MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session February 28, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Tuesday, February 28, 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 William R. O'Donnell Senator Dean A. Rhoads Senator Bernice Mathews COMMITTEE MEMBERS ABSENT: Senator Bob Coffin STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Debbra J. King, Program Analyst Brian M. Burke, Program Analyst Cristin Buchanan, Committee Secretary OTHERS PRESENT: Carolyne W. Edwards, Lobbyist, Clark County School District Nancyann Leeder, Nevada Attorney for Injured Workers Nancy Smith, Legal Office Manager, Nevada Attorney for Injured Workers Deborah A. Erickson, Budget Analyst, Department of Administration Carol Jackson, Director, Department of Employment, Training and Rehabilitation John P. Comeaux, Director, Department of Administration Paula Steinbauer, Budget Analyst, Department of Administration John Orr, Assistant Director, Department of Employment, Training and Rehabilitation Jim Hanna, Administrator, Division of Information Development and Processing, Department of Employment, Training and Rehabilitation Bruce Tucker, Assistant Chief Financial Officer, Department of Employment, Training and Rehabilitation Barbara Weinberg, Administrator, State Job Training Office, Department of Employment, Training and Rehabilitation Stanley P. Jones, Administrator, Employment Security Division, Department of Employment, Training and Rehabilitation Major General Drennan A. Clark, Adjutant General of Nevada, Office of the Military Joel Pinkerton, Budget Analyst, Department of Administration Larry McCracken, Administrative Officer II, Office of the Military Senator Raggio solicited introduction of a bill draft request (BDR). Carolyne W. Edwards, Lobbyist, Clark County School District, appeared before the committee in support of BDR S-739. BILL DRAFT REQUEST S-739: Makes appropriation to Clark County School District for expansion of pilot program for conduct disorders. She explained the need for the bill: ...It particularly deals with those children, in the elementary school, that we consider conduct disordered; those children that we are most concerned about, that can not be handled currently within the school setting, and need a special place for a certain amount of time to deal with appropriate behavior training...It sets aside money for special teachers in a special place designated within a school...In the 2 years that we have had this program federally funded, we have had 100 percent success with it. The children come out of their regular school where they are causing trouble, they go for up to a 9 week program...they can keep doing it if we do not get them in the first 9 weeks, and then we return them to the regular school. Senator Raggio questioned how many sites are currently federally funded. Ms. Edwards stated only one site in Clark County is federally funded. Senator Raggio clarified BDR S-739 would add five additional sites statewide. SENATOR JACOBSEN MOVED TO INTRODUCE BDR S-739. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAWSON AND SENATOR COFFIN WERE ABSENT FOR THE VOTE.) ***** Ms. Edwards addressed the committee on BDR 34-740. BILL DRAFT REQUEST 34-740: Revises provisions governing orders or payment of money belonging to school district. Ms. Edwards testified the bill draft will give the Board of School Trustees more latitude in being able to set a process for bill payments. It does not take away any of the current state mandates or statutes, she assured the committee. SENATOR JACOBSEN MOVED TO INTRODUCE BDR 34-740. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAWSON AND SENATOR COFFIN WERE ABSENT FOR THE VOTE.) Senator Raggio requested Ms. Edwards to review other bills requested by the Clark County School District to see if any can be withdrawn that are no longer necessary. ***** State Industrial Claimants' Attorney - Page 907 Nancyann Leeder, Nevada Attorney for Injured Workers, introduced herself and furnished an overview of the division functions. Senator Raggio questioned Ms. Leeder whether changes, made by the Legislature last session, have impacted the division. Ms. Leeder stated her division is not receiving as many cases from the Managed Care Organizations (MCOs). She informed the committee she is not aware of the cause for the decrease in cases from MCOs. Ms. Leeder distributed a packet of information (Exhibit C) to the committee members and provided a brief description of the contents. Senator Mathews questioned why the informational brochures (contained in Exhibit C) are not printed in languages other than English and Spanish. Ms. Leeder stated the majority of individuals who do not speak English, speak Spanish. She added, "When we need to get other languages interpreted, we go through the regular court interpretation services." Senator Raggio requested Ms. Leeder to comment on the caseload of the attorneys in her division. Ms. Leeder recounted she assigns cases equally by caseload, not case number. She added, cases appointed to the division by the Appeals Officers are assigned by case type, as well as by deadline. Senator Raggio asked how many attorneys are on staff at the office of the Nevada Attorney for Injured Workers (NAIW) and if a request has been submitted for additional attorney positions. Ms. Leeder stated 