MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session February 22, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:15 a.m., on Wednesday, February 22, 1995, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator William J. Raggio, Chairman Senator Raymond D. Rawson, Vice Chairman Senator Lawrence E. Jacobsen Senator Bob Coffin Senator William R. O'Donnell Senator Dean A. Rhoads Senator Bernice Mathews STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Brian Burke, Program Analyst Pamela Jochim, Committee Secretary OTHERS PRESENT: John P. Comeaux, Director, Department of Administration Gary Crews, Legislative Auditor, Audit Division, Legislative Counsel Bureau Rocky Cooper, Deputy Legislative Auditor, Audit Division, Legislative Counsel Bureau Thomas L. Steffen, Chief Justice, Supreme Court Robert E. Rose, Associate Justice, Supreme Court Donald J. Mello, Court Administrator and Director of the Administrative Office of the Courts, Supreme Court Janette Bloom, Clerk of the Supreme Court, Supreme Court Nancy A. Becker, District Court Judge, Eighth Judicial District Susan Southwick, Law Librarian, Supreme Court Law Library Brian E. Doran, Court Administrator, Sparks Municipal Court Kevin Kelly, Chairman, Supreme Court Task Force on Racial and Economic Bias Senator Raggio stated the Department of Administration has requested committee introduction of the following bill draft requests: BILL DRAFT REQUEST (BDR) S-1504: Makes appropriation to state gaming control board for computer and office equipment. John P. Comeaux, Director, Department of Administration, noted BDR S-1504 is a request for a one-time appropriation of $390,406 for equipment replacement. BILL DRAFT REQUEST (BDR) S-1533: Makes appropriation to department of prisons for replacement of various equipment. Mr. Comeaux explained BDR S-1533 requests $2,580,695 for replacement equipment which will be utilized throughout the prison system. BILL DRAFT REQUEST (BDR) S-1481: Makes appropriation to fund to stabilize operation of state government. BILL DRAFT REQUEST (BDR) S-1484: Makes appropriation to commission on ethics for certain equipment. BILL DRAFT REQUEST (BDR) S-1487: Makes appropriation to office of state treasurer for automated check distribution machine, computer hardware and office equipment. BILL DRAFT REQUEST (BDR) S-1488: Makes appropriation to state controller for equipment and computer enhancements and remodeling of basement of capitol annex. Mr. Comeaux related the $38,000 request was deleted from the Controller's Office budget by the Budget Division. The Controller's Office is requesting the funding in a one-time appropriation. BILL DRAFT REQUEST (BDR) S-1491: Makes appropriation to department of education for Reading and Math Proficiency Examination Program at Grades 4 and 8. Mr. Comeaux explained the $479,000 request is for development and replacement of the current norm standardized tests used in the Proficiency Examination Program. He noted the replacement tests will be internally developed or purchased. The tests are utilized to gauge academic achievement in reading and math. BILL DRAFT REQUEST (BDR) S-1494: Makes appropriation to department of education for development of statewide system of reports and analyses of information concerning pupils. Mr. Comeaux said the $11.2 million request is to provide funding to school districts to streamline state and student data collection reporting and analysis procedures. The funds would allow the state and school districts to minimize data requests to improve the consistency and compatibility of data collected. In addition, the funds would help to establish a statewide data base containing individual student data which will allow for more accurate fiscal analysis. BILL DRAFT REQUEST (BDR) S-1496: Makes appropriation to University and Community College System of Nevada for scholarships for students. Mr. Comeaux stated the $7 million request is being made as a one-time appropriation because the state is not in the position to make a commitment of scholarship funds for future bienniums. BILL DRAFT REQUEST (BDR) S-1500: Makes appropriation to budget division of department of administration for enhancements to executive budget system. Mr. Comeaux related, during the budget process, the Budget Division identified a number of areas in the existing system which needed to be enhanced. The $275,000 request would allow the division to implement the needed changes. BILL DRAFT REQUEST (BDR) S-1505: Makes appropriation to state gaming control board for system which allows payment of taxes electronically. BILL DRAFT REQUEST (BDR) S-1509: Makes appropriation to office of labor commissioner of department of business and industry for computer and office equipment. BILL DRAFT REQUEST (BDR) S-1515: Makes appropriation to division of economic development of commission on economic development for replacement of telephone system. BILL DRAFT REQUEST (BDR) S-1516: Makes appropriation to department of human resources to finance state's share of business process re- engineering for certain divisions of department. Mr. Comeaux noted the total cost of the program is $1 million. The Department of Human Resources is requesting $675,436 and the federal government will pay the difference. BILL DRAFT REQUEST (BDR) S-1518: Makes appropriation to mental hygiene and mental retardation division of department of human resources for certain equipment and refurbishment of facilities. BILL DRAFT REQUEST (BDR) S-1519: Makes appropriation to health division of department of human resources for various equipment. Mr. Comeaux stated most of the $1.5 million request would be utilized to purchase new equipment for the expansion of the state laboratory. Funds would also be used for office equipment replacement and medical equipment. BILL DRAFT REQUEST (BDR) S-1521: Makes appropriation to welfare division of department of human resources for replacement of room dividers and office equipment. BILL DRAFT REQUEST (BDR) S-1522: Makes appropriation to welfare division of department of human resources for Nevada Medicaid managed care program. Mr. Comeaux said the $13,417,000 request represents the estimated liability for a managed care program. BILL DRAFT REQUEST (BDR) S-1526: Makes appropriation to division of child and family services of department of human resources for vehicles, equipment, supplies and building maintenance for certain youth bureaus. BILL DRAFT REQUEST (BDR) S-1529: Makes appropriation to department of employment, training and rehabilitation for developmental disabilities program. BILL DRAFT REQUEST (BDR) S-1532: Makes appropriation to department of prisons for expenses related to Stewart conservation camp and Indian Springs conservation camp. Mr. Comeaux noted the $343,317 is requested to help equip the expansion of the conservation camps. BILL DRAFT REQUEST (BDR) S-1536: Makes appropriation from state highway fund to department of motor vehicles and public safety for business process re-engineering study and revision of existing motor vehicle operating applications. BILL DRAFT REQUEST (BDR) S-1537: Makes appropriation to investigation division of department of motor vehicles and public safety for replacement of vehicles. Mr. Comeaux explained $699,525 is requested for the replacement of 45 investigative vehicles. BILL DRAFT REQUEST (BDR) S-1541: Makes appropriations to division of state parks of state department of conservation and natural resources for various expenses. Mr. Comeaux stated $1,753,000 is requested for equipment replacement and maintenance projects. BILL DRAFT REQUEST (BDR) S-1543: Makes appropriations to division of water resources of state department of conservation and natural resources for equipment. BILL DRAFT REQUEST (BDR) S-1544: Makes appropriation to division of state lands of state department of conservation and natural resources for equipment. BILL DRAFT REQUEST (BDR) S-1707: Makes appropriation to channel clearance account. SENATOR JACOBSEN MOVED TO INTRODUCE BDR S-1504, BDR S- 1533, BDR S-1481, BDR S-1484, BDR S-1487, BDR S-1488, BDR S- 1491, BDR S-1494, BDR S-1496, BDR S-1500, BDR S-1505, BDR S- 1509, BDR S-1515, BDR S-1516, BDR S-1518, BDR S-1519, BDR S- 1521, BDR S-1522, BDR S-1526, BDR S-1529, BDR S-1532, BDR S- 1536, BDR S-1537, BDR S-1541, BDR S-1543, BDR S-1544, BDR S- 1707. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Raggio asked Gary Crews, Legislative Auditor, Audit Division, Legislative Counsel Bureau, to provide the committee with an overview of the audit report on the Judicial Branch of Government. Mr. Crews distributed the Judicial Branch of Government Audit Report (Exhibit C. Original is on file in the Research Library.) and highlighted the Executive Summary listed on pages 1-5 of the report. Mr. Crews noted the scope of the audit related to how Nevada's courts process, collect, record, and remit state fines and administrative assessment fees imposed by Nevada Highway Patrol (NHP) citations issued during 1993. In addition, the audit examined how fines were imposed and collected for cases processed at three district courts during 1993 and felony DUI (Driving Under the Influence) convictions processed at one district court during 1991 and 1992. Mr. Crews noted the audit found significant management weaknesses within Nevada's court system. Many courts have poor financial and administrative practices which has cost the state millions of dollars in fines and assessments. He related the Administrative Office of the Courts has the authority to establish and monitor internal controls for the state's court system. Rocky Cooper, Deputy Legislative Auditor, Audit Division, Legislative Counsel Bureau, referred the committee to page 3 of Exhibit C. Mr. Cooper stated $6.7 million was collected from NHP fines and assessments in 1993. Local governments received $5.5 million and the state received $1.2 million. The Audit Division estimates $4.2 million in NHP citations went to the justice courts in 1993 because the courts classified citations as bail forfeitures. It is the Legislative Counsel Bureau's opinion the NHP citation fees are more characteristic of a fine and should have been paid to the state. He noted a number of courts amend NHP citations to violations of local ordinances, therefore, allowing the counties to keep the funds. The Legislative Counsel Bureau has determined certain requirements must be met before a NHP citation can be changed. He stated, based on the information the Audit Division has received, the requirements may not have been met in many cases. Senator Rawson asked for a list of the courts amending the NHP citations. Mr. Cooper explained many counties and local governments have adopted Nevada Revised Statutes (NRS) violations as part of their local ordinances. He noted not all courts are amending NHP citations. Senator Raggio asked if the courts or the prosecuting attorneys are amending the citations. Mr. Cooper replied, most of the citations are traffic citations and are amended during traffic court. He noted, district attorneys, in some cases, file charges under state law and local ordinance. Mr. Cooper stated justice and municipal courts collected only 60 percent of the fines imposed from NHP citations in 1993. The Audit Division estimates over $16 million in state fines, warrant fees, and assessments have accumulated in recent years, due to inadequate collection procedures. Many courts have inadequate internal controls for collecting, recording, and depositing fine payments. Because of internal control weaknesses, some courts have experienced instances of fraud and misuse of funds. A survey of the courts indicates internal control procedures could be improved if statewide accounting and administrative procedures were developed. Senator Raggio said he is concerned with the Audit Division's findings of fraud and misuse of court funds. The senator asked for justification of the audit's findings. Mr. Cooper referred the senator to page 25 of Exhibit C and noted a detailed description is provided on the subject. Mr. Crews interjected, of the 53 courts studied by the Audit Division, 45 did not have adequate separation of duties among employees. Senator Raggio noted page 5 of the audit listed four recommendations for improving financial and administrative controls for Nevada's courts. Mr. Cooper related the recommendations include the following: (1) establishment of minimum control standards; (2) development of uniform procedures to classify, record, and distribute fines and assessments; (3) develop collection procedures, and (4) perform periodic monitoring to ensure control objectives are achieved. He said the Chief Justice has accepted all four recommendations. The Chief Justice's response to the recommendations is located on page 72 of Exhibit C. Senator Rawson commented the NHP does not always put the administrative assessment on the violation. The senator said local governments find it difficult to collect the fee if it is not indicated at the time the violation is issued. Mr. Cooper remarked the audit found this situation occurred in several isolated courts. Senator Rawson asked if the assessment could be printed on the citation. Mr. Cooper explained citations do contain an area where the assessment could be placed. Senator Rawson stated a disclaimer should be printed on the citation indicating an assessment fee will be charged. Mr. Cooper noted instructions on the citations do need improvement. Senator Coffin commented it would be difficult to place the assessment fee on the citation because the amount of the assessment varies with the amount of the fine. Fines are determined on a sliding scale, so the assessment fee is not always readily available. Notice of an assessment fee on the citation would at least alert the violator of the additional charge. The senator noted the assessment fee has become a "political nightmare" for the lower courts. He stated the assessment charge, in some instances, exceeds the amount of the fine. Senator Raggio asked if the majority of courts are in compliance with assessment collections. Mr. Cooper said most of the courts are imposing the assessment fee and remitting it to the state. Senator Jacobsen questioned when was the last time the judicial system was audited. Mr. Crews indicated an audit was conducted 12-13 years ago, however, that particular audit was not as comprehensive as the one just completed. Mr. Crews noted if local courts would enhance their revenue collections, it would benefit not only the state, but the local court system. He related some court jurisdictions collected 90 percent of the assessment fees. Senator Raggio stated if some courts can collect 90 percent of the fees, then all courts should be able to attain the same percentage. The senator explained the assessment fee was originally imposed so the burden of the judicial programs would be placed on the offender and not the public. Supreme Court - Page 103 Thomas L. Steffen, Chief Justice, Supreme Court, came forward and provided the committee with an overview of the court's budget. He stated the total budget for the 1994-1995 biennium was $24,192,392. The proposed budget for the next biennium is $31,779,087. He explained the difference between the current budget and the proposed budget is the request for two additional justices and support staff. Justice Steffen indicated the request for