MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session March 30, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Thursday, March 30, 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 Mary A. Matheus, Local Government Budget Analyst Jeanne L. Botts, Program Analyst Marion Entrekin, Committee Secretary OTHERS PRESENT: Richard T. Gleed, Association Representative, State of Nevada Peace Officers Association Robert E. Dickens, Ph.D., Director, Governmental Relations and Economic Development, University of Nevada, Reno Larry H. Eardley, System Budget Officer, Finance, University of Nevada, Reno Jack N. Armstrong, D.V.M., Chief, Bureau of Animal Industry, Agriculture Division, Department of Business and Industry Michael A. Pitlock, Executive Director, Department of Taxation Peter G. Morros, Director, State Department of Conservation and Natural Resources Patrick Ross, Chief Pilot, Division of Forestry, State Department of Conservation and Natural Resources Mary Peterson, Superintendent of Public Instruction, State Department of Education Kevin Crowe, Director, Planning, Research and Evaluation, State Department of Education Senator Raggio requested introduction of the following bill draft request (BDR). BILL DRAFT REQUEST 27-1833: Transfers duty to pay construction costs of purchasing warehouse building in Reno, Nevada, from purchasing division to buildings and grounds division of department of administration. SENATOR JACOBSEN MOVED TO INTRODUCE BDR 27-1833 SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR O'DONNELL WAS ABSENT FOR THE VOTE). * * * * * Senator Raggio indicated that Richard T. Gleed, Association Representative, State of Nevada Peace Officers Association, wished to introduce BDR 23-755 and BDR 23- 752. BILL DRAFT REQUEST 23-755: Requires reimbursement of peace officer employed by state for required clothing and accessories damaged in performance of duties. Mr. Gleed said the essence of BDR 23-755 is to provide the legal authority for the state to reimburse uniformed and plain-clothed state peace officers for clothing or uniforms lost or damaged in the course of their employment. Senator Raggio asked if the provision would be in addition to the uniform allowance peace officers now receive. Mr. Gleed responded in the affirmative. He added the uniform allowance is for the purchase or maintenance of uniforms or clothing, but does not include the loss of the clothing item due to an unusual circumstance. Senator Raggio asked if a Fiscal Note has been requested for BDR 23-755, and Mr. Gleed responded he believed one had been requested but he did not have it available. Senator O'Donnell joined the meeting at 8:20 a.m. SENATOR RAWSON MOVED TO INTRODUCE BDR 23-755. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * BILL DRAFT REQUEST 23-752: Expands list of officers eligible for early retirement. Senator Raggio stated the BDR relates to the Public Employees Retirement System (PERS) and revises the definition of peace officer for eligibility for early retirement by extending it to all full-time positions in the Bureau of Enforcement of the Registration Division of the Department of Motor Vehicles and Public Safety, Public Service Commission of Nevada, and the Taxicab Authority. Mr. Gleed remarked the BDR addresses three state law enforcement agencies that carry on a range of law enforcement activities, and involves approximately 50 employees who may be eligible for early retirement. Senator Raggio said over the years the issue of early retirement has been under close scrutiny for many units of state employment, including peace officers. He recalled an extensive study in which representatives of the PERS were involved resulting in a list of agencies included in the early retirement provisions. Senator Raggio asserted he does not see a reason to depart from studies and recommendations made within the last 4 - 6 years by the Legislature regarding early retirement, and would be disinclined to have a bill introduced to augment previous studies. He suggested Mr. Gleed may wish to review the studies that have been made concerning the issue of early retirement. Mr. Gleed commented although the study Senator Raggio referred to may have reflected an accurate assessment at the time, due to ensuing sessions and changes that have taken place in law enforcement and within state agencies, another assessment should be made. Senator Raggio opined, "Once we open the door, then everybody wants to be considered for early retirement." Senator Coffin asked Mr. Gleed who had the BDR drafted, and Mr. Gleed responded the State of Nevada Peace Officers Association was granted permission by the Legislative Commission to have the BDR prepared. Senator Coffin asked how long the association has had the authority to ask for bill drafts. Mr. Gleed answered, "This is the first time." Senator Coffin stated he does not like having organizations request bill drafts since he believes the process should be done through a legislator to represent the issue involved. Although he believes the association should not have the privilege to request bills, he said testimony should be heard on the issue requiring an actual bill to be introduced. Senator Coffin asked if the bill draft has been introduced to any other legislative committee. Mr. Gleed replied to his knowledge the BDR is not before any other committee. Senator Raggio said the committee has