MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session March 23, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Thursday, March 23, 1995, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator William J. Raggio, Chairman Senator Raymond D. Rawson, Vice Chairman Senator Lawrence E. Jacobsen Senator Bob Coffin Senator William R. O'Donnell Senator Dean A. Rhoads Senator Bernice Mathews STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Debbra J. King, Program Analyst Dee Crawford, Committee Secretary OTHERS PRESENT: Bob Gagnier, Lobbyist, State of Nevada Employees Association F.T. (Frank) MacDonald, Commissioner, Office of Labor Commissioner Pamela A. Case, Chief, Division of Systems and Programming, Department of Information Services Raymond L. Sparks, Acting Deputy Director, Department of Motor Vehicles and Public Safety William S. Gosnell, Chief, Administrative Services Division, Department of Motor Vehicles and Public Safety David G. Stocks, DMR Group, Inc. Charlotte Crawford, Deputy Director, Department of Human Resources Robert E. Dickens, Ph.D., Director, Governmental Relations, University of Nevada, Reno Orlando A. Sandoval, Director, Physical Plant Administrative Services, Cheyenne Campus, Community College of Southern Nevada Jean L. Laird, Chief Administrative Services Officer, Mental Hygiene and Mental Retardation Division, Department of Human Resources Carlos Brandenburg, Acting Administrator, Mental Hygiene and Mental Retardation Division, Department of Human Resources Ronald Lange, Deputy Administrator, Health Division, Department of Human Resources Donald S. Kwalick, M.D., M.P.H., State Health Officer, Health Division, Department of Human Resources Dean S. Borges, Acting Manager, State Public Works Board Robert E. Bayer, Director, Department of Prisons Robin Bates, Chief, Classification and Planning, Department of Prisons Roger E. Grable, Deputy Manager, Administration, State Public Works Board, Department of Administration Senator Raggio invited comment on a proposed bill draft request (BDR). BILL DRAFT REQUEST S-302: Establishes for next biennium amount to be paid by state for group insurance for state employees and their dependents. Bob Gagnier, Lobbyist, State of Nevada Employees Association (SNEA), stated BDR S-302 had been proposed by the SNEA committee on benefits, not by the administration and it is not included in the Executive Budget. He explained the measure proposes $29.75 more per employee be spent for insurance benefits than the submission made by the administration. SENATOR COFFIN MOVED FOR COMMITTEE INTRODUCTION OF BDR S- 302. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS RAWSON AND O'DONNELL WERE ABSENT FOR THE VOTE.) * * * * * BILL DRAFT REQUEST 23-327: Makes various changes regarding public employees' retirement system. Mr. Gagnier explained of the three changes being proposed by BDR 23-327, two allow employees to return to work after they have retired, while the third provision allows employees who work under an employee-employer basis to make payments into the retirement system with pretax income as recently allowed by the Internal Revenue Service (IRS). SENATOR JACOBSEN MOVED FOR COMMITTEE INTRODUCTION OF BDR 23-327. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS RAWSON AND O'DONNELL WERE ABSENT FOR THE VOTE.) * * * * * There being no further BDRs for consideration, Senator Raggio opened the hearing on the bills itemized on the agenda. SENATE BILL 208: Makes appropriation to office of labor commissioner of department of business and industry for computer and office equipment. F.T. (Frank) MacDonald, Commissioner, Office of Labor Commissioner, offered support for Senate Bill (S.B.) 208. He stated an appropriation of $105,461 to the Office of Labor Commissioner will provide computer upgrades, programming, software and office equipment in response to proposals made in an audit performed by the Legislative Counsel Bureau (LCB). He explained the LCB audit proposed establishment of a management and information system to insure the accurate and reliable collection and reporting of performance information. Mr. MacDonald reported the appropriation will replace old equipment, including two calculators at a cost of $100 each, two tape recorders used to tape prevailing-wage hearings at a cost of $200 each, eight 4-drawer file cabinets for the Las Vegas office at a cost of $223 each, two conference tables for the Carson City office at a cost of $223 each, and a state-imposed purchasing charge of $144 for a total of $2,974. Mr. MacDonald said the recommendation for automation of prevailing- wage information for public works projects, private employment agencies, update on functions already automated, and wage-claim files came about as a result of an audit performed by the Department of Information Services (DIS). According to Mr. MacDonald the suggestion for new equipment includes the purchases listed on a memo from the Office of Labor Commissioner (Exhibit C) dated March 21, 1995. In response to a query by Senator Raggio, Mr. MacDonald indicated the purchases will provide not only for prevailing-wage hearings, but also for wage claims. The computer programming, at a cost of $68,717, he said, will enable the department to handle wage-claim weekly reporting logs, to program for prevailing-wage contract files, for contractor files to determine which are active, as well as retention files and county wage-rate tables regarding prevailing wages. He said funds coming in will be recorded in the receipt files. Mr. MacDonald stated the three query programs will track prevailing wages in order to search contract numbers. He explained each contract reviewed is assigned a public works project (PWP) number. In reply to a question by Senator O'Donnell, Mr. MacDonald acknowledged the DIS had reviewed and approved the requested programming. Senator O'Donnell asked who will do the programming. Mr. MacDonald replied it will be installed by DIS staff members. Pamela A. Case, Chief, Division of Systems and Programming, Department of Information Services, told Senator O'Donnell the number of programmers and time to install the program will depend upon when the project is started. Senator Raggio asked how the $68,717 cost had been computed. Ms. Case responded it was based upon the estimated number of hours to complete the project at an average rate. Senator O'Donnell requested S.B. 208 be held until information on the number of programmers and time to complete the project is made available to the committee. Senator Raggio agreed to do so. Senator Jacobsen suggested the office consider purchasing furniture from prison industries. Senator Mathews announced she would not vote on S.B. 208 due to a conflict. In the absence of further testimony, Senator Raggio closed the hearing on S.B. 208 and indicated the bill will be held pending receipt of requested information. He opened the hearing on S.B. 218. SENATE BILL 218: Makes appropriation from state highway fund to department of motor vehicles and public safety for business process re-engineering study and revision of existing motor vehicle operating applications. Senator Raggio noted S.B. 218 will appropriate $935,388 for a business process reengineering (BPR ) study regarding existing motor vehicle operating applications. Raymond L. Sparks, Acting Deputy Director, Department of Motor Vehicles and Public Safety, introduced William S. Gosnell, Chief, Administrative Services Division, Department of Motor Vehicles and Public Safety (DMV&PS). Mr. Gosnell gave an overview of S.B. 218, outlined in Exhibit D, which will appropriate funds to conduct the BPR study and to commence rewriting of all registration, drivers' license and revenue systems. He said of the total, $595,000 will be directed to the study while the remainder will be expended on the first phase of rewriting existing motor vehicle applications. He noted the bill will provide for part of the overall plan the department has discussed with various committees in the past. Mr. Gosnell pointed out the DMV&PS has nearly 800 employees to serve approximately 1.2 million of the 1.4 million people living in Nevada, which he calculated means each employee serves 1,500 people per year. He said the updated data processing will provide a key element in the department goal