gaming Control Board, and 
Edward Allen, Chief of the Electronic Services Division of the Gaming Control 
Board.  

Mr. Bible explained the Gaming Control Board has two budget accounts:  a 
consolidated budget account including all the Gaming Control Board Divisions and 
a collection or investigative fee budget account which transfers a significant portion 
of its revenues to the administrative budget account in support of personnel costs.

Mr. Bible distributed an organizational chart and attachments (Exhibit P) and 
explained the Gaming Control Board consists of three full time members appointed 
by the Governor.  Additionally, five part time members of the Nevada Gaming 
Commission serve as the ultimate authority for licensure matters, set policy and 
have the authority to adopt regulations.  

The Gaming Control Board is made up of several Divisions.  The Administration 
Division oversees budgets, personnel, hearing functions, research and special 
investigations.  The Audit Division is responsible for auditing Group I licensees ($3 
million or more per month in revenue) and Group II licensees ($1-3 million per 
month in revenue).  The Investigations Division and Corporate Securities Division 
perform pre-licensure investigations on individuals who have applied for gaming 
licenses.  The Electronic Services Division is responsible for computer operations 
and laboratory functions relating to testing of gaming devices.  The Enforcement 
Division is the law enforcement arm of the Gaming Control Board.  The Tax and 
License Division collects taxes levied by Chapter 463 and is responsible for Group 
III licensees (non-restricted licensees with less than $1 million per month in 
revenue).  

Mr. Bible noted page 2 of Exhibit P is a fact sheet which includes:  the number of 
staff assigned to various divisions; a listing of the number of licensed locations 
throughout the state; a listing of State Gaming Taxes and License Fees and their 
distribution.  Page 3 contains a pie chart which reflects the contribution of Gaming 
Taxes to the General Fund.  Page 4 demonstrates actual collections and 
expenditures for FY 90 through FY 94 and projected collections and expenditures 
for FY 95 through FY 97.  The Board is authorized by statute to spend up to 10 
percent of its collections.  Pages 5 through 9 compare Gaming Control Board 
staffing levels to various components of gaming activity.  Page 10 displays 32 new 
positions recommended in the Executive Budget; 25 positions and seven positions 
are recommended for the first and second years of the biennium respectively.  

Mr. Bible testified one-shot appropriations are reflected on page A35 of the 
Executive Budget; a request for $54,400 would implement electronic filing by 
licensees which would include electronic filing of tax reports to expedite processing 
and shift some data entry from the Gaming Control Board to licensees.   Mr. Elges 
distributed a document entitled "Gaming Revenue Report," a copy of which is on 
file in the Research Library of the Legislative Counsel Bureau, and explained this is 
the monthly statistical report produced by the Gaming Control Board.  Licensees 
take information from their computers and manually write it on Gaming Control 
Board forms and Gaming Control Board personnel then manually enter the data into 
the Gaming computers.   

Mr. Bible distributed a document entitled "One-Time Appropriation for Computer: 
 Hardware - $221,356, Software - $61,000" (Exhibit Q).  Mr. Allen explained this 
appropriation will make existing computer resources more available to agents and 
will provide computer support for field agents, primarily in the Audit Division and 
the Investigations Division.  

When Chairman Arberry inquired why the Gaming Control Board has not been able 
to move into the new state office building, Mr. Bible explained there had been 
difficulties with cabling for computer operations.  These problems have been 
resolved.  More recent problems have included power surges; however, it is 
planned to move within two weeks.  Mr. Allen explained another agency noticed 
the problem which caused a failure of at least one computer and several monitors. 
 Power line monitors were placed in the building and it was discovered there were 
separate data power circuits at each work station for computer equipment and 
other power circuits for calculators, coffee pots, etc.  The data power circuits had 
not been identified and computers and calculators were plugged into the same 
circuits and it is thought that caused a major portion of the problem.  

Mr. Bible said the goal for measurement indicator No. 1, Audit Program, had been 
to audit each licensee within 2.5 years.  Actuals for FY 93 and FY 94 were 3.02 
years and 3.27 years respectively.  FY 95 is projected at 3.0 years and it is hoped 
additional staff will improve this performance.  A portion of the audit responsibility 
has been shifted to private CPA's.  Mr. Bible explained regulations require larger 
licensees to have at least annual audits; casinos are visited more frequently than 
this in accordance with Regulation 6A Program activities by agreement between the 
federal government and the state of Nevada whereby the Gaming Control Board 
performs Title XXXI or Bank Secrecy Act responsibilities for the federal government 
designed to prevent money laundering.  

The Corporate Securities Division has responsibility for oversight of the state's 
publicly traded corporations.  Mr. Bible explained the measurement indicator on 
page 670 for actual FY 94 PTC applications filed and related approvals appears 
high because a large number of licensees went from privately traded corporations 
to publicly traded corporations in order to access the capital market to finance 
gaming expansion activities.

Chairman Arberry questioned whether the audit goal of 2.5 years is attainable at 
this time.  Mr. Bible responded negatively.  

Chairman Arberry referred to page 671, measurement indicators for Enforcement 
Division, and noted the number of work permit applications processed is reflected 
but the number of work permit applications rejected is not.  Mr. Bible said this 
figure would be provided. 