already turned down requests made by Mr. Dennis Healy, the attorney representing the State of Nevada Peace Officers Association, due to the results of past studies and the cost to the state to contribute to an early retirement program. SENATOR COFFIN MOVED TO INTRODUCE BDR 23-752. Senator Raggio noted the motion failed for lack of a second. He opened the hearing for discussion of Senate Bill (S.B.) 205 which was taken out of agenda order to accommodate the schedule of those wishing to testify before the committee. SENATE BILL 205: Makes appropriation to University and Community College System of Nevada for scholarships for students. Robert E. Dickens, Ph.D., Director, Governmental Relations and Economic Development, University of Nevada, Reno, testified S.B. 205 requests a one-shot appropriation that has been recommended by the Governor for $7 million to fund financial aid throughout the university system. Senator Rhoads asked if a one-shot appropriation for financial aid assistance had ever been considered in the past. Dr. Dickens responded the university system has not previously received a one-shot appropriation for student financial aid, which would be a new variety of funding for higher education in the State of Nevada. He pointed out that many other states do have state scholarship support from the General Fund. Dr. Dickens commented a portion of the revenue was derived from the system's last student fee increase which occurred as a result of budget cuts. At that time, an agreement was made with the students that approximately one-half of their fee increase would be set aside for what is termed "access dollars, student financial aid," and some of the $7 million includes access funds that were set aside. Senator Rhoads asked for a break out of the access fees that are included in the $7 million recommendation. Dr. Dickens agreed to submit the requested information. He explained S.B. 205 is an appropriate request due to the increasing cost of education and the increasing loan burden on the students to finance higher education. Senator Rhoads asked if any of the $7 million would be used for out-of-state students, and Dr. Dickens replied, "Not a penny." Larry H. Eardley, System Budget Officer, Finance, University of Nevada, Reno, testified the portion of the student access or student financial assistance funds that the university would calculate over the biennium using projected enrollments, registration fees and increased nonresident tuition would generate approximately $4.4 million over the biennium. He stated the $4.4 million is above and beyond what the Governor has recommended in the Base Budget. Senator Rhoads asked if the $7 million is all state revenue and not revenue from student fees, and if the $4.4 million is in addition to the $7 million for a total of $11.4 million. Mr. Eardley replied the $7 million is all General Fund revenue and does not include student fees. The $7 million would be used to cover scholarship amounts. Senator Raggio interjected approximately $5 million is included in the Base Budget each year of the biennium for scholarships plus an additional $800,000 each year for out-of-state waivers. He remarked the message has been clearly sent that if S.B. 205 is approved, it will be a one-shot appropriation only and will not be reflected in the Base Budget in the future. Dr. Dickens stated this has been discussed at length, and the intent of the one-shot appropriation is completely understood. Senator Mathews asked if the one-shot appropriation will be used for scholarship purposes only, and not to finance grants or work studies. Dr. Dickens confirmed the appropriation would only be used for scholarship purposes. Senator Raggio noted the university system would like to be able to utilize one-half of the $7 million during the next academic year. He asked if $3.5 million is appropriated, what will be the time frame to award the scholarships. Dr. Dickens replied the time frame is March 1 to April 15. The concern is granting the award to a financial aid recipient while suggesting the award is contingent upon legislative action. Senator Raggio asked if the $3.5 million is appropriated, what will be the proposed allocation of the funding. Mr. Eardley responded the University of Nevada, Reno, will receive $1.2 million, the University of Nevada, Las Vegas, $1.5 million, the Community College of Southern Nevada $430,000, the Truckee Meadows Community College $203,000, the Western Nevada Community College $112,000, and the Northern Nevada Community College $64,000. Senator Jacobsen stated he is not happy with the request for a $7 million one-shot appropriation, even if the Governor recommended it. He said before he would vote for passage of S.B. 205, he would have to see some type of written justification. Dr. Dickens replied the written justification will be furnished to the committee. He reminded Senator Jacobsen the justification was covered in detail during a recent joint subcommittee meeting. Senator Raggio closed the hearing on S. B. 205 and opened the hearing on Assembly Bill (A.B.) 127. ASSEMBLY BILL 127: Makes supplemental appropriation to division of agriculture of department of business and industry for additional veterinary medical services. Jack N. Armstrong, D.V.M., Chief, Bureau of Animal Industry, Agriculture Division, Department of Business and Industry, said the division overspent their budget