MINUTES OF THE MEETING OF THE JOINT SUBCOMMITTEE ON GENERAL GOVERNMENT ASSEMBLY COMMITTEE ON WAYS AND MEANS AND SENATE COMMITTEE ON FINANCE Sixty-eighth Session May 16, 1995 The meeting of the Joint Subcommittee on General Government of the Assembly Committee on Ways and Means and the Senate Committee on Finance was called to order at 7:40 a.m., on Tuesday, May 16, 1995, Chairman Tiffany presiding, in Room 321 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. ASSEMBLY SUBCOMMITTEE MEMBERS PRESENT: Ms. Sandra Tiffany, Chairman Mr. Dennis L. Allard Mrs. Maureen E. Brower Mrs. Jan Evans Ms. Chris Giunchigliani Mr. Bob Price ASSEMBLY SUBCOMMITTEE MEMBERS ABSENT: None SENATE SUBCOMMITTEE MEMBERS PRESENT: Senator William R. O'Donnell, Chairman Senator Lawrence E. Jacobsen Senator Bernice Mathews SENATE SUBCOMMITTEE MEMBERS ABSENT: None STAFF MEMBERS PRESENT: Mr. Bob Guernsey, Deputy Fiscal Analyst Ms. Jeanne Botts, Program Analyst Ms. Debbra King, Program Analyst Mr. Ronald Steele, Program Analyst DEPARTMENT OF BUSINESS AND INDUSTRY - BUSINESS AND INDUSTRY ADMINISTRATION - PAGE 693 Mr. Ronald Steele, Program Analyst, Fiscal Division, reported the Governor recommended 7 new positions in the Director's Office. When the Director's Office was created by the 1993 reorganization it was provided with 2.5 positions (the Director, one Management Assistant, and one half-time Deputy Director). Annual personnel costs in Fiscal Year 1994 were slightly under $97,000. In May 1994 the Director's Office received Interim Finance Committee approval for an additional 2.5 positions (one Administrative Services Officer, one Management Assistant, and one half-time Deputy Director). Personnel costs for Fiscal Year 1995 were approximately $273,000. Mr. Steele stated decision unit E-126 recommended funding for one new Program Assistant III position for a cost of $21,500 in Fiscal Year 1996 and $29,900 in Fiscal Year 1997. Decision unit E-900 recommended transferring three positions from the Consumer Affairs Division to the Director's Office. The cost for the three recommended positions would be $187,500 in Fiscal Year 1996 and $191,000 in Fiscal Year 1997. He said the three positions are currently assigned to the Director's Carson City office and funded from the Consumer Affairs Division budget. Decision unit E-901 recommended transferring three positions from the Commission on Economic Development budget to the Director's Office. He noted these three positions were recommended for 100 percent General Fund appropriations of $156,000 in Fiscal Year 1996 and $146,000 in Fiscal Year 1997. He pointed out the other costs in the Director's Office budget are cost allocated to the using agencies. Total personnel costs recommended by the Governor were $571,415 in Fiscal Year 1996 and $592,163 in Fiscal Year 1997. Chairman Tiffany said it appeared the Carson City office was heavily staffed. She asked for an explanation of Carson City staffing levels. Ms. Rose McKinney-James, Director, Department of Business and Industry, explained the Carson City office was the principal office dealing with administrative issues. She noted the three positions recommended to be transferred from the Commission on Economic Development would be housed in Las Vegas, creating a better balance in the distribution of staff. Historically, the former Department of Commerce housed the balance of the administrative positions in Carson City. Ms. McKinney-James said the Department needed to interact with certain agencies headquartered in Carson City on a daily basis. She explained a portion of the budget request was for funding to enhance communication capability between Las Vegas and Carson City. Chairman Tiffany asked how many staff members were located in Carson City. Ms. McKinney-James said four positions were in Carson City, including the Administrative Services Officer, the Chief of Industrial Development and Planning, a Program Assistant (if approved), a Management Analyst, and a Management Assistant. Chairman Tiffany asked Ms. McKinney-James what the justification was for transferring the three positions from the Commission on Economic Development. Ms. McKinney-James responded historically the Office of Small Business housed with the Commission on Economic Development suffered from a funding deficiency. In the early stages of government reorganization it appeared it should be transferred to the Department of Business and Industry in order to make it more useful and meaningful. She noted there was a clear distinction in the missions and roles of the two agencies. The Department of Business and Industry was responsible for providing regulatory oversight and assistance to existing business, with an emphasis on business retention and business expansion. The Commission on Economic Development is currently structured to place a greater emphasis on promotion, marketing, and advertising for the state and economic