MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session April 12, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Wednesday, April 12, 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 COMMITTEE MEMBERS ABSENT: Senator Bernice Mathews (Excused) STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Mary Matheus, Local Government Budget Analyst Larry L. Peri, Program Analyst Ron Steele, Program Analyst Pamela Jochim, Committee Secretary OTHERS PRESENT: Mike Meizel, Chief, Buildings and Grounds Division, Department of Administration Lupe Gunderson, Chairman, State Board of Parole Commissioners Thomas P. Wright, Commissioner, State Board of Parole Commissioners Susan J. McCurdy, Executive Secretary, State Board of Parole Commissioners Robert Bayer, Director, Department of Prisons John E. Neill, Chief, Fiscal Services, Department of Prisons John Slansky, Warden, Lovelock Correctional Center, Department of Prisons Senator Raggio opened the hearing on Senate Bill (S.B.) 334. SENATE BILL 334: 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. Mike Meizel, Chief, Buildings and Grounds Division, Department of Administration, testified the management duties for the warehouse are being transferred to the Buildings and Grounds Division. S.B. 334 addresses how the construction costs are to be paid back to the General Fund. He noted the bill will be amended to include renovation costs and expansion costs. Dan Miles, Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, explained S.B. 334 transfers the responsibility for the repayment of the warehouse's original construction costs ($193,310) to the Buildings and Grounds Division. He noted a $734,000 appropriation was made in 1979 for warehouse expansion which included a session law payment requirement. In 1991, the legislature approved a $104,234 appropriation for renovation costs which also included a repayment schedule. He stated the bill must be amended to allow for repayment of all three appropriations. Furthermore, Mr. Miles pointed out the revenue estimates of the Economic Forum are based on the repayment of all three appropriations. Senator Raggio indicated no action will be taken by the committee on S.B. 334 until the proposed amendments are provided. The chairman closed the hearing on S.B. 334 and opened the hearing on Senate Bill (S.B.) 241. SENATE BILL 241: Increases number of members of state board of parole commissioners. Mr. Miles distributed a handout (Exhibit C) to the committee which provides a comparison of Nevada's parole board to 11 other Western states. Lupe Gunderson, Chairman, State Board of Parole Commissioners, stated S.B. 241 will increase the board from six to seven members. Senator Raggio asked why the board needs to be increased. Ms. Gunderson responded a new board member is needed due to the Lovelock Correctional Center opening and for geographic purposes. Presently, the board holds hearings at 17 different institutions which, logistically, is somewhat difficult to manage. Senator Raggio questioned where the new member would be located. Ms. Gunderson answered the new commissioner would be stationed in the northern part of the state. Senator Raggio inquired about the number of parole commissioners present at parole hearings. Ms. Gunderson explained most hearings are attended by a board member and a hearing representative; however, in some instances two hearing representatives are utilized. Senator Raggio, referring to Exhibit C, noted the state of Washington has 10,325 inmates and operates with only four full-time parole commissioners. The senator indicated Arizona's inmate population is 17,098 and functions with a parole board of seven full-time members. In addition, he pointed out California has a nine member parole board and oversees 117,534 inmates. Thomas P. Wright, Commissioner, State Board of Parole Commissioners, related many of the states listed in Exhibit C may conduct hearings in absentia. Nevada's parole hearings are all held in person. He commented it was not uncommon for all three of the northern Nevada commissioners to be out of the office and attending hearings at the same time. Furthermore, he noted, because Nevada's penal institutions are not centrally located, a good deal of time is spent traveling to the various facilities. Senator Coffin commented none of Nevada's penal institutions are located near a major airport. He noted a comparison to other states is somewhat difficult to make when all the facts are not known. Mr. Wright indicated the board's work load is expected to increase by 16.7 percent in the next biennium. He said the addition of one more commissioner would allow the board to have at least one member in the office who could perform case ratifications, meet with Victims of Crime, answer questions from the Governor's