12 attorneys are currently on staff in the division and no new attorney positions have been requested. Senator Raggio inquired whether the current staff of attorneys will be adequate for the coming biennium. Ms. Leeder reflected that the current attorney staff level is adequate. Senator Raggio addressed Enhancement 175 Improved Work Environment (E-175) category. He asked for a justification of that enhancement. Ms. Leeder stated the American Trial Lawyers Association (ATLA) membership is for Continuing Legal Education (CLE) purposes, inasmuch as an attorney with a membership to the ATLA does not pay as much for CLE seminars. Senator Raggio stated the committee would decide the E-175 decision unit uniformly with other budgets in the Executive Budget. The chairman requested staff to review the policy within the Executive Budget, and report back to the committee with the findings. Senator Jacobsen noticed the overall reduction in figures between the division requests and what the Governor recommends, and asked Ms. Leeder if she feels her division will be adequately funded based on the Governor's recommendations. Ms. Leeder identified the reduction in the figures is due to the Maintenance 200 Demographics Caseload Changes (M-200) category, which requests an additional staff member. Ms. Leeder informed the committee that position is no longer necessary, resulting in lower figures across the budget for the NAIW. Senator Raggio praised the NAIW's performance under Ms. Leeder's direction. Employment Training and Rehabilitation, Directors Office - Page 1361 Carol Jackson, Director, Department of Employment, Training and Rehabilitation, conducted an overhead presentation using color charts distributed to the committee (Exhibit D. Original is on file in the Research Library.). During her presentation, Ms. Jackson provided an overview of the proposed realignment of the Department of Employment, Training and Rehabilitation (DETR). Senator Raggio questioned if there will be a net increase or decrease in the total number of positions as a result of the realignment. Ms. Jackson stated, "I would have to say no...it is just moving staff from existing positions that we already have." Senator Raggio requested a specific analysis of the transfers and what impact the transfers have on the individual agencies. He added, "We would like to hear from the agency heads to give us assurance that it does not impact their missions." Ms. Jackson advised the committee the performance indicators provided in Exhibit D are revisions of the performance indicators in the Governor's Executive Budget, in accordance with the request of a joint meeting of the Senate Committee on Finance and the Assembly Committee on Ways and Means. Additionally, Ms. Jackson advised the committee that a supplemental appropriation on the Governor's Committee on Employment of People with Disabilities has been prepared and submitted to the Budget Office in accordance with the joint committee request. Senator Raggio questioned if the supplemental appropriation on the Governor's Committee on Employment of People with Disabilities has been submitted for a bill draft and Ms. Jackson stated it has not. John P. Comeaux, Director, Department of Administration, stated his department will be submitting the bill draft request. Ms. Jackson informed the committee, in accordance with the request at a joint committee meeting, the department has recommended the move of the Governor's Committee on Employment of People with Disabilities to the Department of Business and Industry. Ms. Jackson stated she has met with Rose McKinney-James, Director of the Department of Business and Industry, to discuss the transfer. Senator Raggio requested a status of the discussions regarding the transfer. Ms. Jackson stated Ann Andreini, Executive Assistant for the Governor, is currently working with the Budget Office in preparing the paperwork for the transfer. Senator Raggio asked the Budget Office if a recommendation will be made to the committee on the proposed transfer. Paula Steinbauer, Budget Analyst, Department of Administration, answered in the affirmative. Additionally, Ms. Jackson advised the committee she would be appearing before the Interim Finance Committee (IFC) for approval of work programs. She added, one of the work programs will include a request for 10 positions to staff the One Stop Career Center, which will be primarily federally funded. Senator Raggio asked in what budget the 10 new positions will be placed. Ms. Jackson stated they will be located in the Employment Security Division (ESD) budget. Senator Raggio questioned what portion of the One Stop Career Center will be federally funded. John Orr, Assistant Director, Department of Employment, Training and Rehabilitation, stated the program is entirely federally funded, "from more than one source." He recalled, "The reason we want to place it in employment security is to avoid...program restrictions." Senator Raggio warned that as a matter of policy, the committee attempts to keep the ESD a non-General Fund budget. Mr. Orr responded he is aware of the committee's policy and will respect any decisions by the committee. State Occupational Information Coordinating Committee - Page 1381 Jim Hanna, Administrator, Division of Information Development and Processing, Department of Employment, Training