MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session March 16, 1995 The Senate Committee on Finance was called to order by Vice Chairman Raymond D. Rawson, at 8:10 a.m., on Thursday, March 16, 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 Raymond D. Rawson, Vice Chairman Senator Bob Coffin Senator William R. O'Donnell Senator Dean A. Rhoads Senator Bernice Mathews COMMITTEE MEMBERS ABSENT: Senator William J. Raggio, Chairman (Excused) Senator Lawrence E. Jacobsen (Excused) STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Jeanne L. Botts, Program Analyst Cristin Buchanan, Committee Secretary OTHERS PRESENT: Roger Means, Lobbyist, Washoe County School District Carolyne Edwards, Lobbyist, Clark County School District Keith Rheault, Interim Deputy Superintendent, Instructional, Research, and Evaluation Services, State Department of Education Barbara Clark, Lobbyist, Nevada Parent Teacher Association Douglas Thunder, Director, Fiscal Services, State Department of Education Larry Eardly, Budget Officer, University and Community College System of Nevada Bob Gagnier, Executive Director, State of Nevada Employees Association Dr. Tom Harris, Professor, University of Nevada, Reno Dr. William Chatney, Professor, University of Nevada, Reno Joseph C. Guild, III, Lobbyist, Nevada Cattlemen's Association Ned Eyre, Rancher, Interested Citizen James Richardson, Lobbyist, Nevada Faculty Alliance Pamela B. Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Resources Joseph L. Johnson, Lobbyist, Sierra Club Frances Daugherty, Deputy Attorney General, Office of the Attorney General Tracy Raxter, Chief, Administrative Services Division, Department of Administration Leanne Keever, Executive Secretary, Commission on Ethics Karen Baggett, Deputy Director, Commission on Economic Development Myla C. Florence, Welfare Administrator, Welfare Division, Department of Human Resources R. Michael Turnipseed, P.E., State Engineer, Division of Water Resources, State Department of Conservation and Natural Resources Senator Rawson introduced Bill Draft Request (BDR) S-1776. BILL DRAFT REQUEST S-1776: Makes appropriation to state public works board for design of Phase II of Lovelock Correctional Center. SENATOR RHOADS MOVED TO INTRODUCE BDR S-1776. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS RAGGIO, JACOBSEN AND COFFIN WERE ABSENT FOR THE VOTE.) ***** Senator Rawson indicated the State Department of Conservation and Natural Resources requested the committee to withhold discussion on Senate Bill (S.B.) 76. SENATE BILL 76: Authorizes temporary advance from state general fund for authorized expenses of state department of conservation and natural resources. Senator Rawson opened the hearing on Senate Bill (S.B.) 5. SENATE BILL 5: Requires board of trustees of school district to account for and report donations of money and equipment. Jeanne L. Botts, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, indicated S.B. 5 is the recommendation of a Legislative Commission interim subcommittee study on public elementary and secondary education recommended by Senate Concurrent Resolution (S.C.R.) 52 of the Sixty-seventh Session. SENATE CONCURRENT RESOLUTION 52 OF THE SIXTY-SEVENTH SESSION: Directs Legislative Commission to conduct interim study of public elementary and secondary education. Ms. Botts provided a summary of the findings of the interim subcommittee and explained the purpose of S.B. 5 (see Legislative Counsel Bureau Bulletin 95-3). Senator O'Donnell inquired, "On a number of occasions, I have been asked by groups at the local schools to donate...raffle tickets...Would I have to then report that or would they have to report that?" Ms. Botts responded the school would be required to report the donation as income. Senator Rawson stated S.B. 5 stems from concern that funds raised by Parent Teacher Associations (PTAs) are not accounted for once they are turned over to the principal of a school. Senator Mathews asked what kind of impact S.B. 5 will have on school athletic departments which receive large amounts of donated equipment. Ms. Botts indicated representatives from the school districts, who served on the fiscal advisory committee, are not concerned over the requirement to report donated equipment since most schools already report that information. Ms. Botts reflected the main concern of the school districts is that S.B. 5 will result in a reallocation of donated funds to make funding more equal. She stated, "That could be a disincentive for fund raising if you have a parents group...that is very active and is raising a lot of money. Would they work that hard if the money was not going to go to their school in their neighborhood that they care about?" Senator Mathews sympathized with the concern of the school districts; however, she addressed the issue of schools in low socio-economic communities