during Fiscal Year 1993 - 1994 by $2,197.62. He said this occurred because the division's accounting section was several months delinquent in processing expenditures. The division also experienced a shortfall in actual revenue collections, Dr. Armstrong said. Dr. Armstrong distributed Exhibit C to the committee, which identifies the amount that was overspent, the vendors the division must reimburse, and the amount of shortfall experienced. He also distributed Exhibit D, an internal audit report dated January 27, 1995 from the Agriculture Division, and Exhibit E, Statement of Operations, which Dr. Armstrong said is the veterinary service's attempt to prevent deficit spending in the future. Dr. Armstrong remarked A.B. 127 provides a supplemental appropriation of $2,198 to the Agriculture Division of the Department of Business and Industry for payment of Fiscal Year 1993 - 1994 expenditures in the Veterinary Services Budget. Senator Raggio admonished although there may be alibies there are no excuses when it comes to overspending a budget. He accepted the fact Dr. Armstrong has provided the committee with his assurance the budget will be monitored so that a similar situation will not occur in the future. He asked Dr. Armstrong if he is now satisfied with the budget as presented. Dr. Armstrong replied he is satisfied with the budget as presented. He commented as a result of the division's budget-tracking system now in place, he is confident an overspend will not occur in the future. Senator Raggio closed the hearing on A.B. 127 and opened the hearing on Assembly Bill (A.B.) 128. ASSEMBLY BILL 128: Makes supplemental appropriation to department of taxation to offset revenue shortfalls and for additional data processing expenses. Michael A. Pitlock, Executive Director, Department of Taxation, testified A.B. 128 will provide funding of $1,510,223 from the state General Fund to the department to allow them to continue to operate after April 30, 1995. He stated the request is before the committee solely because of the failure of the Combined Audit Program. Mr. Pitlock reported there are two major elements of revenue that were dramatically affected by the Combined Audit Program. The first is the revenue that was designated in the budget for Fiscal Year 1994 - 1995 to be received by the department from the State Industrial Insurance System (SIIS). In the approved work program, the department was to receive approximately $1.2 million in exchange for performing 4,704 audits of SIIS. Mr. Pitlock reported the actual production to date, plus estimates of what the Department of Taxation can perform for the remainder of the fiscal year, will bring them to the point of only performing approximately 1,200 audits to generate revenue of only $320,000. This segment of the shortfall is in excess of $900,000, Mr. Pitlock stated. Secondly, in addition to the shortfall from nonperformance relative to the SIIS audits, Mr. Pitlock stated a similar situation exists with respect to the Employment Security Division (ESD). The authorized work program called for the performance of 1,944 audits that would have generated almost $450,000 for the department. The department's projections will bring them to approximately 598 audits that will actually be billed and attributable to Fiscal Year 1994 - 1995, and will generate only $136,000 creating a shortfall in excess of $300,000. Between the two items, Mr. Pitlock said the revenue for the department has fallen short by $1.2 million. In addition to the shortfall in the revenues, the Combined Audit Program also added to the department's expenditures, Mr. Pitlock said. In the area of data processing, the department was required to secure approximately $100,000 of additional equipment that was needed in order to interface with the ESD system and perform the ESD audits. Mr. Pitlock pointed out this, combined with approximately $75,000 of unanticipated on-line charges for the testing of the department's new Automated Collection Enforcement System (ACES) program, resulted in a shortfall of approximately $180,000 in the data processing area. The department also had a small overexpenditure in payroll and in other operating costs, some of which were associated with an unanticipated move of the department's offices that occurred in September 1994, and an increase in postage rates. In summation, Mr. Pitlock announced the Department of Taxation's budget is approximately $1.5 million short for Fiscal Year 1994 - 1995. Senator Raggio alerted Mr. Pitlock that some members of the Senate Committee on Finance may not be aware of the agony that was endured in the interim by some of the committee members following the audit experiment. He informed the committee the goal of the Combined Audit Program was to improve efficiency and through revenue collections from ESD and SIIS, generate General Fund savings of $1.5 million over the 1993 - 1995 biennium. He remarked: This was a highly troublesome matter. It was an ill-fated experiment from the beginning and one that this Legislature was reluctant to embrace, but did so upon the urging of the administration. Very frankly, the Legislature was lulled along by a previous spokesman for the Department of Taxation to believing the goals were reachable notwithstanding what they termed a slow start. I think overall the loss is greater than we ever expected...