and Rehabilitation, provided an overview of the duties and programs of the State Occupational Information Coordinating Committee (SOICC). Senator Raggio asked which two school districts do not subscribe to SOICC and Mr. Hanna answered the Eureka and Esmeralda County School Districts. Senator Raggio inquired how much SOICC costs each school district. Mr. Hanna replied the cost varies depending on the number of sites within each school district. Mr. Hanna advised the committee that, in addition to the school districts, SOICC is subscribed to by the Employment Security Office, libraries and prisons. Senator Raggio questioned how often the information contained in the SOICC computer system is updated and how the system works. Mr. Hanna stated the information is updated on an annual basis. He explained that the computer software program matches an individual's interests and aptitude to an appropriate career to allow the user to examine occupational possibilities. Additionally, the program lists schools that provide training for that particular occupation of interest. The system provides users with a list of financial aid sources as well. Senator Raggio questioned how the user will use the system. Mr. Hanna stated a majority of the subscribers to the SOICC system are high schools that provide career counselors to help students utilize the system. Senator Raggio questioned how the success of the program is measured. Mr. Hanna confirmed, "My feeling is the fact that the school districts continue to subscribe to the system, and spend a lot of money for it, that in their estimation, it must be working." Senator Raggio requested an explanation of the Spanish Quest, Scholarship Files and Micro-Skills product lines. Mr. Hanna stated the Spanish Quest program assists Spanish speakers in using the system and the Scholarship Files is a component of the system that provides the user with a list of financial aid sources. Mr. Hanna claimed, "These three components that you mentioned are already in place. What we are simply doing is adding enhancements to these." Senator Raggio clarified under decision unit Enhancements 927 Program Transfers (E-927), SOICC is suggested to be transferred into the Information Development and Processing (IDP) division, as a portion of the proposed realignment presentation given by Ms. Jackson. Mr. Hanna commented the IDP has three bureaus: Data Processing, which will be the department-wide main frame and communication network; Application Development, which is the programming bureau; and Research and Analysis, which develops the labor market and occupational information for the state. Senator Raggio inquired if SOICC is transferred to IDP, will the SOICC budget still exist. Mr. Hanna stated SOICC will still exist; however, instead of being an independent agency, it will be part of the bureau of Research and Analysis in the IDP. Bruce Tucker, Assistant Chief Financial Officer, Department of Employment, Training and Rehabilitation, interjected: The intent here is to transfer the staff...positions and associated operating costs and include them into the IDP budget account...We are going to just transfer...those costs and the three associated staff. Senator Raggio questioned if the SOICC committee will still be intact and Mr. Tucker confirmed to the committee it will continue to exist after the transfer. Senator Raggio inquired as to the duties of the committee. Mr. Hanna stated the committee provides oversight and direction to the three SOICC staff members. Senator Raggio asked how the National Occupational Information System coordinates with the state system. Additionally, he inquired why a state system is necessary if a national system exists. Mr. Hanna recalled, "Part of the legislation...that created the national system, requires individual state committees, and they provide the funding to the state." Senator Raggio queried if federal funding to SOICC will be cut back. Mr. Hanna affirmed a cut back is possible. Senator Raggio asked what the division will do if federal funding is terminated. He warned Mr. Hanna that the division will not be funded with General Funds if federal funding ends. Ms. Jackson confirmed the division understands the chairman's position and stated if federal funding is ceased, the division will not ask for General Funds to fund the SOICC positions. Mr. Orr interjected DETR has prepared for the termination of federal funding. He stated as part of the work program to be presented to IFC for the One Stop Career Center, 10 positions are requested in which one will be an unclassified position. He reflected if the position is approved, one of the three positions in the SOICC budget will fill that position. The two remaining SOICC positions will be funded from the subscriber fees of the Career Information Systems. Senator Raggio stressed the need to advise the individuals employed by SOICC that their positions will be eliminated if federal funding ceases. Mr. Orr confirmed those individuals have previously been advised. State Job Training Office - Page 1387 Barbara Weinberg, Administrator, State Job Training Office, Department of Employment, Training and Rehabilitation, provided testimony on the budget from prepared text (Exhibit E). Senator Raggio asked who administers the $15 surcharge fee on divorce filing fees for the Displaced