to give quality and efficient service to the public. Mr. Gosnell estimated it will take 6 months for the consultant to complete the BPR. He reminded committee members they had been provided with the DMV & PS Business Case Report earlier with a list of costs, staff time and processes which were listed on pages 39 through 45. He said a member of the consulting group was present to answer questions. Senator Raggio asked who would explain the computations regarding the amount requested. Mr. Gosnell responded he would provide the pages of the report showing the breakdown of the figures to be expended for the consultants. The remaining $340,388 will be used to commence the rewriting, he said. He indicated 8 to 10 DMV&PS employees will be assigned to the task at various times as well as the teams from the consulting firm. He pointed out the department employees will include individuals from data processing, registrations, drivers' licenses and administrative services who will be assigned to the task from time to time. Senator Raggio asked, "What will the state have after spending nearly $1 million?... How will the state benefit?" Mr. Sparks responded: One of the issues that we've identified ... as critical to our success in being able to provide better customer service is to address the data processing support before we embark upon any kind of large-scale investment in data processing. We wanted to make sure that it was going to work for the needs of the department. We needed that kind of analysis before we could come before you and request a substantial sum of money to fix the data processing problems. David G. Stocks, DMR Group, Inc., said his consulting firm is located in approximately 40 locations throughout Europe, North America and Australia, with the head office located in Montreal, Canada. Senator Mathews asked if a request for proposal (RFP) had been made prior to the selection of the consulting firm. Mr. Gosnell replied at the time it prepared the Business Case Report, the division worked through the Department of Information Services, and DIS was the contracting agency. He pointed out DMR is not under contract with the division at the present time, and an RFP will be put out if the Legislature appropriates the funding for the study. Senator Mathews expressed support for the competitiveness to be obtained through using the RFP process. Mr. Sparks pointed out the department will comply with state requirements, which mandate competitive bidding, if the appropriation is forthcoming. He said Mr. Stocks had been requested to appear in order to address the general process to be used since the methodologies employed by most firms are similar. Continuing his recital of his company's qualifications, Mr. Stocks said DMR has been in operation for 25 years, it specializes in working for motor vehicle agencies, and it currently is involved in major system development projects for the States of Washington and Oregon. He asserted the company has found certain information investments are more successful than others. He acknowledged many information systems, approximately 29 percent, do not produce any benefits, according to the United States General Accounting Office (GAO), which he called "appalling." Mr. Stocks declared the difference between success and failure often depends upon the preparations undertaken before making a system's investment. He stated a framework, or "architecture," must be drafted within which the new information systems will fit, the most important part of which is development of a clear understanding of the use of the system by the employees. Mr. Stocks explained the design of the detailed work process by which a new information system will be used is called "business process reengineering." He noted the purpose is to create a profound understanding of the new ways for delivering services to citizens before making any other investments in information technology through serious preparation on the methods to be used. Senator Raggio asked if DMR has already performed work on the project. Mr. Gosnell responded: They helped us complete this. This was completed this fall prior to the legislative session, and this is the basis for which we're asking for the appropriation to do the overall review. They've only been in place with us for these 3 or 4 months, and they're no longer. ... We're done as far as that contract is concerned. In response to another query by Senator Raggio, Mr. Gosnell said the Business Case Report is complete and the result of the study is S.B. 218. Senator Rhoads inquired how much the entire project will cost. Mr. Gosnell replied: At this stage, we would estimate that we ought to be able to get this study done, and probably rewrite all the data processing systems, probably in the range of a total of $1.15 million. ... We would come in in January of the 1997 Legislature to ask for whatever's left to finish all the process rewriting. There may be some left. The application platform, or the types of equipment that we would be recommending to buy, would result from the BPR study. We don't know what that's going to be. We have included in our five-point plan a certain amount of money that would put us into a so-called open-end application environment for the second year of this biennium. And when you get the budgets over, you'll see that.... But we believe we can probably finish all the rewriting for no more than half a million [$500,000] and then you're talking putting it on systems and that's where we're at right now. Mr. Sparks reiterated Mr. Gosnell's qualification that the final number will depend upon the BPR study. Senator Coffin asked for clarification of the BPR, its source and when it evolved. Mr. Stocks responded he has studied source material on BPRs provided by his firm. He referred to an article from the Harvard Business Review in which an explanation is made as to why so many BPR projects fail. He explained a BPR consists of careful planning prior to making an investment. He acknowledged his firm does not commonly use the term "BPR," rather the firm refers to the process as "architecture." Mr. Stocks drew an analogy to the building industry in which a concept is proposed for a building, but many other complex decisions must be made before any bricks are laid, such as how many bricks will be needed, where they should be placed, and where the doors and windows should be located. He suggested that in visualizing new information systems many people jump from the vision to "laying the bricks" prior to making decisions regarding the details. Mr. Stocks enumerated the five steps to be taken to create an information system architecture: What actual work will your people do with these new pieces of equipment and application systems that they get? That's the work-process engineering. That's the principal component of Business Process Reengineering or BPR. Once you figure out what work the people are going to do, you have to design an organization to support those people at the point where they're working, at the time they're working. Then you have to provide a data architecture to provide them with the information they need at the point of need, at the time of need, and in the form needed. Sometimes the form is a picture.... After you figure out what data the people need to do their work, you have to create an architecture ... for the computer systems or the application programs that will deliver the data to the point of need to support the worker doing the work. Once you get all that figured out, you can ... buy equipment. The equipment runs the application, the application delivers the data for the worker, the worker does the work to serve the citizens, and the organization has to be designed as well to support the workers. Senator Coffin asked Mr. Stocks to recommend reading on BPRs. Mr. Stocks offered to supply a list for the senator. Mr. Sparks suggested a book written by Hammer and Champy entitled Reengineering the Corporation published in 1993. He averred the concept is not new although the term is new. He explained the fundamental premise of BPR assumes starting from a clean slate. He said: We don't want to come in and make marginal or incremental improvements in that process [of processing titles] and automate the existing system. We want to fundamentally