MINUTES OF THE JOINT SUBCOMMITTEE ON HIGHER EDUCATION/CAPITAL IMPROVEMENTS ASSEMBLY COMMITTEE ON WAYS AND MEANS AND SENATE COMMITTEE ON FINANCE Sixty-eighth Session May 12, 1995 The Joint Subcommittee on Higher Education and Capital Improvements of the Assembly Committee on Ways and Means and the Senate Finance Committee was called to order at 8:00 a.m., on Friday, May 12, 1995, Chairman John Marvel presiding in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. ASSEMBLY COMMITTEE MEMBERS PRESENT: Mr. John Marvel, Co-Chairman Mr. Morse Arberry, Jr., Co-Chairman Mrs. Jan Evans, Vice Chairman Ms. Sandra Tiffany, Vice Chairman Mr. Dennis L. Allard Mrs. Maureen E. Brower Mrs. Vonne Chowning Mr. Jack D. Close Mr. Joseph E. Dini, Jr. Mr. Thomas A. Fettic Ms. Chris Giunchigliani Mr. Bob Price Mr. Larry L. Spitler SENATE COMMITTEE MEMBERS PRESENT: Senator William J. Raggio, Chairman Senator Raymond D. Rawson Senator Dean A. Rhoads Senator Bob Coffin COMMITTEE MEMBERS ABSENT: Mr. Lynn Hettrick (excused) STAFF MEMBERS PRESENT: Mark Stevens, Assembly Fiscal Analyst Gary Ghiggeri, Principal Fiscal Analyst Larry Peri, Program Analyst Yhvona Martin, Secretary PUBLIC WORKS BOARD ADMINISTRATION - PAGE 547 PUBLIC WORKS BOARD INSPECTION - PAGE 552 After providing Budget Closing Action forms to the subcommittee, Mr. Ghiggeri advised the committee the majority of the adjustments being recommended by the Fiscal Analysis Division in budget accounts 101-1560 (Public Works Board Administration) and 401-1562 (Public Works Board Inspection) were transfers between the two budget accounts to align the cost of equipment, data processing, training, travel, and other related costs, with where the positions are funded. In addition, State Public Works Board (SPWB) is requesting consideration to purchase a lap top computer, which was not recommended in the Executive Budget, and additional office space in the Belrose Building in Las Vegas. SPWB initially requested an additional 1,800 square feet of non-state owned office space; however, state-owned office space may be available adjacent to the space occupied in the Belrose Building, which would allow for expansion. The cost for this additional office space will be approximately $.61 cents per square foot instead of $1.55 per square foot for non-state space. Chairman Marvel asked Mr. Dean Borges, Deputy Manager, SPWB, if he were in agreement with the Fiscal Analysis Division's recommendation for SPWB to utilize state-owned rather than non-state owned office space and Mr. Borges answered in the affirmative. Chairman Marvel requested Mr. Borges speak to SPWB's request for a lap top computer. According to Mr. Borges, SPWB's new manager, Mr. Eric Raecke, had requested a lap top computer for his personal use since he expects to be doing a significant amount of travel statewide. Continuing his presentation, Mr. Ghiggeri noted the adjustments being recommended in Option A, a proposal recommended by SPWB, mirror those being recommended by the Fiscal Analysis Division in the two budget accounts with the transfer of construction-related personnel from the General Fund budget account (101-1560) to the construction management budget account (401-1562). The net effect of this transfer, Mr. Ghiggeri said, would be a savings to the General Fund of approximately $790,000 over the biennium. Option A proposes to transfer an engineer, four architects, supervising construction coordinator, architect/drafter, and two accounting clerks from the General Fund account (101-1560) to the construction management account (401-1562). Option A also proposes to transfer the Deputy Manager and an accounting specialist from the construction management account (401-1562) to the General Fund account (101-1560). Senator Raggio wanted to know how the positions would be funded. SPWB proposes to fund the positions from assessments against the projects included in the 1995-97 Capital Improvement Program (CIP), Mr. Ghiggeri advised. He said, however, sufficient funding may not be available at the current assessment level requiring the l997-99 CIP assessment rate to be revisited. The construction management account (401-1562) will fluctuate based upon the size of the CIP. In addition, decision module E-201 in budget account 401-1562 reflects six additional staff not originally recommended by the Governor. The request for additional staff, which was presented by SPWB in response to questions by the two money committees during the initial review of the 1995-97 CIP, includes two architects/engineers, two building inspectors, one building inspector for the roofing and asbestos program, and an account clerk. According to SPWB, the six additional positions are required due to the Governor recommending a CIP which was approximately $40 million more than SPWB originally recommended. Mr. Arberry wondered whether SPWB had considered having a separate staff to design prison projects. It was Mr. Borges' understanding that SPWB's new manager plans to base project managers specializing in prison projects in the Las Vegas office. Mr. Arberry said