office and the media, and meet with the general public. Senator Raggio questioned when the data contained in Exhibit C was compiled. Mr. Miles responded, "1993." Senator Raggio remarked the committee and the administration have been concerned regarding the board's parole grant rate. The senator noted the most recent figures received by the committee indicate a parole grant rate of 20 percent and asked if the parole board has an updated figure. Susan J. McCurdy, Executive Secretary, State Board of Parole Commissioners, stated the board's February parole grant rate for regular paroles was 29 percent. If mandatory paroles and revocations are included, the figure increases to 33 percent. Mr. Miles distributed two handouts: Exhibit D - Parole Grant Rate Chart for January, 1994 to March, 1994; Exhibit E - Parole Grant Rate Chart indicating regular and mandatory yearly averages. Senator Raggio commented the committee needs some direction from the parole board regarding the accuracy of the board's projected 35 percent parole grant rate. The senator stressed the Department of Prisons' budget is based upon the 35 percent grant rate, and if the figure is not realistic, the committee "needs to know that at this time." Senator Jacobsen interjected the parole board indicated to the joint subcommittee a parole grant rate of 35 percent was achievable. Senator Raggio asked whether the 35 percent rate is still a valid projection. Ms. Gunderson replied she is confident the 35 percent rate can be achieved. Senator Raggio questioned if the 35 percent rate can be achieved without endangering public safety. Mr. Wright responded the 35 percent rate is achievable and noted there will probably be an increase in paroles from honor camps and restitution centers. The grant rate from the restitution center in Reno is 80 percent. He explained that violent or sex offenders are not classified to restitution centers. Senator Raggio stated: I want to make it clear, this committee, and certainly not this chairman, is not indicating to you that you should arbitrarily or capriciously meet a parole grant rate. On the other hand, we also understand that you cannot always guarantee what is going to happen when someone is released. We are being asked to build a budget and when we came to this session the budget was based on a 40 percent rate, but we were then told the numbers had changed and that was not an achievable rate and the new budget received from the prison and the Governor is 35 percent. We are going to have to put in considerable more dollars into the operating costs for the prison systems. . . .You are the people who will be in the hot seat, so if that is not achievable or realistic or correct, don't tell us after we leave here. Senator O'Donnell related, during the joint subcommittee, he raised the questioned if the 35 percent was within 1 standard deviation of the last 6 months. The senator, referring to Exhibit D, pointed out the 35 percent projection is "outside the norm." He asked how the 35 percent rate was determined when historical data indicates a lower grant rate. Mr. Wright noted Exhibit D shows a parole grant rate of 40 percent in February, 1994, 39 percent in March, 1994, and 20 percent in August of 1994. Senator O'Donnell asked if the decrease in parole rates occurred because of a change in board philosophy. Mr. Wright replied the board may have reacted to public criticism regarding the release of Charles Collier. He stated, "I think perhaps all commissioners were a bit more reticent to grant paroles in cases of a similar nature." Senator O'Donnell stressed release rates should be based on historical data and not on "how much money we have left over." Senator Coffin pointed out the parole grant rate chart (Exhibit D) only examines 13 months of data and stated 13 months is too short of a time period to draw statistical conclusions. He said Exhibit E provides a more reliable demonstration of grant rates because it is based upon 8 years of statistical data. Senator Raggio stated the committee is relying on the parole board's projection and input to finalize the prison's budget which represents a major part of the Executive Budget. The chairman stressed, if the parole grant rate needs to be adjusted, then the committee needs to be informed now. Mr. Wright related the board wants to avoid feeling pressured to release a certain percentage of inmates at each hearing. Senator Raggio said: With this estimate are you in some way committing yourself to that and are you jeopardizing public safety. We are not telling you to do that, if that is forcing you to do that, tell us now and tell us you are only going to make a 25 percent rate. We need to know that. We are relying on the Governor, the budget director, the prison system, and you folks for those