$14 million we probably will never recover. Mr. Pitlock concurred with Senator Raggio `s comments and said the loss to the state in total goes well beyond the $1.5 million that was a direct impact upon the department's operating budget. There were significant lost opportunities to recover sales and use-tax revenue that Mr. Pitlock believes would have been recovered had the attention of the auditors not been diverted from their principal duties relative to sales and use-tax audits. Mr. Pitlock pointed out the auditors were forced to place their efforts into a Combined Audit Program that was just not going to succeed. Senator Rawson observed the auditors themselves could see the problems that were developing, and knew a shortfall would occur. He said what is disturbing is the individuals responsible were not able to intercept and prevent the occurrence. He would like assurance somebody in authority will listen to employee concerns. Senator Rawson asked, if appropriated, will the $1.5 million solve the problem because he does not wish to approve the appropriation if the problem will be ongoing. Mr. Pitlock responded the Combined Audit Program has been dramatically altered and the department will not "throw good money after bad." The proposed budget for the next biennium would only require the completion of 55 combined audits, which is a dramatic change. In earlier testimony, Mr. Pitlock said he characterized the future Combined Audit Program as a pilot program that will be scaled back to a manageable size to determine, after a 2-year study, if it should be continued. In information submitted to the Fiscal Analysis Division of the Legislative Counsel Bureau, Mr. Pitlock indicated if, within the next 2 years, it appears the department is wasting time performing, the 55 audits, he will immediately stop the program to prevent wasting revenue on a program that will not succeed. Senator O'Donnell stated he would like to track the agency transfers of revenue from SIIS and ESD. He asked if any other agency transfer or General Fund revenue is being placed in the sales tax area to perform audits. Mr. Pitlock responded the combined audits were to be funded by a fee per audit that was to be transferred from SIIS or ESD, depending upon which audit was being done. Senator O'Donnell remarked the collection of sales tax was transferred into a program whereby ESD, involving federal funds, and SIIS, involving employer funds, paid the sales tax collection. He commented: We are looking at putting in $1.5 million from general funds to supplement your budget. I want to know if in the future this is going to change. If you are not going to be performing combined audits, why should the employers of the state, and why should the federal government pay for this? Why should not the General Fund pay for this? Mr. Pitlock responded in the future the only revenue that will be transferred from SIIS or ESD to the Department of Taxation will be for the 55 combined audits that are performed. The rate for one SIIS audit is $263.90 while the rate for an ESD audit is $228.59. He pointed out if the numbers are multiplied by 55, a very small amount of money will be involved in the future. He remarked the Combined Audit Program requested 4,700 SIIS audits to be performed in the current fiscal year which is an unreasonable number of audits and involved a significant amount of revenue. He pointed out the actual performance was nowhere near what the optimistic projections were, and the revenue never flowed from SIIS to the department. Mr. Pitlock confirmed it is not a situation whereby SIIS or ESD has been paying for the collection of the sales tax. Although it has suffered significantly, Mr. Pitlock said the collection of sales and use tax through the audit process has been funded by the General Fund as it should be. Senator O'Donnell asked if the department is expecting to collect $500,000 from SIIS and ESD. He referred to a memorandum (Exhibit F) from Mary Matheus, Local Government Budget Analyst, to the Department of Taxation, dated March 29, 1995, in which he noted $576,994 should have been generated for SIIS and ESD audits. He asked if the $576,994 is the revenue the state can expect to receive between now and the end of the current fiscal year. Mr. Pitlock advised Senator O'Donnell he can provide updated amounts. He stated when A.B. 128 was heard by the Assembly Committee on Ways and Means the department provided updated information that changed the mix of the shortfalls and also changed the total amount. At the present time the department is projecting to receive revenue of $321,000 from SIIS and $167,000 from ESD in exchange for providing audit service to the agencies. He stated this is in comparison to $1.2 million budgeted to be received from SIIS and $446,000 budgeted to be received from ESD. Senator O'Donnell said if the state anticipates to receive approximately $500,000 from SIIS and ESD for audit services, the shortfall on the two elements is $1.2 million. He asked what the outlook will be in the next year of the biennium. Mr. Pitlock stated the revenue the department will receive of approximately $500,000 will get them through June 30, 1995. In the upcoming biennium, Mr. Pitlock said the Combined Audit Program, the source of the problems, has been revised downward to a pilot program that will only call for the completion of 55 audits as opposed to the 4,700 SIIS audits and almost 2,000 ESD