he would like to be assured of SPWB's capability to design prison projects in-house in the future. Mr. Borges suggested Mr. Arberry may have misinterpreted his previous remarks because he said SPWB would need a larger staff, more equipment, and additional office space in order to design specialized projects in-house. He said, however, architectural firms specializing in prison design were available through contract. After expressing his concern about state funds being spent on duplicated designs for prisons, Mr. Arberry asked Mr. Borges to provide a cost estimate to hire an architect specifically for designing prisons. Chairman Marvel agreed with Mr. Arberry's position, noting the design work for the Ely State Prison and the new Lovelock Prison would more than likely be the design of choice for future prisons. Mr. Borges disagreed with Chairman Marvel that a "cookie cutter" type design could be utilized on all prison sites because each site has a different soil content which requires a different foundation. Also, utilities cannot be brought in at the same location at each site and air conditioning and heating requirements vary from site to site. Although SPWB plans on hiring staff with expertise in prison construction and design if the opportunity presents itself, Mr. Borges indicated the architects would not be involved in the actual design and plan changes to the present prototype because of having to manage 15 to 20 other projects. Mr. Borges said, however, he would be happy to respond to Mr. Arberry's request to prepare a detailed estimate of the cost to hire an architect specifically for designing prisons. Senator Raggio told Mr. Borges he wanted the state to have the opportunity to be able to use current plans and designs during the negotiation stage. Since he thought adjustments could be made to the sites for utilities and other infrastructure items, Senator Raggio said it did not make sense to him for the state to pay "full bore" for architectural and engineering (A&E) costs. In responding to Senator Raggio's comments, Mr. Borges noted SPWB was considering the idea of site adapting the prototype for the new Lovelock Prison and the Northern Nevada Correctional Center (NNCC) to an Indian Springs' site in southern Nevada for a men's prison and possibly a women's prison. Although there are no provisions in existing contracts for SPWB to utilize designs and plans from previous projects, Mr. Borges said such a provision could be accomplished in future contracts. To continue his testimony, Mr. Ghiggeri pointed out SPWB was requesting an additional $5,000 each year for in-state travel for budget account 101-1560. He said, however, after having done an analysis of SPWB's actual travel expenditures in the current fiscal year and the amounts being budgeted for FY 1996-97, he could not justify an additional increase in the in-state travel category because SPWB had already requested a substantial increase in this particular category in the Executive Budget. In addressing SPWB's request for an additional $5,000 each year for in-state travel in budget account 101-1560, Mr. Borges introduced Mr. Randy Dunham, Accountant Technician III, SPWB, who he said would speak to the issue. SPWB's request for an additional $5,000 for in-state travel, Mr. Dunham explained, was associated directly to the Deputy Manager position being moved from budget account 401-1562 into budget account 101-1560. In-state travel expenditures were previously recorded in budget account 401-1562, he said. The Deputy Manager, as well as the current Deputy Manager, will be commuting twice a month from Carson City to the Las Vegas office. As a result, he said the Manager and one Deputy Manager would be in Las Vegas on a weekly basis, which should improve service in the Las Vegas area. To respond to Chairman Marvel's comments, Mr. Dunham acknowledged SPWB had expended $15,000 on in-state travel in FY 1994, prior to the Manager making a weekly trip to Las Vegas. According to Mr. Dunham, the Deputy Manager made 18 trips to Las Vegas per year during FY 1994. SPWB's biennial budget request included funding for each of the Deputy Managers to make 24 trips to Las Vegas per year and the Manager 48 trips per year. Mr. Dunham said Mr. Raecke, the new Manager, had indicated his desire for SPWB staff to continue maintaining a high profile in the Las Vegas area. It was Chairman Marvel's understanding SPWB already had staff in the Las Vegas office who could perform oversight and be available to the public. Mr. Borges said SPWB plans to staff the Las Vegas office with several architects or engineers who could respond to some of the problems on new construction projects. To respond to a request for clarification from Mr. Fettic, Mr. Ghiggeri said his analysis of SPWB's budget revealed $15,331 had been expended on in-state travel in FY 1994. Although SPWB originally requested $18,840 for in-state travel in each year of the 1995-97 biennium, it is now requesting an increase of $5,000 in addition to $18,840 in each year of the 1995-97 biennium in budget account 101- 