where parents are not able to raise funds for the school. She announced, "I do not believe anything is equal, but some kind of parity has to be met in this situation." Senator Rawson addressed the opinion that individuals who donate funds have a right to direct their donations to a specific organization. Senator Rawson solicited public testimony on S.B. 5. Roger Means, Lobbyist, Washoe County School District, presented his testimony on S.B. 5. He indicated that if the intent of S.B. 5 is to properly reflect the actual cost of education, the Washoe County School District will support the bill. He warned, however, if the bill is designed to take from the rich schools and give to the poor schools, the school district will not support the bill. Carolyne Edwards, Lobbyist, Clark County School District, informed the committee she is the principal of an at-risk elementary school and reviewed what she, as the principal, is doing to help her school. She commented: I can tell you as the principal, I would not like to ever be told into statute ...or have parents of a wealthy school be told under statute that they were responsible for me...I have two wealthy elementary schools who, under no statute and nobody asking them to, already support me...They looked for at-risk schools like me to help...They are being done out of the generosity of people's hearts and that is why every parent puts in all those hours...They have a right to feel that the money is going to the school that they are supporting. Ms. Edwards informed the committee that the Clark County School District and Washoe County School District require schools to report every gift of money or equipment they receive. She said: ...We have tight restrictions regarding reporting of donations, so we are a little bit ahead of this statute...I will...ask you to trust the elected officials who serve on our school boards and allow them to manage and make decisions for their district...so that we do not ever use any disincentive for fund raising. Senator O'Donnell questioned if the school districts will have to report the name of any individual or entity that makes a donation. Ms. Botts responded in the negative. Senator O'Donnell requested a definition of the phrase "...shall account for all money..." contained on line 3 of the bill. Ms. Botts explained the subcommittee did not specifically address the definition of that language. Mr. Means supplied a brief explanation of how the Washoe County School District accounts for donated funds and equipment. He testified the school maintains a student activity account which is aggregately reported to the district, but it is not identified by school at the district level when it is reported to the state. Ms. Edwards indicated a school-by-school figure is available to the public. She noted the Clark County School District shares the concern of Senator O'Donnell regarding the vague language contained in the bill. Senator Coffin requested a copy of the newspaper article which resulted in the request for the interim study, and asked Mr. Means to provide a summary of the story. Mr. Means explained the article revealed Washoe County School District's reluctance to report school-by-school test scores due to concerns that publishing test scores would initiate a flight from poor schools to more affluent schools. Mr. Means contended there is an association between test scores and the socio-economic area in which a school is located, as well as a correlation between the amount of fund raising that takes place in affluent schools as compared to the lower socio-economic schools. Senator Coffin questioned if the bill will prohibit funds donated from being used to subsidize an employee's salary. Ms. Edwards acknowledged S.B. 5 will bring the issue of subsidizing employee salaries into question. Senator Coffin reflected the bill can be used to ascertain the true cost of education. Mr. Means reiterated if the intent of the bill can be clarified so as to establish the true cost of education, Washoe County School District will support it. Senator Coffin remarked on the impossibility of completely defining a bill and he indicated the fears expressed by the school districts are unfounded. Keith Rheault, Interim Deputy Superintendent, Instructional, Research, and Evaluation Services, State Department of Education, contended the requirements in the bill are not necessary as the department already requires information on donations to be included in the department's accounting and auditing standards. He insisted that adding additional requirements to the report will add undue hardship on the school districts. Barbara Clark, Lobbyist, Nevada Parent Teacher Association (PTA), indicated the bill will be a disincentive for fund raising. She provided an explanation of the process the PTA uses when it raises funds and donates equipment to