the additional justices is not unanimously supported by the members of the court. He noted his disapproval of the proposal. The additional justices, court staff, and equipment total more than $2.5 million. Budget increases have been proposed for elected official salaries and longevity payments totaling $1,538,589. A proposal for seven additional district court judges would cost $1,486,272. He said the six additional positions requested for the Supreme Court would cost $751,711. The new Division of Planning and Analysis is proposed to be placed in the Administrative Office of the Court (AOC). In addition, the court is requesting matching funds of $302,210 for a court improvement federal grant. A proposed new Commission on Racial and Economic Bias is requesting $222,500. Inflationary increases of $220,808 are proposed in the base budget. Senator Raggio asked for a report on the study of the urban courts. Robert E. Rose, Associate Justice, Supreme Court, testified he served as chairman of the Judicial Assessment Commission. Justice Rose said the study was funded by the state, Washoe County, Clark County, and a small grant from the National Justice Institute. Senator Raggio pointed out the state's portion of the funding was a loan, which has been repaid by the commission. Justice Rose stated the commission began November 1993, and met on 10 occasions. The commission is comprised of 50 members, which are divided into four groups: criminal law, special court structures, civil law, and access to and quality of justice. Justice Rose noted the commission's 41 study recommendations are located in the booklet Simplifying the Maze, a Report of the Judicial Assessment Commission (Exhibit D. Original is on file in the Research Library.). The commission found the judicial system should have greater accountability. Accurate statistics should be compiled on the operation of the courts statewide. The statistics could be utilized to evaluate a court or judge's performance and to help with court management. Additionally, the commission found that no one is in charge of Nevada's court system. The commission suggested the creation of a Nevada Judicial Council which would act as a board of directors for the entire court system. The creation of the council requires a constitutional amendment because the state constitution allows local judges the authority to manage their own courts, with the Supreme Court acting as administrative head of the courts. Senator Raggio asked if the council could be created by the Legislature. Justice Rose noted the Legislature has the authority to create courts, but he is unsure if they have the authority to create a judicial council. Justice Rose related the commission developed a Nevada Plan to address the problem of judicial accountability. The Nevada Plan is a compromise between the present plan and the Missouri Plan. The Nevada Plan provides that once a judge is appointed, the judge would be required to run in the first general election, after 2 full years on the bench. If the judge is elected, then the judge would maintain their office through the retention process. In addition, judges would be evaluated by a Judicial Performance Evaluation Commission before running for election. The Judicial Performance Evaluation Commission would publicize their evaluations before the election. Eighteen states are in the process or have implemented these procedures. Senator Raggio questioned how the recommendations would be implemented. Justice Rose stated the changes would require a constitutional amendment. Justice Rose noted the national average caseload for a district court judge is 1200- 1300 cases a year. Washoe County's caseload conforms with the average, but Clark County's caseload per judge is over 2,000 cases per year. The commission recommended that six new family court judges be added in Clark County and one family court judge be added in Washoe County. Senator Raggio asked if the counties support the commission's recommendation regarding the additional family court judges. Justice Rose explained Clark County supports the hiring of an additional four judges, but not six. Clark County supports hiring two judges now and another two in 2 years. Washoe County supports the recommendation of hiring one more family court judge. Justice Rose noted Exhibit E, Judicial Assessment Commission Recommendations Effect on the Supreme Court Procedures & Budgets, and Exhibit F, Judicial Assessment Commission Recommendations Effect on Executive Department and Local Government Procedures & Budgets, addresses all the Judicial Assessment Commission's recommendations and the legislation needed to implement the commission's recommendations. He stated, while the commission was not oblivious to the financial impact of the recommendations, that was not their primary concern. The commission was more concerned with making the court more efficient and "user friendly." Presently, statistics are not uniformly gathered by the state's courts. Chief Justice Steffen interjected the proposed Division of Planning and Analysis listed in the Supreme Court's budget is recommended by the Judicial Assessment Commission. Donald J. Mello, Court Administrator and Director of the Administrative Office of the Courts, Supreme Court, testified the Supreme Court's budget proposes increases in the following areas: inflation, staffing, additional justices and support staff, replacement equipment, and new equipment. A salary increase has been proposed for 23 unclassified positions. Mr. Mello stated: The methodology used to recommend the increases, were a comparison of those salaries to the merit schedule on the classified system as of the last time there was a salary increase for unclassified personnel. Rolling those figures forward by the incremental steps that would have been awarded over that period of time to someone in the classified system. Because the budget is funded by administrative assessment fees, a cost-of-living increase has been included. Mr. Mello said it is difficult to make up cost-of-living increases from administrative assessment fees. Senator Mathews noted budget category M220 requests two additional justices and three secretaries. She asked how the secretaries would be allocated to the justices. Mr. Mello explained one of the secretaries would act as a floating secretary among the seven justices. Presently, the court has one floating secretary and is requesting an additional floating secretary. If the court increases to seven members, then the court will have three floating secretaries. Chief Justice Steffen interjected that one of the floating secretaries is primarily assigned to the Chief Justice's office. Mr. Mello explained the court is proposing to permanently assign one of the floating secretaries to the Chief Justice. The Chief Justice would have two permanent secretaries and the court would then have two floating secretaries to cover during absences. Senator Raggio noted M220 recommends the addition of two new justices and the addition of 15 new support staff. The senator said it was his understanding the court is requesting: three additional Executive Secretaries; four Senior Law Clerks; two Deputy Clerks; two Management Assistants; one Deputy Supervisory Attorney and three Staff Attorneys. He asked for a justification on the personnel request. Janette Bloom, Clerk of the Supreme Court, Supreme Court, responded the personnel requested in M220 would only be needed if the Supreme Court is expanded to seven justices. It is proposed that a panel of three justices hear cases in Las Vegas on a permanent basis. If all seven justices remain in the Supreme Court building, then the requested staffing