Homemaker Program. Ms. Weinberg stated the fee is directed through the Office of the Treasurer from the individual counties and transferred to the State Job Training Office (JTO) budget account. Senator Raggio questioned if the amount the JTO brings in from the Displaced Homemaker Program is necessary to continue the program. Ms. Weinberg confirmed, "It is more than necessary." Senator Raggio inquired what functions the program performs for a displaced homemaker. Ms. Weinberg recited the program identifies the interests, aptitude and work capability of a participant. The participant also receives assistance in basic employment skills. Senator Raggio requested a breakdown of the utilization of the funds used in the Displaced Homemaker Program. He then inquired as to the transfer of the State Literacy Program from the JTO, and asked how the program is utilized and if the program is successful. Ms. Weinberg stated the initial funding the JTO offered to the literacy program was carryover funds from the Job Training Partnership Act (JTPA) and Education Coordination funding. She advised the committee the JTO no longer has carryover funds for the literacy program. She recalled: Everything we did through that program was very worthwhile...the literacy coordinator traveled through the rural areas and assured the various job training and welfare programs were connected with literacy programs. Senator Raggio questioned why the JTO is no longer funding the literacy program and Ms. Weinberg stated the literacy program has achieved sufficient funding from other sources. She added, "This source of funding was providing extras they were able to do while we had the carryover funding, but their base funding maintains the program." Senator Raggio asked how the literacy program is currently being funded. Ms. Weinberg surmised the literacy program is currently funded through state library department resources. Senator Raggio requested the Budget Office to confirm how the State Literacy Program is being funded. The chairman turned the discussion to the Dislocated Worker Program category and inquired as to the definition of a dislocated worker and asked if the program is federally funded. Ms. Weinberg answered the program is federally funded and stated: A dislocated worker is a person who has lost their job because of a major layoff or business closure...The first thing we do when we learn of a dislocation is contact that employer. If we have a sufficient amount of time, and it is a large employer, we establish what is called an employee transition committee...A committee...half made up of management and half made up of employers...determines: what are the best resources for them [the employees] in the immediate phase of dislocation; information about unemployment insurance; information about other jobs that are available;...provides assessment for any workers who are interested and then when it moves into the next phase of actual dislocation and needing job training, that job training is provided out of Job Opportunities In Nevada (JOIN) and Nevada Business Services. Senator Raggio inquired if the division had a surplus of federal funds, could it carry forward the balance of the excess funds. Ms. Weinberg answered in the affirmative and clarified only in cases where the division has low expenditures, would she be required to return the unspent funds to the federal government. Ms. Weinberg continued her testimony on page 2 of Exhibit E. Senator Raggio asked why there is a request and recommendation for an increase in dues and registration costs. Ms. Weinberg stated the dues and registration costs had previously been paid out of other categories, and were put in the dues category of the budget to be conspicuous. Senator Raggio questioned how the membership in the National Governor's Association benefits the division. Ms. Weinberg indicated the National Governor's Association provides the division with constant information on what is transpiring at the national level. Senator Raggio questioned if there is another source for the same information. Ms. Weinberg agreed there are a variety of sources; however, she emphasized the National Governor's Association is the best source since it is aimed at state administration of job training programs. Senator Raggio turned his attention to the 43 percent increase in rent and inquired as to the cause. In response, Ms. Weinberg recollected a portion of the increase is due to a new Las Vegas office. She added the current lease will expire June 30, 1995, and the new lease amount will be substantially increased. Senator Raggio requested the Budget Office to review the issue of rent increase. The chairman focused his attention to the Statewide Cost Allocation Plan category and questioned why the Governor did not make a recommendation. Ms. Steinbauer recollected, "State Job Training...overpaid in the past biennium and they were shown not to owe any for this biennium." Employment Security - Page 1413 Senator Raggio called on Stanley P. Jones, Administrator, Employment Security Division, Department of Employment, Training and Rehabilitation, to begin testimony on the Employment Security budget. Mr. Jones commenced his testimony by reading from prepared text (Exhibit F). Senator Raggio questioned how the division has adjusted to the reorganization of the department. Mr. Jones