Senator Coffin inquired what authority the Gaming Control Board has regarding out-
of-state activities and if enough staff is available for those functions.  Mr. Bible 
explained Nevada enacted a foreign gaming statute in 1975 which stated licensees 
engaging in gaming activity outside of the state of Nevada required prior approval 
 from the Nevada Gaming Commission.  Regulations adopted by the Nevada 
Gaming Commission modified this statute to provide greater flexibility and remove 
some of the prior approval components.  Nevada licensees are required to meet the 
same quality and standards wherever they are licensed.  As licensees are approved 
to engage in gaming activity outside the state of Nevada, revolving funds are 
established whereby licensees deposit funds with the Gaming Control Board which 
allow further investigative activities as the Board determines.  Mr. Bible indicated 
when incidents arise outside the state, the Nevada Gaming Control Board does 
investigate but generally not as the primary agency.   


Senator Rawson asked if reciprocal authorities or agreements or the equivalent of 
extradition powers are available to work with all the different jurisdictions.  Mr. 
Bible responded in many instances memorandums of understanding are written with 
regulatory agencies in other states and countries which provide for sharing and 
exchange of information.  

Mr. Bible reviewed some features of the base budget.  The Board's budget is 
funded through a combination of General Fund authorizations and fees charged to 
applicants through the Investigations Division, the Corporate Securities Division, 
research and development activities of the Audit Division and the Electronic 
Services Division in terms of approvals for new gaming devices.  The base budget 
includes $2.5 million in fees which are recharged from the Gaming Control Board 
Investigation Fund.  Collections are expected to exceed the projection of $2.6 
million by $150,000 to $200,000.  In other non-state revenue, $15,000 is 
included for teaching seminars at the University of Nevada, Las Vegas.  
Expenditures are included for four full time attorneys general in northern Nevada 
and four in southern Nevada, secretarial staff, travel and operating expenses.  

Chairman Arberry inquired if any contracts were made with private legal firms.  Mr. 
Bible responded negatively.  He indicated in the past some private legal and 
accounting assistance has been used in investigative activities, primarily in foreign 
countries.  Chairman Arberry asked which law firms had provided this assistance. 
 Mr. Bible answered  he would have to research this information.  

Mr. Bible indicated the M100 decision unit is for inflation in areas such as  postage, 
motor pool and utilities.  The M200 decision unit reflects the addition of 32 staff, 
25 in the first year and seven in the second year of the biennium.  Staffing 
assignments for the new positions are listed on page 10 of Exhibit P.  

Chairman Arberry requested explanation of one-shot appropriations on page A39. 
 Mr. Bible responded $38,450 is for replacement of furniture and equipment; 
$7,500 is to replace an emulation microprocessor.  Mr. Allen explained an emulator 
provides external control of gaming devices through an external keyboard and is 
used for testing gaming devices.  Mr. Bible added all gaming devices are tested and 
approved before use in the state.  

Senator Rawson inquired who is to receive the Hepatitis B vaccinations funded on 
page 675 in the amount of $2,347.  Mr. Elges responded an OSHA requirement 
states Hepatitis B vaccinations must be offered to all enforcement agents.

Senator O'Donnell referred to decision unit E720 on page 676 and requested 
explanation of the data link which is requested in the amount of $491,998; the 
Governor recommends $18,692.  Mr. Bible responded most of this request was 
moved to the one-shot appropriation of $282,356 for computer equipment.  The 
data link with Las Vegas Police would expedite processing of background checks 
necessary for all gaming applications.  

Ms. Tiffany inquired what would be necessary to avoid duplication of investigations 
or forms.  Mr. Bible said the statutes provide concurrent jurisdiction on licensing 
matters between the state and the county and require counties to use Gaming 
Control Board forms as often as possible.  

Ms. Tiffany asked if the requested computer link would expedite processing or 
provide faster turn around.  Mr. Bible responded the computer link would not 
expedite processing as turn around time is in some cases dependent  on other 
agencies such as the FBI when those agencies are involved in investigations. 


Chairman Arberry inquired how the 25 new positions requested on July 1 could be 
brought on board by that time rather than October 1.  Mr. Bible said in most cases, 
hiring lists are already compiled for those positions; however, it is not realistic to 
expect most positions to be filled by July 1.  If possible, it would be beneficial to 
hire investigative agents and corporate security agents prior to July 1 and fund 
them from this year's budget savings through special authorization.  

Mr. Marvel requested Mr. Bible discuss decision unit E175 on page 675.  Mr. Bible 
explained this decision unit requests reimbursement for license fees to the 45 to 
50 certified public accountants who are required to have a CPA license as a 
condition of their employment in the Audit Division.  This decision unit also includes 
a request for $13,000 and $17,000 in the first and second years of the biennium 
respectively to authorize the Personnel Division to study Gaming Control Board 
salaries in comparison with the salaries of comparable positions in the state 
classified service.  Two divisions would be reviewed in the first year and the 
remainder in the second year of the biennium.  The Budget Director requested 
Personnel review some of the Gaming Control Board's salaries in January and 
preliminary information indicates Gaming salaries to be approximately 6.3 percent 
behind state classified salaries.  Relative parity with the classified system exists in 
the Enforcement and Administration Division; however, the Audit Division is 
approximately 14 percent behind state classified salaries.  Mr. Bible indicated 
employees are being lost due to salaries not being competitive.

Mr. Marvel noted other agencies had requested and not received reimbursement for 
license fees.  He observed the precedent of reimbursing professional license fees 
should not be set.  Mr. Bible responded reimbursing employees for their license fees 
would help reduce employee turnover.  

Ms. Giunchigliani asked why many of Gaming's employees were not part of the 
state classified employment system.  Mr. Bible responded the Board has always 
hired unclassified employees which allows greater flexibility in hiring and 
recruitment practices.  