figures. . . . Mr. Wright indicated the 35 percent rate cannot be achieved unless probation violators are paroled the first time they come before the board. He noted the 35 percent figure also includes paroles to consecutive sentences and half of all inmates coming before the board are being paroled to a consecutive sentence. Senator Raggio stressed, if there is any reasonable doubt regarding the parole grant rate projection, then the Governor should be notified immediately, so the Budget Division has reliable information on which to build the budget. In referring to Exhibit C, Senator Raggio noted many states require parole board members to meet certain qualifications before they are eligible for board membership. The chairman requested the board to submit a report to the committee regarding what the board would deem to be appropriate qualifications for a new board member. Senator Coffin asked the board to provide the committee with statistical information regarding parole grant rates for states who hold parole hearings in absentia versus rates for hearings held in person. Senator Raggio inquired if section 1, lines 17-18, of S.B. 241 needed to be revised if the additional board member is added. Mr. Wright replied no changes would need to be made. Senator Raggio closed the hearing on S.B. 241 and opened the hearing on Assembly Bill (A.B.) 325. ASSEMBLY BILL 325: Makes supplemental appropriation to department of prisons for unexpected increase in incarcerated offenders. Senator Raggio noted initially A.B. 325 requested an appropriation of $1,319,000 and the amount has been decreased to $1,252,500. Robert Bayer, Director, Department of Prisons, stated the bill was modified to delete the Jean Conservation Camp conversion from female to male because of the controversy surrounding the conversion. He said the bill needed to be acted on promptly, so the conversion issue was deleted from the bill and will be addressed at a later date. John E. Neill, Chief, Fiscal Services, Department of Prisons, came forward and distributed a revised budget (Exhibit F) detailing the start-up costs for the Lovelock Correctional Center and the costs associated with the expansion of the Northern Nevada Correctional Center. He explained page 1 of Exhibit F denotes central office costs for providing training and personnel assistance for the Lovelock opening. Senator Raggio observed the figures are based upon hiring staff by April 15, 1995, and questioned whether the date is realistic. Mr. Neill responded the date is realistic for the Personnel Analyst position, but the Training Officer II position could be hired 1 week later. Mr. Neill pointed out pages 3-4 of the revised budget indicates personnel costs for the Lovelock Correctional Center. A total of 178.5 positions will be hired before May 1, 1995. In addition, Mr. Neill commented the prison will be renting equipment to help with loading the prison's warehouse due to shipping delays. Senator Raggio asked when inmates will be moved to the Lovelock Correctional Center. Mr. Neill answered inmates will be transferred to the facility on July 1, 1995. Mr. Neill explained page 6 of the revised budget provides for 44 additional beds added to Unit 7 at the Northern Nevada Correctional Center. He related costs have been reduced as much as possible by utilizing existing supplies, mattresses, and footlockers. Continuing on, Mr. Neill explained page 7 of Exhibit F indicates the addition of 144 beds in Units 1,2 and 3 at the Northern Nevada Correctional Center. He said, once the Lovelock prison is opened, the units will be shut down. Senator Raggio asked how many chaplains the prison system employs. Mr. Bayer responded, presently, one chaplain is employed full-time by the system. He noted a report requested by Senator O'Donnell detailing the chaplain's statewide duties will be ready for distribution by April 14, 1995. Senator O'Donnell remarked the present chaplain has made very few visits to the Ely Correctional Center and the volunteer chaplain currently visiting the Ely prison will be discontinuing his visits after July 1, 1995. The senator said he has recommended that an appropriation be made to add another chaplain for the Ely prison. Senator Rhoads stated he was contacted by a Lovelock citizen who indicated the water well for the Lovelock Correctional Center might not be adequate for the Phase II addition. The senator asked if the department has been assured of the well's capacity. Mr. Bayer responded there is adequate water for Phase II, but the problem is being studied. Senator Rhoads also indicated the citizens of Lovelock would like the name of the prison changed from Lovelock Correctional Center to Coal Canyon Correctional Center. Mr. Bayer said he is researching the issue to determine who has the authority to make