MINUTES OF THE MEETING OF THE JOINT SUBCOMMITTEE ON HUMAN RESOURCES/K-12 ASSEMBLY COMMITTEE ON WAYS AND MEANS AND SENATE COMMITTEE ON FINANCE Sixty-eighth Session March 10, 1995 The meeting of the Joint Subcommittee on Human Resources/K-12 of the Assembly Committee on Ways and Means and the Senate Committee on Finance was called to order at 7:39 a.m., on Friday, March 10, 1995, Chairman Hettrick presiding in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. ASSEMBLY SUBCOMMITTEE MEMBERS PRESENT: Mr. Lynn Hettrick, Jr., Chairman Mr. Dennis L. Allard Mrs. Vonne Chowning Mr. Joseph E. Dini, Jr. Mrs. Jan Evans Ms. Sandra Tiffany SENATE SUBCOMMITTEE MEMBERS PRESENT: Senator Bob Coffin Senator Dean A. Rhoads SENATE SUBCOMMITTEE MEMBERS ABSENT: Senator Raymond D. Rawson, Chairman (Excused) Senator William J. Raggio (Excused) STAFF MEMBERS PRESENT: Mr. Mark Stevens, Fiscal Analyst Mr. Bob Guernsey, Deputy Fiscal Analyst Ms. Jeanne Botts, Program Analyst DEPARTMENT OF EDUCATION - EDUCATION GIFT FUND - PAGE 185 Ms. Mary Peterson, Superintendent of Public Instruction, introduced Dr. Keith Rheault, Deputy Superintendent, and Mr. Doug Thunder, Director of Fiscal Services. Mr. Thunder explained this budget account establishes authority for the Department of Education to receive funding from private and other sources for special projects as described in NRS 385.095. All expenditures from this account must be approved by the Legislature or the Interim Finance Committee. Since the activity in this account varies considerably with the amount of gifts received and because all expenditures require specific approval, the Department of Education had not formulated a budget with specific expenditures for the coming biennium. In order to allow the receipt of gifts, the agency requested $50,000 in revenue authority to be located in the reserve fund. When revenues are received, expenditures are identified to move authority from the reserve fund to a specific expense category. No specific expenses are currently identified. During Fiscal Year 1994 the Department received a $20,000 donation to the gift fund account as part of a Public Service Commission settlement. The authority to spend those funds was granted by the Interim Finance Committee. The Governor has recommended the agency's request in the Executive Budget. Chairman Hettrick asked if the $20,000 had been spent. Mr. Thunder replied the expenditures authorized included class-size evaluation, facilitation of reform and restructuring activities, facilitation of a secondary schools task force, and computer equipment. The cost of the secondary schools task force was later moved to a federally funded account. Approximately $7,000 had been expended to date and $14,000 was carried forward to Fiscal Year 1995. It was anticipated most of the balance would be expended in Fiscal Year 1995. Chairman Hettrick requested a detailed report of expenditures and anticipated expenditures. Mr. Thunder agreed to provide the information. NATIONAL ORIGIN/RACE DESEGREGATION - PAGE 191 Ms. Peterson testified this program is 100 percent federally funded to provide teacher training and technical assistance to local school districts for programs that address the needs of students with limited proficiency in English and race desegregation issues for ethnically/culturally diverse students. She explained the number of students with limited proficiency in English has increased 20 percent per year. The population of ethnically/racially diverse students had an average growth of 4.7 percent per year. The Department of Education estimated in the coming biennium there would be over 20,000 students with limited proficiency in English and 83,500 ethnically/racially diverse students in Nevada. The budget request was based on the assumption that the program would continue to be funded at approximately the same level as in Fiscal Year 1994. No new programs were requested and there was no matching requirement. Chairman Hettrick inquired whether a correction was required to the amounts to be transferred to the Chapter 1 program account. Ms. Peterson said she would look into this issue. Chairman Hettrick asked Ms. Peterson to provide a list of students identified as not proficient in English and the number of students considered ethnically/racially different compared to total enrollment. Ms. Peterson said the department had provided that information the prior day pursuant to the questions asked at the February 14, 1995, budget hearing. Chairman Hettrick inquired whether the report covered the past 10 years. Ms. Peterson said she believed the report covered the past 5 years. DISCRETIONARY GRANTS - PAGE 195 Dr. Rheault stated the account was used for 11 various federal discretionary grants. He noted the Governor's recommendation aligned very closely with the agency's request in this account. The Executive Budget reflected a continuation of the National Diffusion Network activities, the National Cooperative Statistics Program, education of homeless children, bilingual education, Byrd scholarships, the Christa McAuliffe Fellowship Program, community service, foreign language assistance, and emergency immigration grants. The agency request did not include funding for the English Language Arts Standards Project, which was 100 percent federally funded. Grant funds were projected at $376,220 in the first year of the biennium and $378,151 in the second year. He noted a detail of this program would be provided to fiscal staff as soon as possible. The objective of the program was to develop standards in oral language, writing, and reading. Mrs. Evans asked for an explanation of the National Diffusion Network, who would be trained, and why projected numbers of participants trained were decreasing. Ms. Peterson said the National Diffusion Network assembles educational programs which have been shown to be effective throughout the country. Nevada teachers would be trained to use those programs. The reason for the decline in projected numbers was related to anticipated reductions in funding at the federal level. Dr. Rheault noted several programs in this budget would be affected by the recision bill passed by the United States House of Representatives. The programs currently scheduled for termination included the National Diffusion Network, the Byrd scholarship programs, immigrant education, education of homeless children, and the Christa McAuliffe Fellowship Program. He calculated approximately $534,000 of total revenue in this budget would be terminated by those rescissions if the bill is passed by both houses of Congress. Mrs. Evans inquired how many homeless children were attending school in Nevada. Dr. Rheault said this grant was intended to locate homeless children and bring them into the school system. He indicated if the number of homeless children had not already been provided to the committee he would provide the information. Mrs. Evans asked how success of the program was determined. Ms. Peterson said it was difficult to tell whether the program was successful since it was hard to determine how many homeless children were not located. Mrs. Evans questioned whether there would be any effort to continue to locate homeless children if the federal funding ceased. Ms. Peterson replied without