commented the division has been able to provide better service to the work force as a result of the reorganization. Senator Raggio addressed the measurement indicators in the budget. He questioned whether the indicator showing the number of job seekers finding appropriate employment in FY 1995 is a valid projection. Mr. Jones replied the lower projected amount for FY 1995 is a result of the improving economy in Nevada. Senator Raggio informed Mr. Jones the measurement indicators are not complete. He stated: ...That tells us only one side of the picture...How many sought employment all together. We know that 20,588 did find appropriate employment, but...how many sought employment. Mr. Orr interjected directing the committee's attention to the revised indicators under the ESD tab in Exhibit D. He stated under Employment Services Division, outcome #2, the projection for 1995 for the percentage of job seekers that apply for jobs with the division and find employment, is 50 percent. Senator Raggio commented the 50 percent figure does not tell much unless the total number that sought employment is known. He announced, "...In the future, our staff is going to be making a lot of recommendations for measurement indicators. We need to be able to measure performance as well." Senator Raggio questioned how the division has been performing in relation to an audit performed in 1993 which found the division failed to meet federal regulations for scheduling and deciding appeals. Mr. Jones affirmed the division has been meeting the federal standard for conducting timely hearings on appeals. Senator Raggio inquired about the status of Nevada's Unemployment Compensation fund, and asked if the fund is solvent. Mr. Jones answered in the affirmative, and continued his testimony (Exhibit F). Senator Raggio questioned if the division would need seasonal employees in light of the conversion of the intermittent positions to permanent employees. Mr. Jones confirmed the division will still be using seasonal positions. Senator Raggio asked for clarification of Mr. Jones' statement on using intermittent positions on a permanent basis. Mr. Jones declared, as a result of employer and labor force growth, the work load has increased and intermittent employees have been working on a full-time basis. Senator Raggio inquired if the state will incur additional expense in fringe benefits for the intermittent positions, once they are converted to full-time employees. Mr. Jones clarified the intermittent employees receive the same benefits as permanent employees, with the exception of receiving ample notice when a reduction in staff will occur. He stated, "An intermittent employee may be notified a week in advance, then be terminated and we just think that is unfair to employees that are working, in essence, full-time." Senator Raggio questioned whether a decrease for seasonal employment has been budgeted for the division. Ms. Steinbauer confirmed a reduction has been made in the Enhancement 150 Employee Treatment (E-150) decision unit. Senator Rawson joined the meeting at 9:20 a.m. Senator Raggio clarified there is no actual cost to the budget for the seasonal employees. Mr. Jones confirmed Senator Raggio's statement. Mr. Orr highlighted as many as 240 intermittent positions are authorized, and some of those intermittent employees have been working full-time for 3 or 5 years. Of the 240 positions, 61.5 have been recommended to convert to permanent state employees, and a residual pool of 40 intermittent positions will be maintained for seasonal use. Senator Raggio questioned when cyclic changes occur, if the division could represent it will not hire unnecessary full-time employees. Mr. Orr assured the chairman the division will cross train the intermittent employees, making it possible to use less intermittent employees to perform more jobs. Mr. Jones resumed his testimony from page 4 of Exhibit F. Senator Jacobsen questioned whether the ESD has transferred its bank accounts to the state treasurer. Mr. Jones answered in the affirmative. Senator Jacobsen voiced his concerns over the fact when federal funds are accepted by the state, the state must meet certain regulations or be sanctioned. Senator Jacobsen wanted assurance that ESD, by accepting federal funds, accepts the federal regulations and will follow through on them. Mr. Jones assured Senator Jacobsen the division will follow and comply with federal regulations. Senator O'Donnell asked for more information concerning the transfer of the four positions from data processing in ESD to IDP. Mr. Jones replied all former data processing staff from ESD are being transferred to the IDP division. Senator O'Donnell questioned whether Mr. Jones is concerned about the level and quality of service the division will receive after the transfer. Mr. Jones stated the transfer is currently taking place and the level of services the ESD has received has not diminished. Senator Raggio questioned if the consolidation of the ESD data center and the Department of Information Services (DIS) data center would be complete by May, 1995. Mr. Hanna answered in the affirmative. Senator Raggio inquired if Ms. Jackson, as Director of DETR, disagrees with eliminating four systems programming positions, as outlined in the Strategic Plan for Information Resources and Information