1560. Chairman Marvel wondered whether SPWB had considered submitting a work program change to the Interim Finance Committee if additional travel were needed. Mr. Borges said he thought such an arrangement was reasonable. Chairman Marvel asked Mr. Ghiggeri to explain the difference between Option A and the Fiscal Analysis Division's recommendations. The only difference between Option A and staff recommendations, Mr. Ghiggeri explained, is the transfer of construction-related personnel to budget account 401-1562. As he previously stated, Mr. Ghiggeri said Option A was expected to save the General Fund approximately $790,000 over the biennium. SPWB has indicated this transfer can be accomplished during the biennium without increasing assessments against the projects; however, assessments to the projects may need to be increased during the 1997-99 biennium. If the CIP is reduced, SPWB has indicated it would eliminate the construction-related positions. After further discussion on the two budgets, Chairman Marvel said he would accept a motion. Senator Rawson asked Mr. Borges if Option A was acceptable. Mr. Borges said SPWB could accomplish its goals with the budget adjustments proposed in Option A. SENATOR RAWSON MOVED TO ADOPT OPTION A, WHICH INCLUDES $3,200 IN FY 1996 FOR THE ACQUISITION OF A LAP TOP COMPUTER FOR THE MANAGER AND FUNDING FOR AN ADDITIONAL 600 SQUARE FEET OF OFFICE SPACE IN THE BELROSE OFFICE BUILDING, AND TO CLOSE THE BUDGETS FOR THE PUBLIC WORKS BOARD ADMINISTRATION AND THE PUBLIC WORKS BOARD INSPECTION. IN ADDITION, SPWB IS AUTHORIZED TO APPROACH THE INTERIM FINANCE COMMITTEE IF ADDITIONAL FUNDING FOR IN-STATE TRAVEL IS REQUIRED. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. * * * * * * * * * * Mr. Arberry requested Mr. Borges provide a list of SPWB's personnel in northern and southern Nevada, including a breakdown by ethnic group. Mr. Borges said he would be happy to provide a copy of a personnel list to Mr. Arberry. Since several legislative members had expressed their concern recently about the availability of sufficient water and other infrastructure services for proposed Units 3, 4 and 5 at the new Lovelock Prison, Senator Raggio asked Mr. Borges to provide a status report. In reporting on a May 9, 1995, meeting, which was called by the Lovelock Meadows Water District to discuss the water situation at the Lovelock Prison and attended by SPWB's Manager and staff, Mr. Borges said the Board had advised SPWB that water right permits to drill additional wells were available to increase the water capacity at the prison facility. Mr. Borges said, however, the District had requested state funding for the connection fee for another 250-bed unit and this particular issue had not been resolved by the close of the meeting. To respond to a question from Senator Raggio, Chairman Marvel said he had spoken with the Chairman of the Lovelock Meadows Water District who indicated to him a special meeting was being held on Monday, May 15, to resolve the connection fee issue. Mr. Borges added SPWB would have a cost estimate available for the 250-bed unit immediately after the special meeting. Mr. Arberry wondered whether any other private water districts had based their water connection fee structure on the number of inmates. It was Mr. Borges' understanding a private water company had provided water for the Jean Prison; however, the Lovelock Meadows Water District has had no previous experience in this respect. Once the District decides on the connection fee for water, Mr. Arberry wanted to know whether SPWB planned on negotiating the fee. Mr. Borges said SPWB would attempt to negotiate the connection fee, with the assistance of the State Water Engineer, in the best interests of the state. Mr. Dini suggested SPWB follow the guidelines established by the Nevada Public Service Commission (NPSC), who regulates private water companies, in negotiating with the Lovelock Meadows Water District on the connection fee. Mr. Borges thanked Mr. Dini for the suggestion. BUILDINGS AND GROUNDS - PAGE 558 Mr. Larry Peri, Program Analyst, Legislative Fiscal Analysis Division, noted the proposed adjustments were developed and discussed with staff from the Division of Buildings and Grounds. He said he would highlight each of the adjustments, the majority of which were technical in nature. Under Adjustments to Expense, Mr. Peri noted $50,107 was being removed from the base budget in each year of the biennium to Decision Unit E-850 (Building Renovation Projects). One of the more significant adjustments in the base budget, similarly under Adjustments to Expense, is the increased amount for Statewide Cost Allocation, which he said was added by the Budget Division. This revised figure adds another $83,952 in expenditures in each year of the biennium to the Buildings and Grounds budget (budget account 710-1349) for a revised total of approximately $168,000. In explaining the next Decision Unit, Mr. Peri noted M-200 adds contract services funding of $45,785 in FY 1996 and $52,620 in FY 1997 and also adds utility costs of $33,894 