those funds the department had no mechanism to hire people to perform that work. This was the only funding for programs which addressed the needs of homeless children. Chairman Hettrick noted the agency had requested funding from the National Diffusion Network for one-half of an Assistant Director position. He questioned how that could be accomplished if the funding ceased. Ms. Peterson responded the agency would have to look for other sources of funding. She explained the cost was approximately $650 (one-half of the difference in salary grade resulting from a position reclassification). Chairman Hettrick asked how the base personnel costs for this position were funded. Ms. Peterson said the costs were funded by the National Diffusion Network and Chapter 1, and if the National Diffusion Network funding was eliminated another source of funding would have to be found for the base budget as well. Mr. Hettrick noted that would be significantly more than $650. Chairman Hettrick said the department would have to make a decision on how to fund this position in order for the subcommittee to close this budget account. Ms. Peterson stated the difficulty was that it would not be known for some time whether the federal funding would be cut. Chairman Hettrick inquired whether the same problem would be encountered with other Assistant Director positions. Ms. Peterson said she did not believe any other Assistant Director positions were being proposed. Mr. Don Hataway, Chief Assistant Budget Administrator, Budget Division, noted it had been standard operating procedure for the Budget Division to require the Department of Education to state in writing that in the event federal funding for new positions was eliminated, the positions would be eliminated. Therefore, if the funding source supporting this position disappeared and no alternative funding source was located, the position would be eliminated unless the Legislature chose to fund it with General Fund revenue. STUDENT INCENTIVE GRANTS - PAGE 263 Mr. Thunder explained the Nevada Student Incentive Grant Program establishes a federal-state partnership to provide financial assistance in the form of grants to students who have substantial financial need. Regulations apply to all eligible public, private, vocational, and proprietary postsecondary educational institutions in Nevada which elect to participate in the program. The maximum annual grant per student is $5,000. To qualify a student must be enrolled at least half-time in an eligible undergraduate or graduate program in an approved Nevada postsecondary school. The state portion of the budget request is provided by a grant from the endowment fund of the University and Community College System of Nevada. The state must maintain its matching program expenditures at a level not less than the average for the preceding three fiscal years. In this program federal funds cannot be used for administrative purposes. A half-time Program Assistant IV directs the program for the Department of Education. This position is also instrumental in other programs in other budget accounts, namely the Byrd scholarship program and the Nevada Scholars program. The agency request was based on the assumption the program would continue for two more years at approximately the current level; however, it has been recommended for termination by the House of Representatives Appropriations Subcommittee on Education, Labor, and HHS. It is not known at this time whether this recommendation will be adopted by Congress. If the rescission is adopted, this position would have to be eliminated or funded through the state General Fund. He noted it would be unlikely the University and Community College System funding would remain if the federal funding disappeared. Mr. Thunder noted the difference between the Governor's recommendation and the agency request was that the Governor recommended correcting a shortfall in the required state match. Mr. Dini asked how many grants were issued per year. Mr. Thunder said he did not have that information but would provide it to the subcommittee. Ms. Peterson stated the maximum annual grant was $5,000 per year and the minimum was $200 per year. Mrs. Evans suggested this information could be included in the measurement indicators. She stated she would also be interested in knowing the breakout of scholarships according to schools. Mr. Thunder agreed to provide the information. Chairman Hettrick requested information regarding scholarships for teachers. Mr. Hataway noted there was $100,000 in the University special projects account for teacher scholarships. He noted it was from the same account which provided the estate tax for this program. Dr. Rheault noted the expanded program narrative included a breakout of the figures. He said 817 students received some form of funding in 1993 and 703 in 1992. DRUG ABUSE EDUCATION - PAGE 267 Ms. Peterson stated this program is funded by the federal Drug-free Schools and Communities Act. At least 90 percent of these funds must be allocated to local school districts, based upon school-age population, to implement drug education and prevention programs in elementary and secondary schools. These funds may only supplement programs already provided by state and local funds. Ten percent of the funds are retained by the state for program administration, training, technical assistance, curriculum materials and demonstration projects. The agency request was based on the assumption the program would continue for two more years at approximately the same funding level as in Fiscal Year 1995. The program is 100 percent federally funded. No state funds are requested and there is no matching requirement. Ms. Peterson pointed out the program funds for Drug Abuse Education were terminated by the rescission bill passed by the House of Representatives Appropriations Subcommittee on Education, Labor and HHS. It is unknown at this time whether this recommendation will be adopted by Congress. If the federal funding rescissions remain in effect, the program would be eliminated, including the 1.25 full-time equivalent classified positions in this budget account. Ms. Peterson noted the Governor recommended increasing projected federal funding by $3,000 over the agency's request. Chairman Hettrick inquired whether a correction was required to the transfers to the Chapter 1 program to pay for 10 percent of the payroll costs of the Federal Programs Director and a secretary. Ms. Peterson responded affirmatively. Chairman Hettrick asked if the results of the program were monitored and if the program had been effective. Ms. Peterson stated a random sample survey of students in the school districts was conducted every two years. It reflected students' self reported use of drugs and alcohol. The last survey reported a decrease in use. Senator Rhoads questioned whether the agency would be able to make budget adjustments in the event of federal funding cuts or if the Legislature would have to hold a special session to deal with this issue. Ms. Peterson replied some programs had access to funds carried forward from prior years which could sustain the programs for up to a year. In other cases, the programs would be dropped. Mr. Hataway noted the state would receive operating funds