Technology (SPIRIT) presentation. He expounded: Apparently our fiscal division received a memo indicating...it is still going to be necessary to keep two systems programming positions in ESD to support mainframe applications.... Mr. Hanna explained the two systems programming positions are not to be used on mainframe applications, but on supporting the ESD's local area networks, wide area networks and other communications and computerized systems within the department that do not use DIS's mainframe. Senator Raggio asked why DIS was not informed of ESD's intended use of the two programmers. Mr. Hanna replied, "I personally believe there is a confusion between Karen Kavanau (Director, Department of Information Services) and myself on that...and I don't know what her position would be, but I think we made it clear in the beginning." Senator Raggio requested the DIS/SPIRIT subcommittee to address the issue. Senator O'Donnell commented on receiving a letter in January, 1995 from DIS requesting the committee to hold the final meeting on SPIRIT in June, in order to ratify the misunderstandings uncovered during the legislative session. He proclaimed: I found it a little bit disturbing that we...are now making decisions based upon what has been relayed from DIS to ESD, and in actuality, SCR 5 has never been voted on, never been approved, and now the director of DIS wants to push that meeting back until June. I think we have to get more into this. Raggio asked for an explanation on the Enhancement 912 Program Transfers (E-912) decision unit. Ms. Steinbauer stated the figures in E-912 represent the transfer of contracted private attorneys in ESD to the attorney general's office, with the funding to be located through the DETR Director's Office. Senator Raggio asked for an explanation of the figures contained in E-912. Ms. Steinbauer stated the figures represent a savings from contracts for attorney costs that are in the base budget. Senator Raggio inquired if assurance could be made that the transfer of private attorneys is a cost savings to the department. Ms. Steinbauer answered affirmatively. She distributed a schedule titled Nevada Department of Employment, Training, & Rehabilitation, Legal Costs: SFY 94 [Actual] versus SFY 96 & 97 [Proposed] (Exhibit G), of the net savings to the department and indicated there will be an increase to the ESD for legal costs since the allocation is based on the number of employees and ESD has the largest number of employees in the department. Senator Raggio questioned where the cost savings are reflected. Ms. Steinbauer stated the Nevada Office of Equal Rights has a substantial savings since they have few employees. Mr. Orr interjected: Since the expense of attorneys is requested to be placed in the Director's Office, the expense of those legal services would be cost allocated based on the full-time equivalency (FTE) process as opposed to billable charges. If we find that there is an inequity during the biennium, we would come back with a request to bill those charges. Senator Raggio declared once private counsel utilization is terminated it can not be utilized again. Mr. Orr clarified the division is not suggesting terminating the proposal to shift from private counsel to public counsel. He added if the costs of the attorney general's office for support is inequitably spread among the agencies within the department, then the division will discuss the issue with the attorney general. Senator Raggio questioned if the transfer is reflected in the attorney general's budget or if the attorney general would make a supplemental request for deputies to accommodate the transfer. Mr. Comeaux surmised the transfers are in the attorney general's budget, but stated he would verify that information and return to the committee with his findings. Senator Raggio questioned Mr. Jones whether the 100 positions being transferred from his department, as a result of the proposed realignment, would impact ESDs operations. Mr. Jones reflected the transfers are merely a restructuring of services that have been provided for one division within the department. Senator Raggio inquired if the transfers will be physical transfers or if those positions will remain on ESD premises. Mr. Jones indicated there has been no change in physical location of his staff. Senator Raggio asked if salary savings are built into the budget and Ms. Steinbauer indicated they are not. Claimant Employment Program - Page 1425 Mr. Jones began testimony on this budget and read from prepared text (Exhibit H). Senator Raggio questioned why 10 new positions are being requested when the measurement indicators in the budget show the number of claimants as holding steady. Mr. Orr brought the committee's attention to the revised measurement indicators contained in Exhibit D, showing the number of participants in the program are projected to grow by 1,600 applicants. Senator Raggio asked what has changed between the time the measurement indicators in the budget were formulated and when the revised indicators were prepared. Mr. Orr indicated the main incentive governing the change of the measurement indicators is profiling. He stated: ...When we started talking within the department about the affect that profiling is going to have, which is going to identify people in need of comprehensive services and, in