diversification, with the understanding that the Department of Business and Industry would support that role. Ms. McKinney-James said it was her view the Office of Small Business, once transferred to the Department of Business and Industry, would play an integral role in addressing the two primary missions of the department, i.e., information and referral and access to capital. The three positions would be utilized to implement an information and referral unit. She noted the department had previously provided to the subcommittee an explanation of the duties of each of the three positions. Ms. McKinney-James noted the intent of the transfer was to provide assistance to business development generally via a "one-stop resource center." Historically, the Office of Small Business was devoted entirely to small business. The assumption was, however, those seeking the services of the office were likely to be small to medium-sized businesses. Larger offices would primarily be interested in the information and referral services provided. Ms. McKinney-James stated there was an interagency agreement in place with the University of Nevada College of Business Administration for the services of the Small Business Development Center. Chairman Tiffany asked if one of the three positions was funded, which position would be preferable. Ms. McKinney-James replied the Business Development Coordinator position would be the choice if only one position was funded. Chairman Tiffany noted two of the three positions were currently vacant. Ms. McKinney-James pointed out the Commission on Economic Development had not had the ability to fund those two positions, which was the reason for restructuring the budget to fund the positions and make them functional. Chairman Tiffany noted the three positions were funded by General Fund money as opposed to cost allocations. She suggested funding the Coordinator position and leaving two positions vacant. Ms. McKinney-James pointed out the Management Assistant II position reflected as vacant in the Office of Small Business budget was being paid out of another budget account within the Commission on Economic Development. The position was not truly vacant. Chairman Tiffany questioned whether that funding arrangement could continue for the coming biennium. Ms. McKinney-James said the position could not continue to be funded by a separate agency. Ms. Birgit Baker, Administrative Services Officer, explained the position was transferred to the Commission on Economic Development budget to fill a vacancy temporarily until this issue could be resolved and the program could be transferred. She reiterated the position was currently filled although the budget account reflected two vacant positions. Mrs. Evans expressed concern about establishing the one-stop resource center without providing the resources to make it function. She noted the one-stop resource center was needed by the business community. Ms. McKinney-James stated if the three positions were not transferred, it would be difficult to implement the one-stop resource center. The intention was to transfer the Office of Small Business and the three positions to the Office of Industrial Development Planning, which currently had one staff position with access to certain support staff. Funding the three additional positions would allow for a southern Nevada office as well, but funding only the Coordinator position would not provide for staff support for that position. Ms. Giunchigliani asked where the three positions appeared in the Executive Budget. Ms. Deborah Erickson, Budget Analyst, Budget Division, stated funding for the positions was recommended in decision unit E-901. Ms. Giunchigliani asked if the function currently served by the Small Business Office would continue. Ms. McKinney-James said that function would not continue if the three positions were not funded. Chairman Tiffany questioned whether reducing the number of positions recommended to be transferred would result in a corresponding reduction in the funding requested for the one-stop resource center. Ms. McKinney-James said the transfer of the two positions reflected as vacant represented a correction to the overall impact of government reorganization. Two positions which historically had resided in the Director's Office of the Department of Commerce were funded out of a Consumer Affairs budget account. When the situation was reported to the Interim Finance Committee, it was recommended that during the budget process the positions be formally transferred to the Director's Office of the Department of Business and Industry. One of those positions was the Chief of Industrial Development and Planning. The other position was a Management Analyst. Chairman Tiffany asked what the function of the Chief of Industrial Development and Planning would be. Ms. McKinney-James answered that position would have supervisory responsibility for the