through September 30, 1995, the end of the federal fiscal year if the federal rescissions were made effective in the coming fiscal year. If the rescissions were made in the current fiscal year, there could be difficulties in these budgets. Chairman Hettrick stated the subcommittee's concern was the total impact of the rescission on all programs. Mrs. Evans noted the measurement indicators reflected declines in number of participants trained and monitoring of site visits. She asked if those projections were tied to anticipated program reductions. Dr. Rheault responded the measurement indicators did not accurately reflect the outcome of training but were only based on the size of training workshops. In years when larger workshops were conducted, it appeared greater service was being provided. The decline in site visits simply reflected a redirection of the program. He explained the department was redesigning its measurement indicators to more accurately reflect performance outcomes. Mrs. Evans asked if this program would be eliminated if federal funding disappeared. Dr. Rheault responded affirmatively. Ms. Tiffany said she was confused by measurement indicators which declined when juvenile crime and drug use were on the rise. Ms. Peterson noted this budget reflected the work of one consultant providing training throughout the state. She said the department would like to see the measurement indicators increase but there had been no increase in staff to provide additional training. Ms. Tiffany asked if there was any other state training program which was more effective than this program. Ms. Peterson said this program had been effective to the extent of staffing limitations. She said the Bureau of Alcohol and Drug Abuse also did work in this area. The Department of Education coordinated its efforts with the Bureau of Alcohol and Drug Abuse. Ms. Tiffany asked if there was any other state funded drug education program. Ms. Peterson said there was no program in the Department of Education. Dr. Rheault added the measurement indicators showing the number of participants trained reflected the number of teachers and other staff who received training. Therefore, the measurement indicators were not reflective of increases in student numbers. SCHOOL HEALTH EDUCATION - AIDS PREVENTION - PAGE 271 Ms. Peterson testified this is a 100 percent federally funded program to assist local school districts develop health education programs to prevent the spread of AIDS. Funds from the Centers for Disease Control are used to provide teacher training, curriculum materials, curriculum development and current information to school districts on the status and spread and prevention of AIDS. It also includes the collection of information for reporting to the Legislature on the status of AIDS education in local school districts and assessment of student knowledge of AIDS prevention. None of the funds are provided as direct aid to school districts. The emphasis is on training and staff development on a statewide level. The agency's request continues the funding for program activities similar to those provided in Fiscal Year 1994 and continues the funding for the current staffing level of three full-time equivalent classified positions. Ms. Peterson noted the Governor recommended reducing the agency request for personnel expenses by $10,419 in Fiscal Year 1996 and $9,980 in Fiscal Year 1997. The Governor's recommendation would adjust the salary of one consultant position which was recently filled at grade 39, step 5, rather than at grade 39, step 15, as reflected in the agency request. She stated the department agreed with the Governor's recommendation. Chairman Hettrick asked if this federal funding was also at risk. Ms. Peterson said she was not aware that this program was at risk. Mrs. Evans asked how student knowledge was being assessed and what those assessments revealed about the level of knowledge and understanding of AIDS among students. Ms. Peterson replied a student survey was recently conducted at the secondary level based on self-reporting of prevention measures. The results of the survey indicated knowledge had increased and at-risk behaviors had decreased among the teenage population. Chairman Hettrick asked for an explanation of measurement indicator number 5 regarding data collection/reporting/analysis. Ms. Peterson said this item reflected the results of the semi-annual survey. Chairman Hettrick questioned the significant fluctuation in the numbers projected. Ms. Peterson said the numbers probably reflected the number of students surveyed. Chairman Hettrick suggested this measurement indicator should be eliminated since it did not accurately reflect performance. Mr. Allard questioned why all measurement indicators decreased from actual Fiscal Year 1994 to Fiscal Year 1996. Ms. Peterson said she would review the numbers and provide an answer to the subcommittee. Chairman Hettrick asked what the feelings of the school districts were regarding the benefit of the semi-annual survey. Ms. Peterson said the survey was to study student behaviors and attitudes. The department provided that information to the school districts. She could not say how the school districts used the information. EDUCATION STATE PROGRAMS - PAGE 165 Chairman Hettrick noted the subcommittee had developed some basic questions about this budget account. He noted the 1993 Legislature had eliminated 11.5 federally funded positions. The Executive Budget recommended adding back 11 positions. He asked how the amount of money passed through to local school districts would be affected by this change. Mr. Hataway stated it was merely a coincidence that the number of positions recommended to be added was nearly equal to the number eliminated in 1993. He explained the requested positions were new, other than positions for the nutrition education program and the Deputy Superintendent, and were based on current justifications. He said he believed all minimum pass-through requirements had been met. Chairman Hettrick noted the intent of the original staff reductions was to increase the amount of money available to pass through to local school districts. The subcommittee was concerned with the possibility of a trend toward reducing funding to the local school districts. Ms. Peterson stated pass-throughs in the special education account had been increased to as much as 82 percent, but the Legislature had requested the department to use as much money as possible for the out-of-state placement program. Chairman Hettrick said the subcommittee would like assurance that the minimum pass-throughs were being met. Ms. Peterson said the department could demonstrate that minimum pass-throughs had been met or exceeded. She pointed out the staff reduction had been accomplished at a time when overall student enrollment increased 20 percent. Senator Rhoads asked how the federal Goals 2000 program had affected this budget. Ms. Peterson said the Goals 2000 program was included in budget account 101-2706, School Improvement. She said it was a 100 percent federally funded program and school districts could participate on a voluntary basis. Senator Rhoads inquired whether the federal funding would be phased out. Ms. Peterson responded funding was projected