in FY 1996 and $36,401 in FY 1997. These adjustments are to provide for contract custodial services, heating and air conditioning, contract services, buildings and grounds maintenance, and utility costs that were not included in the Executive Budget for the Department of Education, which will soon be occupying the remodeled portion of Fremont School. The adjustments will also accommodate the planned relocation and consolidation of mail services to the older portion of Fremont School and provide for necessary costs for the upkeep of the new Department of Motor Vehicles and Public Safety (DMV&PS) Express Office currently under construction in Las Vegas, which should be occupied by the end of July 1995. Speaking to Adjustments to Revenue, Mr. Peri indicated the expenditures listed under Adjustments to Expense were offset to some degree by additional building revenue of $48,134 in FY 1996 and $62,748 in FY 1997 by adding the rental costs for the DMV Express Office and an adjustment to the Mail Room, which he said he would discuss under budget account 713-1346, Administrative Service Mail Room. The remaining revenue will be derived from the reserve category. The final technical adjustments in Decision Unit E-850 addresses the building renovation category and contains miscellaneous projects for state buildings located statewide the Division of Buildings and Grounds proposes to undertake during the next biennium, Mr. Peri continued. Some of the technical adjustments represent corrected amounts for a proposed carpet replacement project in the Kinkead Building in Carson City. In addition, in order to accomplish a number of projects statewide which involve the sealing and the restriping of state parking lots, the cost per square foot has been standardized. A small amount of money was removed for a project that was recently completed and funding has been added for several projects that were not included in the Executive Budget. The costs for a renovation project at the Stewart Facility that will be accomplished through CIP No. 95-M2, which were included in the Executive Budget, have been removed. In summary, Mr. Peri said renovation projects were reduced $13,087 in FY 1996 and $31,414 in FY 1997; reducing the totals for this category to $180,480 in FY 1996 and $128,555 in FY 1997. Based on these recommended adjustments, Mr. Peri indicated the reserve category amounts would be $826,904 in FY 1996 and $473,779 in FY 1997. Mr. Michael Meizel, Administrator, Division of Buildings and Grounds, told the committee he had discussed the adjustments over the last few weeks with the legislative Fiscal Analysis Division's staff and he was in agreement. It was Senator Raggio's understanding the Fiscal Analysis Division's proposed recommendations include the concept of utilizing the old portion of Fremont School for the state Mail Room and Mr. Peri said Senator Raggio's understanding was correct. Mr. Peri said he would discuss the Mail Room budget next, noting there was a revised timetable for completion of this project and for the occupancy of the building. MR. DINI MOVED TO AMEND THE BUILDINGS AND GROUNDS BUDGET TO INCORPORATE THE RECOMMENDATIONS OF THE FISCAL ANALYSIS STAFF AND TO CLOSE THE BUDGET AS AMENDED. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. MR. HETTRICK WAS ABSENT. BUDGET CLOSED. * * * * * * * * * * ADMINISTRATIVE SERVICE MAIL ROOM - PAGE 513 Mr. Peri apprised the subcommittee the proposed adjustments to budget account 713-1346 had been discussed with Mr. Meizel and Mr. Tracy Raxter, Chief, Administrative Services. The revisions to this budget reflect the latest date available for the completion of the CIP for Fremont School, which is January of 1996. The physical relocation from the current Mail Room facility to the remodeled facility in the Fremont School is anticipated to occur in February of 1996, with the Mail Room facility expected to become fully operational by March of 1996. All of the adjustments being recommended for this budget coincide to that revised time frame, Mr. Peri said. Directing the subcommittee's attention to Adjustments to Revenue, Mr. Peri noted $72,000 represents an additional balance forward from this current fiscal year into FY 1996. Similarly, under Adjustments to Expense, the Statewide Cost Allocation amount is being reduced by $89,245 in each year of the biennium based upon revised figures received from the Budget Division. These adjustments represent additional revenue not anticipated in the Executive Budget that will be placed in the reserve category. In Decision Unit M-200, the recommended adjustments reflect the revised time frame for the proposed consolidation of mail services. The revised time frame resulted in an adjustment in the State Owned Rent category, reflecting the February 1996 date when the current Mail Room facility is expected to relocate to the remodeled Fremont School. In addition, $2,198,394, included in the Executive Budget in the operating category, will be moved to category 10, to be utilized solely for postage expenses. The Fiscal Analysis staff is also