levels would be reduced. Senator Raggio questioned where the Supreme Court site would be located in Las Vegas. Ms. Bloom related the court presently is located in the Bridger Building in Las Vegas, but because the building is scheduled to be destroyed, it is proposed that the court relocate to the fourth floor of the Clark County Courthouse. Senator Raggio inquired if the cost for the Las Vegas facility was included within the budget. Mr. Mello said Las Vegas rental expense is included in the base budget on page 105 of the Executive Budget. Senator Raggio commented the rental cost totaled only $13,000 a year and questioned why the cost was so low. Nancy A. Becker, District Court Judge, Eighth Judicial District, stated she is the head of the Justice Center Task Force in Clark County. The task force's primary goal is to develop new court facilities in downtown Las Vegas. The $13,000 rental fee incorporates the existing offices as they operate now. If the Supreme Court expanded its facilities in Las Vegas, the county would increase the rent. Judge Becker said the present lease rate is not a problem as long as the court does not contemplate any substantial remodeling. Senator Raggio observed the Out-of-State Travel, In-State Travel, and Judicial Commission categories reflect Fiscal Year (FY) 1995 work program amounts rather than FY 1994 actual amounts as required by the budget instructions. The senator asked why the actual amounts were not utilized. Mr. Mello stated the misclassification of the figures is an error caused by the court's misunderstanding of the budget instructions. Senator Raggio requested Mr. Mello to provide the correct figures to the fiscal staff. Mr. Mello noted the Supreme Court's budget had been revised (Exhibit G) and distributed a copy of the revision to the committee. He said in category M210 under New Positions, the number should reflect six positions instead of five. Senator Raggio asked if the fiscal staff has the necessary detail on the request for support staff in category M220. Brian Burke, Program Analyst, Legislative Counsel Bureau, stated the Fiscal Division has the position count, but they do not have justifications on the requested positions. Chief Justice Steffen stated the proposed additional justices will be counterproductive. The proposal will create logistical problems and adversely affect the corpus juris of the state. A seven-member court would increase the likelihood of dissenting and concurring opinions. He said all the experts the court has surveyed indicated the proposed change is not the way to proceed. Instead, resources should be utilized to educate the public on the need for an intermediate appellate court. The Chief Justice used the Utah Experience as an example. Utah created an intermediate appellate court after a task force study in 1984 rejected a plan to increase the number of justices serving on the court. The Utah task force concluded judicial panels would create far too many problems and would result in only marginal increases in productivity. He recalled the Mississippi Supreme Court enlarged to nine justices, but abandoned the system because the backlog of cases continued to increase. Mississippi is now implementing an intermediate appellate court. Chief Justice Steffen stressed the proposed change to the Nevada Supreme Court would be counterproductive to the court. He stated he has written a position statement on the proposed change and would make a copy available to the committee. Senator Raggio asked if the positions requested in category M210 would be needed if the court is not augmented. Ms. Bloom said the positions would still be necessary. Senator Raggio noted budget categories E710 and E720 request a total of $25,000 in each year of the biennium for replacement and new photocopying equipment. The senator asked for a breakdown of the expenditures. Mr. Mello explained $1,591 in FY 1996 and $1,070 in FY 1997 constitute new equipment. The balance of the request provides for existing contracts. Senator Raggio questioned why these expenditures would be considered an enhancement. Mr. Burke clarified he has spoken with the court and it has been agreed that contract expenditures should be located in the base budget. Mr. Mello stated he is perplexed why existing equipment and purchasing obligations needed to be shown, per budget instructions, as replacement or new equipment. He observed the budget process does not appear to accommodate these types of items in the base budget. Mr. Comeaux explained it is the Budget Office's objective to eliminate all equipment purchases from the base budget, but this objective would not extend to contracts or leases. Senator Coffin asked if Chief Justice Steffen has visited with lower court judges regarding the NHP assessment fees. The Chief Justice indicated a proposal has been made to phase out the General Fund participation in the administrative assessment fee. He commented he is not sure the court has the authority to impose collection and reporting measures on the lower courts. Senator Coffin inquired what the average assessment fee totaled. Mr. Mello responded the average assessment is $22.71. He commented lower court judges are pressured by local legislative bodies to collect and keep the funds in their community. Brian E. Doran, Court Administrator, Sparks Municipal Court, stated his local governing agencies pressure the court on the collection of administrative fees. He explained he has been trying to establish a central collection agency for the cities of Sparks and Reno, which would be responsible for collecting administrative fees. Presently, the Sparks Municipal Court has $2.2 million in outstanding warrants. A recommendation was made to the Judicial Assessment Commission for a statewide collection agency or some other type of coordinated effort to collect administrative assessment fees. He noted many courts allow offenders to offset their administrative fine with community service work or schooling. Chief Justice Steffen commented he is not convinced community service work should eliminate the assessment fee charge. He agreed community service work could be used to suspend the fine, but not the administrative assessment fee. Senator Raggio stated it might be appropriate to change the statute, so the assessment fee is not relieved by community service and bail forfeitures are handled properly. The senator acknowledged he will be asking for a bill draft request addressing both of these problems. Mr. Crews interjected a bill draft request has already been submitted on the issue of bail forfeitures. Senator Raggio asked Mr. Mello to address the budget request in E800, regarding unclassified salary increases. Mr. Mello stated the request constitutes the additional amounts for salary increases for 23 unclassified positions specified in the unclassified pay bill. He explained: The last increase for these positions was in 1991, with the exception of one. We went back to 1991 and equated those salaries to the merit salary schedule in the classified system. Persons in that system would have received, since 1991, four merit step increases. We took the salary levels of our unclassified persons and added four merit step salary increases and that results in the present request before you. Senator Raggio asked if the unclassified salary increase is for attorney positions. Mr. Mello replied the request pertains to: the Clerk of the Court, the Deputy Clerk, Supervising Staff Attorney, Deputy Supervising Staff Attorney, all of the attorneys, the Court Administrator, Deputy Court Administrator, and the Supreme Court Law Librarian. Mr. Mello referred to budget category E802 and noted the category