MINUTES OF THE JOINT SUBCOMMITTEE MEETING OF SENATE COMMITTEE ON FINANCE AND ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session May 4, 1995 The joint subcommittee meeting on Human Resources/K-12 of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman Raymond D. Rawson at 7:45 a.m. on Thursday, May 4, 1995, in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. SENATE COMMITTEE MEMBERS PRESENT: Senator Raymond D. Rawson, Chairman Senator William J. Raggio Senator Bob Coffin Senator Dean A. Rhoads ASSEMBLY COMMITTEE MEMBERS PRESENT: Mr. Lynn Hettrick, Chairman Mrs. Jan Evans, Chairman Mrs. Vonne Chowning Mr. Joseph E. Dini, Jr. Mr. Dennis L. Allard COMMITTEE MEMBERS ABSENT: Ms. Sandra Tiffany (Excused) STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Mark Stevens, Fiscal Analyst Steve Abba, Program Analyst Sue Parkhurst, Committee Secretary OTHERS PRESENT: Myla C. Florence, Administrator, Welfare Division, Department of Human Resources Michael J. Willden, Deputy Administrator, Administrative Services, Welfare Division, Department of Human Resources Christopher Thompson, Administrative Services Officer IV, Health Care Financial Analysis Unit, Department of Human Resources Ann Wilson Andreini, Executive Assistant, Governor's Office Jon Sasser, Lobbyist, Nevada Legal Services Senator Rawson indicated his intention for the committee to make its budget closing recommendations regarding the Welfare Division budgets. Energy Assistance - Welfare - Page 1237 Petroleum Overcharge Rebate - Page 1241 DOE Weatherization Program - Page 1243 Program For Homeless Nevadans - Page 1247 Homeless Grants - Page 1249 Safety Seat Program - Page 1253 Refugee Program - Page 1257 SENATOR RAGGIO MOVED TO RECOMMEND CLOSING THE BUDGETS LISTED ABOVE IN ACCORDANCE WITH THE STAFF REPORT. MR. DINI SECONDED THE MOTION. Mrs. Evans asked if the committee needs to take separate action to give the Welfare Division the authority to accept the homeless grants, or whether this would be included in the motion. Senator Rawson said the authority would be included as part of the motion, which is restated as follows: SENATOR RAGGIO MOVED TO RECOMMEND CLOSING THE BUDGETS LISTED ABOVE IN ACCORDANCE WITH THE STAFF REPORT AND TO AUTHORIZE THE WELFARE DIVISION TO ACCEPT THE HOMELESS GRANTS. MR. DINI SECONDED THE MOTION. ASSEMBLY: THE MOTION CARRIED. (MR. HETTRICK AND MS. TIFFANY WERE ABSENT FOR THE VOTE.) SENATE: THE MOTION CARRIED UNANIMOUSLY. * * * * * Welfare Administration - Page 1181 Steve Abba, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau (LCB), provided a review of the issues to be addressed in this budget and related staff proposals as outlined in the budget closing action sheets prepared by staff (Exhibit C). Mr. Abba called attention to the line item on page 20 (Exhibit C) that indicates a reduction in General Fund appropriation of $24,166 and a corresponding increase in federal funds. He said the adjustment is based on allocation of the costs of some of the additional staff in the Welfare Administration to the NOMADS (Nevada Operations Multi Automated Data Systems) project, which provides additional federal funds and thereby reduces the General Fund appropriation. He said additional positions were identified in the process. Regarding policy issue 1 on page 21 (Exhibit C), Mr. Abba said this issue revolves around the projected caseloads that were developed in March 1995 as compared to the caseloads built into the Executive Budget. More specifically, he stated, the caseloads are for AFDC (Aid to Families with Dependent Children), the Food Stamp Program and the MAABD (Medical Assistance for the Aged, Blind and Disabled) program. The decision units involved are M-200 and E-901. Mr. Abba said the Welfare Division provided revised caseload estimates to both the Fiscal Analysis Division and the Budget Division in March 1995, and there were significant reductions compared to the caseload estimates included in the Executive Budget for Fiscal Year (FY) 1996 and FY 1997. He stated the reductions, which are significant, were based on a number of factors: (1) caseload size has been decreasing for the last several months, and (2) the caseload factors used in the Welfare Division's caseload projection model were updated to mirror the Economic Forum's revised revenue projections. Continuing, Mr. Abba said throughout the AFDC and Medicaid budgets there are recommendations for adjusting the budgets for caseload. In the Welfare Administration module, however, there are no caseload adjustments per se, aside from potential reductions in additional staff that had been recommended in the Executive Budget for the projected caseload increases. Mr. Abba said the fiscal analysis staff compared the proposed caseload in the Executive Budget with the revised caseload estimates, examined the recommendations for personnel in decision units M-200 and E-901, and based upon their analysis concluded it is possible to eliminate 19 Eligibility Worker positions over the biennium. A total of 62 ECS (Eligibility Certification Specialist) positions have been recommended in decision unit M-200 and 24 in decision unit E-901, Mr. Abba stated. Further explanation of this policy issue centered on the state error rates in Welfare Division programs and is presented on page 21 of Exhibit C. Mr. Abba referenced page 24 of the budget closing action sheets, which contains a table depicting the quality control error rate history for the welfare programs. Calling attention to the Food Stamp error rate, he said the division "seems to be holding its own." He noted, however, the data must still be quantified for 1994, and the error rate possibly could be higher than the 6.5 percent error rate indicated for that year after the data have been quantified. Mr. Abba indicated he would not recommend reducing the positions recommended in the M-200 decision module, but staff reductions can be made in unit E-901. He said the division contends the positions recommended in M-200 are needed because the agency has not been granted sufficient positions to handle its work load over the last several years, and having the additional positions might enable the division to begin to catch up. Senator Rawson suggested the committee consider making its closing recommendations on this budget, recognizing there are some reform proposals pending. He requested Mrs. Evans and Mr. Allard to examine the E-901 decision module with respect to potential staff reductions. Senator Coffin requested the Welfare Division representatives to indicate what is in the model referenced by Mr. Abba that engenders confidence the caseloads will remain lower for the next 26 months. Myla C. Florence, Administrator, Welfare Division, Department of Human Resources (DHR), responded after introducing Michael J. Willden, Deputy Administrator, Administrative Services, Welfare Division (DHR). She stated that with regard to the caseload projection model, the current model employed by the division has a confidence level of approximately 95 percent. In conjunction with staff working with the economic forecasting commission, Ms. Florence said, this model has been perfected with regard to the hotel, gaming and recreation (HGR) variable. She said the division believes the model has improved in its predictability to a confidence level of approximately 96 percent. Ms. Florence said the division's statistical staff is quite comfortable with the refinement of the HGR variable, and consequently she has confidence in the new caseload projections. In further discussion of caseload projections, Ms. Florence said the Welfare Division updates its projections every month, and it is therefore not uncommon for the agency to have, during the course of the legislative session, two or three projections during the budget deliberations to better define the direction in which the caseload is moving. She said it is also important to understand the caseload is still growing, it is simply the rate of growth that is decreasing in the refined model. Senator Coffin stated his desire to follow up on Ms. Florence's reference to gaming. He said he has read studies whose thesis is that the addition of the new casinos creates an increasing welfare work load beyond what would normally be projected. He noted there was a "bubble" in welfare that seemed to have coincided with the bubble in the growth of Las Vegas casinos as a result of an influx of people from around the country seeking employment with the casinos. Predicting this will soon occur again in Las Vegas, the senator asked if this has been accounted for in the division's projections and if the projections will accommodate increased population growth in Las Vegas during the upcoming biennium. Ms. Florence responded the division's projections very much take into account the concerns raised by Senator Coffin and are based on the number of hotel rooms projected over the biennium. She said it should be kept in mind the division is still projecting growth, but a slower rate of growth; the HGR variable had been over- estimated. The new information (from the Economic Forum) improves upon the caseload projection model, Ms. Florence continued. She added that she stands by the division's model and views it as a model for the nation. She said the Welfare Division in Nevada has been contacted by other states with regard to its AFDC caseload projection methodology. Mrs. Evans questioned Ms. Florence regarding the recommendations from the fiscal analysis staff to reduce positions within this budget. She inquired as to how the proposed new staffing levels, including the possibility of cutting 19 positions, meshes with the division's revised projections on staffing levels, given the four factors of caseload, error rate, the 45-day waiting time for AFDC and CHAP (Child Health Assurance Program), and the staffing study. Ms. Florence said she strongly advocates against reducing staff, for a number of reasons. First of all, she stated, as pointed out previously by Mr. Abba, prior to developing its budget the Welfare Division engaged in an extensive staffing standards study which was independently conducted by budget and statistics staff and research staff outside of the line workers, supervisors and other personnel. In the course of conducting the study it was determined an appropriate caseload for an eligibility worker handling all programs is 249 cases. Ms. Florence remarked this is still the highest caseload level in the western region. She said the division took a conservative approach in evaluating the caseload level eligibility workers can effectively and efficiently handle. Staff was requested by the agency based on that standard, Ms. Florence continued, whereas the Governor recommended an increase in staff as a percentage of caseload. She expressed hope that by the end of the current legislative session the Legislature will recognize there is a maximum caseload that an eligibility worker can handle efficiently and accurately, rather than continuing to place more responsibilities on the frontline workers at the expense of effectiveness. She said to achieve the required vacancy savings the division must leave 33 positions vacant during the biennium; consequently, assuming a caseload level of 249 cases per eligibility worker, staff would actually be handling more cases than that due to the vacancy savings required. The situation is compounded by the absence of workers due to illness or on extended leave, Ms. Florence said. Continuing, Ms. Florence said she could not in good conscience say the Welfare Division can adequately handle the current work load with a reduction of 19 staff members on the front line. Mrs. Evans asked if Ms. Florence is saying the calculations are based on full staffing rather than on keeping 33 position vacant. She suggested there is a big difference between the two. Ms. Florence replied the reduction of staff is based purely on caseload reductions and does not consider vacancy requirements nor the other complicating factors facing the division during the upcoming biennium, including the conversion to NOMADS, the cross-training of workers for all programs, and the climbing error rates being experienced by the division. She said the agency is in the process of addressing the problem with the error rates, and there is a learning curve involved in becoming familiar with eligibility for all welfare programs. Given the situation the division is currently experiencing, Ms. Florence said, it would be desirable to provide some relief for the frontline during the upcoming biennium while the