for five years, although there was a proposed rescission of approximately 40 percent. Chairman Hettrick noted the Executive Budget included a recommendation to reinstate a Deputy Superintendent position to be one-half funded from this budget account. He asked for an explanation of this recommendation. Ms. Peterson responded the department was organized in two divisions, one headed by Dr. Rheault, and one formerly headed by the Deputy Superintendent of Administrative and Fiscal Services position, which had been vacant since the fall of 1991. The position was designed to oversee all fiscal and accounting procedures within the Department of Education and to provide technical assistance to local school districts regarding financial matters. It was essential to fill this position in order for the department to be as responsive as it would like to be to the Legislature and the needs of the school districts. She noted there were some problems with the other funding source, account number 101-2720, Education Support Services, the indirect cost account. She noted the indirect cost account was dependent on the indirect costs charged to many of the accounts which would be deleted if federal funding ceased. The department could not be assured there would be money in account number 101-2720 to fund one-half of this position. Chairman Hettrick asked if the position was authorized and federal funds were eliminated, would the department have to seek funding from the Interim Finance Committee to fund the other half of this position. Ms. Peterson said that was a distinct possibility. Mr. Hataway noted the preliminary Governor's recommendation on this budget did not include the Deputy Superintendent position. The department appealed the preliminary recommendation and requested that the Deputy Superintendent position be given higher priority than a recommended Systems Analyst position. The deputy position was added with the understanding that it would be supported 50 percent by indirect costs and 50 percent by state revenues. It would be the preference of the Budget Division that the position not be funded if the indirect cost support was not available. Mrs. Chowning asked for a breakout of funding required for dues for full participation in the Education Commission of the States, Council of Chief State School Officials, National Association of State Boards of Education, and the National Association of School Boards. She expressed her opinion it was important to fund Nevada's participation in the Education Commission of the States. Mr. Hataway said the Governor's recommendation would fully fund dues for the organizations in which the department wants to participate, including the Education Commission of the States. The difference between the agency's request and the Governor's recommendation was that the department requested funding for the payment of arrearages in dues which it had been unable to pay. Mrs. Chowning asked how that debt would be paid. Mr. Hataway explained the organizations had allowed Nevada to participate in their programs at a reduced dues rate. Mrs. Chowning asked for breakout of arrearages. Dr. Rheault responded the dues were $38,500 for the Education Commission of the States, $16,808 for the Council of Chief State School Officials, $10,561 for the National Association of School Boards, and $1,770 for the Nevada Association of School Boards. The Education Commission of the States was billing the department for past due payments totaling $52,117. Ms. Peterson noted the department had been receiving billings for the past due amount and felt strongly the balance should be paid. Chairman Hettrick asked if any other states were paying past due balances. Ms. Peterson said she did not know the answer to the question. Chairman Hettrick noted the organization had allowed participation in the program even without payment. Chairman Hettrick asked how the Deputy Superintendent function was currently being performed. Ms. Peterson replied some of the functions had been late in being done or had not been done. One of the services the department would like to be able to provide is more technical assistance to local school districts. Chairman Hettrick asked if federal guidelines allowed the one-half funding of this position from indirect costs. Mr. Thunder described this as a dark gray to light gray issue. The federal government was primarily concerned with not funding chief executive positions through indirect costs. It was unclear which positions constituted chief executive positions. He said it probably would be acceptable to fund the Deputy Superintendent position. He explained he had tried to fill many of the responsibilities of the Deputy Superintendent position. He expressed concern that his responsibilities as Director of Fiscal Services had not been accomplished to the extent he would like. He noted he had also been serving as principal auditor because there was insufficient funding to fill that vacancy as well. He added the fiscal difficulties currently being experienced by one of the local school districts might have been averted if the Department of Education had been able to provide more fiscal support. Another major function of the Deputy Superintendent was the formulation of the budget. Mrs. Evans asked what the role of the Department of Education was in providing fiscal oversight or services to local school districts. Ms. Peterson said fiscal oversight rested at the local level with the local school board. The Department of Education obtained information from the local districts pursuant to statute, which it, in turn, reported to the Legislature. Sanctions against school districts were limited to withholding payment of funds from the Distributive School Account. Mrs. Evans noted the difficulty in White Pine County had only recently come to the attention of the subcommittee. She asked Ms. Peterson how she would characterize that situation. Mr. Thunder said the situation was very serious. Mrs. Evans asked if "bankrupt" was too strong a term to apply to this situation. Mr. Thunder said the White Pine County School District would have some difficulty meeting its payroll in March and April. The certified public accountant for the school district and the superintendent have agreed there would be a negative $1.3 million cash flow situation by the end of July. He said the Nevada Department of Taxation would be reviewing what possible action should be taken. Mrs. Evans inquired when the state became aware of White Pine County's fiscal difficulties and what the process was for helping school districts. Mr. Thunder replied the department had been aware of a problem in White Pine County but had no staff available to become involved in the situation. Mrs. Evans requested a report from the department regarding actions currently being taken to assist White Pine County School District and options for avoiding similar problems in the future. Ms. Peterson explained representatives of the department had met with the White Pine County Superintendent of Schools to discuss the problems in the school district and offer possible solutions. Subsequently, auditor services had been provided. She reiterated the Department of Education did not have staff or funding to resolve the problems in White