encumbers administrative assessment revenue for Cost of Living Adjustments (COLA) the Legislature might grant this session to the classified and unclassified employees. Because the Supreme Court is partially funded by administrative assessments, it would not receive an allocation from the Department of Administration to fund the COLA increase. Mr. Mello said the funds indicated for the COLA increase are overstated and may need to be adjusted downward, once the Legislature determines the amount of the increase. Senator Raggio pointed out several of the courts budgets have large reserves. He said the Judicial Education budget has $440,000 in reserves and the Retired Justice Duty Fund indicates $200,000. The senator questioned why the reserves could not be utilized by the court's budgets, which are not fully funded by the assessment fees. Mr. Mello agreed the use of reserve funds should be considered, but he maintained the judges' associations would be sensitive to a reclassification of the funds. He said all the funds in the Judicial Records budget are presently encumbered, except for $44,000. Mr. Mello stated a measure was introduced in the Assembly Committee on Ways and Means regarding a supplemental appropriation of $282,000 for the Supreme Court budget to remedy a projected shortfall in administrative assessment fees for the fiscal year ending June 30, 1995. Board of Pardons Commissioners - Page 111 Mr. Mello explained the purpose of the budget account is to provide a mechanism to compensate Supreme Court Justices equally regardless of the date they are elected. Budget category E800 requests funding to provide a means to increase the salaries of three justices whose terms expire subsequent to January 6, 1997. Mr. Mello said the funds in the budget reflect the amounts necessary to implement the recommendation of the Commission to Review the Compensation of Constitutional Officers, Legislators, Supreme Court Justices, District Judges, and Elected County Officers to increase justices' salaries from $85,000 to $107,600. He stated the Legislature will have to decide if this mechanism to compensate the justices will continue. Chief Justice Steffens commented there have been no bill draft requests made to continue this mechanism for equalizing justices' salaries. He pointed out the Nevada Constitution prohibits midterm salary increases for Supreme Court Justices. The Legislature has, in the past, allowed the justices' salaries to be equalized by funding from this budget. He noted it is entirely up to the Legislature whether this avenue of funding continues. In addition, he pointed out if the Legislature increases justices' salaries to $107,600 per year, then newly elected justices would receive the higher amount, but the justices still serving their term would continue to receive $85,000. He stressed the equalization of salary is of great concern to the Supreme Court. Senator Raggio stated the Legislature has struggled with the problem and the question was presented to the voters in the 1994 General Election and overwhelmingly rejected. The senator said the Legislature has "gone the extra mile" to rectify the constraint in the Nevada Constitution. He observed the budget might have to be continued in order to maintain an element of fairness among the justices' salaries. Retired Justice Duty Fund - Page 113 Mr. Mello testified the budget is funded by administrative assessment fees. The budget supports the recall of former judiciary members to help during times of illness, vacations, excessive caseloads, and to act for judges who are disqualified. Senator Raggio asked how many former judiciary members are eligible to fill the assignments. Mr. Mello replied, "10." Supreme Court Justices' and Widows' Pensions - Page 115 Mr. Mello stated the budget provides for the payment of pensions to Supreme Court Justices, widows and surviving dependents. The budget is funded by a General Fund appropriation. Senator Raggio questioned how many individuals are presently receiving pensions. Mr. Mello responded pensions are being paid to five retired Supreme Court Justices, one widow, and one dependent child. Senator Raggio asked if all the pension recipients will receive a COLA increase. Mr. Mello explained the retired justices will receive a COLA increase, but widows are ineligible under Nevada Revised Statutes 2.070. Senator Raggio inquired if the amount widows receive is fixed. Chief Justice Steffen answered widows receive $2,000 per month. Law Library - Page 117 Susan Southwick, Law Librarian, Supreme Court Law Library, indicated there are discrepancies in several budget categories between the Governor Recommends column and the Agency Request column. She pointed out the Budget Division lowered the rent for the library's portion of the Supreme Court Building. In addition, a payroll adjustment has been made in category M200. Senator Raggio questioned how the library measures client satisfaction. Ms. Southwick said client satisfaction is difficult to measure because it is such a subjective area. A survey conducted last year indicated a fairly high customer satisfaction. Senator Raggio asked if there is a high level of cooperation between the National Judicial College Library, the Washoe County Law Library, the Clark County Law Library, and the Supreme Court Law Library. Ms. Southwick related the library relies on the Washoe County Law Library and the Judicial College Library for law reviews which the Supreme Court Law Library does not order. She explained all the law libraries cooperate with one another in providing inter-library loan transactions. Ms. Southwick commented the library is requesting a 6 percent increase for new titles and inflationary increases for periodical continuations. She distributed a survey conducted by the American Association of Law Libraries (Exhibit H), which demonstrates the inflationary costs for books. Senator Raggio noted the budget indicates a 13.3 percent increase for periodicals and publications in Fiscal Year (FY) 1996. Ms. Southwick explained the budgetary request for continuations is based upon a 6 percent inflation rate. She related the book funding request is based on the American Association of Law Libraries' formula. Senator Raggio requested Ms. Southwick to meet with the fiscal staff to review the formula used to derive the amount needed for publications and periodicals. Senator Mathews inquired if the Law Librarian position is unclassified. Ms. Southwick responded in the affirmative. She stated the Law Librarian's salary increase is included in the Supreme Court's proposal on unclassified salary increases. Senator Rawson asked if the Legislative Counsel Bureau's (LCB) attorneys utilize the Supreme Court Law Library. Ms. Southwick said the LCB staff uses the law library quite frequently. Senator Rawson inquired if the library has any on-line services. Ms. Southwick related the LCB staff uses WESTLAW and Lexis on demand and the library is reimbursed for the cost of the services. Senator Rawson questioned if a law library needs to be duplicated in the attorney general's office for adequate access. Ms. Southwick pointed out the attorney general's office is not totally self-contained from a legal research point of view. She is not aware of the types of duplication there might be between the law library and the attorney general's office. Senator Rawson asked if the attorney general's office performs its own research on WESTLAW. Ms. Southwick replied in the affirmative. Senator Rawson inquired if the state is adequately equipped to meet the needs of the courts, the Legislature, and the executive branch. Ms. Southwick related the law library is in the forefront with proposed