the name change. Senator Rhoads pointed out the name change should be pursued as soon as possible to avoid extra printing costs. Senator Coffin asked what is being done to address the housing shortage in Lovelock for prison personnel. Mr. Bayer related Lovelock officials have indicated there is a mobile home park which can add up to 43 spaces and two subdivisions totaling 56 homes have recently been approved. In addition, a large subdivision of 118 homes is ready to begin construction, once the developer is confident the state will go forward with Phase II of the Lovelock prison expansion. Furthermore, the City of Lovelock currently has approximately 50 apartment units available for rent. Senator Coffin questioned how many state employees will be living in the area. Mr. Bayer explained approximately 190 employees will be hired for Phase I and an additional 86 will be hired for Phase II. Senator Coffin inquired what type of impact the prison opening will have on the Lovelock school district. Mr. Bayer replied Lovelock officials have informed him the necessary infrastructure is in place. John Slansky, Warden, Lovelock Correctional Center, Department of Prisons, stated he has spoken with the superintendent of schools for Pershing County and was told the school district is capable of handling the influx of new students. Senator Jacobsen related, during the tour of the Lovelock Correctional Center, he was assured by county officials that everything is in order from the county's perspective for the prison's opening. Senator Raggio closed the hearing on A.B. 325 and opened the hearing on Bill Draft Request (BDR) 1-1337. BILL DRAFT REQUEST 1-1337: Revises provisions governing commission on judicial discipline. Senator Raggio noted Leonard Gang, General Counsel, Commission on Judicial Discipline, has requested committee introduction of the BDR. SENATOR COFFIN MOVED TO INTRODUCE BDR 1-1337. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * Senator Rhoads stated he also had a request for a bill draft. The senator explained the funding for the State Board of Sheep Commissioners and the Committee to Control Predatory Animals has been drastically reduced due to the state allocation process. He said Stephanie Licht, Executive Secretary for the two committees has made an agreement with the Budget Division to forgive the remainder of the past state cost allocation debt and to exempt the committees from future state cost allocation charges. A memo (Exhibit G) was distributed to committee members from Ms. Licht detailing the necessity for the bill draft request. SENATOR RHOADS MOVED TO OBTAIN A BILL DRAFT FOR THE PURPOSES SET OUT IN EXHIBIT G. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS MATHEWS AND RAWSON WERE ABSENT FOR THE VOTE.) * * * * * W.I.C.H.E. Loan & Stipend - Page 385 Mr. Miles informed the committee a revised position schedule for the program is outlined on page 2 of the Budget Closing Packet (Exhibit H). He stated the revised schedule includes an optometry program which was mistakenly left out of the Executive Budget. SENATOR COFFIN MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY STAFF WITH THE ADDITION OF THE OPTOMETRY PROGRAM. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS MATHEWS AND RAWSON WERE ABSENT FOR THE VOTE.) * * * * * W.I.C.H.E Administration - Page 389 SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY THE GOVERNOR. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS MATHEWS AND RAWSON WERE ABSENT FOR THE VOTE.) * * * * * Department of Taxation - Page 597 Mary Matheus, Local Government Budget Analyst, Fiscal Analyst Division, Legislative Counsel Bureau, testified while referring to Exhibit H, the budget closing action sheet. She noted revenue adjustments primarily offset adjustments to expenditures. One revenue adjustment is a shift from General Fund appropriations to Out-of-State Audit Collections. Originally, in the Executive Budget, the Out-of-State Audit Collections were calculated at 50 percent of cost, but the collections are projected to be 85 percent of cost. In addition, there is an adjustment to the frozen merit salary expense and an adjustment to the hire date of new employees from July 1, 1995, to October 1, 1995. Ms. Matheus noted the Executive Budget recommends continuation of the combined audit program, but on a reduced scale. The agency estimated $27,087 would be collected from 55 combined audits, while $292,087 would be generated from 65.3 sales and use tax audits. The department will continue to make sales and use tax audits its priority. She stated the fiscal staff recommends a letter of intent should be issued to require the Department of Taxation to report quarterly to the Interim Finance Committee (IFC) regarding the progress of the combined audit program. Senator