workers are encountering tremendous change. She said she hopes to be able to report to the Legislature during the next biennium that NOMADS is operational and is performing many of the functions currently being performed by workers, and the division's staff needs will therefore not be as great. Senator Rawson commented the reduction of welfare administration staff by 19 positions would be too draconian. He reiterated his request that Mrs. Evans and Mr. Allard examine and report on the staffing issue. Noting there is legislation pending that proposes welfare reform, the senator said he does not wish to send the message to the legislators introducing these measures that there will be no discussion of their bills. By the same token, he continued, it would not be advisable to hold the budgets. He proposed recommending closing the budgets and subsequently reopening them, if necessary, to make adjustments later in the legislative session. He expressed concern regarding the caseload projection. Mr. Abba explained policy issue two, pertaining to decision unit M-300 (page 21, Exhibit C), which provides for the unfreezing of eligibility worker merit salaries. Over the biennium this would result in adding approximately $1.3 million to the salary category once the salary category "rolls up into a total line item," Mr. Abba said. (Further details regarding M-300 are presented on page 21 of the budget closing action sheets.) Mr. Abba said one issue to be considered is reducing the M-300 category by $79,478 in FY 1996 and $98,847 in FY 1997 for the recruitment and filling of eligibility worker positions at a trainee level versus a journey level. The division generally recruits and fills at a much lower level (approximately 15 percent lower), and reducing the funding in M-300 should not adversely affect the division's efforts to manage its salary category. Senator Rawson invited response from Ms. Florence, who said if there must be a decision between elimination of workers and reducing the amount in M-300, the division's preference would be the reduction in M-300. She urged that consideration be given to improve the conditions under which the frontline staff operate. She said the ability to have flexibility to fill positions as they become vacant rather than holding them for extended periods of time, thereby adding to workers' caseloads, would be very appropriate during this biennium. Ms. Florence said her preference would be that no action be taken with regard to either eliminating positions or reducing the funding in the M-300 category. Senator Raggio said it is his understanding the Welfare Division will have substantially more flexibility than it currently has through the unfreezing of the merit salaries and assuming vacancy savings are not significantly increased. He inquired of staff if an adjustment could be made in addition to reducing the funding in the M-300 category that would still leave sufficient flexibility for the agency in this category. He suggested once the NOMADS training is completed, additional staff time should become available for working on cases. The senator asked when it is anticipated the NOMADS training will be completed. Ms. Florence responded that welfare personnel in other states have indicated that when they have converted to seamless worker concepts such as NOMADS, the learning period for the staff is approximately 18 months. During that period, training and retraining occurs, and there is close supervision of workers in an attempt to focus on caseload errors, she stated. The NOMADS training has begun and is expected to continue at least through July 1996. Senator Raggio inquired as to whether the training will consume a worker's entire day every day of the projected 18-month learning period. Ms. Florence said it depends; there are 5-day training sessions projected in some cases, involving just NOMADS training. Even before the familiarity with the computer system and equipment is begun, Ms. Florence continued, the workers must learn all of the program eligibility requirements, which is what they are doing at present. Senator Raggio asked if Ms. Florence is suggesting the eligibility workers would be doing nothing except training for 18 months and would be unavailable to work on cases. Ms. Florence said she was not suggesting this at all. She said whenever personnel are pulled from the frontline, even for 1 day, client service is affected, and the agency is constantly shuffling personnel in an effort to meet the caseload requirements. Senator Raggio said he understands this, but is attempting to determine what is a reasonable amount of latitude or flexibility that conserves state funds and would be appropriate during the training period. He noted M-300 will add approximately $1.3 million in General Fund expenditures and said he is attempting to ascertain the funding level that will be prudent yet will facilitate the needs of the agency. Mr. Abba suggested as an option examining, in lieu of the elimination of positions per se, the possibility of eliminating position salaries and making the adjustments in decision unit M-300. He said this would allow the division the flexibility to manage its salary category, and if the salary category can be managed the agency would also have the flexibility to fill positions as needed. Senator Raggio said Mr. Abba's suggestion makes sense and is in line with his thinking on this policy issue. He indicated support for the amount staff recommends to be reduced in M-300, which he said would appear to leave considerable flexibility in this module. He asked Ms. Florence for comment. She replied this recommendation would be the division's preference, if an adjustment must be made. Mrs. Evans indicated agreement with Senator Raggio's position on the M-300 policy issue. She requested no action be taken on this budget until policy issues one and two can be further discussed and negotiated. Senator Rawson agreed to defer action on the policy issues referenced by Mrs. Evans. Mr. Abba explained item 3 on page 21 of Exhibit C which concerns the NOMADS project in decision unit M-581. He called attention to the adjustments in M-581 on page 20 of the budget closing sheets, which provide for reductions of approximately $1.2 million and $2 million in the first and second years of the biennium, respectively. He said the reduction in General Fund appropriation is approximately $1.3 million and, in federal funds, approximately $2 million over the biennium. Mr. Abba said the amounts recommended to be reduced in module M-581 appear significant, but there have been a number of changes in the costs projected for the upcoming biennium, that will allow for those modifications. First, he stated, because of the numerous delays in implementing the NOMADS project, the implementation schedule has been modified and rescheduled, and there are a number of deliverables that would have come on line in FY 1995 that must be refunded in FY 1996. This adds approximately $1.7 million to the budget, Mr. Abba said. However, there are a number of items that were over-budgeted in the original budget; for example, the Department of Information Services (DIS) charges for facility maintenance and programming costs were significantly overstated. The fiscal analysis staff, working with the Welfare Division and DIS staff, has developed modifications that have been agreed to by the subcommittee considering the DIS budgets. Those modifications will reduce the costs in the NOMADS category for DIS charges by approximately $1.8 million over the biennium, Mr. Abba stated. Additionally, Mr. Abba continued, the Welfare Division has reviewed its own projections in the NOMADS category, and based upon those re-projections of costs there are a number of adjustments which could be made that would reduce overall NOMADS costs. In particular, he said, computer hardware lease costs have been reduced by approximately $300,000 each fiscal year. The projected interface costs for NOMADS have been reduced by approximately $412,000 in FY 1996 and $225,000 in FY 1997. Another large item that has resulted in a cost reduction is that the NOMADS project will utilize an electronic mail insertion/sorter system. Initially it was determined this would be a contract function with another entity; however, as part of the consolidation of the state mail functions, the state mail room will perform the mail-sort function for NOMADS. As a result, a significant reduction in this category of $767,132 in FY 1996 and $722,718 for FY 1997 is recommended. Mr. Abba said the proposed cost reductions were worked out between the Welfare Division and the Department of Administration, and the proposal allows for implementation of the mail-sort function in February and provides for the overhead costs. He noted the recommendation also allows for $300,000 in change orders for FY 1996, which is the projected amount of unspent authority that will remain in change orders for FY 1995. He said the Interim Finance Committee (IFC) previously approved that amount. Continuing, Mr. Abba called attention to another issue. He said the Phase II code has been rescheduled for delivery on May 31, 1995, and at this point there is no reason to doubt this deliverable will be received by that time. However, if delivery is delayed beyond the close of the fiscal year, the payment for Phase II must be re-budgeted. Mr. Abba said the Phase II payment is approximately $2.7 million, and modification of this budget may be necessitated as more information is received. Senator Raggio remarked, "I think this is a red letter day, the first time in 6 years that somebody has told us NOMADS is going to cost less than we thought." SENATOR RAGGIO MOVED TO RECOMMEND ACCEPTANCE OF STAFF RECOMMENDATIONS REGARDING MODIFICATIONS TO THE BUDGET CATEGORY PERTAINING TO THE NOMADS PROJECT (ITEM 3, POLICY ISSUE 2) AS PRESENTED ON PAGE 21 OF EXHIBIT C. INCLUDED IN THE MOTION IS THE RECOGNITION THAT A RE-APPROPRIATION WOULD BE REQUIRED IN THE EVENT THE NOMADS DELIVERY PROJECTED FOR MAY 31, 1995 IS DELAYED BEYOND THE CLOSE OF THE STATE FISCAL YEAR ON JUNE 30, 1995. MRS. EVANS SECONDED THE MOTION. THE MOTION CARRIED. (MS. TIFFANY WAS ABSENT FOR THE VOTE.) * * * * * Addressing item 4 in policy issue number three (page 22, Exhibit C), Mr. Abba said the five new Program Assistant positions recommended in decision unit M-581 to meet the requirements of the National Voter Registration Act (NVRA) are recommended to be deleted. He said the Welfare Division has been tracking the amount of time and effort expended by the district office staff to meet the NVRA requirements, and based upon the last 3 months the number of hours spent is less than the time spent by one FTE (full-time equivalency position) on these activities statewide. It is therefore recommended the positions and their support costs, except for printing and postage, be eliminated. Maintaining the printing and postage costs would allow the division to print forms and pamphlets and to mail information as requested. Mr. Abba noted the Welfare Division agrees with the proposal, as indicated in a letter to that effect which is identified as page 26 in Exhibit C. MRS. EVANS MOVED TO RECOMMEND ACCEPTANCE OF THE STAFF RECOMMENDATIONS REGARDING ITEM 4 OF POLICY ISSUE 2 (PAGE 22, EXHIBIT C). MR. HETTRICK SECONDED THE MOTION. ASSEMBLY: THE MOTION CARRIED. (MS. TIFFANY WAS ABSENT FOR THE VOTE.) SENATE: THE MOTION CARRIED UNANIMOUSLY. * * * * * Reviewing the budget closing recommendations regarding policy issue number 3 (page 22, Exhibit C), Mr. Abba said this issue involves several decision units: E-175, E-178, E-179, E-180 and E-181. The decision units provide for 12 new positions and their support costs over the biennium to enhance the Welfare Division's administrative structure, he told the committee. He said the division has received no administrative support for a number of years. The support has been mainly for the frontlines and not for the central office. The division has provided a priority list of the recommended positions, at the request of the fiscal analysis staff (page 22, Exhibit C). Mr. Abba noted the positions have been recommended to start effective July 1, 1995. Staff recommends, at a minimum, delaying the positions. Mr. Abba said the delay can be accomplished through a 3-month delay for the position FTE count (a reduction of 25 percent) or in decision unit M-300, reducing the salaries by 25 percent and offsetting that amount in M-300. The 3-month delay would effect a savings of $110,650 (50/50 federal/state). The staff has no particular