participation in an on-line network of systems. Ms. Southwick clarified budget category M200 proposes the elimination of a half-time position in consideration of a full-time Library Assistant position. Administrative Office of the Courts - Page 123 Mr. Mello testified the Administrative Office of the Courts (AOC) performs the administrative functions for the Supreme Court and the Nevada court system by managing the Judicial Education Program and the Uniform Records System. The court administrator serves as the secretary to the Judicial Selection Commission. Mr. Mello pointed out the measurement indicators listed on page 123 of the budget indicate the percentage of time required by the AOC on each of the court's budgets. Senator Raggio noted the AOC reduced its administrative assessment fee revenues by $500,000 each year of the biennium. The senator asked why there is such a large reduction in the estimated revenue and why the AOC did not include any increased revenues which might be realized from the audit recommendations. Mr. Mello said because the Audit Division's recommendations were recently released, corrections were not made to the budget. He explained a conservative figure was projected for collection of assessment fees because it is unclear how aggressive the local governments will be in pursuing fee collections. Mr. Mello distributed a chart (Exhibit I), demonstrating administrative assessment fee revenues for all Justice and Municipal Courts from 1988-1995. He related the chart indicates assessment fees are declining. Senator Raggio questioned why assessment fees are declining. Mr. Mello responded many courts sentence offenders to community service work in order to work off the assessment fee. In addition, the Legislature in 1993 allowed for deferral of Driving Under the Influence (DUI) fines if the offender conformed to certain requirements. The Legislature also changed the amount of time a bail bondsman has to retrieve the insured person, therefore, more offenders are being returned to jail causing the bonds to be returned to the bail bondsmen, rather than the court. Senator Raggio observed page 2 of Exhibit I indicates assessment revenues in Reno Municipal Court were extremely low and asked Mr. Mello for an explanation. Mr. Mello stated he has been informed the Reno Police Department does not concentrate on traffic fines because they are too busy with other types of crimes. Senator O'Donnell questioned if Mr. Mello has any statistics indicating the Reno Police Department is writing fewer traffic tickets. Mr. Mello replied he will ask the department for statistical information and provide it to the committee. He related a police officer in the City of Reno does not always respond to an automobile accident. The police department has a recording which advises accident victims to file a report at the department's headquarters. Because a police officer does not come to the scene of the accident, a citation is not issued. Mr. Mello stated budget category E802 proposes a General Fund appropriation for the COLA. Because the AOC is funded by administrative assessment fees, it will not receive an allocation from the special appropriation made to the Department of Administration to cover the COLA increase. Mr. Mello said the special allocation has been requested because it is difficult to take the amount needed from assessment fees. Division of Planning and Analysis - Page 129 Mr. Mello noted the explanation for the new budget is located on page 129-1 of Exhibit G. The Judicial Assessment Commission recommended the establishment of the division in order to centralize research, planning, and technical assistance to various Nevada courts. Senator Raggio asked if three new positions would still be necessary if the Judicial Council is not created. Mr. Mello replied the personnel would still be needed even if the Judicial Council is not created. He noted the Division of Planning and Analysis would be housed within the AOC. Senator Raggio questioned if the AOC is already performing the duties recommended by the Judicial Assessment Commission. Mr. Mello responded the AOC is performing some of the duties, but not adequately. Senator Raggio asked what is the benefit of data collection, when the AOC does not have the authority to advise lower courts on case management. Mr. Mello replied one of the obligations, defined by statute, of the court administrator is to examine the dockets of the various courts and make recommendations regarding case management. Senator Raggio inquired what benefit would the State of Nevada receive by the implementation of the new division. Mr. Mello explained the division would provide information to the Legislature regarding justification for additional judicial positions. Local governments would also receive information on whether new positions are necessary. Justice Rose interjected the Division of Planning and Analysis would be able to monitor assessment fee collections. In addition, the division would collect case statistics which would be supplied to the lower courts for better case management. Presently, no entity is gathering statistics on court management. Justice Rose stressed the Chief Justice and the Nevada Supreme Court have the authority to manage Nevada's court system. The Judicial Assessment Commission recommended creation of a Judicial Council, wherein, all courts would participate in the statewide management of the courts. Presently, the AOC does not have the ability to provide the training, analysis, and modern management techniques. The AOC is not performing half the duties required by statute. The Division of Planning and Analysis would help the court comply with the statute and perform the duties recommended by the Judicial Assessment Commission. Justice Rose related some of Nevada's sister states have implemented a planning and analysis division which has proven to be very beneficial to them. Senator O'Donnell stated he would support a program which would help with collection of administrative assessment fees, but he is not supportive of a program that would only collect statistics. Justice Rose related the proposed division would provide services in both areas. Chief Justice Steffen interjected there is a need to have information readily available for sentencing in domestic violence cases and family court matters. Presently, reliable information is not available from other districts regarding pending cases or outstanding warrants on individuals. The proposed division would centralize the information so it is more readily available to all Nevada courts. Senator O'Donnell asked what equipment would be utilized to accomplish the division's goals. Justice Rose stated all the courts would be tied into a common network, which would allow them to share information. Much of the information can be gathered through cooperation between the municipalities and the courts. Senator Raggio questioned if the division would be utilizing office space and equipment already located within the AOC. Mr. Mello said the division would utilize office space within AOC and a portion of the requested funding is to be used for computer equipment purchases. Uniform System of Judicial Records - Page 131 Mr. Mello testified the budget supports the automation of the Nevada court system. Senator Raggio inquired about the status of the program. Mr. Mello said the program is presently on hold because an audit being conducted by the Audit Division has not been concluded. The program is presently installing "baseline" automation systems in the various courts. Senator Raggio asked if all state courts have benefited from the automation program. Mr. Mello replied all courts