schools. She clarified funds raised by the PTA are not put into principal accounts, but rather the PTA votes on how the funds will be used. Senator O'Donnell asked for a further clarification on how the PTA distributes funds to schools. Ms. Clark indicated parents vote on how they want funds raised to be allocated. She declared the principal of a school has no discretion over the funds raised by the PTA. Senator O'Donnell asked if donations have to be accounted for once they have been given to the school. Ms. Clark responded, "According to this bill, yes, it would be." Senator Rawson closed the hearing on S.B. 5 and opened the hearing on Senate Bill (S.B.) 6. SENATE BILL 6: Requires department of education annually to compute and report total expenditure per pupil of each school district. Ms. Botts stated for the record, "As an employee of the Legislative Counsel Bureau, I neither support nor oppose any bill. I am providing information at the request of the committee." Ms. Botts informed the committee S.B. 6 was drafted as a result of the S.C.R. 52 of the Sixty-seventh Session interim study which found that all expenditures of categorical funds need to be properly tracked and included in calculations of expenditures per pupil. Ms. Botts distributed an example of a status report (Exhibit C) the State Department of Education previously published. Ms. Botts summarized the State Department of Education no longer publishes the status reports inasmuch as the bi-school accountability reports required under Senate Bill (S.B.) 511 of the Sixty-seventh Session will take its place. SENATE BILL 511 OF THE SIXTY-SEVENTH SESSION: Revises provision concerning program of accountability for public schools. Ms. Botts recapitulated the S.C.R. 52 of the Sixty-seventh Session subcommittee indicated the information contained in the status reports is critical for calculating per pupil expenditures and they recommended the State Department of Education be required, by statute, to prepare and submit status reports to the director of the Legislative Counsel Bureau. Senator Rawson turned the gavel over to Senator O'Donnell at 8:50 a.m. Senator O'Donnell requested an explanation of Exhibit C. Douglas Thunder, Director, Fiscal Services, State Department of Education, reviewed the figures contained in Exhibit C, then provided testimony in opposition to S.B. 6 and read from prepared text (Exhibit D). Senator O'Donnell closed the hearing on S.B. 6 and turned the gavel over to Senator Rawson at 9:05 a.m. Senator Rawson began the hearing on Senate Bill (S.B.) 15. SENATE BILL 15: Provides that travel allowance for members of board of regents be computed at rate provided for state officers and employees generally. Larry Eardly, Budget Officer, University and Community College System of Nevada, appeared before the committee in support of S.B. 15. Senator Rawson asked if the members of the Board of Regents currently have a travel allowance. Mr. Eardly answered in the affirmative and stated the members currently receive a reimbursement of 21 cents per mile for travel. Mr. Eardly indicated the Board of Regents also receives a $60 per diem, or the higher of what is established in the Federal Register, for meals, lodging and attending meetings. Senator Coffin clarified that S.B. 15 addresses the issue of travel reimbursement only. Mr. Eardly corroborated Senator Coffin's remark. Bob Gagnier, Executive Director, State of Nevada Employees Association, appeared to propose an amendment to the bill. He stated: ...This bill would...provide...the Board of Regents...be equal to all other state employees and officers on the ground, but not in per diem. What I...propose is that you eliminate lines 6 - 9 and insert, `A travel allowance and per diem computed at the rate provided for state officers and employees generally in subsection 3 of Nevada Revised Statutes (N.R.S.) 281.160.' Then it would be the same in all regards. Right now...their per diem is higher because they get the federal rates...This would make it uniform for everybody... Mr. Gagnier informed the committee Assemblyman Dini has sponsored a bill that would change the mileage allowance so that it will fluctuate with the federal rate. Senator Rawson closed the hearing on S.B. 15 and opened the hearing on Senate Bill (S.B.) 18. SENATE BILL 18: Requires study of rates charged for leasing grazing rights on private property in Nevada. Senator Rhoads provided a brief history of the events leading to the request for S.B. 18. He stated the federal government utilizes a survey containing two questions to set the standard grazing fee. He asserted since Nevada has minimal private grazing lands, the grazing fee set according to the survey is not representative of the standard fee for Nevada. Dr. Tom Harris, Professor, University of Nevada, Reno, commented on the importance of complete data gathering