examine the existing process and see why we're doing what we're doing. Do we need to continue to do what we're doing? How can we change the process? Once that decision is made, then we decide how the ... technology should be structured to support that. Senator Jacobsen asked if an estimate can be made of the time frame between "new and obsolete." Mr. Stocks responded it depends upon the location within the architecture, starting with 6 months near the bottom of the technology. He asserted the work-processes used to deliver services to citizens are more important, and well- designed work-processes may last for many years. He suggested the data used, such as the identity of the citizen, privileges being extended, funds collected and reactions to certain incidences such as convictions, generally remain constant. Senator Jacobsen remarked he was seeking some assurance the system will not be obsolete and will be upgraded. Senator Raggio interjected no BPR contract has been let and it will go to an RFP. Mr. Stocks responded DMR does not sell technology, including computers or telecommunication gear, the company only designs the program. Senator O'Donnell commented funding to be appropriated under S.B. 218 will be for business process reengineering only and it will not be used for software; thus a further request for software funding can be expected. In the absence of further testimony on S.B. 218 , Senator Raggio closed the hearing and opened the hearing on S.B. 210. SENATE BILL 210: Makes appropriation to department of human resources to finance state's share of business process re-engineering for certain divisions of department. Senator Raggio noted the bill will appropriate $675,436. Ms. Case stepped forward to speak about the bill. Ms. Case explained the Department of Human Resources (DHR) has many divisions which serve citizens through several programs and there is a critical need for reengineering in light of welfare reform and changes at the federal level. She declared the installation of the Nevada Operations Multi Automated Data Systems (NOMADS) will be important for other divisions within the department to take advantage of the information collected through NOMADS. She opined a reengineered system which uses NOMADS will effect a better savings than continuation of the development of fragmented systems in each division. Senator Raggio asked if $324,564 in federal funds will be available for the appropriation under S.B. 210 which will amount to a total of $1 million for the project. Ms. Case confirmed his query. She admitted the process will be similar to that outlined for the Department of Motor Vehicles and Public Safety. She stated the department intention, in conjunction with the Department of Administration, is to outline the requirements, specifications and information about the division in the form of an RFP in order to select the appropriate consultant. Senator Raggio drew attention to information provided by the agency regarding the one-shot appropriation for reengineering set forth in paragraph 8 of Exhibit E. He reported the agency has indicated the BPR study scheduled for the coming biennium will be restricted to systems analysis and planned development and no hardware or software will be included. Ms. Case affirmed his statement. Senator O'Donnell asked if NOMADS is complete. Ms. Case replied it is not finished. She confirmed most of the funding allocated for NOMADS will come from the federal government, and she agreed it is possible the NOMADS funding may change. Senator O'Donnell asked why the state should fund a BPR when change is possible and the NOMADS project has not been completed. He suggested it might make more sense to wait until the federal government's portion is stabilized and the state will be able to gauge the federal response more accurately prior to funding a BPR. Ms. Close responded the federal changes customarily are made faster than the state can respond. She stated: That is probably the primary reason why the BPR is important now. I don't believe we would be able to deal with federal changes if we do not get a handle on and understand all of the detailed processes within [the Department of] Human Resources. Ms. Case asserted there is a great deal of information that is redundant and overlapping within DHR. She suggested the divisions involved in the various programs have a real inability to understand all the different programs and the services being provided, often to the same citizens. She reiterated her belief it is critical to go forward due to the likelihood of federal changes. Ms. Case acknowledged difficulties come about within the agency because it is so large and the programs are so diverse that it is nearly impossible for each of the agencies to understand the interrelationships with other divisions without a BPR. She asserted the BPR will prepare the agency to make the proper changes that will provide more efficiency and cost-effectiveness and to enable the department to react to federal changes in a more timely manner. She asserted the agency will not be able to react well to federal mandates without the benefit of the BPR. Senator O'Donnell inquired who instigated the request for the BPR. Ms. Case replied the Department of Information Services recommended the study with full agreement of the Department of Human Resources. Charlotte Crawford, Deputy Director, Department of Human Resources, concurred there is much overlap within the agencies of DHR, most of the operations of the DHR are not automated, and there is a serious need to evaluate the department. She voiced agreement with the DIS appraisal indicating a need for a BPR evaluation. Senator O'Donnell asked if the department could assimilate a $1 million study. Ms. Crawford responded a more serious question might be whether $1 million will be sufficient for the study. She concurred there are concerns both ways, but she asserted a study must be commenced. Senator O'Donnell voiced concern the timing may be wrong to appropriate $1 million to begin a new study, before NOMADS is complete and before a better understanding can be made regarding federal programs. Ms. Crawford disagreed, saying the BPR should have been made prior to contracting for NOMADS. Senator Raggio asked if the matching funds are assured. Ms. Crawford admitted the figures are primarily based upon an estimate. She declared the funds are presently available, but she was unable to state whether changes will be made in federal funding formulas. Senator Raggio inquired if the funds are matched two-thirds to one- third. Ms. Crawford replied it depends upon the program, that some are split 50-50. Senator Raggio asked what aspects of DHR will be covered under the BPR. Ms. Case responded the study will not cover Child and Family Services because a BPR is already under way in that division. She noted that BPR will be tied to the BPR proposed for the department. She acknowledged there is the possibility the two BPRs can be performed by different contractors. She did not subscribe to the suggestion it will be disadvantageous to have two different contractors because the Child and Family Services BPR should be complete before the RFP goes out for the department BPR. Ms. Case reiterated her belief the BPR is necessary due to the size of the Department of Human Resources and its diversity, with many areas which are not automated and are being handled manually. She asserted the state will make a serious mistake by proceeding with new technologies without a BPR. Senator Raggio asked for a comparison with other states regarding BPR studies. Ms. Case replied many other states are embarking upon BPR studies, and large companies in the private sector have been making such studies for several years. Senator Raggio voiced his concern because BPR requests are being recommended across the board in the Executive Budget, which, cumulatively, could cost the state millions of dollars. He surmised those studies ultimately will mandate the expenditure of tens of millions of dollars for hardware and software which could become obsolete or impractical within a short period of time. He expressed concern the voters need assurance "this is not some gimmickry" and that the state is utilizing existing functions to the fullest. He agreed the state should stay