receiving grants have benefited from the program. The Washoe County court system has been automated and is now upgrading and replacing its equipment. Two small counties have not automated because of their small caseload. However, the Brady Bill and the Violence Against Women Act require that courts become automated. The federal government has realized the criminal history repositories are not accurate and up-to-date because of a lack of information from the court systems. Senator Raggio requested a report on the program's planned expenditures for automation. The senator stated the courts not cooperating with assessment collections could possibly be penalized by making them ineligible for the funds. Mr. Mello noted when the grants are issued, the local court signs a contract including a clause requiring timely remittance of the administrative assessment fee. Senator Rawson asked if all the computer systems are able to communicate with one another. Mr. Mello replied, "Absolutely." Senator O'Donnell noted Mr. Mello had previously testified the court has a $282,000 shortfall in assessment fees. Mr. Mello explained the $282,000 shortfall relates to the Supreme Court's budget. The overall shortfall affecting the state's judiciary budgets is approximately $555,000. The Uniform System of Judicial Records' budget has a $56,000 shortfall in assessment fees. Mr. Mello stated the current year budget will have to be reduced by $56,000. Senator Raggio recessed the committee meeting at 10:50 a.m. Senator Raggio reconvened the committee meeting at 12:00 p.m. The chairman noted the committee was given a position paper (Exhibit J) from Chief Justice Steffen regarding his stance on the court expansion proposal. Mr. Mello distributed a chart (Exhibit K) indicating the share of administrative assessment fees received by the Judicial Branch. He explained the difference between the actual receipt of fees and the budgeted amount demonstrates the $555,000 shortfall. The $555,000 shortfall was calculated by adjusting "one standard deviation" included in the estimation formula. District Judges' Salary - Page 133 Mr. Mello testified the budget provides for the payment of district court judges' salaries as required by statute. Budget category E801 recommends funding related to the recommendations made by the Commission to Review the Compensation of Constitutional Officers, Legislators, Supreme Court Justices, District Judges and Elected County Officials to increase district court judges' salaries. Mr. Mello pointed out budget category New Positions should reflect 39 positions instead of 38. Senator Raggio questioned the number of existing judges. Mr. Mello replied, "46." Senator Raggio observed budget category M220 recommends funding for seven additional district court judges. He requested justification on the funding for the additional judges. Mr. Mello explained justification for the judges is contained within the Judicial Assessment Commission's report (Exhibit D). Judge Becker stated the recommendation is for six judicial officers, of which, three would be judges. The district courts' caseload is so heavy, motions are being heard in 90 days instead of 21 days. Clark County has indicated it would support the addition of two more family court judges if the additional personnel were "staggered in" at a later date. Judge Becker declared the family division judges support the addition of six more judges. Mr. Mello explained a survey was conducted to see if the district judges would be seeking additional judicial positions. He noted the survey indicates the need for seven additional judges. The budget includes funding for seven district court judges in anticipation of bill draft requests for the additional personnel. Senator Jacobsen asked if the additional judicial personnel will help the rural counties. Chief Justice Steffen replied the justices can be transferred to wherever they are needed. Senator Raggio stated the committee needs assurance from the affected counties that they are willing to assume the required facility expense. Judge Becker commented she will be testifying at a later date regarding administrative assessment fees and she would like to provide the committee with more information on how the assessment program works. She related: I formerly was a municipal court judge and I think I have a better idea of how they [assessment fees] work and the considerations. The auditors certainly understand the financial aspect of it and how much is collected and how much is assessed, but I do not believe they have a good understanding of what a judge can and cannot do constitutionally to collect them. I think that creates some assumptions in the report that are not accurate when you look at the constitutional duties that a judge has to do in maintaining a fair and impartial situation. There are things the judiciary can do to improve collection and there are things that probably would have to be done through the executive branches of the local governments. Board of Law Library Trustees - Page 137 Mr. Mello testified the budget was created as a mechanism to compensate district court judges equally regardless of the date they were elected. The proposed increase to the district court judges' salaries would include all district court judges. District Judges Travel - Page 139 Mr. Mello stated the budget is funded entirely by preemptory challenge fees pursuant to Supreme Court Rule 48.1. He related the fees are growing faster than expenditures. The court proposes to take the surpluses and apply them to special projects, such as the expansion of the Battle Mountain Justice Court. Last year a portion of the funds were used to match a State Justice Institute grant. Senator Raggio noted his concern that a precedent might be started by using the budget's funding to build county court facilities. Mr. Mello explained some counties will not provide for additional court facilities. Chief Justice Steffen suggested the excess funds could be utilized to educate the public on the importance of an intermediate appellate court. District Judges' Widows' Pension - Page 141 Mr. Mello stated the budget provides pensions to 20 retired district judges or their widows. Judicial Education - Page 143 Mr. Mello testified the budget is funded 100 percent by administrative assessment fees. The purpose of the program is to provide continuing education for district court judges, justices of the peace, municipal court judges, and supreme court personnel. The AOC provides four seminars per year: two for the municipal court justices; one for the district court judges; and one for court clerks and administrators. In addition, judges request funds from AOC to attend educational programs at the National Judicial College and the National Council of Juvenile and Family Court Judges. The adjusted base budget reflects a transfer of one position from AOC to the Judicial Education budget account. Senator O'Donnell pointed out in budget category Balance Forward there is a negative $80,193 listed for Fiscal Year (FY) 1993-1994 and asked how the figure was calculated. Mr. Mello stated he would have to research the question. Senator O'Donnell observed $430,000 was budgeted in FY 1994-1995 for Lower Court Judges Education and questioned what types of programs are being offered. Mr. Mello explained the AOC organizes four seminars a year. The budget must maintain a reserve in the event new judges are elected or appointed. He said if all the funds are not disbursed in 1995, then the funds are treated as a balance forward to the next year. Senator O'Donnell stated the budget should indicate the projected amount of funds needed to provide educational programs and