industrial development bond program and the one- stop resource center as well as additional programs which hopefully would emerge as the result of having this unit available to secure additional grant and federal funding. Chairman Tiffany asked what the position titles were and where they would be located. Ms. McKinney-James said the Chief of Industrial Planning and Development, the Management Analyst position, the Program Assistant III, and the Management Assistant would be located in Carson City. The Coordinator for the Business Development Center, the Assistant Coordinator, and the Management Assistant II would be in the Bradley Building in Las Vegas. Chairman Tiffany inquired which three positions were recommended in decision unit E-901. Ms. McKinney-James replied those positions included the Coordinator for the Business Development Center (currently in the budget as the Chief Associate for Small Business), the Assistant Coordinator, and one Management Assistant. Ms. Brower asked if the three positions would still have proximity to the small business community. Ms. McKinney-James said the unit would be housed in the Bradley Building with the other divisions of the Department of Business and Industry. This would allow them better proximity to the business community as well as the services provided by the other agencies within the department. Ms. Brower inquired whether two positions would remain in their current location if they were not transferred as recommended. Ms. McKinney-James said the two positions would disappear if they were not transferred. Senator Jacobsen asked Ms. McKinney-James to explain what services were provided in the north, the south, and the rural areas. Ms. McKinney-James said the activities of the Office of Small Business were limited. The staff primarily responded to telephone inquiries and was engaged in coordinating with the congressional delegation and other states regarding the status of federal programs and other state programs. The Office of Industrial Development and Planning was actively engaged in promoting the industrial development bond program. She noted the rural communities had taken advantage of the services of the bond program. She hoped in the future to centralize the information most frequently requested by small businesses and other businesses throughout the state which were seeking to enhance their efforts or relocate. She noted efforts in the rural areas were focused on mining and agricultural operations. She expected the proposed new unit would engage in active dialogue with those two industries to determine issues or importance and either design programs targeted to them or provide the information they are seeking. Additionally, a program was proposed to provide capital for eligible businesses throughout Nevada. Senator Jacobsen inquired whether the programs would be better served by combining the Commission on Economic Development and the Commission on Tourism. Ms. McKinney-James said the combined resources would allow the Department of Business and Industry a greater ability to achieve its goals. Senator Jacobsen asked if the department would be operating in competition with the Commission on Economic Development and the Commission on Tourism. Ms. McKinney-James said the relationship was not at all competitive. Mrs. Evans noted the subcommittee did not have many opportunities to assist new and emerging businesses. She acknowledged the concern for expending General Fund money, but pointed out as businesses grew and became successful the state would realize a return on investing in those businesses. She suggested the subcommittee make a commitment to some investment in the growth and expansion of business in Nevada. She pointed out measurement indicators should be developed reflecting how the proposed operations were functioning and how businesses were being assisted. She stated she was inclined to adopt the Governor's recommendation regarding the three positions. Ms. Giunchigliani asked how long it would take to implement the proposed one- stop resource center. Ms. McKinney-James responded the framework would be in place within 30 to 60 days following transfer of the positions and existing programs from the Office of Small Business. Ms. Giunchigliani inquired whether the positions to be transferred from the Commission on Economic Development were funded with General Fund revenue. Ms. Erickson responded the funding mechanism for the positions was court ordered stripper well repayments and that funding mechanism would disappear. They were proposed to be funded from the General Fund in the coming biennium. Ms. Giunchigliani questioned where room tax revenue was located. Ms. McKinney- James stated that funding was in the Commission on Tourism budget. Ms. Giunchigliani suggested using room tax revenue for economic development. Ms. McKinney-James said she believed the intention was to use room tax revenue for