audits that generated the numbers in the current fiscal year. Mr. Pitlock said the financial risk to the state is, therefore, minimized. Senator O'Donnell asked, "You are looking at a $700,000 differential that I can see. How are you going to make that up? What is going to happen to the $700,000? How are you going to change your audits?" Mr. Pitlock responded the department will return to being funded through the General Fund. The goal of the Combined Audit Program was an attempt to be more efficient in the use of the auditors to bring revenue into the General Fund as opposed to paying for the auditors with General Fund resources, which was a failure. Senator O'Donnell recalled the state had revenue set aside for a combined audit tax program, possibly a computer program. Mr. Pitlock said there was not a computer program specifically for the Combined Audit Program, but there was computer equipment that needed to be secured in order to perform the audits. Mr. Pitlock commented the ESD has their own mainframe, and the auditors had to be able to interface with the mainframe with the laptops used in the field, that required the department to secure additional equipment which amounted to approximately $100,000 and is included in the $1.5 million shortfall. Mr. Pitlock said the effect on the shortfall from the department's programming efforts had to do with some on-line charges for the implementation of the ACES program not related to the Combined Audit Program. He stated the department incurred approximately $75,000 in additional on-line charges as they continued through the testing and implementation of ACES which is included in the $1.5 million shortfall. Senator Raggio asked Mr. Pitlock to advise the committee regarding the current status of the department, and the outlook for the next biennium. He explained there have been major internal difficulties, concerns, morale problems, and missions that need to be identified. Mr. Pitlock said as he began his review of the department, he has been impressed by the staff, particularly the audit staff. He determined after discussion with the audit staff that employees ignored their concerns over the last year. He pointed out the auditors knew the Combined Audit Program would not work but were forced to continue the effort of "fitting a square peg into a round hole." Mr. Pitlock said the staff is aware of the changes being made in the Combined Audit Program, and morale within the department has greatly improved. Senator Raggio verbalized: I received communications, some identified some not, during the course of the problems emphasizing what you are saying. In my own opinion there were instances in which some people were made scapegoats for the failure of the administration. In all fairness, I think somebody ought to revisit some of the individuals that were made scapegoats for the situation. Mr. Pitlock reported one of the first actions he took upon his arrival to the department involved personnel evaluations that he believed to be unfair, and he reversed the actions taken. Senator Mathews suggested an evaluation be provided next year to the Interim Finance Committee (IFC) rather than wait 2 years for an update. Senator Raggio agreed, and invited Mr. Pitlock to appear before the IFC as he deems necessary to keep the committee informed regarding the status of the Department of Taxation. He commented, "I do not think you, the administration, or the Legislature wants things to get out of hand again." Mr. Pitlock replied he would welcome the opportunity to appear before the IFC at periodic intervals. Senator Raggio asked when the department will begin to see an improvement from the loss of sales tax and other revenue. Mr. Pitlock responded after reviewing the monthly reports pertaining to the recovery of sales and use tax, he has already seen a turnaround in the numbers, and the department is projecting sales and use tax recoveries of approximately $20 million for the first year of the next biennium. He stated this will place the department back to a level about equal to the year prior to the implementation of the Combined Audit Program. Senator Raggio commented, "It is inconceivable that those in charge either did not see this coming or would not admit to it." Mr. Pitlock replied in reviewing all of the information, he also cannot understand why someone from the Department of Taxation did not stand up and say, "We have to stop this thing. It is just not going to work. I do not know why that was not done." Senator Coffin provided the following background information: In 1991, I proposed a bill to create language in the statutes that would allow the sharing of information between departments, specifically taxation, SIIS, and ESD, so that when an auditor went into one person's place of business they would create a spreadsheet of numbers that would be used by other agencies to review for consistency...and would create an audit exception if they did not, to save time. The point was to save time for the businessman who had his or her books opened three times a year by a visiting auditor, and could reduce that to one visit unless potential fraud was found. The Budget Director testified for that bill in 1991. The bill never went anywhere because every agency in state government opposed it because it included too many agencies, by mistake, in bill drafting. No one was more surprised than me in 1993 to