concerns with the positions that are recommended, Mr. Abba stated. Senator Rawson inquired if there are any positions among the 12 that it is critical to fill on schedule rather than delaying the effective starting date, as recommended by staff. Ms. Florence replied yes. She said it is critical to fill three positions in particular as early as possible, recognizing there often is a lag time between the budget finalization process at the end of the session and the recruitment process. The three positions are the Administrative Services Officer (ASO) I, which position assists with the Medicaid projections program (financial analysis); the Property Inventory Clerk position, which is needed to address pressing facility issues; and the Management Analyst II, who performs federal cost allocation tasks. Ms. Florence said in reality the division could probably not fill the positions, through the normal recruitment process, until August or September. Senator Coffin suggested the possibility of following the same policy approved in the M-300 module, which essentially is that the positions are approved, but the funding is delayed. He said this provides flexibility to fill the positions as needed, to the extent the funds are available. Discussion ensued regarding this issue. Ms. Florence said her understanding of the personnel process is that if the agency is authorized to hire effective July 1, the Budget Division and the Department of Personnel will issue a personnel card that recognizes the agency's authority to fill the position. If it is indicated the positions will not be effective until October 1, however, the necessary paperwork will not be initiated until after October 1. Ms. Florence proposed at least authorizing the division to fill the priority positions effective July 1 to provide hiring flexibility between July and October. The committee indicated this would be acceptable. MR. HETTRICK MOVED TO RECOMMEND THAT POSITIONS 1, 2 AND 3 AS LISTED IN ITEM 5 OF POLICY ISSUE 3 (PAGE 22 OF EXHIBIT C) START EFFECTIVE JULY 1, 1995 AND THAT THE FUNDING FOR THE 12 POSITIONS BE APPROVED FOR OCTOBER 1, 1995 MRS. CHOWNING SECONDED THE MOTION. ASSEMBLY: THE MOTION CARRIED. (MS. TIFFANY WAS ABSENT FOR THE VOTE.) SENATE: THE MOTION CARRIED UNANIMOUSLY. Noting there is no closing recommendation with regard to policy issue 4, Mr. Abba summarized the provisions within decision unit E-400 as described on page 22 of Exhibit C. He said E-400 is part of three components of the Governor's proposed Welfare Reform Demonstration Project (WRDP), which is recommended to be effective January 1997. The three components are in the Welfare Administration, the Aid to Families with Dependent Children (AFDC) program and the Employment and Training budgets. Mr. Abba emphasized that even though the components in these three budgets have been packaged as a comprehensive program, each can be considered separately on its own merits. He said the component within the Welfare Administration budget provides for five new social workers, beginning January 1997, and six ECS workers beginning July 1995, as part of the case management eligibility assessment component of the Governor's proposal. Basically, Mr. Abba continued, the social workers will provide case management services for applicants seeking welfare assistance who have extreme barriers that may prohibit employment. A social worker will be located at each district office. Mr. Abba said the division has entered into a contract with the University of Nevada, Las Vegas (UNLV) to provide student interns to assist in some of the other areas because five social workers will not be a sufficient number to handle the types of caseloads that will be entailed. Mr. Abba said the six ECS workers are provided to allow staff to spend an estimated additional 15 minutes per applicant during the initial interview process. The extra 15 minutes would be spent discussing employment issues and to assess the applicant's employability at the time of application, he explained. If the assessment indicates the individual requires further assistance, the applicant would be referred to the social worker component. Decision unit E-400 also includes $25,000 in contract services to conduct an independent evaluation of the demonstration project's success or shortfalls, Mr. Abba stated. He said in the AFDC component there will be a federal requirement to waive certain eligibility budgeting rules. When such a waiver is in place, there is a requirement to have an outside entity to monitor the success of the waiver. Regarding decision unit E-400, which is entitled Self-sufficiency Through Social Services, Senator Raggio said when this budget was heard initially by the Senate Committee on Finance on February 14 there was considerable question as to whether or not this program is necessary at this time. He noted its cost would be $116,000 in FY 1996 and $188,000 in FY 1997 in state General Fund appropriations. The senator voiced the opinion the case was not made for this program at the initial hearing. He requested clarification as to the waiver requirement. Mr. Abba said the waiver requirements are in the AFDC budget, and the waiver exempts the division from compliance with certain budgeting rules to allow retention of income by AFDC clients. The component recommended in the Welfare Administration budget is part of the Governor's overall proposal to stress the importance of employment, to provide case management services, to work with AFDC clients and assist them in employment endeavors, and to allow the frontline eligibility staff to spend more time emphasizing employment when they are interviewing applicants. Stating his mind is not closed with regard to this program, Senator Raggio suggested deferring action on the issue to allow the committee to obtain additional information. Senator Rawson agreed. Ms. Evans requested Ms. Florence to present the highlights of the rationale for this program and the Executive Budget recommendations with respect to funding the program. Ms. Florence responded that during the interim, the Welfare Division formed a task force of 15 representatives of various state and local agencies as well as employment and advocacy groups, and the effort was to design a program that would meet Nevada's needs. She said the group focused on the need for the division to facilitate applicants becoming employed, to provide incentives to work and to support the efforts that will enable this to be done. Ms. Florence said the primary issue with regard to this portion of the budget concerns discussion with an applicant at the outset in terms of why the person is applying for public assistance and what alternatives to such assistance may be available. At this time, Ms. Florence continued, the eligibility process does not address the issue of possible alternatives, but is focused totally on eligibility as opposed to employability and self-sufficiency. She said this is an area in which the division needs to invest its time and resources. The culture of the welfare office must be changed so the emphasis is not on how applicants can be certified as eligible, but how they can become employed, Ms. Florence said. She suggested this would be facilitated by providing additional time for frontline eligibility workers to ask the necessary questions. Secondly, she stated, reintroducing social workers into the eligibility phase of the process acknowledges the fact there are many people who have multiple problems which cannot be addressed simply by issuing an assistance check. These people need case management services and need to be served by the various agencies available within their communities to help them achieve a higher level of functioning and self- sufficiency, Ms. Florence stated. She said the requested additional staff would enable the division to begin rethinking the manner in which services are currently provided within welfare offices. Senator Raggio said as he understood the program when it was presented at the initial hearing on this budget, the staffing recommendations would allow for an additional 15- minute interview to determine employability, and there is a waiver requirement that would entail hiring at least one person to evaluate the demonstration project. Ms. Florence said this is not required under the waiver. She indicated the way the budget is constructed, the proposed self-sufficiency program could be implemented without a waiver. Senator Raggio requested further clarification of the proposal, which as he recalls from testimony presented at the February 14 hearing would allow for an additional period of time to be spent with each of the applicants to determine employability. He asked if it is being proposed that matching funds be provided to obtain federal funds for the program, and why it is necessary to do so at this time. Ms. Florence responded it is necessary because the current system is not working, and what the current system fosters is an eligibility worker only processing forms and looking at eligibility components rather than at the circumstances that led the individual to seek welfare assistance and the resources available to quickly have them exit the system. She emphasized this is not part of the current interview. Senator Raggio questioned why, if all of the new caseworker positions are to be added to the program, the determination of an applicant's employability and reasons for seeking assistance cannot be made part of the caseworker's job. He called into question the need to add six ECS positions and, subsequently, additional positions in order to achieve the desired results as proposed in this program. He agreed it is important to determine an applicant's employability and circumstances. Ms. Florence responded there is nothing to preclude the division's ability to implement the program immediately, except time. She said the average interview, which merely addresses the applicant's eligibility, is 45 minutes. Within that time the error rates are already high, she observed. Calculations using the projected number of interviews over a 1-year period, along with the number of man-hours available, indicate the need for six additional FTEs to provide the additional interview time. Senator Raggio inquired if these positions are still necessary given the recommendation for new eligibility worker staff discussed within policy issues 1 and 2 (page 21, Exhibit C). Ms. Florence replied yes. She pointed out the agency's initial staffing request was not recommended in full in the Executive Budget. The senator reiterated his desire to defer action on this item pending review of additional information. Referencing a recent tour by legislators of the Clark County Social Services facilities, Senator Rawson said he liked the fact the Clark County agency heavily utilizes social workers on the front line and emphasizes the need to promote self-sufficiency rather than establishing eligibility. He said the agency's approach seems very effective. He agreed there should be further discussion on this issue. He noted there are three components to the Governor's welfare reform package, and they can be addressed separately although the Governor's goal is probably "to tie them into a coordinated package." Senator Coffin pointed out the Executive Budget declares a waiver is necessary, and there is a need for clarification as to the actual requirements for the waiver. He commented, "Also, I think the frustration perhaps can be focused on the fact that the project does not really become effective until January of 1997." He said much has changed since the Governor's budget was constructed, and whereas the schedule for implementing the proposal seems to have "a rather leisurely schedule," the Legislature seems inclined to act quickly on the welfare reform issue. Ms. Florence responded that because the welfare reform package flows through several different budgets, it is difficult to track. She said first of all a waiver is not needed to perform more front-end services with regard to discussing employment and utilizing resources toward that end. The waiver reference in module E-400 pertains to the funding for the evaluation component, she stated, and that is in the second year of the biennium. She explained waivers are needed only when rules are being changed, not when administrative policy changes or there are changes in the philosophy of service delivery. Ms. Florence said the proposed waiver of eligibility rules would occur in January of 1996, based on the agency's assumptions about NOMADS wherein different