marketing and promotion efforts. There had been no discussions regarding use of that funding for business retention or to provide services to existing businesses. Ms. Giunchigliani said it might be time to revisit the issue of room tax revenue collection and distribution to determine if there was a better use of those dollars. Ms. McKinney-James said Ms. Giunchigliani made an excellent point and she encouraged exploration of this issue. She emphasized it was her opinion the Department of Business and Industry played a secondary role to the proposed Department of Economic Development and Tourism with respect to economic diversification efforts. Senator Jacobsen asked fiscal staff to develop a schedule of room tax revenue collections and distributions for all 17 counties. Mr. Steele reported the Executive Budget recommended $8,199 (five trips to Washington, D.C., and one trip to New York) for out-of-state travel in each year of the biennium. The Governor also recommended funding for in-state travel of $10,060 in the first year and $17,476 in the second year. The total travel budget was $43,934 for the biennium. He noted it appeared from information provided by the department that a portion of the travel might be related to Housing Division activity. He inquired whether that travel could be funded in the Housing Division budget. Ms. McKinney-James explained the Director's Office was funded through cost allocations from the divisions of the department. The Housing Division was contributing to travel costs via those cost allocations. Chairman Tiffany asked if the Director could assess agencies for the cost of travel made specifically for their benefit. Ms. McKinney-James responded doing so would limit the agencies' ability to fund their own travel expenses. The agency budgets did not anticipate cost impacts from the Director's Office other than the cost allocations. She noted in the event of an emergency the Director could ask the agency to make a choice about foregoing their own travel to fund travel for the Director. Ms. McKinney-James noted the six trips projected may or may not be necessary, but the projection was based on the department's best judgment of the amount of travel which would be required. She said the request for travel funding was not inconsistent with the requests of other department heads, and, in fact, was probably less than other requests. Senator Jacobsen noted in the past authorization for travel was required from the Budget Division. He asked if that policy was still in effect. Ms. Erickson stated that policy had changed. Currently each department head was authorized to approve travel. Chairman Tiffany requested that in-state travel expense be cut 20 percent. She asked if such a reduction in funding would affect the department's performance. Ms. McKinney said a reduction would interfere with performance. She said the budget proposed was reasonable and consistent with the responsibilities of a department as large and diverse as the Department of Business and Industry. She explained the in-state travel funding requested would cover the travel expenses of the Director, the Administrative Services Officer, the Chief of Industrial Development and Planning, and the Coordinator for the Small Business Office. She noted on occasion Carson City staff members attended meetings in Carson City and Reno in the Director's place in order to avoid incurring in-state travel expense. She said over the past two years she had attempted to demonstrate her willingness to use the resources available and she was trying through the budget request to institutionalize those resources. If the in-state travel category was cut by 20 percent, the Director would return to the position of being one of the few cabinet members who was uncertain whether travel funding would be available to attend cabinet meetings. Mr. Steele said it was the position of fiscal staff that with additional staff positions and computer networking capability a 20 percent reduction in in-state travel was feasible. Ms. Giunchigliani asked how many divisions were within the department. Ms. McKinney-James answered there were 29 divisions within the department. Ms. Giunchigliani inquired whether the Department of Business and Industry was the largest agency. Ms. McKinney-James said the department was probably the largest agency with respect to units but not with respect to number of employees or budget size. Mr. Price noted he was not as critical of travel expense as some subcommittee members. He said attendance at conferences, association meetings, etc., could be extremely valuable. He questioned how department heads in Nevada could be expected to do their business without traveling. He noted air fare information provided to the subcommittee seemed higher than the state rate. Ms. McKinney- James explained the cost information represented a combination of air fare and travel per diem. Senator