Pine County. Mrs. Evans said the state had a responsibility to support local school districts, and it was important for the Department of Education to keep the Legislature informed of problems so remedial action could be taken. Ms. Peterson noted it was December before it became apparent how serious the situation in White Pine County was and the Legislature convened in January. Senator Coffin asked if White Pine County School District was bankrupt. Mr. Thunder said there had been no formal filing of bankruptcy. The school district would do everything within its power to keep that from happening. One issue was the cost of construction of a new high school and repayment of bonds from school district funds. Senator Coffin questioned whether the state should take over management of the school district. Ms. Botts pointed out the Department of Taxation had been monitoring the problems in White Pine County for over two years and had kept fiscal staff advised of the situation. Fiscal staff, in turn, had advised the Department of Education. The Department of Taxation had made a finding of fiscal mismanagement and decided a corrective action plan was required. In effect, the Department of Taxation had taken over management of the school district, instructing the school district not to issue any more short-term debt or to sell additional bonds. Senator Coffin asked what authority the Department of Taxation had to rescue a school district. Ms. Botts said there was fairly broad statutory authority for the Department of Taxation to take necessary measures. She noted in the past the Department of Education had provided early intervention to avert situations as serious as White Pine County's from occurring. Mr. Thunder commented the school district could apply for emergency assistance from the Distributive School Account, but only as the result of shortfalls in revenues, which was not the problem in White Pine County. Senator Rhoads inquired how bad the situation had to become before the state took over. Mr. Thunder said there was currently no statutory mechanism to trigger the state to assume responsibility for a local school district. Mr. Dini noted historically the state had provided fiscal support to school districts. Mr. Thunder added Mineral County School District was also likely to experience fiscal difficulties in the future as the result of a property tax dispute. Chairman Hettrick asked if Mineral County would be eligible for emergency funds from the Distributive School Account. Mr. Thunder said he believed it would be eligible. Chairman Hettrick asked about the $11.2 million supplemental appropriation for records. He inquired what the function of the automated records system would be, if an Education Consultant or a Systems Analyst was required to support this system, and whether any funding was available in the Goals 2000 Program. Ms. Peterson replied the funding was for the Statewide Management of Automated Record Transfer (SMART) system. The system would allow the department to electronically collect student records. Data to be entered into the system at the district and state levels will be determined in conjunction with district personnel. The system would allow for collection of all information required in the accountability report as well as other information needed at the state level for accurate data collection and reporting. An Evaluation Consultant position was required because of the work needed to be done in the local school districts to identify data to be entered in the student record, training system users, and putting system safeguards in place. Ms. Peterson said the Goals 2000 revenue for Fiscal Year 1995 totaled approximately $427,000, of which $75,000 was targeted for technology for instructional purposes. Some of that money would be used for technology and training needs. Chairman Hettrick asked why two new secretarial positions were proposed to start on July 1, 1995, when the associated new professional positions were not scheduled to start until October 1, 1995. Mr. Hataway said this was an oversight and all positions should be scheduled to begin October 1, 1995. He noted the Deputy Superintendent should also start on October 1, 1995. Chairman Hettrick inquired about the status of the department reorganization. He noted reorganization was not reflected in the Executive Budget. Ms. Peterson said the department had been involved in pilot restructuring efforts in 1993 and 1994 and was planning to implement the successful components of the pilot program, effective July 1, 1995. Senator Rhoads suggested a temporary superintendent be named in White Pine County. Ms. Peterson said the department had made that suggestion to the county. Payment for those services would be an issue, however. Ms. Tiffany asked what "consultant" referred to. Ms. Peterson replied education consultants were classified permanent positions. Ms. Tiffany inquired whether the need for the SMART program consultant would be ongoing. Mr. Thunder said the department envisioned ongoing maintenance and training associated with the SMART program. Therefore, the position would be permanent. Ms. Tiffany questioned whether the position could be viewed as temporary. Ms. Peterson said it was the position of the department the consultant would provide ongoing technical assistance. Ms. Tiffany said she was uncomfortable locating technical support staff for a specific computer project within the administration budget. Mr. Hataway noted the Legislature had the right to question the need to continue positions every legislative session. The Budget Division's objective was to strengthen the department in the technical area. Although the initial responsibility of the technology consultant would be to manage the SMART program, the ongoing responsibility of that position would include distance learning systems. He noted technology was far broader than just computers. He added this account was not simply an administrative account but was the repository of positions supported by the General Fund. The other budget accounts were generally federally funded. Ms. Tiffany noted measurement indicators were lacking for several positions. Mr. Hataway pointed out it was difficult to develop measurement indicators since outcomes were at the local level, not the state level. The Department of Education acted as a consultant in advising the local school districts how to take specific actions to elicit improvements. Ms. Tiffany said if staff was added she would like to see measurement indicators reflecting outcomes. She said she did not agree with adding a technology consultant to an $11 million computer project. Mrs. Evans inquired about the Library Consultant position created by the Legislature in 1987. She asked if that position was currently filled and what function was being performed. ECIA CHAPTER 1 - PAGE 187 Chairman Hettrick asked why funding was requested in this account for one-half the personnel expenses for an Assistant Director of Federal Programs when this program would not utilize one-half the services of that position. Ms. Peterson said the proposal was to add an Assistant Director position to monitor federal activities. The employee who was currently performing that function was one-half funded from this