in the forefront of technology, but not at the expense of wasted appropriations. Ms. Case concurred, yet noted the processes being utilized within the state have evolved over the past 25 to 40 years, making most of them out-of-date and inefficient. She expressed the opinion the best way to effect change is through a new technology suggested by a BPR, which she asserted will produce measurable benefits and will make the department more accountable. She declared, "Business process reengineering should help us be able to come back to you and be more accountable for what technology is going to provide." Senator Raggio iterated, "Too often we spend large amounts for studies, for design, and we end up getting a final product which is about 90 percent boilerplate and about 10 percent fluff." He asked if the department feels the process will result in a particularized design. He asked if the BPR study will be original or only a modified version of a study performed for another state. Ms. Crawford acknowledged the department shares his concern. She added research regarding business process reengineering has indicated there are successes and failures. She opined the successes are the result of control over the projects and understanding of what makes them fail. She suggested, "They fail when they're done in a vacuum by a consultant and they go on a shelf because there's no buy-in by the people who are affected by those changes. " Ms. Crawford said when the RFP is written by HR and the Department of Administration it will be done in a manner to insure success. She stated one element of the RFP will be methodology called joint application development (JAD) wherein the agency to be studied must be part of the process to insure that the consultant will not work in a vacuum. Senator Raggio pondered why experts have not been developed in- house in the agencies who could report on modern technological changes. He asked if the $1 million charge to complete the project is firm and if it will be adequate to provide a proper design. Ms. Close acknowledged the figure is an estimate based upon prior studies, which she cannot vouch for until after responses to the RFP have been received. Ms. Crawford stated one complicating factor has been national change. She cautioned, "We have to be very careful how we time this or that we ... focus on those areas that are less impacted. " Senator Raggio suggested it may be better to wait until the next session of the Legislature when federal changes will be in place and when the state can benefit from the experience of BPR studies done in other states during the interim. In the absence of further testimony on S.B. 210, Senator Raggio closed the hearing and opened the hearing on Assembly Bill (A.B.) 193. ASSEMBLY BILL 193: Makes appropriation to University and Community College System of Nevada for Cheyenne and West Charleston campuses of Community College of Southern Nevada. Robert E. Dickens, Ph.D., Director, Governmental Relations, University of Nevada, Reno, stated A.B. 193 will appropriate $6 million for equipment for existing facilities for the Community College of Southern Nevada (CCSN). He explained the appropriations are on the priority lists of the Board of Regents and the State Public Works Board and are recommended by the Governor. Dr. Dickens stated A.B. 193 is one of two accelerated pieces of legislation, the other being financial aid. He said the bill will provide funding for furniture and equipment for the West Charleston and Cheyenne campuses and early passage will enable purchasing deadlines to be met so the equipment will be in place in time for fall classes. He urged approval. Orlando A. Sandoval, Director, Physical Plant Administrative Services, Cheyenne Campus, Community College of Southern Nevada, furnished the committee with a compilation of the requested items (Exhibit F. Original is on file in the Research Library.). He indicated the list provides for all the furniture and equipment for Phase III and Phase V of the construction projects at the two campuses. Senator Raggio inquired what changes have been made since the end of the last legislative session. Mr. Sandoval responded the cost for the equipment being requested has been reduced from $8 million to $6 million. He requested the funding be provided sooner than it would be through the natural course of a capital improvement project (CIP). He acknowledged the funding will make the laboratories fully functional. Senator Raggio remarked the building budget approved during the last legislative session did not provide funding for equipment. He pointed out the equipment is listed in the CIP proposal for the next biennium, and the request is to fund the equipment during the present biennium which will reduce expenditures during the next biennium by a like amount. Senator Jacobsen asked if prison industries will have an opportunity to bid on any of the furnishings. Mr. Sandoval reported the prison industries have already been contacted and an attempt is being made to work with them. In the absence of further testimony, Senator Raggio closed the hearing on A.B. 193 and opened the hearing on S.B. 211. SENATE BILL 211: Makes appropriation to mental hygiene and mental retardation division of department of human resources for certain equipment and refurbishment of facilities. Jean L. Laird, Chief Administrative Officer, Mental Hygiene and Mental Retardation (MH/MR) Division, Department of Human Services, offered support for S.B. 211 which will provide onetime funding for equipment in offices throughout the state and will extend the Advanced Institutional Management System (AIMS) software system to northern and rural mental health offices. Ms. Laird indicated the funding will provide five computers, a network system, three replacement vehicles and 10 replacement computers for the northern Nevada mental retardation agencies. She noted it will provide various vehicles, an ice machine, nine computers, carpeting and a file system for medical records for the Southern Nevada Adult Mental Health Services (SNAMHS). The Nevada Mental Health Institute will be provided with generator switching gear, nine computers, program equipment, carpet and linoleum through the bill, she said, while four computers and various equipment pieces will be provided for the Rural Clinics' offices. She provided lists (Exhibits G and H. Originals are on file in the Research Library. ) to the committee. Ms. Laird said the Lake's Crossing Center for the Mentally Disordered Offender will be provided with a weapons detector, three portable radios and recharger, and one computer through S.B. 211. She said the AIMS computer system will be charged to the division's administration budget. Ms. Laird pointed out there are changes which will reduce the amount of funding by $10,461 due to the differences in prices. She added the Eagle Pines Group Home is going to be closed and converted back to an inpatient facility, so neither a computer nor the two station wagons may be necessary for that facility, amounting to another reduction of $44,502. Ms. Laird noted due to suggestions by Senator O'Donnell and research on prices for equipment and software, a reduction of $62,447 is being recommended for extension of the AIMS computer system to northern and rural offices. She declared the reductions will amount to $117,410 for a new total of $707, 342 to be appropriated under S.B. 211. Carlos Brandenburg, Acting Administrator, Mental Hygiene and Mental Retardation Division, Department of Human Resources, interjected the amount includes the addition of a utilization review (UR) system for southern Nevada to be used as a pilot project. He declared the staff was able to negotiate a reduction in the cost under the AIMS project. Senator Raggio inquired, "What is involved in the refurbishment of mental health facilities in this bill?" Dr. Brandenburg replied: On the carpet and linoleum, we would consider staff to take the $52,779 and put it into public works that we're using for the institute study where we're basically doing the carpeting and repainting and linoleum work at the institute, and if we could kind of roll that into that one project? Senator Raggio inquired if estimates for the work and total costs have been obtained. Dr. Brandenburg replied he has obtained