calculations must be performed with reference to income because the earned income for the first 3 months would be disregarded. Earned income for the following 9 months would also be disregarded for those applicants who actually obtain employment. Secondly, Ms. Florence continued, within the AFDC the budget projects savings based on the moving of people from welfare to self-sufficiency as a result of earnings. The waiver only relates to federal eligibility rules that the state intends to change and then must demonstrate to the federal government, through a test and control group, that a change in the benefits issued has occurred as a result of changes with regard to the eligibility component. Ms. Florence further testified that moving toward the goal of focusing on employability at the time of the interview, in line with the Governor's recommended budget, would begin in July 1995. She said the proposals put forth for the upcoming biennium represent incremental changes to the entire system. Senator Rawson inquired whether the NOMADS system is intended to be a paperless system that produces only electronic output. Ms. Florence replied there will be a computer terminal at every eligibility station. The long-term goal is to have a totally paperless system, although it will not be that way initially. Ms. Florence said applications for assistance would still be submitted on paper and certain other documents, such as verification, would use paper. The senator expressed concern with regard to the number of personnel that must be dedicated to bringing an applicant into the system. In further questioning Senator Rawson asked if an interface with agencies such as the Employment Security Division (ESD) and the Department of Motor Vehicles and Public Safety (DMV&PS) will be afforded with the NOMADS system. Ms. Florence answered yes and said there are some 39 different interfaces envisioned in NOMADS, which will be a very comprehensive system. Senator Rawson inquired if the system will allow interfacing with other welfare agencies in the state, such as those in Washoe and Clark counties. Ms. Florence replied the capability ultimately will be provided. She said there is a beginning interface with the Washoe County and Clark County district attorney with regard to the child support component. It will not be difficult to implement the interfacing once the system has been fully implemented, she stated. Mr. Allard stated he agrees with the intent of the welfare reform program but questions whether it will be effective. He asked whether screening criteria will be established to target applicants with significant barriers to employment. Ms. Florence replied yes. She said there would be "a brief tool" for the first point of contact. She emphasized what is being discussed is the first contact with the division by the eligibility worker. In the proposed reform program there would be not only social workers to whom applicants would be referred, but also the employment and training unit, where appropriate. Ms. Florence said more importantly, the goal of the Welfare Division is for those applicants who are "job-ready" to be referred immediately to the appropriate unit. Mr. Allard suggested all applicants for welfare have barriers to employment or they would not be applying for public assistance. Ms. Florence countered, "Not necessarily." Mr. Allard asked what the barriers are. Ms. Florence answered the more significant barriers would include lack of basic education, substance abuse problems and a family history of welfare dependency. Mr. Allard inquired as to the percentage of welfare applicants having problems; he suggested the percentage is significant. Ms. Florence referenced the agency's presentation at the March 15 budget hearing, when material was presented indicating that about 31 percent of welfare applicants are employable at the time of application, approximately 53 percent would be employable with some assistance, and 16 percent would be employable with intensive assistance. The last group consists of applicants with less than a fifth grade level of literacy, no work history or a minimal work history, law enforcement problems or other severe barriers to employment. In further questioning Mr. Allard asked if the welfare reform program is intended to identify those applicants who are the most unemployable or who have the most significant barriers. He indicated his questioning was an attempt to determine what is being targeted with the proposed reform program. Ms. Florence replied the particular component under discussion must first be identified. She said the additional time to be provided for the eligibility worker is primarily intended to refocus the procedures utilized in handling cases. She explained that currently, due to lack of time, the eligibility worker is not even discussing with applicants the situation that led them to apply for welfare assistance, due to lack of time. The focus at present is strictly on eligibility criteria at hand and the verifications required, Ms. Florence continued. By adding time to the initial interview it is hoped the 31 percent that are employable can immediately be directed toward obtaining employment. Mr. Allard asked if it is the program's intention to refer the applicant to the Employment Security Division. Ms. Florence answered the intention is that the appropriate referrals be made, whether it be to ESD, to Job Opportunities In Nevada (JOIN) or through knowledge of jobs available through the division's own employment and training efforts, based on a determination of the applicant's particular skills. Mr. Allard asked why all applicants cannot be referred directly to the ESD since the employment function belongs to that agency while the Welfare Division's responsibility is to provide welfare assistance. Ms. Florence replied, "That in effect is what we are doing now, and it is not working." Mr. Allard inquired as to how the reform program is expected to change the situation. Ms. Florence said she believes the program changes the entire attitude of the applicant toward the eligibility worker and the interview that is conducted with the client. She said currently the eligibility worker does not care whether or not the person becomes employed, and she contended that is what is wrong with the current system. Mr. Allard said the problem is whether the applicant cares and asked if it is believed the eligibility worker's thinking will be redirected toward seeking employment. Ms. Florence responded the applicant would not initially see a social worker, but an eligibility worker; only a limited number of social workers have been proposed within the decision module under discussion, and will take effect in the second year of the biennium. She said this is where the entire situation becomes so complicated. The issue with regard to the point of contact with an eligibility worker is to change the focus from eligibility to employability, Ms. Florence continued. Mr. Allard questioned whether more positions are needed in order to change the focus. Ms. Florence replied the additional positions are needed to enable the eligibility workers to have the time to address such topics as employability, because the workers' existing time is spent minimally complying with the existing eligibility requirements. She said these requirements cannot be disregarded. The forms still must be completed and verifications obtained. Adding time to the interview translates into six eligibility workers statewide for 14 district offices and seven or eight satellite offices and is a minimal investment to try to redirect what is currently being done within the welfare system, Ms. Florence maintained. Mr. Allard inquired if any other state has implemented a similar program. Ms. Florence answered yes. Mr. Allard asked if the program is working in other states. Ms. Florence indicated it is too early to answer definitively. The most comprehensive research available at present pertains to a program in California wherein five different counties are involved in a similar effort that emphasizes employability as the focus during the initial contact with an applicant. Ms. Florence said the results are encouraging in some counties and not as encouraging in others. Mrs. Evans said with reference to an earlier question regarding the delay in implementing the self-sufficiency program, Ms. Florence pointed out it is necessary to have the automated system (NOMADS) in place in order to track the results and ensure the effectiveness of the program. Secondly, Mrs. Evans said, the question at hand is whether or not welfare reform is desired. She applauded the efforts of Ms. Florence and the Welfare Division over the past 2 years in working out the details of and presenting a reform plan, stating the agency appears to be moving in the right direction in terms of its focus on employability rather than merely on eligibility. She posed the question, "If we are not going to do welfare reform now, then when?" Commenting this discussion is very important, Senator Raggio said it is unlikely any member of the subcommittee does not believe there is a need for welfare reform. He recalled that according to the Governor's State of the State address, one of the key provisions of the Welfare Reform Demonstration Project is for welfare recipients receiving some income to remain eligible for assistance, in order to address the problem of lack of incentive to become employed. He said everyone supports the concept of welfare reform; the problem is how and when it is to be implemented. The senator said there are many ideas being put forth that sound good, but they should not be implemented merely on that basis. Senator Raggio observed that as indicated earlier by Ms. Florence, what has been proposed in the Executive Budget is significantly less than what was requested. He referenced information at hand relative to concerns he had when testimony was presented earlier in the legislative session, some of which were alluded to in the above discussion with Mr. Allard. Pointing out that with regard to the position requests in the E-400 module (item 6, policy issue 4, page 22, Exhibit C) only one social worker position requested would be located at each large district office, Senator Raggio said the obvious question is, given the limited budget, how will this enable the proposed self-sufficiency services to be provided? He questioned the ability to effectively screen applicants with the addition of only one social worker, and the ability to monitor the applicant's follow-up on employment opportunities presented during the interview. Emphasizing that he does not oppose the program, Senator Raggio said he is concerned as to whether this is the time to implement it. He said the question asked by Mr. Allard regarding whether such programs have proved effective in other states is significant. There is at this time no measurable way to determine whether or not similar programs implemented elsewhere have been effective, he remarked. He further stated that, according to his understanding, the demonstration project would be operational for only approximately 3 months and would start in January of 1997. He said it would appear that an independent evaluation probably is not necessary until at least the beginning of FY 1998. He stressed the need to implement a program such as the one proposed (emphasizing self-sufficiency), which he said is regarded as a key element of welfare reform, but if it is to be done it should be done correctly. He indicated this would include deferring implementation until a history of similar programs in other states is available, and waiting until the next biennium to appropriate funds for an independent evaluation of the project in view of the probability that the evaluation is not necessary until the beginning of FY 1998. Senator Raggio said this is the genesis for all of his concerns. Ms. Florence responded first to the question of timing. She said the January 1997 implementation would apply only to the reform areas that require a waiver. The reason for including $25,000 for the evaluation component during that time is to enable the division to design an evaluation early in the biennium. She noted $100,000 per year has been budgeted for the evaluation itself. Senator Raggio interjected he had mis-spoken, and the $25,000 is for the last quarter of the year, based on an estimate of $100,000 per year. Continuing her response, Ms. Florence said over the past several years states have designed a number of reform initiatives which are planned for a 