recommending increased postage costs for DMV&PS, which were not previously included in this budget. These two amounts, $500,362 in FY 1996 and $571,717 in FY 1997, are being placed in Decision Unit M-200, category 10, and represent costs that are included in DMV&PS' budget for payment of postage costs to the consolidated mail services' effort. Continuing his remarks, Mr. Peri noted Decision Unit M-200 also includes the addition of a General Fund payback of $21,239 in each year of the biennium. These two amounts represent a 20-year payback of $424,778, the estimated cost of CIP No. 95-C14. Mr. Peri said the Fiscal Analysis Division recommends the requirements for this payback be included in the CIP bill. Decision Unit M-201 requires the addition of a new mail clerk position, effective March 1, 1996, to coincide with the operation of the consolidation, for the new mail inserter machine for the Nevada Operations Multi-Automated Data Systems (NOMADS) Project. When this budget was originally submitted by the Governor, Mr. Peri explained, it did not include the NOMADS Project; however, subsequent to that submittal, the Budget Director, the Welfare Division and Mr. Meizel worked together to ensure the mailing requirements of that automation can be accommodated by the Mail Room consolidation upon completion of the NOMADS Project. The new mail inserter machine will cost $140,000. Also, an existing machine within the Employment Security Division (ESD) is being proposed to be upgraded to serve as a backup at a cost of $45,700. Speaking to the last item for the subcommittee's consideration, Decision Unit E- 900, Mr. Peri explained the Executive Budget had recommended four positions be transferred from other state agencies to this budget account to accommodate the consolidation of mail services; however, due to the anticipated length of the phase- in period, the Fiscal Analysis Division is recommending two positions from ESD and one position from the State Industrial Insurance System (SIIS) not be transferred until the beginning of FY 1997. Senator Raggio wanted to know whether the subcommittee's action on this budget would also approve the transfer of funding for the Capitol Police to Public Safety. Mr. Peri directed the subcommittee's attention to the expenditure category "Transfer to Capitol Police" on page 563 of the Executive Budget which, he said, funds the Capitol Police's budget in its entirety. Since he was concerned the issue of the transfer of the Capitol Police and the new security detail had not yet been resolved, Senator Raggio said he wished to draw attention to one of the aspects of the reorganization; i.e., the transfer of the Capitol Police to Public Safety. According to Senator Raggio, the Miller Administration had reversed itself on splitting Public Safety and Department of Motor Vehicles and the two governmental functions will remain together. As a point of clarification, Mr. Dini wanted to know whether the expenditure of $1,066,179 shown under the category "Transfer to Capitol Police" in the Executive Budget was based on the Capitol Police being transferred to the Nevada Highway Patrol (NHP), under the jurisdiction of Public Safety, with a different wage structure. Mr. Ghiggeri said this particular expenditure category had nothing to do with the wage structure, but rather was a funding mechanism for the Capitol Police. Since the Buildings and Grounds budget utilizes a portion of its state-owned building rent collections to fund the Capitol Police, Mr. Ghiggeri said this funding mechanism would remain intact regardless of whether the Capitol Police were to be moved to NHP or remained with Buildings and Grounds. If the Capitol Police were to be transferred to NHP and a wage disparity between the two law enforcement units were to become an issue, Mr. Arberry wanted to know whether there was sufficient funding in budget account 713-1346 to rectify such a problem. Mr. Ghiggeri said an adjustment could made in the rent assessment in budget account 713-1346 or funding could be transferred from the reserve category in the Buildings and Grounds budget to address such an issue. In response to Mr. Arberry's concern about the possibility of a wage disparity occurring between the two law enforcement units, Senator Raggio indicated Mr. James Weller, Director, DMV&PS, had told the Committee on Senate Finance that the Capitol Police would retain its separate identity and would not be under NHP's compensation plan if it were to be transferred to Public Safety. SENATOR RAGGIO MOVED TO CLOSE THE ADMINISTRATIVE SERVICE MAIL ROOM BUDGET IN ACCORDANCE WITH THE FISCAL ANALYSIS DIVISION'S RECOMMENDATIONS. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. MR. HETTRICK WAS ABSENT. BUDGET CLOSED. * * * * * * * * * * There being no further business to come before the subcommittee, the meeting was adjourned at 9:15 a.m. RESPECTFULLY SUBMITTED: Yhvona Martin, Committee Secretary Joint Subcommittee on Higher Education/Capital Improvements Assembly Committee on Ways and Means and Senate Committee on Finance May 12, 1995 Page