account. It was judged appropriate to reclassify the position to Assistant Director based on the duties being performed. She noted the additional cost was approximately $1,400, and there were funds available to cover that cost in this account. Chairman Hettrick asked Ms. Peterson to provide the subcommittee with a list of the programs which the Assistant Director would supervise. She agreed to do so. ECIA CHAPTER 2 - STATE PROGRAMS - PAGE 202 Chairman Hettrick inquired whether the department was confident accounts could be maintained separately if this budget was consolidated with the Title II EESA budget. Mr. Thunder assured the subcommittee the accounts could be maintained appropriately. He noted the Budget Division had recommended combining the two budgets, and the federal government may combine the two programs. Chairman Hettrick asked if all information requested by the fiscal staff had been provided by the department. Ms. Peterson said it had. TITLE II EESA - PAGE 205 Mr. Hataway noted most of the costs reflected in this budget were isolated in specialty categories and tracking would not be difficult if this account was consolidated with the previous budget. EDUCATION FOR HANDICAPPED ACT TITLE VI-B - PAGE 209 Chairman Hettrick asked how many complaints were being received, how those complaints were investigated, and whether staff could keep up with the workload. He also noted effective dates for some new positions should be corrected to October 1, 1995. Mr. Hataway indicated he did not object to moving the effective dates. Ms. Peterson introduced Ms. Gloria Dopf, Director of Special Education. Ms. Dopf testified the complaint investigation process was required by federal and state law. The Department of Education served an oversight role to ensure federal requirements were carried out according to the Individuals With Disabilities Education Act and programs were operating at minimum standards before state funding was allocated. She noted the complaint process was specifically delineated and required that any individual in the community could allege a violation of federal law, setting into motion a 60-day time frame in which to investigate the issues and develop findings of fact regarding the allegation. If violations are found, a corrective action plan must be put in place. Ms. Dopf said the number of complaints had increased from 1 in the 1990-91 school year to 16 to date in the current school year. The percentage increase from 1991-92 to 1993-94 was 62.5 percent. The percentage increase from 1993-94 to the current year to date was approximately 45 percent. She explained the increased numbers did not necessarily reflect more violations, but rather the growing special education population. Additionally, constituents were gaining an awareness of the complaint investigation process and the process was being accessed more frequently. Chairman Hettrick questioned whether it would be troublesome to combine this budget account with the Early Childhood Special Education budget and the Special Education Training budget. Ms. Dopf responded the recommendation to consolidate the budget accounts had come from the Budget Division. The department felt compliance with that recommendation would not create significant problems. An internal management process would be implemented to ensure tracking of the three separate federal grants. Mrs. Evans asked if the federal requirement to grant a percentage of federal funds to local school districts would be met in each year of the coming biennium. Ms. Dopf replied the federal requirement would be met and the department had provided supporting documentation to fiscal staff. EDUCATION OF HANDICAPPED PERSONS - PAGE 215 Chairman Hettrick noted the subcommittee had some concerns about controlling costs of out-of-state placements. He asked what could be done to improve cost projections for out-of-state placements made by the Division of Child and Family Services, how the process of applying for Medicaid benefits for out-of-state placements might be streamlined, and how in-state capacity for severely disabled children might be increased. Ms. Dopf distributed a report which updates some of the activities of the department pursuant to NRS 395 (see Exhibit C). NUTRITION EDUCATION - PAGE 227 Chairman Hettrick noted the budget proposed increasing staffing, which would result in a reduction of federal aid to local school districts. He requested justification for the request. Mr. Thunder stated the department was not asking for additional positions, but rather increased hours for part-time positions. He said payments to school districts would not be affected by the increase since those payments were based on the number of meals served. Staffing costs would be covered by the administrative grant provided by the Department of Agriculture. He explained the staff performed more work than they were currently being paid for and programs had increased by approximately 57 percent since 1991 while staffing levels have remained constant. The Governor's recommendation supported the agency's request. Chairman Hettrick asked for an explanation of Decision Unit E-250. Mr. Thunder stated the department had supplied information to fiscal staff which addressed that issue. Mrs. Evans requested the department to closely monitor participation in the school lunch program in light of proposed reductions at the federal level. She asked what Nevada would have to do to make up any shortfalls which might result from federal reductions. Mr. Thunder said the federal government was considering allowing a 4.5 percent maximum increase in the program from one year to the next. Nevada had experienced approximately 15 percent increases per year in recent years. Proposed federal reductions would have a more than moderate effect on the budget. In the past the department had approached the Interim Finance Committee to request additional funding. He noted the department had attempted to improve its projections so it would not have to approach the Interim Finance Committee in the future. Mrs. Evans asked if the Executive Budget had been calculated on the basis of a 15 percent increase. Mr. Thunder said he believed Mrs. Evans' statement was correct. Ms. Tiffany inquired how priorities would be set if the 4.5 percent cap was imposed on this program. She suggested the department give serious consideration to prioritization. OCCUPATIONAL EDUCATION - PAGE 233 Chairman Hettrick asked if any federal funding was available for apprenticeship programs in lieu of providing General Fund support. He also noted the subcommittee needed to know the value of this program if it was to become a permanent General Fund program. Dr. Rheault replied the department had requested state funding for the apprenticeship programs because most of those programs no longer qualified for federal funding. The Community College of Southern Nevada was still receiving approximately $65,000 in federal funds. He explained an increase in state funding was requested to meet the maintenance of effort requirement. Finally, the federal government required programs to monitor participants extensively and it was less cumbersome for programs to meet the reporting requirements for state funding. Mr. Allard asked for an explanation of the