Mr. Bible indicated he would appreciate the opportunity to further discuss salary 
issues with a subcommittee.  

GAMING CONTROL BOARD INVESTIGATION - PAGE 679

Mr. Bible explained this budget account is for collection of the Board's investigative 
fees.  Investigative fees collected from applicants vary greatly depending on the 
complexity and difficulty of the investigation.  Funds are collected into this account 
and are expended directly for travel and operating expenses.  Requested in this 
budget is out-of-state travel in the amount of $434,144, in-state travel of 
$108,143 and operating expenses of $183,339.  Funds are transferred back to the 
Gaming Control Board account to reimburse labor costs.

Senator Raggio inquired whether applicants receive an itemized billing outlining total 
investigation costs.  Mr. Bible responded each applicant receives a bill; however, 
detailed costs are provided only on request.  Senator Raggio observed many 
applicants do not understand the amounts billed in connection with an investigation 
and inquired what assurance exists that applicants are billed only for the cost of 
their specific investigation.  Mr. Bible responded all investigators keep detailed time 
and expense records for billing purposes.  Senator Raggio asked if applicants are 
entitled to receive a detailed billing.  Mr. Bible responded applicants normally do not 
question the bill; he noted in some cases detail would not be provided to preserve 
privacy of those who had provided information.  


Senator Raggio inquired again if applicants are billed for the actual cost of their 
investigation.  Mr. Bible responded affirmatively.  Mr. Elges added that a summary 
bill is provided.  

Senator Jacobsen requested an update regarding the status of Indian gaming in the 
state.  Mr. Bible noted the state has now entered into three compacts for the 
conduct of Indian gaming.  The first compact was enacted in 1987.  The Board has 
considered the application for the Fort Mojave Project, managed by Bob Cashell. 
 The Commission will consider that application on February 16.  The state has 
entered into a slots-only compact with the Moapa Paiutes and a compact with the 
Las Vegas Paiutes.  Negotiations are in process with the Reno-Sparks Indian 
Colony.  The compacts all vary in terms of jurisdiction and accounting 
requirements; however, the Fort Mojave project will reimburse the state one 
percent or the greater of the Gaming Control Board's costs.  Mr. Bible indicated the 
budget may need to be augmented because additional staffing may be required 
during the application and investigation process.

Mr. Bible testified the federal government has proposed regulations to substantially 
amend Title XXXI, the Bank Secrecy Act, and may at some point during the 
biennium call upon the state to revise its regulations to conform with Title XXXI. 
There is a potential fiscal impact if this does occur.  

STATE INDUSTRIAL INSURANCE SYSTEM - PAGE 2049

Douglas Dirks, General Manager of the State Industrial Insurance System (SIIS), 
gave an overview of SIIS and changes that have occurred since the last session. 
 SIIS adopted a strategic plan approximately a year ago which set several primary 
goals: 1) to pursue sound business practices at SIIS including developing a 
marketing and policy holder services unit; technologic advances in the area of 
imaging policy systems rewrites; 2) to use technology wherever possible to 
improve policy holder services; 3) to explore improvements in the way business is 
done through a total quality improvement program; 4) to improve communication 
at SIIS, both internally and externally by expanding the performance measures, 
empowering individuals to make decisions and providing for appropriate 
accountability; and 5) to pursue the financial responsibilities inherent in a trust fund 
as SIIS is a constitutional trust fund which derives its money from premiums 
charged to policy holders and the investment income earned on those dollars.

Mr. Dirks explained adjustments to the base  propose a reduction of 13.5 FTE.  At 
the present time, the impact of managed care organizations is being evaluated.  The 
managed care program has been in force for 13 months and the early indications 
suggest a financial benefit.  Initially managed care organizations were not well 
acquainted with worker's compensation.  Some of the contracted organizations had 
some experience with worker's compensation in the self-insured market but no one 
in Nevada was experienced in managed care in the SIIS environment and because 
of this, reductions in staffing were not realized in the early part of the program.  
However, in the last year staffing has been reallocated away from the claims areas 
and into policy holder services in response to an approximate 17 percent reduction 
in claims expenses, concurrent reduction in active claim counts and increase in 
overall numbers of policy holders.  


Mr. Dirks noted a substantial increase in in-state and out-of-state travel over the 
next biennium.  This is due to an accounting change at SIIS.  Previously travel 
expenses related to claims were charged directly to the claim which made tracking 
or expenditures difficult.  Now, travel expenditures related to a claim appear in the 
travel category.  All travel at SIIS will be centralized to provide a common point of 
review.  Mr. Dirks testified there is an increase in travel expense not related to 
claims in order for staff to attend training on policy holder services, managed care, 
and other areas of the business that have been neglected in the past.  

Mr. Dirks pointed out a significant increase in funding for equipment.  SIIS has 
placed a greater emphasis on loss control and staff has not had the necessary 
equipment to provide appropriate services to policy holders.  Also proposed is an 
upgrade of the policy holder services area with greater attention paid to the 
ergonomic needs of staff, the majority of whom spend most of their work time at 
a keyboard in front of a monitor.  It is projected this investment will pay for itself 
through fewer claims for staff.  

Mr. Dirks indicated an increase in funding for the land and building improvements 
area.  SIIS owns its own buildings, many of them old and in need of repair.  

Data processing also includes a substantial funding increase for document imaging. 
 There is a heavy demand on paper files by multiple users, staffed by 76 file clerks. 
 It is believed efficiency would be greatly increased by converting to a document 
imaging environment.    