turn, funnel those people right to this program, we said you [Mr. Jones] do not have the capacity to handle the people that are being profiled at the Unemployment Insurance side...What profiling is intended to do is to identify those people who are most apt to be on the rolls for the longest time. We have never targeted those people. Senator Raggio elucidated the purpose of the program is to give applicants better skills in order to reduce unemployment. Mr. Orr affirmed the chairman's statement and added DETR uses the division to identify, plan and deliver training to those individuals who need skills to reenter the work force. Senator Raggio voiced his concerns the division is requesting 10 new positions simply because it has a large reserve of $2.7 million. He questioned if it would be better to give employers a tax break and reduce the tax rate from .05 percent of taxable wages to .04 percent. Mr. Jones stated the program provides a tax reduction in that the program returns unemployed persons to gainful employment at least 2 weeks earlier than they would otherwise be returned. Senator Raggio concurred with Mr. Jones' statement; however, the chairman contends a tax decrease could be a benefit the program could pass on to employers. Mr. Jones articulated the employer base has grown by 18 percent, the labor force by 17 percent and initial filings for unemployment insurance claims have grown by 13 percent over the last 5 years. He commented: That signals an additional work load for the Claimant Employment program. In addition to that, the Nevada Economic Development Commission is bringing in industries that require specific job skills...the Claimant Employment Program is capable of training...persons to fill those jobs that the employers...need. Senator Raggio requested Mr. Jones to provide the committee, in written form, a justification why the division needs 10 new positions and why it would not be feasible to reduce the tax on employers. Mr. Jones confirmed he would provide the requested information to the committee. Employment Security - Special Fund - Page 1433 Mr. Jones opened the hearing on this budget and provided testimony from prepared text (Exhibit I). Senator Raggio addressed the Enhancement 710 Replacement Equipment (E-710) decision unit and asked for confirmation that the funding for the decision unit is no longer needed due to the consolidation of DETR's data processing with DIS. Mr. Jones corroborated the chairman's comments and continued his testimony. Senator Raggio questioned how many square feet are being requested for the expansion of the Fallon office. Mr. Jones proclaimed his understanding the expansion will add 4,000 square feet. Senator Raggio retorted the agency requested a 3,000 foot expansion for $239,532 and the Capital Improvement Program only recommends a 2,000 square foot expansion for $200,000. The chairman requested Mr. Jones to meet with the Fiscal Analysis staff to discuss the differences between the figures. Turning the discussion to the General Fund loan requested in the Equal Employment Opportunity budget, Senator Raggio questioned if the Employment Security Special Fund could provide the loan rather than the General Fund. Ms. Steinbauer read from Nevada Revised Statutes (NRS) 612.615, section 5, and stated the intent of the statute appears to be to limit the fund to employment security. Ms. Steinbauer stated an Attorney General's Opinion (AGO), asserting money from the special fund could be used for other accounts, is required before the Budget Office will assign money from the fund. Senator Raggio stated a bill draft request (BDR) is needed and asked if the Budget Office has requested one. Mr. Comeaux answered a BDR has not been submitted. Senator Raggio asked Mr. Comeaux to look into submitting a BDR and directed the Fiscal Analysis Division to make a note of the potential loan source from the Employment Security Special Fund to the Equal Employment Opportunity budget. Military - Page 2031 Senator Raggio solicited Major General Drennan A. Clark, Adjutant General of Nevada, Office of the Military, to begin testimony on the budget. General Clark provided the committee with a review of various activities in which the Office of the Military has participated. General Clark distributed a sheet containing amended measurement Indicators (Exhibit J), and explained the changes to the committee. Senator Raggio asked if the changes in the measurement indicators will result in a decrease in the budget. General Clark replied in the negative and stated the Budget Office was in possession of the correct figures when the budget was formulated. Continuing with his testimony, General Clark reviewed the figures contained in the budget. Senator Raggio addressed Enhancement 425 Safety of Citizens and Visitors (E-425) decision unit and asked why a .51 position is recommended. Joel Pinkerton, Budget Analyst, Department of Administration stated a .51 position has become prevalent and the reason, as General Clark stated in his testimony, is to enable an employee to participate in the state retirement system and not be required to pay social security. Senator Raggio questioned if federal funding for the Washoe Armory and Southern Nevada Armory Complex will be provided if those facilities are under contract by September. General Clark answered in the