on private leases. He said: ...Two questions...leaves a lot of information that is not gathered...Leases have a lot within them on attributes such as what is the productivity of the land, how close is the lease to transportation...those kinds of attributes, which are not there...In this way, what we hope that this study will do is provide information, especially for the State of Nevada, in looking at proper development of grazing fees and also looking at lease rates. Dr. William Chatney, Professor, University of Nevada, Reno, testified that not enough information is known on the different types of leases in Nevada. He proclaimed: ...If we ever get to the point where...states have some say in what kind of grazing fee they have...then we have to be prepared to establish some kind of a fee and we need a better basis on which to do that. This (S.B. 18) would provide some of that background. Senator Rawson asked if the most recent increase in the grazing fee is a result of the old survey. Dr. Chatney responded: That is a difficult answer because basically, if you are referring to the one that was put out with land reform in 1994, that one was primarily going back to the old formula. Changing the base difference, not so much with the index number of the private lease rate, but more would just change in the base amount that they started with. But there are variations on that too. Senator Rhoads stated the old format was used in the survey. Dr. Chatney commented, "Plus it was based upon a certain year and that, versus the current year, became the index number which was multiplied by a base and that changed it from year to year." Senator O'Donnell requested more information on what the rate will be used for, once it is determined. Dr. Chatney stated the rate can be used as an index number to adjust the base. Senator O'Donnell asked if it is used for charging ranchers for use of land. Dr. Chatney answered in the affirmative and demonstrated, "The private lease rate becomes the opportunity cost when it is for public [lease] when it is not known what that public value might be. The only other market indicator that we have is the private market." Senator O'Donnell declared, "Establishing a market is essentially what you are doing, but is it state land that they are grazing on?" Dr. Chatney answered in the negative and clarified it is federal land. Senator O'Donnell voiced his concern over the likelihood of the study influencing the federal government to effectuate change. Senator Coffin asked if the survey team will encounter landowners and ranchers who are unwilling to disclose information necessary to the survey. Dr. Chatney indicated he is expecting some refusals; however, he stated the ranchers usually cooperate with surveys if they are notified ahead of time. Senator Rhoads asked when the university plans to begin the survey. Dr. Chatney stated that no date has been set to begin the project. He indicated the university has project funds available to begin preliminary field testing before the actual survey is conducted. Senator Rhoads clarified an amendment to line 24 of the bill, after the figure $26,370, the words `for the Agriculture/Economic Department' need to be added. Joseph C. Guild, III, Lobbyist, Nevada Cattlemen's Association, appeared before the committee in support of S.B. 18. Senator Coffin asked if the railroad industry leases land for grazing. Mr. Guild answered in the affirmative. Ned Eyre, Rancher, Interested Citizen, testified in support of the bill. James Richardson, Lobbyist, Nevada Faculty Alliance, stated, "I would like to go on record as supporting this bill...using resources at the university to address questions of this nature is an excellent one." Pamela B. Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Resources, maintained that more information on grazing leases is necessary since the state leases grazing land. She indicated the state puts grazing leases out to bid for a minimum amount and additional information will be useful in proposing those leases. Senator O'Donnell asked, "Do the bids go at the minimum?" Ms. Wilcox answered in the negative and declared typically, more than one bidder will appear. Joseph L. Johnson, Lobbyist, Sierra Club, testified in favor of the study proposed in S.B. 18 but he proposed another source of funding. He said: ...I think it is appropriate that the university make the study, and at the direction of the Legislature, but there is a source of funding...from grazing fees...12 percent of the fees generated...are returned to the source counties for the benefit of the counties...I would suggest to you that it would...be appropriate that a study that will primarily benefit the industry should be funded out of the state grazing fees. Senator O'Donnell questioned if it would be a conflict of interest for an industry to fund a study relating to