Chairman Arberry asked if testing of the imaging system had been completed.  Mr. 
Dirks responded negatively and indicated vendors have been invited to perform 
evaluations as part of the bidding process.  When the bidding process closes on 
February 15 at 5 p.m., the viability of the project will be evaluated. 

Ms. Giunchigliani inquired if Price Waterhouse is participating in the bidding 
process.  Mr. Dirks responded to his knowledge, they did not.  Ms. Giunchigliani 
asked if the committee would see the request for proposal at some point in the 
process.  Mr. Dirks answered yes; six weeks are allowed for review of the request 
for proposal.  Ms. Giunchigliani asked if the evaluation will include moving to the 
paper less environment in comparison to money spent in the past on the computer 
program which never functioned in the expected manner.  Mr. Dirks said this is the 
next step in development of the computer program and that the difficulties with the 
function of the computer program were due in part to a change in environment 
from design until the time of implementation.  He noted currently the program runs 
at about 98.5 percent availability.

Ms. Giunchigliani confirmed it is no longer necessary to ship claims out of state to 
be processed due to the computer not functioning correctly and asked when this 
change occurred.  Mr. Dirks responded the system came on-line November 6, 
1993, at which time the claims system was only partially functional.  This was 
corrected within 8-10 weeks; however, at the same time managed care 
organizations were brought on-line which added confusion in the area of medical 
bill payment.

Ms. Giunchigliani inquired if the proposed new contract would include sanctions for 
time lines.  Mr. Dirks responded affirmatively.  

Mr. Dirks continued the data processing area also includes a proposal to rewrite the 
policy holder system, the last portion of upgrade on the SIIS computer system.  
The current policy holder system is approximately 20 years old, is inadequate and 
the program is not easily modified.  It is anticipated to move completely away from 
the state facility to a SIIS computer at the completion of the policy system rewrite, 
approximately in 1998.


Mr. Dirks said the data processing area also incorporates a request for increased 
capacity and greater networking capabilities.  SIIS is now doing business with 15 
different managed care organizations and also provides access to its system for the 
Attorney General's Office, the Division of Industrial Relations and numerous outside 
users.  It is anticipated to have more electronic communication with vendors in the 
future which will require an increase in capacity.  Portions of this cost can be 
passed on to managed care organizations as part of the contract but some 
additional costs will be incurred.

Ms. Giunchigliani indicated the last request for proposal included communication 
capabilities for managed care organizations and asked if electronic communication 
was currently in effect.  Mr. Dirks responded managed care organizations currently 
do communicate as full users on the claims system.  Ms. Giunchigliani noted the 
state had paid for computer hook-ups and then the capitated rate the state pays 
was also structured to include administrative costs.  Mr. Dirks pointed out the 
capitated rate was separate from hook-up of the computer and managed care 
organizations do provide a terminal in their own offices.  Ms. Giunchigliani 
requested explanation be provided of why a capitated rate is being paid to managed 
care organizations.    

Mr. Dirks explained the operating expense category includes an increase for 
managed care organizations.  Proposed legislation will remove the mandates of 
seven managed care organizations in Clark County and five in Washoe County in 
order to open a more competitive bidding process and lower the cost of managed 
care.  The cost of managed care has been budgeted at $20 million for the next 
biennium.  

Mr. Dirks noted a significant increase in the training expense category.  Staff 
training will be necessary for the complex information system.  Also, claims 
management training has been neglected.  In addition, SIIS will be subject to 
regulation by the Division of Insurance and in 1996 will report on a statutory basis, 
a new method of accounting which will require training.  

Senator Raggio requested discussion regarding the fiscal impact of small business 
grouping for purposes of self-insurance and how that is reflected in the budget.

Mr. Dirks stated the budget had been put together before the issuance of any 
regulations regarding group self-insurance by the Division of Insurance.  The area 
is changing quickly.  Hearings were held early in the winter, regulations have not 
yet been issued and are being readdressed by the Division of Insurance.  Mr. Dirks 
referred to decision unit M200 and indicated it results from the impact of group 
self-insurance.  A 20 percent reduction in overall premiums is expected over a 
period of five years.  The Commissioner of Insurance has identified approximately 
$17 million of premium that have already requested information regarding the 
provisions of group self-insurance from the Insurance Commissioner's Office.  It is 
projected to lose approximately $20 - $25 million in premium in the first year and 
up to 25 percent of premium or $110 million over a five year period of time.  The 
impact will be significant as most likely the businesses lost will be those that have 
 historically generated a profit for SIIS.


Mr. Dirks stated three possible scenarios of the potential impact of group self-
insurance have been developed.  These scenarios were developed through 
determination by industry class and premium amount what businesses appeared to 
be the most likely candidates to move to group self-insurance.  Information was 
obtained from other states that have already implemented group self-insurance 
plans to obtain their assessments of the impact; however, Nevada is unique in that 
SIIS has a $2 billion unfunded liability.  It is believed this liability is responsible for 
causing many insurers to leave the system.    

Senator Raggio inquired what formed the basis for the estimate of a 25 percent 
reduction.  Mr. Dirks indicated other states and individuals experienced in group 
self-insurance were surveyed to determine what types of industry classes were 
likely to form self-insurance groups.  Internal data was studied in terms of loss 
ratios and premium volume.  With no historical experience for group self-insurance 
in Nevada, the only method to project the impact has been to survey other states 
that have already gone through this process.  