measurement indicator reflecting number of applications approved. Dr. Rheault said the number of applications was associated with the federal programs funded through the Occupational Education account. The measurement indicator simply indicated the number of school districts or community colleges which have applied for funds. Mr. Allard asked if any applications were not approved. Dr. Rheault replied in some cases several applicants were competing for the same funds and some applicants did not receive funding. Mr. Allard inquired how the department was improving occupational programs. Dr. Rheault responded 75 percent of federal money received by the department was allocated to local school districts. In 1994 an assessment was made of all areas of occupational education. It was determined a priority should be utilizing federal funding to help increase the transition from school to work by providing more work experience. The greatest achievement over the years--as far as benefitting students--was the articulation of secondary level programs with the community colleges. Students could earn up to 22 community college credits while completing their high school degree. The department would like to see an increase in the number of students receiving technical as well as academic training in high school and gaining knowledge of the work environment. Mr. Allard asked what was a major hurdle in helping students obtain work experience. Dr. Rheault said businesses needed to have more incentive for offering work experience to students. There needed to be more outreach with businesses. The greatest hurdle was finding quality work experience sites. Mrs. Evans asked when the department would know if the Community College of Southern Nevada qualified for federal funds for the coming year. Dr. Rheault responded the department would know by May 1 which programs qualified for federal funds. Mrs. Evans noted the subcommittee was concerned about whether the General Fund contribution to this budget could be reduced in Fiscal Year 1996 through the use of federal funds. She asked the department to work with fiscal staff to determine if a General Fund reduction was possible. Mrs. Evans asked if it would be preferable to place funds directly into the community college budgets for occupational education. Dr. Rheault said he would not object to funding the community colleges directly since the community colleges were the sole recipients of the funding. He noted the department provided some technical assistance to the community colleges and could continue to do so. Chairman Hettrick noted fiscal staff had requested a spreadsheet on each position and travel expenses. Dr. Rheault said the information had been provided. He noted the department had followed a 1993 letter of intent from the Legislature regarding travel to the letter. No staff travel was paid from this account Ms. Tiffany asked if the department was working with the Economic Development Department to find work experience sites in new businesses coming into Nevada. Dr. Rheault said the Economic Development Department was heavily involved in the school to work transition program. CONTINUING EDUCATION - PAGE 237 Chairman Hettrick asked if there would be any problem combining this account with the Adult Basic Education Program and the Job Training Partnership Program accounts. Dr. Rheault said there would be no problems. Chairman Hettrick questioned whether the State Job Training Office was in favor of the consolidation. Dr. Rheault said the Department of Education had sole responsibility to manage the program. He guaranteed separate fiscal accountability would be maintained. Chairman Hettrick asked if a Grants and Projects Analyst I could be hired in place of an Education Consultant to assist the full-time Education Consultant. Dr. Rheault said the cost of this position would be paid from federal funds. The position description for Education Consultant more accurately fit the criteria for receiving the federal money. PROFICIENCY TESTING - PAGE 243 Chairman Hettrick asked if the Education Consultant position requested to be transferred from the Education State Programs budget account would only be working on proficiency testing programs. Ms. Peterson answered the position was dedicated to proficiency testing. Chairman Hettrick inquired about participation in the National Assessment of Educational Progress (NAEP). Ms. Peterson stated this assessment program had been in place for 25 years and tested a random sample of students in core subject areas. In the past the Legislature had questioned why Nevada was not reported in NAEP results. Nevada was one of only nine states which did not participate in the program. Participation would provide information regarding how Nevada students performed relative to students in other states. Chairman Hettrick asked for an explanation for the request to increase the pay for the written exam scorers. Dr. Rheault said the Governor recommended paying $104 per day for readers. The readers were non-biased teachers who reviewed writing samples. Each reader was required to read approximately 400 essays. The $104 per day would restore the compensation rate paid in 1991. School districts were currently supplementing reader pay to bring it to $104 per day. He noted it was becoming increasingly more difficult to recruit readers for the compensation offered. The agency had requested $11,000 for readers, which translated to approximately $150 per day. Mr. Hataway said the Governor recommended $6,400 to increase pay for test scorers. The portion of the agency's request which was not recommended was for reimbursement to the school districts for substitute pay. The Governor recommended full funding for increasing hourly pay for test readers. Dr. Rheault said he would have to review this account. Chairman Hettrick asked that this information be verified to the subcommittee. Mrs. Chowning noted the measurement indicators reflected the number of students tested. She asked how many students had failed. She also questioned why the projections were scheduled to decrease from actual numbers. Mr. Thunder responded the reason the numbers were decreasing was that in 1994 additional tests were given to ninth grade students. Ms. Peterson said she could provide to the subcommittee information regarding how many times students take the test before they actually pass. She pointed out after the 1993 legislative session the department changed the testing schedule from administering tests at grades three, six, nine, and eleven to testing at grades four, eight, and eleven/twelve. If students passed the test in eleventh grade they were not required to take the test in twelfth grade. During Fiscal Year 1994 the department continued to test ninth graders, which accounted for the discrepancy in the measurement indicators. Mr. Allard requested inclusion in the measurement indicators of the percentage of the total student body tested. Ms. Peterson explained all students were required to pass the Nevada High School Proficiency Test before they could graduate from high school. Mr. Allard asked if all students had passed the test. Ms. Peterson agreed to provide that information to the subcommittee. Chairman Hettrick noted the cost per test had risen