O'Donnell stated data indicates the combined audit program is a complete failure. He said the program should be dismantled and the resources should be put back into sales and use audits. Senator Raggio asked if the budget includes funding for the 55 combined audits. Ms. Matheus concurred the budget reflects funding for the 55 audits. She explained eight audit positions that were specifically assigned to the combined audit program have been removed. After removing the eight positions, audit staffing levels will still be 31 percent higher than the levels in 1993. Ms. Matheus explained Assembly Bill (A.B.) 338 and Assembly Bill (A.B.) 423 will have some effect on the Department of Taxation's budget. ASSEMBLY BILL 338: Removes certain restrictions governing disposition of certain fees imposed by justices' courts. ASSEMBLY BILL 423: Transfers responsibility for collection of taxes and fees imposed on certain fuel from department of taxation to department of motor vehicles and public safety. Ms. Matheus read from section 3, page 2 of Exhibit H regarding the proposed changes suggested in A.B. 338. Senator Raggio asked if A.B. 338 will change the department's budget. Ms. Matheus replied the proposed changes are reflected in the budget. Ms. Matheus related A.B. 423 recommends the transfer of the collection of the motor fuel taxes from the Department of Taxation to the Department of Motor Vehicles and Public Safety. She commented the legislation would have a significant impact on the department's budget. It is estimated that if the revenues are removed from the budget, additional General Fund appropriations would be required in Fiscal Year (FY) 1996 of $989,568 and $999,453 in FY 1997. Senator O'Donnell questioned the status of A.B. 423. Ms. Matheus said the bill is presently in the Assembly Committee on Taxation. SENATOR RHOADS MOVED TO CLOSE THE BUDGET AS RECOMMENDED IN EXHIBIT H BY STAFF. SENATOR COFFIN SECONDED MOTION. Senator O'Donnell asked if the combined audit program will continue to operate. Senator Raggio replied the combined audit program will operate on a limited basis as outlined by staff in Exhibit H. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * Senior Citizen's Property Tax Assistance - Page 607 SENATOR COFFIN MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY THE GOVERNOR. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * Personnel - Page 653 Larry L. Peri, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, referred the committee to pages 9-11 of Exhibit H and noted the numerous adjustments which have been made to the budget. He indicated the most significant adjustments have been made to the revenue section of the budget. The Personnel Assessment has been increased by $443,504 in FY 1996 and $439,114 in FY 1997. These two adjustments are primarily being made for the university system's Personnel Assessments because the assessments were not built into the revenue collection authority for the department. Payroll Assessments have also been adjusted by $52,000 each year of the biennium. Senator Rawson commented the Personnel Assessment collection is added to the Reserve account and questioned if the assessment should be decreased or if the account needs such a large balance. Mr. Peri stated the $1.2 million addition to the Reserve account is fairly significant, but a minimum amount of funds must be available to pay for any salary increases granted by the 1995 Legislature. He said a review of the Personnel Assessment rate could be done to determine if it should be decreased. Mr. Miles proposed, once the budget is closed by the Senate Committee on Finance and the Assembly Committee on Ways and Means, the fiscal staff will report back to the joint committee with a recommendation regarding decreasing the Personnel Assessment rate. Senator Raggio stated the Executive Budget indicated a Reserve amount of $300,000 and the revenue adjustments to Personnel Assessments will increase the Reserve account by $1.2 million. He commented, "The question is how much is a reasonable amount required in the Reserve account?" Mr. Miles said this question cannot be answered until the fiscal staff perform calculations on cash flow reserve requirements and the amount needed from the reserve for the proposed pay increases. Senator Raggio asked for a general explanation on the budget's adjustments to expenditures. Mr. Peri explained most of the adjustments are technical in nature. He said the budget recommends three new positions: one Administrative Aide for the Las Vegas office to begin July 1, 1995; one Training Officer starting October 1, 1995 for Las Vegas; and one Training Officer starting October 1, 1996 in northern Nevada. Senator Coffin questioned whether the reduction in category M525 for furniture will abolish the funding