Senator Raggio asked, assuming the provision is not repealed, what would change 
in the SIIS budget.  Mr. Dirks said there would be a reduction in revenue of 
approximately $25 million in the first year.  Decision unit M200 reflects a reduction 
in revenue of $94 million.  However, this projection was made before any 
regulations were available and should now be revised to reflect $110 million over 
five years, with $20-$25 million in the first year.  The first year will also include 
some reduction in claims expense but the premium will fall off much more quickly. 
 
Senator Raggio asked if there would also be a reduction in personnel.  Mr. Dirks 
indicated this was true and that decision unit M200 does reflect a reduction in 
personnel.  

Senator Raggio indicated the committee needs a budget based on the existing law 
because a strong likelihood exists that the statute will not be repealed.  Mr. Dirks 
reported this budget does provide for that reduction; however, the numbers will 
change depending on the final regulations formulated by the Commissioner of 
Insurance.

Senator Raggio inquired if information was available on projections made last 
session.  Mr. Dirks responded detailed information would be provided at a later 
date, but stated generally the projection was that in FY 94 SIIS would experience 
a $47 million negative cash flow, but in fact experienced a $61 million positive 
cash flow.  

Mr. Hettrick pointed out that the true loss appears to be $4 million.  The actual FY 
94 work program reflects 72 percent in claims cost and 8.5 percent in personnel. 
 If those two figures, which total approximately $16 million, are deducted from the 
projected $20 million loss, the net loss would be approximately $4 million.  In light 
of these figures, it would be difficult to justify not allowing that statute to remain 
in effect.  Mr. Hettrick also noted a $25 million increase in premium under M201, 
partly due to an increase in premiums by raising the salary cap to which premiums 
apply.  He added it would be difficult to stop group self-insurance when a $4 
million loss is compared with a $25 million increase in premiums.

Mr. Dirks responded the premium is driven by the payroll cap increasing to 
$36,000; also, the number of policy holders continues to increase although they 
are smaller policy holders than the policy holders which moved to self-insurance.


Ms. Giunchigliani indicated policy as well as cost needs to be considered in this 
issue as the potential does exist to hurt small businesses which cannot and do not 
need to move into group self-insurance.  She requested Mr. Dirks provide the 
figures regarding how many businesses are waiting to move to group self-
insurance, how many businesses have already moved to group self-insurance during 
the last year, the size of the companies and what companies would remain within 
the system.  Mr. Dirks responded this information had already been compiled and 
would be provided to the committee.

Mr. Spitler mentioned the tail created with Medicaid liabilities when the conversion 
to a managed care system was made.  Since SIIS converted in January of 1994, 
he asked where to find the amount of liability against whatever actuarials existed 
based on claims filed before the conversion.  Mr. Dirks responded an actuarial 
report based on fiscal year is available but it is difficult to segregate the information 
at a particular point in time.  Mr. Spitler inquired if data is available that 
demonstrates the liability against the reserve as opposed to what liabilities may be 
incurred under the managed care scenario.  Mr. Dirks indicated this could possibly 
be done on a case based reserve.  Mr. Spitler requested that any available 
information regarding the tail be provided to the committee.

Senator Coffin inquired if private agencies have offered to purchase SIIS.  Mr. Dirks 
responded he was not aware of an offer to acquire SIIS but there had been a 
proposal by a private insurer to provide consulting services regarding how the 
agency might be privatized; included in the proposal is how the consultant might 
be the successful candidate.  Mr. Dirks indicated he was drafting a letter on behalf 
of the Governor in response to that proposal, but noted he would characterize the 
proposal as an offer to assume the $2 billion liability of SIIS and guarantee 
coverage for its 40,000 policy holders.

Senator Coffin requested a copy of the Governor's final letter be provided to the 
committee.  Mr. Dirks indicated he would communicate this request to the 
Governor's Office.

Senator Coffin asked if SIIS had the ability under the law to declare bankruptcy. 
 Mr. Dirks responded that to his knowledge this could not be done because SIIS is 
a constitutional trust fund and not covered by any of the federal bankruptcy laws. 
 
Senator Coffin inquired if the equivalent of a force majeure clause exists between 
policy holders and SIIS should the cash flow become insufficient to pay claims.  Mr. 
Dirks expressed his reluctance to provide a legal answer but said his layman's 
answer is that there is no clear provision for either assessing policy holders or for 
the state assuming the liability.  

Senator Coffin asked if taxpayers would be responsible for the SIIS losses.  Mr. 
Dirks said he had never seen a legal opinion which indicated it was the taxpayers' 
responsibility to assume that liability.  

Senator Coffin indicated he understood the Associated General Contractors planned 
on leaving SIIS and asked if legislation to repeal the existing provision would take 
into account the possibility of policy holders leaving the system with obligations in 
the form of a tail or claims incurred but not reported, and asked if the potential 
liability could be calculated on those policy holders expected to leave the system. 
 Mr. Dirks responded premium deficiencies for the period of time a business had 
been a policy holder could be estimated; also, the premiums a policy holder  have 
paid if SIIS premiums had been appropriately priced could be calculated.  


Senator Coffin asked if the system would continue to be obligated to pay pre-
existing claims.  Mr. Dirks responded affirmatively and said the presumption under 
the law is that policy holders pay premiums assessed to them and that is the extent 
of their responsibility.  There is no provision in the law to allow the system to go 
back and charge additional premiums.  Senator Coffin indicated the potential 
liability of those who might leave the system needed to be determined before a 
budget could be built.  Mr. Dirks indicated these figures would be provided.