its own trade. Mr. Johnson contended the credibility of a survey is not based on the source of funding, but rather on the researchers and individuals who build the framework of the study. Senator Rawson closed the discussion on S.B. 18 and invited public testimony on Senate Bill (S.B.) 200. SENATE BILL 200: Makes appropriation to commission on ethics for certain equipment. Frances Daugherty, Deputy Attorney General, Office of the Attorney General, indicated the Commission on Ethics is in dire need of the appropriation contained in the bill. Tracy Raxter, Chief, Administrative Services Division, Department of Administration, advised the committee that due to the urgency to obtain the necessary equipment, the request was not included in the ongoing budget. Mr. Raxter commented on the requested equipment, reading from Exhibit E. Senator O'Donnell questioned on what did the commission use funds previously appropriated for equipment. Leanne Keever, Executive Secretary, Commission on Ethics, explained a microcomputer had to be purchased because the existing computer was not repairable. She said, "We felt is was more beneficial to purchase the computer rather than the printer, at that time, and other equipment, which we had been allocated for." Senator Rawson concluded the hearing on S.B. 200 and initiated the hearing on Senate Bill (S.B.) 209. SENATE BILL 209: Makes appropriation to division of economic development of commission on economic development for replacement of telephone system. Karen Baggett, Deputy Director, Commission on Economic Development, provided testimony in support of S.B. 209 from prepared text (Exhibit F). Closing the hearing on S.B. 209, Senator Rawson invited testimony on Senate Bill (S.B.) 213. SENATE BILL 213: Makes appropriation to welfare division of department of human resources for replacement of room dividers and office equipment. Myla C. Florence, Welfare Administrator, Welfare Division, Department of Human Resources, testified in support of the bill by reading from prepared testimony (Exhibit G). There being no further testimony on S.B. 213, Senator Rawson closed the hearing on the bill and opened discussions on Senate Bill (S.B.) 222. SENATE BILL 222: Makes appropriation to division of state lands of state department of conservation and natural resources for equipment. Pamela B. Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Resources, testified the appropriation set forth in the bill is for replacement equipment for the department. She indicated $400 can be deducted from the requested amount due to a piece of equipment that will be purchased with other funds. Senator Rawson asked if the department has a "large plotter." Ms. Wilcox answered in the affirmative. She commented that of the two new requested computers, one will contain a digitizer. Senator Rawson ended the discussion on S.B. 222 and opened the hearing on Senate Bill 223. SENATE BILL 223: Makes appropriation to channel clearance account. R. Michael Turnipseed, P.E., State Engineer, Division of Water Resources, State Department of Conservation and Natural Resources, provided a brief history on the activity of the fund. He testified the city of Yerington will be requesting an appropriation from the fund to clear a gravel bar in the Walker River and the fund will "need to be replenished after the draw for Yerington." Senator Rawson asked if the fund is utilized as a disaster account. Mr. Turnipseed stated the fund is used only to clear snags and gravel bars in river channels to prevent flooding. He indicated a separate flood control account exists for use in emergency flooding situations. Mr. Turnipseed testified the Interim Finance Committee (IFC) replenished the account in 1994, even though it had no authority to do so. He requested that S.B. 223 be amended to provide IFC with the proper authority to replenish the account should the need arise during the interim between sessions. Ms. Botts interjected the Division of Water Resources submitted a BDR to allow IFC to replenish the channel clearance fund, however, the BDR was submitted after the deadline. She stated the BDR also contained language that would permit IFC to allocate funds from the reserve in the event of an emergency. Senator Rawson directed the Fiscal Analysis Division to prepare the language that would give IFC authority to appropriate funds to the channel clearance account so the committee can discuss it during a work session. Ms. Wilcox testified as to the importance of maintaining the account after a draw is made. She articulated the fund may actually have to be increased at a later date. There being no further discussion, Senator Rawson adjourned the meeting at 10:15 a.m. RESPECTFULLY SUBMITTED: Cristin Buchanan Committee Secretary APPROVED BY: Senator Raymond D. Rawson, Vice Chairman DATE: Senate Committee on Finance March 16, 1995 Page