for the Americans with Disabilities Act (ADA) replacement furnishings. Mr. Peri explained $6,500 of the $8,390 reduction was recommended to remodel the first floor of the Blasdel Building to comply with ADA requirements. He stated the fiscal division is suggesting the funds for the furnishings be provided by the State Publics Works Board from funding the board has received for statewide ADA compliance. Mr. Peri drew the committee's attention to page 12 of Exhibit H and noted category E125 of the budget includes $175,000 in FY 1996 and $125,000 in FY 1997 for the completion of the department's Business Process Reengineering (BPR) project. He pointed out the department proposes to utilize the BPR process in a somewhat different manner than other state agencies. The department proposes to use BPR to evaluate civil service reform efforts which are taking place throughout the country. Most agencies use BPR to study work functions prior to automation. Senator O'Donnell inquired about the type of computer system used by the department. Mr. Peri responded the primary system is a Local Area Network and indicated the department performs a lot of mainframe processing for both the payroll and personnel systems. Senator O'Donnell commented, "I think anytime there is a deviation from the ES9000 or autonomy, you will find a BPR, because the intent of the Department of Information Services, is to suck everything back up to the mainframe." Senator Raggio voiced the committee's concerns regarding the BPR programs which have been proposed for a number of agencies. The senator asked how the department's BPR study would be funded. Mr. Peri replied the funds for the study would come from the Reserve account. Senator O'Donnell suggested funding one or two BPR studies this session to see if the process works and to determine if the studies are necessary. Senator Raggio asked if Senator O'Donnell has any suggestions as to which agencies should be selected for a BPR study. Senator O'Donnell responded he will review all the BPR requests and prioritize them for the committee. Senator O'Donnell said the BPR study requested by the Department of Personnel is outside the area of a BPR study and is not necessary. He stated BPR studies normally address technology advances and office efficiency. Senator Coffin agreed with Senator O'Donnell's suggestion of approving a limited number of BPR studies this session in order to ascertain if the other requested studies are necessary. Senator Coffin questioned if the fiscal division has an approximate cost for all the proposed BPR studies and the hardware needed for implementation. Mr. Peri replied the division has an itemized listing of all recommended BPRs, but does not know the associated costs for hardware and implementation. Senator O'Donnell pointed out multiple BPRs are too voluminous to address in one session. Senator Raggio asked if some benefit would be gained by contacting other states who may have utilized BPR studies. Mr. Peri noted the Division of Child and Family Services is presently conducting a BPR study, along with the Budget Division. Senator Raggio questioned if the committee would be comfortable closing the budget with the proposed staff adjustments and deleting the BPR funding. The chairman said the budget could be reopened to address the BPR or the potential change in the Personnel Assessment rate. SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET ACCORDING TO STAFF RECOMMENDATIONS LISTED ON PAGES 9-12 IN EXHIBIT H WITH THE DELETION OF BPR FUNDING IN THE AMOUNT OF $300,000 AND WITH THE UNDERSTANDING THE BUDGET CAN BE REOPENED TO ADDRESS PERSONNEL ASSESSMENT COSTS. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * Child Care - Page 661 SENATOR COFFIN MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY THE GOVERNOR. Mr. Miles explained the program was proposed to provide child care to state employees. A funding request of $1,250,000 was made, but the Governor did not recommend an appropriation for the program. Senator Rawson asked that no action be taken on the budget at this time. Senator Coffin rescinded his motion. State Unemployment Compensation - Page 663 Mr. Peri distributed a memo (Exhibit I) from John P. Comeaux, Director, Department of Administration, indicating budget revisions requested by Assemblyman Morse Arberry. Mr. Peri explained Mr. Arberry was concerned the Reserve account balance of $10,000 in the second year of the biennium was too low. He said because of Mr. Arberry's concern, the Budget Division reviewed the projected expenditures for 1995 and made a more accurate balance forward projection. The Reserve account balance for the second year of the biennium was increased from $10,000 to $160,000. Senator Raggio inquired why expenditures are projected to be lower than originally calculated. Mr. Peri replied, "I am not sure." He noted the budget represents draws from employment security on unemployment compensation premiums which are collected from personnel to cover costs for state employees who have received unemployment benefits for the previous quarter. SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH THE ADJUSTMENTS PROVIDED BY THE BUDGET DIVISION IN EXHIBIT I. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * Military - Page 2031 Robert Guernsey, Principal Deputy Fiscal Analyst, Legislative Counsel Bureau, stated there are two major adjustments to the budget. He explained the State Industrial Insurance System (SIIS) premiums in the amount of $15,169 were not included in the budget for Nevada National Guard members called to active duty. In addition, the budget needs to be adjusted for utility shortfalls for FY 1996 and FY 1997. A transfer increase of $500 a year from the Construction Fund for Armory rentals has also been recommended. Furthermore, it is recommended the hiring date for new positions be delayed until October 1, 1995. SENATOR RAWSON MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS AS OUTLINED ON PAGE 15 OF EXHIBIT H. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * Adjutant General Construction Fund - Page 2039 Mr. Guernsey stated an increase from $1,500 to $2,000 a year is recommended from the main Military budget to this budget in order to reflect receipt of Armory rental income. SENATOR JACOBSEN MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS AS LISTED ON PAGE 24 OF EXHIBIT H. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * National Guard Benefits - Page 2041 SENATOR RAWSON MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY THE GOVERNOR. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * Public Employees Retirement System - Page 2043 Ms. Matheus noted the budget has been adjusted to reflect Statewide Cost Allocation and Attorney General Cost Allocation. In addition, the agency has requested an increase of $10,000 for FY 1996 and an increase of $14,000 for FY 1997 due to an increase in the agency's actuarial contract. Ms. Matheus referenced pages 26-27 of Exhibit H and reviewed the budget closing recommendations. She noted the budget is requesting unclassified pay increases for the Operations Officer and the Investment Officer. The pay increases will bring the two salaries into parity with similar positions in other states. Senator Raggio commented the committee will not be acting on the unclassified pay increases at this time. Mr. Miles interjected the Public Employees Retirement System (PERS) unclassified positions are exempt positions and final approval for salary increases belongs to the Interim Retirement Committee. The retirement committee will not be meeting until September, 1995 to approve the increases proposed by the PERS board. The salary increase is funded from Administrative Fees. Senator Rawson noted there is a decrease in the Attorney General Cost Allocation and asked if the decrease indicates a reduction in attorney general services to the agency. Ms. Matheus explained a portion of the decrease is due to overcharges by the attorney general's office in prior years. Mr. Miles commented the Attorney General Cost Allocation was significantly changed and is now based on actual time records which should be a more accurate depiction of actual costs. Ms. Matheus indicated the agency had requested an augmentation to the Governor's recommended budget for additional Out-of-State Travel funds of $16,000 for each year of the biennium. The additional funding for travel is not being recommended. Senator Raggio noted the committee is in favor of including the additional funding for Out-of-State Travel. SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS AS LISTED ON PAGES 26-27 OF EXHIBIT H AND TO INCLUDE THE AGENCY REQUEST OF $33,516 FOR THE BIENNIUM FOR OUT-OF-STATE TRAVEL. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * Mr. Miles distributed a new budget (Exhibit J) for the Advocate for Insurance Customers which was deleted in the original Executive Budget, but is now being recommended by the Governor. Senator O'Donnell asked for guidance from the committee regarding funding for the $500,000 loss experienced by the Department of Insurance. Ron Steele, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, interjected the fiscal division has recently received a new budget proposal from the insurance division and the new projections indicate only a small amount of funding will be needed from the General Fund. There being no further business before the committee, Senator Raggio closed the hearing at 10:50 a.m. RESPECTFULLY SUBMITTED: Pamela Jochim, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance April 12, 1995 Page