Senator O'Donnell expanded on remarks by Mr. Spitler and Senator Coffin regarding 
the tail and the responsibility and liability for ongoing concerns of SIIS.  An 
individual group that leaves SIIS does leave an unfunded liability or tail.  If the 
group leaving the system is required to pay a portion of the unfunded liability, those 
remaining in the system will continue to be treated while those who left the system 
are no longer a burden on the medical community and payments for their medical 
costs no longer need to be made.  The tail will gradually become smaller because 
those policy holders who have left the system are now taking care of their own 
unfunded liability.  Mr. Dirks indicated if premium deficiency was measured over 
the years 1983 to 1994 and applied to the policy holders in the system during that 
time, the $2 billion unfunded liability would result because it represents the amount 
that should have been charged and wasn't.  

Mr. Hettrick observed no tail exists.  Policy holders bought and paid for coverage 
 and if the system inappropriately charged premiums, it is the responsibility of the 
system and not the policy holder.  He likened SIIS to private insurance whereby 
premiums are paid and if a claim is incurred and the policy holder then decides to 
move to another company, the first company is still responsible for the claim and 
the policy holder moves to the next company without a tail.  

Senator O'Donnell noted a claim could be re-opened after several years, so it is 
difficult to calculate the true amount of the "tail."  Ongoing costs and 
responsibilities exist and it is difficult on a long term basis to know how much to 
set aside for premiums for an individual who has been injured.  

Mr. Dirks stated this year SIIS is at a break-even point and is appropriately priced 
for the first time since 1983.  

Mr. Close agreed with Mr. Hettrick there is no "tail" because premiums have been 
paid by employers in good faith.  He questioned whether policy holders are leaving 
the system because of the outstanding debt or because they are not satisfied with 
the service.  Those who have moved to self-insurance have found their systems to 
be more efficient with claims handled more expeditiously than SIIS.  SIIS is in  
competition with private enterprise and the state has no right to tell policy holders 
they cannot form their own insurance groups.  

Mr. Close questioned measurement indicators which reflect 52 percent of Nevada's 
work force on SIIS while the percentage of growth of active policy holders is 
demonstrated to be three percent.  Mr. Dirks responded these figures are correct. 
 Mr. Close asked when the 52 percent figure was calculated.  Mr. Dirks noted this 
is at best an estimate taken from ESD numbers for the total number of employees 
in the state.  Mr. Close requested written answers for questions regarding 
computer requests:  the numbers and cost of treatments provided to workers by 
the provider since the managed care organization began; the number of workers 
treated by managed care organizations; and, a report of services provided in dollars 
spent.  Mr. Dirks indicated this information would be forthcoming.

Mr. Allard asked who would be responsible for claims re-opened after an insured 
had moved to self-insurance.  Mr. Dirks responded re-opened claims were the 
responsibility of SIIS.


Mr. Allard noted his business had experienced service problems with SIIS and 
suggested the shortfall be made up through improved efficiency.  Mr. Dirks agreed 
with the need to increase efficiency at SIIS.  He indicated the budget requests for 
training, rewriting the policy system and document imaging are aimed at improving 
efficiency.  

Ms. Giunchigliani inquired if audit positions would be returned to SIIS.  Mr. Dirks 
said two of the six audit positions that were lost are being returned.  Ms. 
Giunchigliani asked if this would help increase audit penetration.  Mr. Dirks said 
bringing back two of six positions when the policy holder count has increased from 
42,000 to 47,000 will cause penetration to decrease.  Laptop computers are being 
requested for premium auditors to increase audit penetration and efficiency without 
increasing numbers of staff.

Ms. Giunchigliani requested information regarding the 60 day turn-around on 
payment of claims, pre-existing conditions and denial of claims be available for 
review in subcommittee.

Ms. Tiffany asked about the request for an imaging system.  Mr. Dirks responded 
an unsuccessful pilot had been attempted in 1987, and SIIS has not been in an 
imaged environment since that time.  

SIIS REHABILITATION CENTER - PAGE 2057

Mr. Dirks testified the Jean Hanna Clark Rehabilitation Center has undergone many 
changes during the past few years.  He noted a reduction of 59.5 FTE's, reflective 
of decreasing caseloads because of a reduction in overall claims counts.  Currently 
there are 55,000 active claims compared to past counts of 65,000-70,000 active 
claims.  Another major change is that the possibility of providing use of the facility 
to other parties who might find it beneficial is being explored.  

Ms. Giunchigliani inquired if the Center has become a managed care facility.  Mr. 
Dirks said initially a provision existed in contracts with the managed care 
organizations which dictated that the first 25 percent of market share through 
managed care organizations would go to the Jean Hanna Clark Center.  That 
provision has since been removed.   Each managed care organization has placed the 
Center on its provider panel so the Center is now an optional referral but is no 
longer mandatory.  Mr. Dirks added the system does not manage the relationship 
between providers and managed care organizations and only becomes involved if 
there are not enough providers in each specialty.  

Mrs. Brower indicated employees of the Center have speculated that it may close. 
 Mr. Dirks responded this is a rumor and there has been no discussion of closing 
the facility.  The effort is being made to make the facility self-sufficient.  Current 
staffing levels do not match patient loads and either patient loads need to increase 
or staffing needs to be reduced.  Staff reductions will occur only after every other 
avenue of increasing patient loads has been explored.

Mr. Close spoke in support of the Jean Hanna Clark Center and the service it 
provides to the state.

DIVISION OF INDUSTRIAL RELATIONS - PAGE 737

Rose McKinney-James introduced Ronald C. Swirczek, Administrator of the Division 
of Industrial Relations, and Mary Keating, Administrative Services Officer for the 
Division.  Ms. McKinney-James observed the Division handles a variety of issues 
related to workplace and worker safety.  