estimates and the total cost to remodel the Nevada Mental Health Institute (NMHI) will be approximately the same as that proposed by the public works department for a capital improvements project. He said: We're using that to basically do some nonstructural rehabilitation of the buildings, do some painting, do some carpeting and allow us monies to do some advance planning to take a look at the institute to see exactly what direction we want to go, to what extent we want to remodel or add on to the institute and hopefully present to this committee in the next biennium a specific plan of attack and strategy. Senator Raggio asked for Dr. Brandenburg's opinion on spending funds to refurbish the facility or if it will be better to contract outpatient care. Dr. Brandenburg responded that has not been resolved. He said the public works department study on NMHI is being used as a guideline for the next 2 years of the biennium and thereafter the division will have a recommendation. Dr. Brandenburg said the institute contemplates maintenance, carpeting and painting in the near term. He reiterated the request that the $52,779 earmarked for carpeting and linoleum be included in the funds being allocated to the institute from the public works department for additional rehabilitation of the buildings. In response to Senator Raggio's request for clarification, he said, "What I wanted to do is ... be able to use this money in addition to the money that public works is giving us to do the rehabilitation at the institute." Senator Raggio asked if the funds can stay in the bill and be used for the purpose proposed by Dr. Brandenburg. Dan Miles, Fiscal Analyst, responded the funds can be appropriated through S.B. 211 and then transferred to the public works department to enhance the NMHI project. Senator Raggio remarked the bill will require an amendment. He closed the hearing on S.B. 211 and opened the hearing on S.B. 212. SENATE BILL 212: Makes appropriation to health division of department of human resources for various equipment. Ronald Lange, Deputy Administrator, Health Division, Department of Human Resources, read an outline for a one-shot appropriation request (Exhibit I) for four separate programs. The requested items will provide equipment for a rural nursing program, automation of the agency, radiological health records and the state laboratory at a total cost of $1,526,002. Mr. Lange provided a detailed list of the requested items (Exhibit J) for the Bureau of State Laboratory Services, and $60,000 earmarked for a business process reengineering study. He stated the figures were generated in coordination with DIS based on experience with the automation of the Maternal and Child Health Program. Senator Raggio asked if a BPR is necessary if the laboratory information system is one that can be purchased off the shelf. Mr. Lange replied: I think we do need some help. I don't know whether we need a full-blown BPR ... study because there are systems in other states that currently exist. They have been existing for a long time regarding laboratory reporting systems. Senator Raggio reiterated his concern a BPR may not be necessary when established programs are available for purchase without the necessity of spending $60,000 for a new design. Mr. Lange responded he would like some technical assistance in addition to that provided by the in-house staff. Senator Raggio opined those working in the laboratory should have the best idea of what is needed. Donald S. Kwalick, M.D., M.P.H., State Health Officer, Health Division, Department of Human Resources, concurred the staff should be the entity most equipped to determine which information system will be best. He offered the opinion it will be difficult to adapt an existing program to the needs of the laboratory. He stated that had been attempted after the last legislative session in which approximately $10,000 was appropriated and the adaptation has not been successful. Ms. Case acknowledged, though she is not intimately familiar with the request by MH/MR, DIS has recommended a BPR for the department and the Health Division is included. Regarding the laboratory, she said, the funds are probably earmarked for a needs-assessment rather than for a BPR which will resolve the issue as to whether packaged software would be appropriate. She asserted the use must be defined prior to purchase of the package. She was unsure whether the defining will be done by DIS staff or under contract. Mr. Lange interjected the basic needs will be defined by Dr. Arthur DiSalvo, director of the state laboratory. Senator Raggio inquired why an expenditure of $60,000 is necessary if Dr. DiSalvo is going to define the laboratory needs. Mr. Lange responded, "If we do need some assistance from DIS, we have to pay them on an hourly rate. Now whether we'll need the entire $60,000, I don't know." In response to a question by Senator Raggio, Ms. Case said the DIS rate range for the next biennium will average approximately $57 per hour, a lower rate than for the past biennium. Senator Raggio suggested the cost be reexamined. Mr. Lange offered to elaborate on the list of equipment (Exhibit K). Dr. Kwalick acknowledged the laboratory already has many of the items, but he explained the equipment will allow for more efficiency and will allow the laboratory to keep up with technological advances. Senator Raggio reported several operators of private laboratories have told him and other legislators that fees charged by the laboratory are lower than those private facilities must charge. He indicated the private sector is concerned that the state laboratory is supported by the General Fund and thus receives an unfair advantage through state subsidization. He invited response. Dr. Kwalick explained: The purpose of the lab is not to compete with the private sector, and I think anything that can indeed be done in the private sector in an efficient way should be done that way. What we are doing is analyzing for more of the required parameters in order to maintain primacy in the Safe Drinking Water Act .... What came out at one of the hearings as far as the amounts of money that we're getting from General Fund for chemistry ... it's about $52,000 in General Fund ... which is really a drop in the bucket, and about half of that goes for clean water and the part for the Safe Drinking Water [Act]. We do take in a bunch of fees. I think you did receive a table ... as to a comparison of various parameters we're testing for, and some we are higher, some we are lower.... Senator Raggio inquired if some laboratory functions should be discontinued because they compete directly with private laboratories. Dr. Kwalick reiterated the primary function of the laboratory is to "maintain primacy" in the Safe Drinking Water Act. He explained the state must certify approximately 60 other laboratories both in-state and out-of-state. He explained the bureau must keep abreast of new technology, travel to other laboratories, and have them submit specimens in order to check their expertise. Senator Raggio questioned whether the state laboratory should be competing by selling a service to the private sector while, at the same time, checking on private laboratories. Dr. Kwalick replied: In order to be able to perform any tests there's a certain critical volume that has to be done, and the people keep up to par with the bench-work that's necessary, the use of the machines, etc. If, indeed, we could do the testing that's necessary to keep that expertise, to be able to certify private labs, both in- and out-of-state, as to their expertise, and at the same time assure that we have the funds to have the staff that's available to do all those things, without having fees, it would be great. But in order to really have the staff that has the technical expertise, we have to charge fees to support the staff to get the equipment to do the test to maintain primacy. Senator Raggio inquired if the fees should be the same as those charged in the private sector. Mr. Lange responded: You could require that.... Our fees are essentially based on recovering costs. Otherwise, if we raise our fees, we could ... be making a profit on the operation. But if we raised our fees, 27 percent of our work load on the chemistry side is for the private sector. The bulk