5-year period under the 1115 waiver process (a federal waiver pertaining to research and demonstration projects in the Social Security Act, 42 U.S. Code, section 1315, subsection 1115). The research into the results of such initiatives is just beginning to emerge, as all of the programs are still in the early stages of implementation. Ms. Florence stated there is probably no dispute with the basic concept of broadening eligibility to include the goal of employment. How the various states or local entities accomplish this has changed, she noted. She asserted the state cannot wait another 2 years to determine the effectiveness of similar programs in other states before acting on welfare reform. She said the proposal has been on the table for at least one legislative session during her tenure with the Welfare Division, and many key people within the state have invested significant time in efforts to design a program that meets Nevada's needs. Ms. Florence voiced the opinion the representation on the advisory committee has served the Legislature well. She noted the members volunteered their time to serve on the committee. Senator Raggio said he agreed but questioned why the Welfare Division is not therefore recommending enhanced funding to accomplish the objectives. He said the budget request is very limited with respect to additional positions. He asked, "Why aren't you here telling this committee we need five people in each of these offices? Is it because we want to cut the caseload down on welfare to compensate for programs in the other parts of the budgets? Let's be realistic about it." Responding, Ms. Florence pointed out a request for a significant increase in staffing for this program is included in the division's employment and training budget. She said in terms of the proposal and based on input from the task force, she regarded it as unrealistic that she could approach the Governor's Office or the Legislature with a request for 10 social workers in every district office, although having these additional positions would be "a giant step" toward refocusing the agency's efforts. Ms. Florence said the division intentionally took an approach it is believed will first of all demonstrate progress (which the division is confident will be validated by an independent evaluation), and secondly to begin reintroducing social work components into welfare. Ms. Florence said when the Welfare Administration budget is examined in conjunction with the employment and training budget, it is apparent there is a significant investment in resources aimed at accomplishing welfare reform. Further, savings in the AFDC budget are expected to be realized as a result of this initiative, she stated. Mr. Allard agreed something needs to be done now with regard to welfare reform, but he suggested the proposed additional time for interviewing might be merely "window dressing." He said significant reforms need to be made, but indicated doubt the proposal at hand will address the problem. He suggested the program would be a waste of taxpayers' money. He voiced the opinion the problems are more severe than an interview aimed at facilitating employment of applicants can resolve, and it is necessary to rethink the entire welfare system rather than merely adding personnel. Mr. Allard questioned what could be gained from the additional 15-minute interview in terms of ascertaining an applicant's employability or the problems they are having in their lives. He commented that if the applicants did not have such problems they would not be at the welfare office in the first place. Ms. Florence answered the proposal is a comprehensive package that does not merely add time to the interview. She said a review of the employment and training budget should clarify the relationship of the various components of the plan. Regarding the additional interview time, Ms. Florence said eligibility workers complain they do not have the necessary time to obtain the most critical kinds of information, and obtaining such information is really what they should be doing. While it may not seem like 15 minutes would make much difference, she continued, the overall interactive time between the client and the eligibility worker would be significant. Mr. Willden offered information pertaining to a financial component of the budget referenced by Ms. Florence. He said it is important for the committee to recognize that all of the costs in the Welfare Administration budget are offset with the negative E-400 module in the Aid to Dependent Children (ADC) budget. He noted there are two costs in the Executive Budget associated with welfare reform: the cost of the new staff and the cost of the budgeting disregards in the ADC budget. All of those costs have been offset with savings built into the ADC budget, so technically this budget has been built as revenue neutral, Mr. Willden continued. If costs are decreased in the Welfare Administration budget and the proposal under discussion is not implemented, it will be necessary to revisit the ADC budget and add funding because that budget is predicated on anticipated savings. Mr. Willden said in response to questions raised by Mr. Allard that, speaking as a former eligibility worker himself, the eligibility worker's job at present is simply to determine an applicant's eligibility for ADC, food stamps or Medicaid, and no employment-related activity is introduced until 30 to 45 days after the application is taken. Then referrals are made to the division's employment-related services, to the Department of Employment, Training and Rehabilitation (DETR), or other agencies. Mr. Willden said the additional interview time would enable the eligibility worker to begin immediately coordinating with the division's employment and training staff to assist applicants to obtain employment. The client would be required to begin seeking employment immediately. The eligibility worker would work in concert with the social workers in cases involving hard-to-employ applicants. Employable applicants would be introduced immediately to all of the resources available to them, including child care programs and other resources the client does not even hear about at present until 45 days after the initial interview, when the eligibility worker decides on the applicant's eligibility. Once eligibility is established, regulations requiring an applicant to participate in an employment program would take effect. The added interview time would facilitate introducing applicants into the employment programs from the outset. Those determined less employable would be provided the necessary services and resources to enhance their employability. Continuing, Mr. Willden commented the request for just one social worker for the larger district offices pertains only to state-funded positions. He said contracts are in place with the two universities, who would be supplying two to four more social workers per welfare office to assist with the process. Mr. Willden said the division is attempting to place all resources in one basket and "attack the problem up-front." Mr. Allard inquired why applicants cannot be referred to the Employment Security Division (ESD) as soon as they arrive at the welfare office, since it is the function of that agency to put people to work. He suggested no additional staff is necessary for a client to be directed to the ESD. Mr. Willden responded that many applicants can be referred directly to the ESD, but others have significant barriers to employment such as transportation and child care problems. Mr. Allard asked if it is believed all of these problems can be solved with the proposed 15 minutes of additional interview time. Mr. Willden replied he does not believe all of the problems can be solved in this way, but the proposed program begins to address the problem. Mr. Allard said he takes exception to constantly making programs bigger and bigger, taking more tax dollars and saying, "Well, we have another problem [and] government's going to try to solve it. Let's take some more tax dollars from the people and let's figure out the problems for them." Acknowledging that many of the applicants require help, he said they need incentive to return to work and that is the crux of the matter, in his opinion. Constantly taking more tax dollars and putting them into programs is not the answer, Mr. Allard asserted, and what it does is to put more people on welfare because people are being so heavily taxed. He insisted the many new programs constantly being introduced are not working. Mrs. Chowning said she is hearing many messages and expressions of frustration on the part of many people. Speaking as a former teacher, she suggested it would be extremely helpful for the Welfare Division to provide the committee with graphic/audiovisual aids such as charts to illustrate the objectives, components and impacts of the reform package. She requested the division to furnish the illustrative material so the committee may have a comprehensive package on which to base its decisions with regard to this proposal. She said this would enable the committee to make an intelligent decision instead of merely "constantly criticizing." Mrs. Chowning said the nation has asked for welfare reform, and it is the duty of citizens to criticize if they believe taxpayer dollars are not being spent wisely. On the other hand, she stated, the agency administrators must be allowed to present information based on their expertise. She said there are many people who care about welfare reform, but "if we keep doing what we're doing then we're just going to get what we get." What is proposed with the reform project, she continued, is that from the outset the focus will be different, and it is the responsibility of the legislators to allow this to be done. Mrs. Chowning reiterated the need for good audiovisual aids to assist the committee in making informed, intelligent decisions and to save valuable time. Mrs. Evans told Ms. Florence the committee may discuss the possibility of a field trip to a welfare office to provide a glimpse of the proceedings involved. In reply, Ms. Florence encouraged all committee members to visit the welfare offices. She remarked, "It is very tough work." She said while common sense might dictate that an applicant simply be referred to the ESD or other employment programs, for the most part the eligibility workers are immersed in processing forms and determining applicant eligibility. For this reason, Ms. Florence continued, it is important to add time to the interview for the purpose of changing the direction of the application and eligibility certification process. She said the additional 15 minutes might not sound like much, but in the last year there have been positive changes that should be supported. Senator Raggio said he does not disagree with any of the comments made by others at this hearing but he questions the timing with regard to funding the program in this budget, and the necessity for the program at this time. He said this discussion leads into the next budget to be considered, the ADC budget (page 1195), wherein the reform project is reflected in decision module M-200. He pointed out a total savings of $1 million in FY 1997 has been built into that budget, $513,000 of which is a General Fund appropriation. The senator said he is not convinced the proposed phase- in with limited funding will provide a half million dollars in savings for the ADC in the second year of the biennium. He stated: I don't want us to find out that we've taken $513,000 out of the ADC budget because those are anticipated savings, and have Mr. Sasser come back in midstream and tell us that was a wrong decision. That's the other side of what we do here. So if you're comfortable that...this program, limited as it is being recommended, is going to result in that kind of savings, then you're the one that has to live with that. Senator Raggio said he has an overall concern about the construction of the budget. Ms. Florence acknowledged the senator's concerns, but stated that while this decision module appears limited, when combined with the significant increases in the budget for employment and training it becomes evident there is a strong redirection of resources that will carry out the intent of the reform proposal. Based on that, she stated, the welfare administration believes the projected savings in the ADC budget will be accomplished. Senator Rawson said it is clear that welfare reform is desired and is an integral part of the Legislature's business for the current legislative