Mr. Swirczek noted 109,000 workers' compensation claims were filed in FY 93 at 
a total cost of $528 million.  This figure includes both SIIS and self-insured 
employers.  He added the number of lost-time work claims has decreased from 
21,000 in 1993 to 14,000 in 1994.  

Mr. Swirczek referred to page 737 in the Executive Budget and explained this 
account includes the Office of the Administrator, legal counsel and industrial 
insurance regulation which regulates worker's compensation.  For the last two 
years, focus has been on the medical delivery system and an audit of the managed 
care organization program as it relates to SIIS will be completed soon.  

Mr. Swirczek stated another area of focus has been the permanent partial disability 
ratings, in excess of $100 million a year for SIIS alone.  The American Medical 
Association's Guides to Evaluating Physical Impairment has been evaluated and it 
is expected that adopting this guide will likely decrease costs and alleviate 
confusion on the part of employers, insurers and injured workers through use of a 
uniform method of evaluation.  

Mr. Swirczek said focus has also been placed on uninsured employers.  SB 316 
gave the Division the ability to impose fines of up to $10,000 on employers not 
paying their fair share.  A total of 418 fines have been imposed totalling $465,000. 
 Finally, focus has been on compliance audits of the 196 self-insured employers.

Mr. Swirczek observed the Division's performance indicators on page 737 were not 
adequate and said new measurement indicators would be produced.

Vice-Chairman Evans asked when the revised indicators would be provided.  Mr. 
Swirczek responded within thirty days.  Vice-Chairman Evans requested revised 
indicators be submitted to fiscal staff before the subcommittee hearing for the 
Division of Industrial Relations is scheduled.  

Vice-Chairman Evans asked for explanation of the disparity between projections and 
actual.  Mr. Swirczek said the number of compliance audits conducted as opposed 
to the number projected was low because audits were conducted not only of the 
insurance certificate holder but also of one or two affiliates of that certificate 
holder, which greatly increased the time involved in each audit.  He explained a 
certificate holder may be administered by several third party administrators.  

Vice-Chairman Evans questioned measurement indicator No. 2, subsequent injury 
claims processed.  Mr. Swirczek responded projections were submitted prior to the 
subsequent injury claims of SIIS being transferred from the Division of Industrial 
Relations to SIIS and after SB 316 the Division handled only subsequent injury 
cases for self-insured employers.  

Mr. Swirczek testified the primary consideration in the budget regarding worker's 
compensation regulation is the M200 decision unit.  This is a result of the 
increasing number of self-insured employers.  In order to meet these needs, five 
additional field auditors are requested in order to comply with the statutory 
mandate of auditing insurers at least once every three years.

Vice-Chairman Evans requested discussion of the base budget.  Mr. Swirczek noted 
the agency currently consists of 140 full time equivalent positions statewide.  
Funding sources are assessments against worker's compensation insurers, federal 
grants for OSHA programs and workplace safety programs and a small portion from 
licenses and fees related to the asbestos program.


Mr. Swirczek reported the base budget remains essentially the same as the last 
biennial period with the exception of the information services line where the agency 
requests $56,575 and the Governor recommends $7,190, a transfer from the base 
budget which is further accounted for in the maintenance decision units.

Senator O'Donnell questioned the division of duties between SIIS and the Division 
of Industrial Relations.  Mr. Swirczek explained SIIS is an insurance company which 
is regulated by the Division regarding delivery of benefits to injured workers, non-
payment and late payment to medical providers and billing disputes.  

Senator O'Donnell inquired about the duties of the Attorney for Injured Workers. 
 Ms. McKinney-James said the Attorney for Injured Workers is responsible for 
legally representing the interests of injured workers when the Department of 
Administration Appeals Officer recommends representation for the injured worker. 
 
Senator O'Donnell asked whether the Attorney for Injured Workers should be under 
the Department of Business and Industry.  Ms. McKinney-James responded the 
position is within Department of Business and Industry as a result of reorganization. 
 Senator O'Donnell commented lines of authority seem to overlap within the 
Department of Business and Industry and the Division of Industrial Regulation and 
the Attorney for Injured Workers.  Ms. McKinney-James explained SIIS is one of 
many self-insurers under the regulation of the Department; however, the situation 
is unique since Industrial Relations and SIIS are sister agencies within state 
government.  Senator O'Donnell expressed concern about the interaction between 
these agencies.

Ms. Giunchigliani inquired where the $465,000 in fines for uninsured employers 
appeared in the budget.  Mr. Swirczek responded the fines would go back into the 
uninsured fund; other fines would go into the fund for worker's compensation and 
safety; at the end of the fiscal year any unused revenue is refunded back to the 
appropriate insurers.  

Ms. Giunchigliani asked when the change was made to give SIIS back the 
subsequent injury, was any money rebated to employers.  Mr. Swirczek answered 
any unused portion attributable to SIIS was returned to SIIS.  

Ms. Giunchigliani stated lost time claims would be a good measurement indicator 
and inquired if a bill was required to change the name of "Preventing Safety" to 
"Safety Prevention."   Mr. Swirczek responded the new names of sections resulting 
from reorganization are Occupational Safety and Health Enforcement; Safety 
Consultation and Training; Mine Safety and Training; and Industrial Insurance 
Regulation.

Vice-Chairman Evans requested information be provided regarding audits performed 
by Administrative Services, who is being audited and how those audits are 
distinguished from those done by audit staff in the Department of Administration.