significantly but the test had not been upgraded recently. Mr. Hataway referred to Decision Unit E-900, a $54,000 transfer from the Education State Programs budget account and the recommendation for $52,875 to fund participation in NAEP. Chairman Hettrick asked if there were any available alternatives to the test currently being used. Ms. Peterson responded the department had requested additional funds to upgrade the test but those additional funds were not included in the Governor's recommendation. Chairman Hettrick inquired whether there was a commercial test available or if the department could develop its own test. Ms. Peterson said if the department was to develop a test it would have to be in line with NAEP standards. Chairman Hettrick inquired about reimbursements to the local districts for the cost of administering proficiency tests. Mr. Thunder replied the school districts contributed approximately $28,000. He explained approximately $21,000 of the $28,000 was included in the base budget operating expenses. The other $7,000 was carried forward to Fiscal Year 1995. EDUCATION PERSONNEL TESTING - PAGE 249 Chairman Hettrick asked the status of the program to streamline teacher licensing. Ms. Peterson responded there was a proposal to fund business process reengineering in the Governor's recommended supplemental appropriations to streamline and automate the licensing process. Business process reengineering would include examination of the current licensing process and recommendations for improvements. Chairman Hettrick asked if the supplemental appropriation would pay for hardware or for a study and hardware. Ms. Peterson said her understanding was $50,000 would pay for the study. According to the Department of Information Services, there could be additional costs to assess needs in order to implement automation. She said she was continuing to question the need to pay more than the initial $50,000 prior to moving into automation. The Department of Information Services had not yet been able to provide firm figures for additional study costs. Chairman Hettrick noted he would like to see funds being applied to automate the licensing process rather than to the cost of additional studies. Mr. Hataway noted the Department of Information Services' original proposal was for $150,000 for the business process reengineering study. Follow up discussions with representatives of the Department of Information Services had led him to believe $50,000 would be adequate for the study. The remaining $100,000 would cover the cost of implementing the automation. Chairman Hettrick expressed the hope the $150,000 would cover the cost of the study and the implementation. Chairman Hettrick inquired whether this account could become fee funded. Mr. Hataway distributed a copy of a spreadsheet explaining a discrepancy between fee revenue projected by the Economic Forum and fee revenue projected by the Budget Division (see Exhibit D). He explained by his conservative estimate license fees would have to be increased $2.45 per year in the first year of the biennium and $3.24 in the second year to balance the Executive Budget. Exhibit D also included a comparison of fees charged by other state licensing boards. He noted $50 for a five-year teacher's license was comparatively reasonable. Mr. Hataway explained the Executive Budget reflected fee revenue continuing at the current ratio of teacher licenses to expenses. Teacher license fee revenue supported 70.8 percent of the budget. The balance was provided from the General Fund. He noted legislation had been proposed to transfer the fingerprint fee revenue portion of teacher license fees to the Department of Motor Vehicles to pay FBI costs, with the remainder being credited to the Department of Education. Chairman Hettrick asked the status of teacher competency testing. Dr. Rheault answered no teachers had lost their jobs to date due to the competency testing requirements. The parties of a Clark County lawsuit had reached settlement, with teachers not meeting requirements being given until July 30, 1995, to do so. In lieu of passing the required test in reading, math, and English, those teachers could take a university course prior to the July 30 deadline. Teachers would still be required to pass the specific subject area test and the professional knowledge test. Chairman Hettrick called for public testimony. There was none. EDUCATION SUPPORT SERVICES - PAGE 257 Mr. Hataway stated he had some updates to this account. He explained cost allocation estimates had been revised and he would be providing detailed information to fiscal staff. He noted the Executive Budget currently reflected $186,284 for the statewide cost allocation and the Attorney General cost allocation. The revised figure for this budget account would be $161,415 for Fiscal Year 1996 and $143,001 for Fiscal Year 1997. Savings could be transferred to the reserve category. As a result of the savings, funding for implementation of the computer network system recommended in Decision Unit E-126 could be moved to Fiscal Year 1996. Chairman Hettrick asked if the vacant Auditor III position would be funded. Mr. Thunder stated filling the position was a top priority. Ms. Tiffany asked if the position would be responsible for monitoring local school districts to prevent fiscal problems such as that in White Pine County. Mr. Thunder replied each school district was required to have an annual single audit. Those audits were reviewed and information from the audits was used in a variety of reports. Audit findings were then reported to the appropriate authority. The last audit report did not reveal any fiscal problems in White Pine County. The audit report just received reflected a need for corrective action, which would be taken. Ms. Tiffany asked if the department was behind on the audit process. Ms. Peterson stated White Pine County had been granted an extension on filing its audit report. The audit report which was due in October 1994 was not received until recently. Ms. Tiffany said she was trying to establish responsibility for the problem in White Pine County. Mr. Thunder stated the department only had the responsibility for monitoring the audit reports. It had no administrative authority to take fiscal control of the school district. Audit findings and corrective action had to be addressed by the school district. The department served a primarily advisory function. Ms. Peterson said she was not aware of any statutory authority which would allow the department to assume control of a local school district. Ms. Tiffany asked if the statutory authority was needed. Ms. Peterson said she would like to see some discussion about this issue. She noted historically the department had taken on more and more responsibility without additional staff. She said she would be hesitant to take on fiscal responsibility for local school districts without additional and an appropriate level of staffing. Chairman Hettrick called for public testimony. There was none. There being no further business, the meeting was adjourned at 10:35 a.m. RESPECTFULLY SUBMITTED: Dale Gray, Committee Secretary Joint Subcommittee on Human Resources/K-12 Assembly Committee on Ways and Means and Senate Committee on Finance March 10, 1995 Page