of our work load is for municipal water systems, community-based water systems. But ... if that's this committee's desire, that we raise our fees, again, my problem is I end up with a potential cash-flow problem and not having any reserves behind me.... Senator Raggio asked if Mr. Lange has discussed the matter with private lab operators. Mr. Lange responded only two operators have complained out of the 62 labs the bureau has certified. In the absence of further discussion, Senator Raggio closed the hearing on S.B. 212 and opened the hearing on S.B. 278. SENATE BILL 278: Makes appropriation to state public works board for design of Phase II of Lovelock Correctional Center. Dean S. Borges, Acting Manager, State Public Works Board, pointed out the actual capital improvement project should be listed as 95- C1GovR rather than that set out in S.B. 278, although the figure $790,000 is correct. He distributed a project cost estimate (Exhibit L). He declared the sum is necessary to pay for design fees in order to complete capital improvements and have the facility ready for use by May 1997. He qualified the time by saying the facility will be ready if there are no delays due to a bid protest or the inability of the provider to obtain bonding. Senator Raggio commented a press-release has been issued by the Governor which indicates a third housing unit may be built at the Lovelock facility in addition to the two contemplated under S.B. 278. Mr. Borges responded the design for the third unit is included in the cost as proposed under project 95-C1GovR. Senator Raggio inquired if the cost will change with the addition of the third unit. Mr. Borges replied, "It has. We've adjusted the design to include that, and it does. What we're presenting here is the budget number that our designer we hope to hire would be involved in." He admitted some additional fees may be needed to accommodate expansion of the sewer lagoon and the addition of a water storage tank for the extra building. He added there may be extra fencing and guard towers required for the additional building. He confirmed the $790,000 will provide planning for three housing units and the additional described facilities. Mr. Borges pointed out the measure is being presented as an accelerated request and an advantage will be obtained through early approval of S.B. 278. He pointed out the Governor has indicated the need for accommodations for the prison population which is growing at a rate of 12.6 to 12.8 percent. Senator Raggio inquired if the funding will be adequate for all the documents, plans and specifications to put the project out to bid. Mr. Borges replied everything for the three buildings, the tower and the fencing should be ready for bidding by mid-September. Senator Raggio recalled a discussion there may be savings realized for the design expense since it will be a reverse of the existing plans. He asked if negotiations are being undertaken due to a requirement that architectural services cannot be put to bid and if the services of the same architect will be utilized for the expansion. Mr. Borges concurred and said discussions are under way with the architectural firm of Sheehan-Van Woert, who drew the previous phase, and they agree they have some advantage and will reduce the estimate by nearly half of the original CIP proposal. In response to Senator Raggio's suggestion the amount should be reduced, Mr. Borges replied, "That's a budgeted amount. I hope to reduce it. I don't know how to get it exact unless we have the money to negotiate with it first." Senator Raggio remarked once the architectural firm learns $790,000 has been appropriated, the price may be $790,000. He pointed out the state is captive to the one firm. Mr. Borges declared he does not propose to spend the entire $790,000. Senator Mathews asked if the additional buildings will be necessary if prison terms are lower and many inmates will be paroled earlier as projected. Mr. Borges responded buildings will be constructed according to needs. Robert E. Bayer, Director, Department of Prisons, stated projections are based upon a parole rate of 35 percent, including short-term and long-term paroles, which are considered in the determination for construction needs. He provided projections for in-house populations (Exhibit M). Senator O'Donnell asked what the current parole rate is. Mr. Bayer replied the last figure he has shows the rate at 29 percent, up from a previous rate of 22 percent. Senator Raggio inquired if a revised prison budget has been developed. Mr. Bayer replied parts have been furnished to the Legislature, but the completed budget has not been made available. Bob Guernsey, Principal Deputy Fiscal Analyst, interjected the revised budget is being prepared by the Budget Division and should be made available early in the coming week. Senator Raggio voiced his chagrin over having been informed 2 days earlier by the budget director that no final figures regarding the estimated number of inmates over the biennium would be available until the end of the week, although he was told there may be an increase of about 200. He said an hour later he received a press release from the Office of the Governor which indicated the estimate is 400. He asked if the additional number of inmates has actually been determined. Mr. Bayer replied the department has determined there will be 408 additional prisoners by the end of the biennium. He distributed a graph and list of projections (Exhibit N) depicting the projections. He stated the prison population is projected to grow by 361 to the end of June 1996 and by 408 to the end of June 1997. He indicated the total population is forecast to be 8,015 by the end of June 1997 with a parole grant rate of 35 percent. In response to a query by Senator Raggio, Mr. Bayer confirmed the figures on Exhibit N had been prepared by the National Council on Crime and Delinquency (NCCD), including the 408 additional inmates, prepared 10 days ago. Referring to the Governor's press release, Senator Raggio voiced his understanding the Department of Prisons intends to request funding for an additional conservation camp. Mr. Bayer affirmed the statement and indicated it will require an additional capital expense of approximately $8.5 million for the housing units plus another $4.4 or $4.5 million for the conservation camp for a total of nearly $14 or $15 million in capital expenditures. Senator Coffin asked what has happened to explain the projected increase in the number of convictions. Mr. Bayer responded: After we made our first appearance, and our projections and our budget was based on a 40 percent parole rate, and the joint committee accurately saw that we were not coming close to that 40 percent rate, and so we were tasked with re-drawing our budget. We were waiting for some indication from the parole board, in terms of what rate they felt they would be able to achieve, and so after a certain period of time what I decided to do was to have NCCD run it at about five different rates, which I did. And so, if you see a preparation date, what happened basically was we got five different runs back, and then I needed to wait until I had an answer as to what the projected parole was going to be, because that was the last element to plug in.... In terms of what makes up the projection, you're looking at a variety of things. I think that the big difference here ... was ... the parole rate, but ... from ... the biennial report from parole and probation ... their sentencing ... in the last couple of years has dramatically increased. And NCCD did not have that information available, did not plug that in to their December projections. And when ... they re-forecast with that as well as the different rates, then you saw a difference from what we anticipated last December. Senator Coffin asked if NCCD uses in its calculations the 6-year cycle of convictions and sentencing rates that comes about during election years. Mr. Bayer voiced his understanding the cycle is taken into consideration. Robin Bates, Chief, Classification and Planning, Department of Prisons, confirmed the query. He said an average of sentencing practices over a long period of time is taken into account by the NCCD. Senator Raggio inquired what the increase in the number of inmates will be if the parole