Mr. Close asked that a flow chart of the organization also be provided.  Mr. 
Swirczek responded a flow chart with the function of each section would be 
forthcoming.

Vice-Chairman Evans referred to the M200 decision unit on page 739 and asked 
for additional information on how the information services expenditure line will be 
 used. 


Mr. Swirczek testified the M201 decision unit reflects an agency request with no 
Governor recommendation.  This decision unit would provide the necessary start-up 
funds for the group self-insurance program.  

Senator Coffin asked whether Mr. Swirczek said an adjustment would be made 
upwards or downwards according to the number of those who move to self-
insurance.  Mr. Swirczek responded a bill draft request is being discussed whether 
to temporarily defer institution of group self-insurance.  This budget request would 
remain accurate if the statute passes.  

Senator Coffin noted very little increase in the size of the agency is reflected.  Mr. 
Swirczek responded the agency is undergoing extensive re-evaluation.  Senator 
Coffin then observed that if the law passes as written many more auditors will be 
required because there will be a larger number of audits to perform.  Mr. Swirczek 
said with the statutory requirement that every self-insured employer be audited 
once every three years, the new group self-insured entities would not be scheduled 
for immediate detailed audits.  

Senator Coffin inquired if the Division of Insurance will be involved in verifying 
whether insurers are stable.  Mr. Swirczek responded affirmatively.  Senator Coffin 
questioned whether staffing levels at the Division of Insurance were sufficient to 
cover all the new insurers.  

ENFORCEMENT FOR INDUSTRIAL SAFETY - PAGE 743

Mr. Swirczek testified lost-time accidents have decreased dramatically during the 
last biennium.  The written workplace safety program has been presented to nearly 
5,000 employers and the Educational Informational Program now receives requests 
from employers for on-site assistance.  The construction industry has historically 
been one of the contributors to lost time accidents and during the last session the 
Preconstruction Conference Regulation required that safety rules be reviewed with 
all involved parties before a project is started.  Also, contract safety inspectors 
have been hired for major construction projects and this has resulted in a significant 
reduction in the number of lost-time accidents on construction projects.  
Vice-Chairman Evans indicated if inspectors are required to perform specific 
numbers of inspections, that information should be incorporated into performance 
indicators.  Mr. Swirczek responded inspections are becoming more complicated 
due to additional OSHA regulations and are taking longer than in the past.  

Mr. Swirczek referred to the M200 decision unit on page 744 and indicated funding 
this decision unit would enable the division to hire enough inspectors to keep pace 
with the number of new employers and growth in the work force.  

Ms. Giunchigliani expressed her appreciation to Mr. Swirczek for changing the 
direction of the Division so that it now acts as a service to employers and provides 
assistance before accidents occur.  She requested that the reduction of lost-time 
claims be used to demonstrate that employers are being saved money.  She asked 
if SIIS acted as the first contact with employers with the Division becoming 
involved if SIIS is not successful.  Mr. Swirczek indicated an agreement is being 
negotiated with SIIS in order to combine efforts and areas of expertise and to share 
the work load and prioritize how best to reach employers.  


Ms. Giunchigliani observed many small employers object to the mandatory safety 
plan.  Ms. McKinney-James responded most small businesses with two or three 
employees feel the requirements for written workplace safety plans are too 
stringent and that those with good safety records should be able to avoid these 
requirements.  She indicated these guidelines are being reviewed.  Ms. Giunchigliani 
stated an attempt had been made to exempt the small businesses.

Mr. Hettrick concurred with Ms. Giunchigliani that changes should be made 
regarding the workplace safety requirements for small businesses as workplace 
safety training in a business with two employees becomes nearly ridiculous.  He 
made the suggestion that companies smaller than a certain size could be exempt; 
however, in order to provide the incentive to establish a workplace safety plan, 
those companies would be given a three percent premium discount off their SIIS 
rates when a workplace safety plan is submitted.  

Ms. McKinney-James noted that interest even among the small businesses opposed 
to establishing workplace safety plans has been heightened; the importance of 
workplace safety has been emphasized; and, businesses have recognized that 
safety hazards exist, even in the smallest of businesses.  

Mr. Hettrick noted in many safety programs, small employers buy a plan from a 
local employment agency.  He observed the workplace safety training requirements 
have been written for large companies and tend to put small companies in the 
ridiculous situation of employees training themselves.  Any mandated program 
needs to be on a basis that makes sense for small companies.

Vice-Chairman Evans informed Mr. Swirczek that any revisions on performance 
indicators must be provided as quickly as possible before the Division's next 
scheduled hearing.

Ms. Giunchigliani requested Mr. Swirczek introduce other staff members present. 
 Mr. Swirczek introduced Ken Thomas, Safety Consultation and Training; Karlin 
Dunlop, Industrial Insurance Regulation; Nort Pickett, Mine Safety and Health; 
Danny Evans, Occupational Safety and Health Enforcement.  

PREVENTATIVE SAFETY - PAGE 749

This budget hearing was deferred to subcommittee.

MINE INSPECTION - PAGE 755

This budget hearing was deferred to subcommittee.

Vice-Chairman Evans indicated fiscal staff would follow up with written requests 
for information on remaining items.  

With no further business to come before the committee, Vice-Chairman Evans 
adjourned the meeting at 5:31 p.m.




RESPECTFULLY SUBMITTED:



	
Deborah Salaber,
Committee Secretary



Assembly Committee on Ways and Means
February 15, 1995
Page