session. He recommended the budget be temporarily held and directed staff to discuss with the agency representatives their next presentation to the subcommittee. He noted there has been significant expression at this hearing that even if it is more expensive than what has been recommended in the Executive Budget, an effective reform program should be initiated as quickly as possible. He said the committee will work toward that end. At 9:30 a.m. Senator Rawson relinquished the gavel to Mr. Hettrick, who presided over the remainder of the hearing. Mr. Abba explained the policy issues pertaining to decision unit E-425 (page 23, Exhibit C). He said staff is recommending approval of the decision unit, but there is a duplication of cost in the Capital Improvements Program (CIP) for the security enhancements recommended in the Welfare Administration budget. He noted the funding in the CIP is to be deleted because the Welfare Division will be able to take advantage of an opportunity to obtain matching federal funds to provide for the agency's security needs. Mr. Abba said the General Fund costs in decision unit E-425 are primarily to pay for the ongoing costs of contract security guards to be located on a full-time basis in three district offices. The higher level of federal funds in the first year of the biennium pertain to the additional match requirements that will coincide with state funding of the onetime appropriation provided in Assembly Bill (A.B.) 253 for security alarm systems, wall panels and cellular phones recommended as part of a private firm's recommendations based on its analysis of the security needs of the division's district offices. ASSEMBLY BILL 253: Makes appropriation to welfare division of department of human resources for safety and security equipment, computer equipment and vehicles. Mr. Abba said decision units E-900 and E-901 (item 8, page 23, Exhibit C) recommend consolidation of the Welfare Administration and Food Stamp budgets. This is necessary to enable cost allocation of eligibility worker staff, he stated. With the advent of NOMADS, the division is pursuing a seamless worker concept, but the Food Stamp budget does not allow cost allocation of staff between programs. Staff recommends approval of the consolidation, Mr. Abba said, but this would significantly expand the Welfare Administration budget, and it is recommended for the next legislative cycle that the eligibility functions and the administrative functions in the Welfare Administration budgets be segregated into two separate budgets. It is proposed by staff that a letter of intent to this effect be transmitted to the Welfare Division. Regarding item 9 on page 23 (Exhibit C), Mr. Abba said the reductions in caseloads that were referenced for the Food Stamp budget in decision unit M-200 will allow for a reduction of transaction costs ($18,392 in state funds in FY 1996 and $32,000 in FY 1997) for the issuance of food stamps. Staff recommends approval of this item. Mr. Abba said decision unit E-909 provides for the transfer of two Information System Specialist positions to DIS. The subcommittee that is reviewing the consolidation proposals for DIS has supported the proposed transfer. Mr. Abba noted there is a duplication of salaries. He explained the budget was built on the premise the two positions would be transferred. The salary costs, which would become an overhead cost to the Welfare Division for the NOMADS project, include the costs for staff; these costs are also included in E-909. Staff has made an adjustment to the budgets to resolve the duplication. Senator Raggio suggested this budget should be held temporarily, pending resolution of major issues within the budget. Mr. Hettrick concurred. Aid to Dependent Children - Page 1195 Mr. Abba said the closing recommendations pertain to the Welfare Division AFDC caseload projections for FY 1996 and FY 1997 that were revised in March 1995. He referenced a table on closing sheet page 27 (Exhibit C) which represents the AFDC caseloads that were included in the original Governor's budget, the caseloads as revised in March 1995 and the overall difference for both fiscal years. The reductions recommended in decision unit M-200 reflect those reduced caseloads, Mr. Abba said. Concerning decision unit E-400, Mr. Abba said this is the second component of the Governor's welfare reform proposal. This is the component that will require a federal waiver because the Welfare Division will apply different AFDC budgeting rules to a demonstration group, which will consist of approximately 50 percent of the statewide cases. Under the proposal, Mr. Abba explained, AFDC households will be allowed to have their entire earnings disregarded for the first 3 months of their tenure on AFDC, and 50 percent of earnings will be disregarded for the remainder of the year; actual child care expenses will always be deducted while the recipient is employed and receiving benefits. He noted the test and control group referenced earlier by Ms. Florence will continue to receive their benefits under the current AFDC eligibility disregard in the budgeting process. Mr. Abba further explained the issues and staff recommendations for this budget, as presented on page 28 of the budget closing sheets (Exhibit C). He referenced a table on page 29 that lists projected welfare reform costs and pointed out the estimated costs for the demonstration project over its 5-year life are estimated at $18.3 million, half of which would be paid by the state and the other half by the federal government. Mr. Abba noted a waiver will be required for the welfare reform project, as indicated previously in Ms. Florence's testimony. Such a waiver must be cost neutral to the federal government. The assumptions are that the additional costs indicated on page 29 (Exhibit C), will be offset by slowed growth of approximately 2 percent in the AFDC caseloads over the 5-year period, Mr. Abba continued. He said according to the Welfare Division, the slowed growth will be realized through the additional employment and training provisions in the Welfare Administration budget and the Employment and Training budget. Continuing, Mr. Abba said the fiscal analysis staff requested information from the division regarding the experience of other states that have implemented similar proposals, and has received information from the division indicating the State of Utah and the county of Riverside, California have legitimate data establishing there are savings through budgeting disregards via slowed growth. He said the Riverside project has been in existence for 8 years. Mr. Abba said the State of Illinois was also mentioned as an example of a state with a welfare reform package similar to the one proposed for Nevada. From information provided by the Welfare Division it appears too early to tell whether the proposals are reducing costs in AFDC caseloads over a period of time, he stated. Mrs. Evans said given the interrelatedness of the ADC budget with the previous discussion of issues in the Welfare Administration budget, it does not appear the budget can be closed at this time because it will be greatly affected by the Legislature's decision on welfare reform. Senator Raggio concurred, stating the information just presented by Mr. Abba is the reason for his concern. He said he understands the Catch-22 situation that in order to be granted the necessary waiver, the agency must project the reform project as a cost neutral situation for the federal matching funds. He stressed his concern the project might be implemented only to be learned at some point that it is not cost neutral, which might result in sanctions from the federal government. He questioned the projected savings of $1 million from this program in FY 1997. The senator reiterated his concern is whether this is the time to implement such a project, noting the projections in the agency's budgets reflect immediate savings whereas the other places that have implemented similar programs have apparently been unable to achieve the projected savings. Ms. Florence responded, stating the Welfare Division has taken a rather comprehensive approach and is not dealing only with the issue of waivers. If the change in the environment of welfare can be made immediately, it is believed by the second year of the biennium there will be savings as projected. Stating the second issue pertains to evaluation of the project, Ms. Florence said the division's intent would be to monitor the project from the outset to ensure costs do not escalate. She said if the monitoring reveals a reduction in costs is not being effected, the agency can "pull the plug" on the project at any point in time without protest from the federal government. Senator Raggio asked what would happen with regard to the additional staff provided for the project should it be discontinued. Ms. Florence replied if this were to happen, the division would add to the number of positions it is required to "freeze," which she said is not an uncommon practice when there are budgetary implications. She maintained this will not be a problem for the division. Mrs. Evans said her thinking on this issue parallels that of Senator Raggio with respect to making a commitment to such a project and evaluating its results. She said it would be necessary to have someone monitor the project, and the Legislature would need to receive reports at least quarterly on the progress of the project and the budgetary consequences. She further stated, "Yes, you hate to start and then stop something, but if I make a commitment on welfare reform to get you started, I'm not going to say I'm going to stick with you for 5 years no matter what happens." She said if the indications are that the project is not working, it would be necessary to "fall back and regroup." Continuing, Mrs. Evans called the committee's attention to two items. The first item, in the budget summary for ADC on page 1198 of the Executive Budget, illustrates the significant growth in cash assistance for ADC from nearly $47 million in FY 1994 to the projected amount of $65.5 million for FY 1997, which Mrs. Evans noted is a relatively short period of time. Examining the chart on page 29 (Exhibit C) which lists the projected costs of welfare reform, she sees the potential "to invest a little to save a lot," because the cash assistance is growing quickly and the costs for this program are increasing substantially. Mrs. Evans commented it is necessary to start at some point, and the numbers will continue to escalate "in a very large magnitude" if nothing is done. She said there is an assumption with regard to welfare reform that there will be a dramatic decrease in costs. She stated this will not occur, however, because there is a cost involved in helping people who are receiving assistance to become self-sufficient. Mrs. Evans maintained welfare reform does not mean smaller budgets, but allocating funds to programs that enable people to leave the welfare system or perhaps preclude their ever entering the system in the first place. She reiterated it is unrealistic to expect a dramatic decreases in costs in the ADC budget. Mr. Hettrick voiced the opinion the need to monitor the project will require a very sophisticated oversight contract to provide an accurate evaluation, and this will be difficult to achieve. Mr. Hettrick stated his intention to proceed with discussion on the other welfare budgets in the hour remaining, beginning with the Medicaid budget. Nevada Medicaid - Page 1215 Ms. Florence testified that since the last presentation to the subcommittee on March 15, 1995, there have been several significant changes to the Medicaid budget. She said as discussed in the other budgets, the caseload reduction has had a significant impact on several modules within the Medicaid budget. The agency revisited its Medicaid Projection Program (MPP) based on the reduced caseload, which resulted in a $7.7 million reduction in FY 1996 and a $4.3 million reduction in FY 1997. Ms. Florence said the primary factors affecting that change have to do first of all with the reduced caseload, then the revised utilization, cost-per-service and rate information from the MPP. Secondly, as indicated in testimony at the March 15 meeting, the Welfare Division was advised by the Health Care Financing Administration (HCFA) that the State of Nevada may be responsible for adolescents' emplacement at the Rites of Passage through the Title IV-E program and the Foster Care program. Subsequently, a budget adjustment in the amount of approximately $299,000 in FY 1996 and $314,000 in FY 1997 was made to provide for that ruling. Referencing the first bulleted item on page 1 of the budget closing action sheets (Exhibit C), Mr. Hettrick said he is extremely bothered that the State of Nevada is paying the matching funds for California youths entering the Rite of Passage (ROP) program. He inquired as to how the situation works when Nevada youths are sent to programs out-of-state, and he asked if the state pays the entire cost for participation by youths from Nevada in a program in Tennessee. Ms. Florence replied the situation under discussion only applies to Title IV-E children and would not apply to institutional care. Observing the amounts involved are significant, Mr. Hettrick asked what can be done about the fact Nevada is essentially paying California's bill for participation of California adolescents in the ROP program. Ms. Florence said that is a difficult question, because this is a national ruling. She said theoretically the State of Nevada could choose to place more adolescents out-of- state in foster care and hold another state responsible, although in her opinion this would not be a good policy and it is better to keep Nevada youths in-state to the extent possible. She pointed out Rite of Passage is very concerned about this ruling because of its desire to be a positive community presence. She said ROP personnel have indicated to the Welfare Division that given the nature of their program adolescents coming into the program are healthy and many of them are covered by Medi-Cal or other insurance, their estimate is that the expenses involved may be only $77,000 to $80,000 based on their history. However, they have not included in their calculations the youths currently covered by Medi-Cal, Ms. Florence stated. She said her assumption is that California will discontinue coverage, based on their knowledge of this ruling. Continuing, Ms. Florence said in the best case scenario, if the California participants in the ROP program (which Ms. Florence noted is very athletically oriented) do not incur any major trauma, the state could avoid significant costs. If a California youth should be involved in a traumatic incident and could not be returned to California for medical care, the costs could well exceed what has been projected in this budget. Not having any experience in this area, Ms. Florence stated, the division is uncertain what will occur. She reiterated that ROP does not wish to be a burden on the State of Nevada and is very concerned about this ruling, as well. Mr. Hettrick said given the huge population in the State of California and assuming continued growth of the ROP program, the requirement to pay the costs program for California youths could become a tremendous burden on the State of Nevada and is therefore a cause for concern. He mentioned a suggestion made earlier by Mr. Dini that the state should consider contracting with Rite of Passage to place more Nevada adolescents in their program since the state is paying the costs, anyway. Ms. Florence said the third significant issue affecting this budget since the March 15 meeting concerns the Intergovernmental Transfer (IGT) and provider tax proposal. She reminded the committee members the division had indicated at the last hearing that there would be a benefit to the state of approximately $17 million. She stated that since then there have been several meetings of the affected parties and a number of adjustments are now proposed. Ms. Florence said the agency indicated in testimony at the earlier hearing there would be $48 million in intergovernmental transfers that would provide $71 million in IGT revenue, providing for $71 million in payments from DSH (Disproportionate Share, pertaining to payments from the federal government to match Medicaid costs). Referencing the diagrams on pages 17 and 18 (Exhibit C), Ms. Florence noted the revised calculations project, for FY 1997, revenues of $52.5 million from the IGT program and over $49 million in balance-forward funds. She said the change in balance forward from FY 1996 to FY 1997 is an increase from $24.4 million to $26.9 million, and the reserve in FY 1997 has been projected at $1.5 million (increased from $500,000). The division now projects $15.3 million in net state benefit from the new program and $73.5 million in DSH payments, Ms. Florence continued. Ms. Florence called attention to the table on page 19 of the budget closing sheets (Exhibit C), which lists the various entities eligible for this program and the projected payments to those entities. Mr. Hettrick requested Ms. Florence to briefly discuss the HMO (Health Maintenance Organization) tax and its anticipated effect. Ms. Florence recalled that at the March 15 hearing she said the division had determined there would be a problem with the HMO tax, as envisioned by the agency with respect to the Medicaid managed care issue. She said the division now believes the state benefit for managed care will depend upon which HMOs are selected, in terms of whether or not they will receive a home office credit. She suggested further discussion on this issue be deferred until the managed care issue is considered. Mr. Willden said regarding the HMOs, there would be a benefit to the state only if the HMO does not receive a home office credit. Mr. Hettrick agreed to Ms. Florence's request to postpone discussion of the HMO issue. He asked her whether, in the IGT program, there is concurrence among the program participants at this point. Ms. Florence deferred to Ann Wilson Andreini, Executive Assistant, Governor's Office, to respond. She said Ms. Andreini has been the "point person" on this issue. Ms. Andreini said it is her understanding at this point the rural counties, Washoe County and the Governor's Office have all accepted the plan, but there are various entities in Clark County that do not like the distribution of revenues for various reasons. She said the University Medical Center of Southern Nevada (UMC) is seeking a higher distribution for itself with a correspondingly lower distribution to the state Medicaid budget. She stated Sunrise Hospital and Medical Center is very concerned about the distribution as it is currently proposed. Ms. Andreini noted that in the current fiscal year UMC will receive approximately $4.9 million through the DSH program. It is being proposed that in each of the next 2 fiscal years UMC will receive approximately $15.2 million. She said Sunrise is very concerned about the additional $10 million allocated to UMC, and there are concerns regarding subsidization of competition and similar issues. Summarizing, Ms. Andreini said there are some Clark County entities that believe UMC's portion of the DSH payments should be higher and other Clark County entities that believe they should be lower. She reiterated it is her understanding Saint Mary's Hospital and Washoe Medical Center in Reno, and the Washoe County Social Services agency are in agreement with the program as presented. Mr. Hettrick said the committee needs a resolution on this issue in order to proceed with the budget process. Ms. Andreini indicated it might not be possible to obtain agreement among all parties involved. She said she has met with all parties individually on numerous occasions since becoming involved with the issue in January; additionally, there have been several meetings of all of the parties. She voiced the opinion the proposal she has submitted represents the best compromise possible between all of the principals involved. Ms. Andreini said it is impossible to obtain agreement from all parties because the Clark County interests are diametrically opposed to the plan. Mr. Hettrick asked when the solution will be decided upon. Ms. Andreini recommended that the committee proceed on the proposed solution at this time. She noted Sunrise Hospital has submitted a plan to Senator Raggio and to the Governor's Office for an alternative health care program, and the program is proposed as an alternative to the managed care program with which the Welfare Division is now proceeding as directed by the interim committee. Ms. Andreini said the hospital proposes to use the "additional $10 million" (the difference between the $4.9 million UMC received this year and the $15.2 million projected for FY 1996) to fund the alternative health care financing program. She said the calculations for the proposed program were just received by the Governor's Office the previous week, and they are being reviewed by Ms. Florence and Charlotte Crawford, Director, Department of Human Resources (DHR), and their staffs. Continuing, Ms. Andreini said she cannot tell the committee at this time whether or not the plan submitted by Sunrise Hospital is viable. She noted Senator Rawson's staff is also examining the calculations and the plan for the health care financing program. She said the program, if implemented, would affect the DSH/IGT fund. Ms. Andreini said her concern is that the plan arrived too late in the legislative session to be processed by the Legislature. Mr. Hettrick inquired if there is a bill draft request (BDR) to implement the solution proposed by the Governor's Office. Ms. Andreini replied yes. Christopher Thompson, Administrative Services Officer, Health Care Financial Analysis Unit (HCFAU), Department of Human Resources, said the BDR was submitted to the bill drafters approximately 2 weeks ago and is in the review process at this time. Continuing her discussion of the Medicaid issues, Ms. Florence said a number of adjustments have been made to the division's Medicaid managed care program. She said this is due first of all to a reduction in caseload, which has a cascading effect on the anticipated claims, fiscal agent charges and other aspects of managed care. Mr. Willden directed attention to page 9 (Exhibit C) and explained the revenue line item in decision module E-401, category 00-4750, Transfer from Human Resources, Director's Office. He said the table indicates that in the original recommendations of the Governor in the Executive Budget the Medicaid program was projected to receive $1.3 million from the HMO premium tax. He said the revised calculations show there is no revenue from this source any longer. In the second year, the amount of $5.1 million is also being "zeroed out," Mr. Willden said. With reference to the original projections in the budget recommended by the Governor of $1.3 million in FY 1996 and $5.1 million, he explained that with the caseload reductions and the recalculation of managed care, the amount of $11.5 million for FY 1996 in the expense component of E-401 (line item 12-8701, Aid or Grants to Individuals - A) includes the payment to the HMOs based on the capitated rate. The Medicaid budget will now pay $1.264 million to the HMOs in FY 1996 instead of a $1.3 million, and $4.739 million in FY 1997 instead of $5.1 million. Continuing, Mr. Willden said what happens is that "through the premium tax discussion with [the Department of Taxation and the Division of Insurance]," the budget is being constructed such that out of the $1.2 million and $4.7 million in the category of Transfer from Human Resources, Director's Office, $632,000 in FY 1996 and $2.3 million in FY 1997 are General Fund appropriations. As currently constructed the budget provides the HMOs will receive the home office credit and therefore will not "pay back" the $1.2 million and $5.1 million, but instead will pay the $632,000 and $2.3 million amounts. In other words, Mr. Willden said, the effect on the General Fund is "a wash." Referencing earlier comments he had made on this issue, Mr. Willden said in the revised Medicaid budget no net state benefit is derived, nor costs incurred, from the HMO premium tax; the impact on the budget is neutral. Ms. Florence continued her discussion of managed care. She said as a result of the above-noted changes there is a reduction in the cost of the managed care "tail," from $13.4 million down to $12.8 million. She remarked the tail is not incorporated in the Medicaid budget but is a onetime appropriation bill, Senate Bill (S.B.) 214. SENATE BILL 214: Makes appropriation to welfare division of department of human resources for Nevada Medicaid managed care program. Ms. Florence further testified that with regard to managed care, on May 1 the division received responses to a request for information. She said the request for proposal (RFP) will be finalized based on the information contained in those documents. She indicated the original completion date for the RFP, May 15, was