rate projection were 5 percent lower, at a rate of 30 percent. Mr. Bayer was unable to give him an answer, but agreed to provide the information. Senator Raggio asked when the negotiations with the architects will be complete. Mr. Borges responded the negotiations should be complete within a couple of weeks. Pointing out S.B. 278 can be processed at any time, Senator Raggio asked Mr. Borges to report the results of the negotiations back to the committee before the committee takes action on the bill. Mr. Borges agreed to do so. Senator Coffin pointed out there will be two major crime bills on truth-in-sentencing. He asked if a fiscal note has been presented to the Senate Committee on Judiciary regarding the impact of the proposed truth-in-sentencing measures and whether those measures will increase sentencing time. Mr. Bayer replied he is unsure what the net increase will be based upon the proposals. He acknowledged the projections in Exhibit N are based upon the Governor's proposal, but proposals regarding truth-in-sentencing under consideration by the Senate Committee on Judiciary are not included. He declared NCCD has been notified they will be provided with a final copy of the bill from which they will make projections. He said the fiscal note has not been prepared. Senator Coffin asked if the Governor's bill includes a component for truth-in-sentencing or if it contains only provisions for a sentencing commission. Mr. Bates replied the Governor's bill does not propose reform with the exception of the habitual criminal statute. He said the bill proposes that a full-time sentencing commission address reform during the interim rather than spelling out truth-in-sentencing provisions. Senator Coffin explained he was attempting to determine how much of the difference came about as a result of the Governor's proposed legislation. Mr. Bates responded the projections in the exhibit are based upon present laws and policies, with two exceptions. He described those as being two programs included in the Executive Budget which propose to divert low-risk offenders from prison. He said in one case the residential confinement act will be expanded and in the other it will divert probationers from prison through the establishment of life-skills programs in communities. He affirmed the assumptions built into the Executive Budget in those two cases will result in reductions and thus the Governor's budget is reflected in the projections and the Governor's proposal will not change the numbers. Mr. Bayer explained the formula has been adjusted to reflect that during July 1995 there will be approximately 111 inmates in residential confinement who otherwise would have been in prison. In January 1996, he said, there will be 115 inmates in residential confinement programs who would have been in medium security beds. He stated the projections for the life-skills program for January 1996 should divert approximately 54 inmates from the prison population and those projections are included in the figures in the exhibits. Senator Coffin calculated there will be approximately 200 people who will no longer be inmates and will be under other programs at the end of June 1996, or 500 if the legislation is not passed. Mr. Bates explained the proposed pieces of legislation will add to the figures in Exhibit N. Mr. Bayer interjected the effect will be cumulative because some prisoners will have been diverted in each of the preceding months to other programs and the terms of some will have expired, making it difficult to project an exact number at a specific point in time. Senator Raggio asked if the $790,000 was included in the numbers depicted on Exhibit L showing projections for the Lovelock facility for A/E Design and Supervision at $1,563,879 in Fiscal Year (FY) 1994 and $1,642,073 in FY 1995. Mr. Borges declared the figures cited are correct for project number 95-C1Gov, but a revised estimate has been made as project number 95-C1GovR. Referring to the A/E Design and Supervision line item, Mr. Borges said, "The one ... normally would be our 5 percent range is what they would be asking for in that category." Senator Raggio asked, "Is this money, $790,000, ... part of the A and E Design and Supervision amount that is in the project cost estimate?" Mr. Borges replied, "That's for the total construction of all those buildings and such. This is only for the design portion so the construction management isn't in the ... dollars that we're talking about for the bill." Roger E. Grable, Deputy Manager, Administration, State Public Works Board, Department of Administration, stated, "The amount of money that you see on [95-]C1Gov has been revised by [95-]C1GovR, and [95-]C1GovR represents building units 3, 4 and 5." He acknowledged project number 95-C1Gov on Exhibit L does not include the latest version of the proposal for the Lovelock Correctional Center. He said the $790,000 includes the design services for building units 3, 4 and 5 as well as changes to the water and sewer systems. Senator Raggio inquired what the new figure is for the line item A/E Design and Supervision under project 95-C1GovR. Mr. Grable replied, "The number that is there is reduced by the amount of this design fee." Mr. Borges stated the new figure should be reduced by $772,214 for 1996. Senator Raggio asked if the $790,000 had been removed from the figure cited. Mr. Grable replied: It has had the $790,000 removed. It has had certain additional fees added to it for the management side of the construction for the addition of sewer farms and an additional water system. So it won't reflect straight across in mathematics. Mr. Grable said the fee was negotiated after 2 days of talking with Sheehan-VanWoert regarding the design fees. He stated if the water and sewer systems are adequate for the additional load, the design fee may be reduced. He said the agreement with Sheehan-VanWoert will contain those conditions, and if the architectural firm finds no changes are necessary through early studies of health and fire safety under the new codes, the fee will be reduced. He pointed out the safety codes have changed since the original plan was drafted in 1987, which is why some changes are necessary. In the absence of further testimony, Senator Raggio closed the hearing on S.B. 278 and commenced the work session. SENATE BILL 146: Makes appropriation to state board of examiners to restore balance of certain accounts. Senator Raggio noted the emergency account for stale claims from the Mental Hygiene and Mental Retardation Division is included in the measure. He said the Assembly amended the bill with amendment No. 102 which increases the stale claims account by $418,593.27. Mr. Miles distributed a letter from Janet Johnson, Deputy Budget Administrator (Exhibit O) which includes an explanation of the increase in stale claims. Mr. Miles said Ms. Johnson had been unaware of those claims when the bill was first considered in the Senate. SENATOR O'DONNELL MOVED TO CONCUR WITH ASSEMBLY AMENDMENT NUMBER 102 TO SENATE BILL 146. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 278: Makes appropriation to state public works board for design of Phase II of Lovelock Correctional Center. SENATOR JACOBSEN MOVED TO DO PASS SENATE BILL 278. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 211: Makes appropriation to mental hygiene and mental retardation division of department of human resources for certain equipment and refurbishment of facilities. SENATOR O'DONNELL MOVED TO AMEND AND DO PASS SENATE BILL 211 BY REDUCING THE APPROPRIATION ON LINE 3 TO $707,342. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * ASSEMBLY BILL 193: Makes appropriation to University and Community College System of Nevada for Cheyenne and West Charleston campuses of community College of Southern Nevada. Senator Rawson announced he would abstain from any discussion and from the vote. SENATOR COFFIN MOVED TO DO PASS ASSEMBLY BILL 193. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAWSON ABSTAINED FROM THE VOTE.) * * * * * Senator Raggio stated he would hold S.B. 210 , S.B. 218 and S.B. 208 for the time being. SENATE BILL 148: Makes supplemental appropriation to state board of parole commissioners for retroactive retirement contributions. Mr. Miles reminded the committee they had requested information on contributions made by the member of the parole board for whom the measure was drawn. He provided copies of a letter (Exhibit P) in response to the query and noted the statutes require contributions be made on behalf of all public employees who belong to the Public Employees' Retirement System. SENATOR JACOBSEN MOVED TO DO PASS S.B. 148. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 149: Makes supplemental appropriation to department of education for expenses related to residential and educational needs of children with disabilities. Senator Raggio called attention to a memorandum dated March 15, 1995 (Exhibit Q) indicating the appropriation may be reduced to $603,311. Senator O'Donnell announced he would abstain from the vote because his wife teaches homebound students. SENATOR RAWSON MOVED TO AMEND AND DO PASS SENATE BILL 149 BY REDUCING THE SUPPLEMENTAL APPROPRIATION TO $603,311. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR O'DONNELL ABSTAINED FROM THE VOTE.) * * * * * SENATE BILL 15: Provides that travel allowance for members of board of regents be computed at rate provided for state officers and employees generally. Mr. Miles presented copies of a memorandum (Exhibit R) from Richard S. Jarvis, Chancellor of the University and Community College System of Nevada opposing an amendment that was offered by Mr. Gagnier. Senator Rawson asked for an explanation of the purpose of the bill. Mr. Gagnier explained the bill will provide the same mileage rate for regents as that provided for other state officers, but the university wants to maintain a higher per diem rate. He acknowledged the regents presently receive a lower mileage rate, but a higher per diem rate than other state employees. Senator Raggio interjected the regents do not receive salaries. Mr. Gagnier responded he only wished to address the per diem issue. He suggested the statute be changed to allow mileage and per diem in accordance with other state officers and employees. SENATOR COFFIN MOVED TO DO PASS SENATE BILL 15. SENATOR JACOBSEN SECONDED THE MOTION. Senator Coffin voiced sympathy for the request in the memorandum which points out the low per diem paid to state employees. He expressed his sense of obligation to the Board of Regents who do not receive other compensation. Senator Raggio suggested S.B. 15 be considered only regarding travel allowances and the other issue should be considered separately. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 117: Authorizes financing of parking facilities with certain revenue bonds of University and Community College System of Nevada. Senator Raggio called attention to an amendment proposed in a memorandum from John Swenseid (Exhibit S) dated March 10, 1995. He asked Mr. Miles to explain a further amendment that had been requested. Mr. Miles explained the University of Nevada, Reno, wants to raise the bonding authority from $10 million to $12 million to allow an opportunity similar to that which will be provided at the request of the University of Nevada, Las Vegas. Senator Raggio requested Mr. Miles prepare one amendment to cover both requests and bring it back for action later. Mr. Miles pointed out the memorandum from Mr. Swenseid requests not only an increase from $10 million to $17,500,000, but also it extends the time in which the bonds may be issued by 4 years. The committee took no action on S.B. 117. SENATE BILL 200: Makes appropriation to commission on ethics for certain equipment. SENATOR RAWSON MOVED TO DO PASS SENATE BILL 200. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 209: Makes appropriation to division of economic development of commission on economic development for replacement of telephone system. SENATOR O'DONNELL MOVED TO DO PASS SENATE BILL 209. SENATOR RAWSON SECONDED THE MOTION.. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 213: Makes appropriation to welfare division of department of human resources for replacement of room dividers and office equipment. SENATOR RAWSON MOVED TO DO PASS SENATE BILL 213. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 222: Makes appropriation to division of state lands of state department of conservation and natural resources for equipment. Senator Rawson recalled the intention to reduce the measure by $400 for a total appropriation of $24,350. Mr. Miles reported the appropriation will provide new computers, video camera, binoculars, surveying instruments and storage cabinets. SENATOR RAWSON MOVED TO AMEND AND DO PASS SENATE BILL 222 BY REDUCING THE APPROPRIATION TO $24,350. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 223: Makes appropriation to channel clearance account. Senator Raggio called attention to an amendment (Exhibit T) proposed to incorporate requests made by the State Engineer. Senator Rawson recalled the State Engineer proposed the Interim Finance Committee (IFC) be given authority to replenish the fund, which he speculated may have draws in excess of $50,000 in the coming months due to flood channel damage. The amendment will allow the IFC to replenish the account from contingency funds. Senator Raggio asked how much will be authorized to replenish the fund. Mr. Miles responded historically the fund has been replenished to the $50,000 level. He said the proposed amendment would have been approved as a bill by the administration had it met the statutory deadline for bill draft requests. He explained none of the language has been changed from that submitted by the State Engineer. Senator Rawson expressed concern the amendment might open a "floodgate" and leave no option other than to repeatedly replenish the fund under the proposed changes for section 2, subsection 2, paragraph (e). Mr. Miles explained the purpose for the section cited is to allow going to a statutory contingency fund in the case of an emergency involving the protection of life or property. He noted the statutory contingency fund is administered by the State Board of Examiners, which is more accessible than the IFC, should the need arise. He pointed out the fund has not been used often over the past several years, although it has been accessed more frequently of late. Senator O'Donnell expressed doubt there is a need for the measure. He opined the bill might allow access to the fund without any oversight from the legislative process. Senator Raggio said he would ask for clarification before taking any action. Senator Coffin pointed out the state is responsible for the bottom of the base of the channels, but not for the sides, frustrating farmers who cannot clear the bottoms of channels. Senator Jacobsen noted the fund has never been open-ended although it has been used in many areas, mostly rural. Senator Raggio reiterated his intention to pursue the matter further. Senator Jacobsen suggested a letter be sent encouraging use of prison industries in such matters. Senator O'Donnell added there may be inmates in the prison system with technical backgrounds whose services could be utilized in a repair shop for many of the items which cost the state large sums for repairs. Senator Rawson countered the prison industry has avoided involvement with computers "because they've been very creative with computers and have probably committed significant crimes with them." He suggested community colleges might provide a better source for repairs. He commented many agencies are reluctant to work through prison industries under the misunderstanding all prison industry furniture is made of wood. Senator Raggio stated caution must be used in putting prison industry into direct competition with legitimate businesses. Senator Jacobsen voiced concern the state may be accumulating an excess of computer equipment. He noted there are computers from the community colleges that have been stored at the Stewart Facility for several years which are deteriorating due to a leaky roof. He suggested they should be disposed of if they are not being used. He recalled distributing approximately 250 air conditioners from the Stewart Facility to honor camps and other sites where they have been utilized. There being no further business to come before the committee, Senator Raggio adjourned the meeting at 10:50 a.m. RESPECTFULLY SUBMITTED: Judy Jacobs, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance March 23, 1995 Page