hear the Governor in the State of the State address announce a new program to do this very thing....Then I found out it was just a budget- balancing trick instead of a serious attempt to save people time. I realized they had taken my idea and totally blown it up. I barely was able to support it last session....I do not know an agency person that supported it. It was totally run out of the budget office. One of my mistakes was not saying no on this program completely. If I had my way, I would not even allow a pilot program of 55 audits with a sharing of expenses. I would rather go back to the concept I originally started in 1991 of just a sharing of information and have some language put into the statutes that would allow that. That way you would have no financial risk at all. Senator Raggio agreed Senator Coffin's suggestion regarding the sharing of information ought to be explored as it has some merit. Mr. Pitlock stated the department is looking into this. He remarked one of the recommendations made by the Governor's task force on the Combined Audit Program is there are efficiencies that can be gained by the sharing of information and scheduling of information to prevent overburdening the taxpayer with more than one audit at a time. Senator Raggio closed the hearing on A.B. 128 and opened the hearing on Assembly Bill (A.B.) 129. ASSEMBLY BILL 129: Makes supplemental appropriations to state department of conservation and natural resources for additional staff and equipment for state administrative offices. Peter G. Morros, Director, State Department of Conservation and Natural Resources, stated A.B. 129 is a critical request by the department for financial support staff for the Division of Forestry where a dire need exists for positions to assist with the accounting and clerical work load. A.B. 129 provides supplemental appropriations totaling $44,024 to add three positions to the Division of Forestry and to provide equipment for the new employees contemplated to be hired by April 15, 1995. Mr. Morros reported over the past 2 years there have been serious budget- management deficiencies that have arisen due to the loss of personnel since 1992, and the reassignment of budget and fiscal responsibilities to fire suppression staff who lack the proper training, skill, and basic knowledge to do the work required. To gain control over the spending, the Administrative Services Officer in the director's office has assumed the management of the division's accounting duties and, in the process, accumulated several hundred hours of overtime. He stressed the early hire of the three positions will enable the division to train them before the start of the 1995 fire season and curtail a lot of the overtime now being utilized. Senator Raggio noted an amendment was placed on A.B. 129 by the Assembly Committee on Ways and Means to allow the department to place a Management Analyst III and an Accounting Specialist in the director's office. He asked Mr. Morros if the arrangement meets with his approval. Mr. Morros replied, "Absolutely. The problems are serious enough that I want to have direct oversight to make sure they are corrected." Senator Raggio closed the hearing on A.B. 129 and opened the hearing on Assembly Bill (A. B.) 126 which was taken out of agenda order to allow Mr. Morros to testify. ASSEMBLY BILL 126: Makes supplemental appropriation to division of forestry of state department of conservation and natural resources for certain expenses relating to helicopters for use during fire season. Mr. Morros introduced Patrick Ross, Chief Pilot, Division of Forestry, State Department of Conservation and Natural Resources, who distributed Exhibit G, Air Operations Supplemental Appropriation Detail, to the committee. Mr. Morros testified A.B. 126, which is recommended in the Executive Budget, provides a supplemental appropriation of $66,250 to provide the funding necessary for the maintenance and repair of the Division of Forestry's existing helicopter, and to put a second helicopter into service before the start of the 1995 fire season. Mr. Morros pointed out Exhibit G provides a detailed explanation of the funding requirements. The amount recommended for the division's second helicopter totals $30,970 and provides the installation of an upgraded engine, which was acquired at no cost from the United States Army; a water bucket for the second helicopter; replacement of the helicopter's military radios with civilian radios; insurance for the second helicopter, and the cost to train and qualify a second helicopter pilot. Senator Rhoads mentioned the effectiveness helicopters provide in putting out fires. He stated there was a major fire in the Elko area in the summer of 1994 that was rapidly and efficiently extinguished by the use of a helicopter. Senator Rawson asked what type of helicopters were being used. Mr. Ross replied both are UH-IH model helicopters similar to the ones used in Vietnam that will carry up to a crew of eight. Senator Raggio closed the hearing on A.B. 126 and opened the hearing on Senate Bill (S.B.) 203. SENATE BILL 203: Makes appropriation to department of education for Reading and Math Proficiency Examination Program at Grades 4 and 8. Mary Peterson, Superintendent of Public Instruction, State Department of Education, testified S.B. 203 is a Governor recommended one-shot appropriation to purchase and score standardized