overly optimistic and said it will be delayed by 1 or 2 weeks because of the need to verify data before the actuary completes the data book, which will be part of the RFP. In further testimony on the issue of managed care, Ms. Florence said there is another change that involves carrying forward $250,000 out of the original $300,000 appropriated during the current fiscal year for evaluation of the data system needs associated with this program. As testified during the last hearing, Ms. Florence stated, while there is some work underway through a master services agreement with the Department of Information Services (DIS) for the balance of this fiscal year, the welfare administration believes that effort will come on-line during the upcoming fiscal year. Information has been submitted to the fiscal analysis staff with regard to that issue, she noted. Ms. Florence said that as previously stated, all of the other adjustments with regard to the managed care module, E-401, are primarily driven by caseload, which affected the division's fiscal agent, utilization and review charges costs, along with the projected capitated payments. Mr. Hettrick inquired if the division has applied for the 1915[b] waiver (a federal program waiver in the Social Security Act, 42 U.S. Code, section 1315, subsection 1915[b]). Ms. Florence replied yes. She said the waiver was submitted to the Health Care Financing Administration (HCFA) on March 31. Senator Coffin inquired as to the reason the division had applied for the 1915[b] waiver instead of the 1115 waiver. Ms. Florence said the legislation originally proposed the 1115 waiver, but when the welfare administration officials met with HCFA regarding the interim committee's proposal the HCFA officials indicated the proposal does not meet the criteria for an 1115 waiver, which is for demonstration projects and often involves including new eligibility groups, raising eligibility levels and other innovations in health care delivery. The division at this point is only proposing to move the AFDC, Child Welfare and CHAP (Child Health Assurance Program) populations into managed care. Senator Coffin said comments made on this issue indicate there is a strong bias toward certain types of providers based on the difference between the two waivers. He asked if this has been addressed by the division in any legislative committee hearings. He inquired if legislation is required for the waiver at this point. Ms. Florence responded some cleanup legislation will be required with regard to the implementation date for the managed care program, because Senate Bill 559 of the Sixty-seventh Session required bringing all of the Medicaid population into managed care during the biennium. SENATE BILL 559 OF THE SIXTY-SEVENTH SESSION: Makes changes relating to legislative committee on health care and provides for establishment of coordinated care program for recipients of Medicaid. With regard to Senator Coffin's reference to bias associated with the types of waivers, Ms. Florence stated the opinion the bias does not exist. Senator Coffin asked Ms. Florence if, in other words, she would dispute the contention that waiver 1915[b] heavily weights the process toward federally qualified HMOs versus waiver 1115, which would leave the door open for other types of managed care organizations. Ms. Florence replied yes, she disputes that argument. She said the state has the ability to establish the licensing requirements under either option, whether an HMO is state licensed or federally qualified. She voiced the opinion that had the supposed bias been an issue it would have been raised in the previous request for information from the Welfare Division. Ms. Florence said the matter will be well documented by the division. Mrs. Evans commented, relative to the waiver issue raised by Senator Coffin, that the matter of which waiver to seek was pursued with "great intensity." She said she and Senator Rawson, members of the fiscal analysis staff and members of the Welfare Division staff visited both the regional office of HCFA in San Francisco and the home office in Baltimore and met with officials of HCFA for a number of hours. The group presented its case for the 1115 waiver, but the HCFA representatives were not at all encouraging. Mrs. Evans indicated it does not appear feasible at this point to seek this particular waiver, given HCFA's response to the state's proposal. She emphasized the pursuit of the waiver was not done in haste and was undertaken with a great deal of effort and expense, to ensure the State of Nevada is pursuing a waiver that HCFA will approve. Mr. Hettrick requested Ms. Florence to discuss the request for three new positions in decision unit E-401. Ms. Florence said the three positions are associated with the managed care program. The positions include that of Social Welfare Program Chief, which would have responsibility for all of the management functions retained by the state, for writing various RFPs and operational reviews that occur during this process, working with the actuary and other contractors and providing overall supervision of staff. The Management Analyst II is a fiscal position. The person in this position would be working with the other Medicaid staff as well as the insurance division to ensure financial solvency of the program. The Management Analyst II would also participate in operational reviews and would work with contractors, DIS staff and other personnel to facilitate the reporting and programming that would need to occur with this program. The third position is "merely a clerical support position" for the managed care program, Ms. Florence stated. She pointed out both of the existing contractors have expressed some concern about the limited staffing being invested in a program of this size, but the division administration believes that with those positions and reallocating some of the time of existing staff the division should be able to perform adequately with respect to the managed care program. Mr. Hettrick said this issue will probably need to be addressed at another time because some of the legislators who had raised the question earlier were not in attendance at this time. Ms. Florence said since the March 15 meeting the Welfare Division has received information from HCFA that they do not believe there is an appeal to some recent court orders with regard to Medicaid payments for what are termed "Medicare cross- overs" (people who are qualified Medicare and Medicaid beneficiaries). She said currently what happens is that if someone is both Medicare and Medicaid eligible and "under 100 percent of poverty," the state is required to pay the Part B premium, co- pays and deductibles for these recipients up to the Medicaid allowable amount. As an example, Ms. Florence, "If a hospital bill comes in and Medicare pays $600 and ...our upper limit under Medicaid is $500, we would not be paying anything because we view that as Medicare satisfying its full amount." Continuing, Ms. Florence said recent court rulings require that states pay beyond their upper limits, and given the fact there are almost 13,000 Medicare/Medicaid recipients in the state, the impact on the state's Medicaid budget could be significant. She said HCFA has not issued a definitive statement to the states on this matter, but the court rulings have been published in Medicaid journals. Ms. Florence stated for the record that sometime during the biennium the state may learn from HCFA that a determination has been made which will have an impact on the Medicaid budget, and given the fact this is a capped budget it is requested the Legislature give consideration to this issue in the appropriations language. Mr. Hettrick replied the committee is aware of the situation and realizes some flexibility must be maintained regarding this budget. Returning to an explanation of the policy issues pertaining to the Medicaid budget (page 1, Exhibit C), Mr. Abba said rate increases have been incorporated in the budget under decision module M-100 for all Medicaid providers, both those operating under the rules and regulations of the federal Boren amendment (hospitals and long-term care providers) and what are referred to as non-Boren providers (physicians and hospital outpatient facilities). He said the rate increases recommended for the non-Boren providers are approximately $6.9 million for FY 1996 and $10.2 million for FY 1997. Mr. Abba said staff is currently working with the Welfare Division on a plan to delay the rate increase for the non-Boren group by 3 months, making the effective date October 1, 1996. This would result in savings to the state of approximately $1 million over the biennium, he stated. He said a firm proposal will be presented to the committee for consideration prior to the closing of this budget. Mrs. Evans inquired if the proposed delay is legal under the Boren amendment. Mr. Abba replied yes. He said the amendment primarily concerns the hospital institutions and long-term care facilities. He explained the intent is not to avoid a rate increase, but merely to make the effective date of the increase 3 months later. Mrs. Evans asked if there is language in the amendment that requires the rate increase be provided at a certain time or within a specified period. Mr. Abba said the proposed delay would only apply to the non-Boren providers, not the Boren groups. Mr. Abba continued his review of the Medicaid policy issues. He said there was a significant amount of discussion at the March 28 hearing on the long-term care institutional cap in terms of what the state is responsible for paying and what the counties are responsible for paying. Mr. Abba said currently the cap at the state level is $714 per month, and it is the responsibility of the county to pay the institutional care of clients above that level of SSI (social security insurance) income. He noted the $714 threshold has been in effect for a number of years, and what happens is that as clients receive income adjustments each year through SSI they are "pushed up above the threshold" and become the responsibility of the county rather than the state. The counties have expressed great concern about this situation, Mr. Abba stated. He said the Welfare Division has provided information regarding the feasibility of raising the cap. Two possible courses of action have been presented in this information. In the first scenario, the cap would be raised by the same percentage as the SSI level was increased for the past year (2.7 percent). This would raise the cap from $714 to $733, which would be the new threshold for the state's responsibility. The additional cost over the biennium would be $48,000 per fiscal year, Mr. Abba said. The other option would be to apply the dollar rate of increase for the maximum threshold of the counties' obligation, or $36. The former threshold cap "at the upper end" was $1338. Applying the rate of increase to that level would raise the threshold for the counties to $1374. Applying that rate of increase would increase the state's threshold to $750, Mr. Abba stated. He said with regard to the state's responsibility in terms of new clients on the state rolls, the additional General Fund cost would be approximately $212,000 in FY 1996 and $250,000 in FY 1997. It was decided to defer action on the Welfare Division budgets pending receipt of additional information. Jon Sasser, Lobbyist, Nevada Legal Services, echoed Mrs. Chowning's call for a comprehensive presentation on welfare reform that will enable the committee to view the entire package of reform proposals and compare it with the current system. He requested the task force members be allowed the opportunity to address some of the questions surrounding this issue at a future date. Mr. Hettrick voiced approval for Mr. Sasser's suggestion. He said the committee needs to "tie it all together." He stated the real concern has been expressed, which is whether or not savings can be generated quickly enough to truly be reflected in the budget or whether, instead, the reform proposals will result in greater problems. He expressed optimism that if the welfare reform proposals can be examined as a complete package, progress can be made. The meeting was adjourned at 10:45 a.m. RESPECTFULLY SUBMITTED: Sue Parkhurst, Committee Secretary APPROVED BY: Senator Raymond D. Rawson, Chairman DATE: Assemblyman Lynn Hettrick, Chairman DATE: Assemblywoman Jan Evans, Chairman DATE: Senate Committee on Finance Assembly Committee on Ways and Means Joint Subcommittee on Human Resources/K-12 May 4, 1995