any excess funds should be indicated in Reserves or Balance Forward. Senator Coffin asked if the level of training at the National Judicial College is sufficient for the Supreme Court justices. Chief Justice Steffen stated new appellate court justices attend New York University, Conference for Appellate Court Justices. The National Judicial College is primarily geared for trial judges and the trial bench. Senator Coffin questioned if the court monitors how educational funds are being spent. Chief Justice Steffen explained judges are required to take 10 hours of Continuing Legal Education every year. Each justice surveys the subject matter of the seminar and selects a seminar which they feel is most appropriate to their needs. Senator Raggio inquired if the 9 percent assessment fee is still an appropriate amount to fund the budget. Mr. Mello responded he does not want to change the percentage amount, but he agrees the surplus funds should be utilized in other areas. He noted 14 new judges were elected in the last election, which is a tremendous expense. Commission on Racial and Economic Bias - Page 147 Mr. Mello referred the committee to Exhibit G page 147 and noted revisions have been made to the budget. He said it is proposed that the $222,500 in Agency Request funding be divided in half and $111,250 be allocated in each year of the biennium. In addition, the court requests Legislative approval to carry forward any remaining balance to the next fiscal year in order to continue the commission's work. Kevin Kelly, Chairman, Supreme Court Task Force on Racial and Economic Bias, testified the task force was established to determine if there is racial or economic bias within the court system. The task force is mandated to investigate such areas as: how charges are filed against individuals; if individuals are released on bail or on their own recognizance; probation versus incarceration; and post-conviction relief. Presently, 20 states have begun or completed an inquiry into racial or economic bias within the court system. He related the District of Columbia's commission made 105 recommendations, of which, 97 have been implemented. Senator Raggio questioned when the task force was created. Mr. Kelly replied it was created by order, on December 7, 1992. The members of the commission were not named until July, 1993. The commission members' experience and professions are varied. Mr. Kelly commented the commission may be able to receive assistance from the Department of Sociology or Criminology of the University of Nevada, Las Vegas (UNLV), in order to keep study costs down. The National Center of State Courts has developed a manual used by states to organize and manage their commissions. The court requests a General Fund appropriation in FY 1996 to support the commission. Mr. Kelly noted the funding request contains no excess funds. In fact, he related the funding requested for research is most likely inadequate. Bids will be submitted to the UNLV and an independent company in Reno for research. Senator Mathews asked who in law enforcement in northern Nevada is on the task force. Mr. Kelly replied, "Sheriff Kirkland." Senator Raggio inquired if the present task force would become the Commission on Racial and Economic Bias. Mr. Kelly explained the Supreme Court has designated the fact finding group as a task force. Senator Raggio questioned if the funds in the budget will be used primarily for the research contract and travel. Mr. Kelly said the two largest expenditures are for a full- time executive director and research which will be contracted out. Senator Raggio asked how long it would take to complete the study. Mr. Kelly replied it takes most states 2-4 years. The commission's goal will be to try and complete the study within the 2 year time period. Senator Raggio stated it would be helpful to the committee if the court will provide more detail on the commission's goals and the benefits the state will receive from the study. Senator Coffin asked if there are any federal court cases pending which would indicate Nevada has a problem in this area. Chief Justice Steffen said he is not aware of any federal cases addressing the issue of court bias. Mr. Kelly related a study done in the state of Washington revealed the perception of racial and economic bias is false. Court Improvement Program - Page 149 Senator Raggio commented the State Court Improvement Program is part of the Omnibus Budget Reconciliation Act of 1993 authorizing funding to state courts to assess and improve the handling of proceedings relating to foster care and adoption. The senator noted a funding match by the state is required and asked why the program is needed. Chief Justice Steffen distributed a handout (Exhibit L) summarizing the State Court Improvement Program. He said the program is justified because the court has experienced a number of problems over the years with adoption and foster care cases. On several occasions, the court has heard parental termination cases only to find out the child has already been adopted. The Chief Justice stated the idea behind the program is to use the funds to improve the current foster care system and adoption program. In addition, the funds would be utilized to investigate how time constraints in custody matters could be improved. Senator Raggio inquired if an application to the federal government for the funds had already been processed. Mr. Mello stated the application has not been completed. He said the court will receive $80,876 from United States Department of Health and Human Services (HHS) for the assessment phase which is expected to cover 12-18 months. Mr. Mello explained the grant is similar to a grant applied for by the Nevada Department of Human Resources. The HHS is working with courts and state welfare departments to implement the program. The court would be required to work with state and local welfare officials to provide solutions facing foster care and adoption procedures. Senator Raggio asked who would conduct the program and how it would be implemented. Mr. Mello stated the court would hire a program director on a temporary basis to define the problems encountered with foster care and adoption and to find solutions for the problems. The chairman questioned the amount of funding needed for the state match. Mr. Mello said approximately $75,000 would be needed over the biennium for the state's portion of funding. Judicial Selection - Page 151 Mr. Mello testified the average expenditure cost per applicant has increased. The funds requested will provide for the selection of two or three judicial nominees. It is difficult to determine the number of judicial vacancies that will occur during a biennium, therefore, making it difficult to calculate the amount of funding the budget requires. Mr. Doran related he has developed a Court Information Exchange System which works with the Criminal History Repository of the Department of Motor Vehicles & Public Safety (DMV). The computer system he has developed is generic in nature and will allow municipal courts to participate in the coordination of information. He has completed a work flow chart indicating the implementation of the computer program will save his department one full-time person. He stated if the Supreme Court had a Division of Planning and Analysis issues could be addressed statewide and coordinated with all the state court administrators. He related his support for the proposed new division. There being no further business before the committee, Senator Raggio adjourned the meeting at 1:00 p.m. RESPECTFULLY SUBMITTED: Pamela Jochim, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance February 22, 1995 Page