affirmative. Senator Raggio questioned the cost of each project. General Clark stated the total cost for the Southern Nevada Armory Complex is estimated at $15 million, with federal funds providing $10.4 million toward the cost. Federal funding of the Washoe Armory will be $5.1 million, with a requirement under the federal- state agreement that the state perform the site preparation and pay utilities for the property. Senator Raggio inquired about the use of the old armories. General Clark recalled the old armory in Reno will revert to the state. He informed the committee the Reno/Sparks Visitors and Convention Authority would like to purchase the facility from the state. The old armory in Las Vegas will revert to the City of Las Vegas once the property is vacated. Senator Raggio requested a report on the type of aircraft being used in the Air Guard Unit. General Clark replied RF-4 Phantoms are currently used in photo reconnaissance missions. He reflected the Air Force did not continue funding for the continuation of the RF-4 missions and the planes will be grounded at the end of FY 1995. He maintained the National Guard Bureau has assigned a new transport mission to the unit, which will require air and maintenance crews to attend school to transition to the new C-130 aircraft. Senator Rawson inquired if the Reno airport is large enough to accommodate the C-130s. General Clark answered in the affirmative. Senator Rawson questioned if the adjutant general is pleased with the change in missions. General Clark reflected the unit would prefer to operate in tactical aircraft missions, but stated with the training schedule that has been developed, the unit will be combat ready (C-1 status) in 2 years. Senator Rawson reflected: ...We show that a high percentage of them are ready to be deployed and yet with the change of armor, I am wondering if we should rework that and be a little more realistic about that...it looks to me like we are left with army units that are not ready to go. General Clark corroborated Senator Rawson's comments and cited, "We don't have a whole lot of choice in that. The National Command Authority tells us what is available and what we are going to have." He announced when the unit converts, it will become a C-5 unit (not combat ready). Senator Rawson explained he is not comfortable with the unit receiving equipment which is not operational. General Clark clarified the unit will be receiving totally reconditioned M1A1 tanks this summer. He assured the committee he is not required to, nor would he, accept equipment that is substandard. Senator Rawson suggested the committee should tour the facilities. General Clark indicated he is trying to arrange a tour for the committee this summer. Senator Jacobsen asked the adjutant general to comment on the Challenge Program. General Clark explained the Challenge Program is a federally funded program which serves high school dropouts ranging in age from 15 to 18. He attested: They take them into an 18 week military type school with military training, physical training...computer training to help them get their GED [General Education Diploma]...in this 5 month program. Then they are provided with, assuming they complete that portion of the program, a stipend of $1,700 dollars that can be utilized for tuition at college, community college, or some career enhancing training and they are assigned a mentor in the community where they come home to. Senator Raggio questioned how the program is funded. General Clark replied the United States Department of Defense (DOD) funds the program. Senator Raggio asked if an adjustment has to be made in the budget to allow for State Industrial Insurance System (SIIS) premiums. Larry McCracken, Administrative Officer II, Office of the Military, responded the department can bill for the SIIS premiums. Senator Raggio asserted the department is required to pay the premium whether the National Guard members are on active duty or not and therefore questioned if it would be better to add that expense into the budget. He suggested Mr. Pinkerton meet with the Fiscal Analysis Division regarding this issue. Senator Jacobsen questioned if honor camp crews could be utilized to provide some maintenance for the facilities. Mr. McCracken stated the division pays a stipend of $9,000 per year for prison labor. Adjutant General Construction Fund - Page 2039 General Clark indicated this budget receives and uses federal funds for construction and repairs of facilities throughout the state. The committee had no questions on this budget therefore Senator Raggio solicited Major Clark to begin testimony on the next budget. National Guard Benefits - Page 2041 General Clark began testimony on the budget and provided a brief explanation of the program. Senator Raggio inquired as to the number of guardsmen participating in the program. General Clark recited 135 Army Guardsmen and 96 Air Guardsmen presently participate in the program. Senator Raggio asked what percentage the program is currently paying towards tuition costs. General Clark reflected the program is paying approximately 30 percent of the tuition costs. There being no further business, Senator Raggio adjourned the meeting at 10:50 a.m. RESPECTFULLY SUBMITTED: Cristin Buchanan, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance February 28, 1995 Page