achievement tests for students in grades 4 and 8 statewide. She introduced Kevin Crowe, Director, Planning, Research and Evaluation, State Department of Education, who has the oversight responsibility for the proficiency examination. She stated Mr. Crowe is here today to provide background information outlining how the funds will be utilized. Mr. Crowe's presentation before the committee was read for the record (Exhibit H). He also distributed two brochures prepared by the State Department of Education providing an overview of the state's Writing Assessment and Proficiency Examination Programs (Exhibit I). Senator Raggio noted the state has aimed toward norm-referenced testing in order to have an accurate measurement of proficiency. He inquired if the examinations are norm-referenced tests required by the Nevada Proficiency Examination Program at grades 4 and 8. Mr. Crowe stated, as mentioned in Exhibit H, the passage of S.B. 203 will allow the department to purchase new national norm-referenced tests for use starting with the 1996-1997 school year. The tests will be used at grades 4 and 8 and the costs of scoring the tests will be subsidized. Ms. Peterson testified it is the intent of the department to clearly state within S.B. 203 the proficiency examinations are norm-referenced tests as required by the Nevada Proficiency Examination Program. Senator Raggio asked how the degree of grading will be monitored for uniformity. Mr. Crowe replied funding of S.B. 203 will permit the department to use the same scoring contractor for all of the school districts who would then report directly to the department. At the present time, a variety of testing vendors are used, and the department must collect the information from them. Senator Raggio asked Ms. Jeanne Botts of the Fiscal Analysis Division to prepare an amendment to specify the use of norm-referenced tests for accountability and proficiency. Ms. Botts pointed out the appropriation of $479,000 specified by S.B. 203 does not provide for centralized scoring of testing material. She pointed out Clark and Washoe counties will still be scoring their own examinations. She asked Mr. Crowe to explain the difference, which would amount to an additional $190,000 if the state were to do all of the scoring, by providing one vendor for all of the counties. To clarify, Senator Raggio asked why uniform scoring across the state was not requested. Mr. Crowe replied the department prefers uniform scoring, but it would increase the one-shot appropriation by approximately $190,000. He said uniform scoring would allow the department to require the tests to be scored by a single contractor who would electronically report the data directly to the department. Senator Raggio commented there is no justification in having the scoring accomplished one way in the rural counties and another way in Clark and Washoe Counties. He said this nullifies the purpose of norm-referenced testing. Ms. Botts noted at the present time Clark County tests in the fall and the other counties test in the spring. She asked Mr. Crowe if the department plans to change the requirement that all the counties test at the same time. Mr. Crowe said part of the department's plan is to require testing be done at the same time of the school year in all the counties. At the present time, the department has allowed the individual districts to determine their testing schedule according to logistics and cost efficiencies. He said if the cost is covered by the state, it will relieve the school districts of the burden, while acquiring uniformity. Before closing the hearing on S.B. 203, Senator Raggio requested Ms. Botts to draft a bill amendment to require uniform testing to be utilized throughout the state. The hearing was opened on Senate Bill (S.B.) 220. SENATE BILL 220: Makes various changes to provisions relating to the expenditure of money for state parks. Senator Raggio commented discussion was previously heard on S.B. 220 on March 27, 1995, at which time an amendment was requested to be added. Ms. Botts remarked S.B. 220 originally provided that a onetime appropriation totaling $1,735,739 be awarded in a lump-sum payment to the Division of State Parks. The amendment to the bill separates the onetime appropriation to provide $1 million for park improvements to be distributed to Washoe Lake State Park ($130,000); Lake Tahoe Nevada State Park ($97,740); Spring Valley State Park ($302,600); Cathedral Gorge State Park ($30,310); Spring Mountain Ranch State Park ($281,850); Valley of Fire State Park ($135,000); and Fort Churchill State Park ($22,500). Ms. Botts indicated the $1 million appropriation for park improvements covers several high- priority projects of the division in the seven Nevada parks, but section 4 of S.B. 220 allows the division the flexibility to transfer funds among the park improvement projects or to add or substitute other projects with approval of the IFC. According to Ms. Botts, S.B. 220 also appropriates $474,270 to be used for new and replacement equipment for state parks and $261,469 for onetime equipment purchases for the opening of Big Bend of the Colorado State Park, the District V visitor center for state parks in White Pine and Lincoln counties, and maintenance operations at South Fork State Recreation Area. Ms. Botts pointed out the division is requesting the amount allocated for feasibility studies be increased by $14,000 to $314,000, which is addressed in section 5 of S.B. 220. Senator Rawson asked if the state reduced the number of firearms requested by the division at the request of the Governor, and Ms. Botts stated the Fiscal Analysis Division recommended a reduction in the number of firearms issued to the division. SENATOR RAWSON MOVED TO AMEND AND DO PASS S.B. 220. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Senator Raggio asked for a motion on Senate Bill (S.B.) 216 heard by the committee on March 27, 1995. SENATE BILL 216: Makes appropriation to department of employment, training and rehabilitation for developmental disabilities program. SENATOR RAWSON MOVED TO DO PASS S.B. 216. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Senator Raggio requested a motion on Senate Bill (S.B.) 219 discussed by the committee on March 27, 1995. SENATE BILL 219: Makes appropriation to investigation division of department of motor vehicles and public safety for replacement of vehicles. SENATOR JACOBSEN MOVED TO DO PASS S.B. 219. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Senator Raggio asked for a vote on Senate Bill (S.B.) 221 that was heard by the committee on March 27, 1995. SENATE BILL 221: Makes appropriation to divisio n of water resour ces of state depat ment of conser vation and natura l resour ces for equip ment. SENATOR RAWSON MOVED TO DO PASS S.B. 221. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Senator Raggio opened the hearing for discussion of Senate Bill (S.B.) 223. SENATE BILL 223: Makes appropriation to channel clearance account. Senator Raggio recalled the committee heard testimony on March 16, 1995 from R. Michael Turnipseed, State Engineer, Division of Water Resources, regarding S.B. 223 at which time a proposed amendment was suggested. He asked if other changes have been made. Ms. Botts replied the amendment clarifies the budget account is established in the General Fund and can be replenished from the IFC contingency fund. The division can also obtain funding from the Board of Examiners' Reserve for Statutory Contingency in the event of an emergency, Ms. Botts said. Senator Rawson noted the account for the channel clearance, surveying and monumenting program is created in the state General Fund to be administered by the state engineer. He asked the definition of "monumenting." Ms. Botts replied it refers to marking and surveying streams and is considered a part of the stream clearing process. Senator Rawson asked, "Do you sense this is opening up a new mission that has not been dealt with before?" Ms. Botts replied a match is required from the local government. Since the creation of the account in 1973, Ms. Botts said approximately $175,000 has been awarded in grants that required a dollar for dollar match by local governments. Senator Rawson referred to subsection 2 of section 2 of S.B. 223 and asked if an unlimited obligation to the state would be required to pay all claims presented. Ms. Botts responded section 2.(d) applies to the Channel Clearance Account. She stated she would check with the Legal Division of the Legislative Counsel Bureau and provide the information to the committee. Senator Raggio suggested an amendment be requested before further action is taken on S.B. 223. He also requested Ms. Botts to obtain clarification from the Legal Division regarding the state's obligation to pay claims. Senator Raggio requested a motion be made on A.B. 126, A.B. 127, A.B. 128, and A.B. 129. SENATOR JACOBSEN MOVED TO DO PASS A.B. 126. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * SENATOR RAWSON MOVED TO DO PASS A.B. 127. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * SENATOR O'DONNELL MOVED TO DO PASS A.B. 128. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * SENATOR RHOADS MOVED TO DO PASS A.B. 129. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Senator Raggio stated a motion will not be taken on S.B. 203 until an amendment is received from the Fiscal Analysis Division as requested in earlier discussion. He also pointed out if a motion is taken to pass S.B. 205, the committee will have to act on the request by the University and Community College System of Nevada (UCCSN) to utilize one-half of the $7 million one-shot appropriation during the next academic year. Senator Rhoads asked if this type of action has ever been taken before. Senator Raggio responded he is not aware of specific appropriations for additional scholarships although the state does provide approximately $6 million to the university budget for each year of the biennium to be used for scholarships. He pointed out an additional $800,000 is also appropriated for grants and aid to out-of-state schools. In view of the fact that the university system did not receive anticipated increases in previous bienniums, the $7 million one-shot appropriation proposed by S.B. 205 is part of the Governor's proposal to bolster the appropriation amount designated for the UCCSN. Senator Raggio remarked the fact the proposed one-shot appropriation has not been added to the budget indicates the UCCSN will not receive the additional revenue on an ongoing basis. Senator Raggio asked that any motions on S.B. 205 be held for further committee consideration. Senator Raggio adjourned the meeting at 10:10 a.m. RESPECTFULLY SUBMITTED: Marion Entrekin, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance March 30, 1995 Page