O'Donnell agreed in-state travel was necessary to accommodate the needs of the department. He expressed appreciation for Chairman Tiffany's frugality but said he would rather err on the side of allowing the department do its job, and in the event there were excess funds in the budget that the department would revert those funds to the General Fund. Chairman Tiffany asked if internal resources could be used in developing the department's cost allocation plan. Ms. McKinney-James said at the time of the state reorganization a simplified cost allocation system was developed for the department which did not take into consideration equity or sources of funding. There was no funding available in the budget to obtain consulting services to formulate a more effective cost allocation system. The Department of Administration had a contract with a consultant who had assisted in developing the overall state cost allocation system and helped other state agencies develop strategic plans and cost allocation. That resource was available to assist the Department of Business. Ms. McKinney-James stated she was unaware of any available in-house technical advice which did not tie directly to this consultant. Chairman Tiffany suggested the Administrative Services Officer or the State Controller could provide assistance in developing a cost allocation plan. Mr. Steele noted federal requirements provided only that cost allocations be reasonable and documented. He questioned the need to spend $24,000 to develop a plan which could be developed by the department itself. Ms. McKinney-James said she would be happy to work with anyone who could assist her in making the cost allocation system more equitable, more reasonable, and based on sound economic principles. She stated it was her understanding, however, the individuals Chairman Tiffany suggested could provide assistance were relying on information provided by the consultant. She pointed out other agencies had incurred similar and greater costs for consulting services from the same company in developing strategic plans. She said the estimated cost was reasonable and would provide a professional overview of the cost allocation system. She pointed out the department's cost allocation system was complicated due to the number of agencies involved and the variety of funding sources, including federal funding with associated federal restrictions. She explained she was attempting to avoid having the federal government scrutinize the department's cost allocation plan as it was doing with other agencies' plans. Mr. Steele questioned whether the cost allocation plan needed to be as complex as the plan Ms. McKinney-James was proposing. MRS. EVANS MOVED TO CLOSE THE BUDGET INCLUDING POSITIONS AND FUNDING FOR TRAVEL EXPENSE RECOMMENDED BY THE GOVERNOR BUT REMOVING RECOMMENDED FUNDING FOR COST ALLOCATION SYSTEM DEVELOPMENT. MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED. CHAIRMAN TIFFANY WAS OPPOSED. MR. ALLARD WAS ABSENT FOR THE VOTE. BUDGET CLOSED. * * * * * SENATOR MATHEWS MOVED TO CONCUR WITH THE ASSEMBLY MOTION. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. * * * * * INDUSTRIAL DEVELOPMENT BOND - PAGE 701 Mr. Steele explained the only adjustment recommended by fiscal staff was to provide additional budgetary control for out-of-state travel and in-state travel. He noted this adjustment was developed in coordination with the Director's Office. He explained the adjustment was simply to segregate the cost of issuance. MS. GIUNCHIGLIANI MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS. MRS. EVANS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. MR. ALLARD WAS ABSENT FOR THE VOTE. BUDGET CLOSED. * * * * * SENATOR MATHEWS MOVED TO CONCUR WITH THE ASSEMBLY MOTION. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. * * * * * OFFICE OF THE LABOR COMMISSIONER - PAGE 807 Mr. Steele noted this budget had been heard previously, at which time concern was raised about decision unit M-200, which provides for a prevailing wage unit in Las Vegas and General Fund appropriations of $137,630 in Fiscal Year 1996 and $172,397 in Fiscal Year 1997. Chairman Tiffany stated four positions were recommended to be shifted internally to the prevailing wage unit, with the staffing to be determined by the Labor Commissioner. The subcommittee subsequently considered funding but not filling four new positions and allowing the agency to approach the Interim Finance Committee for authorization to hire. Chairman Tiffany said she had since learned from a lobbyist the request for the additional positions was not generated by the Labor Commissioner but by an outside source who lobbied the Governor for them. She asked Ms. McKinney- James to comment on this matter. Ms. McKinney-James stated the Labor Commissioner's Office played a significant role in the lives of a variety of people outside the state system. Historically the office has been deemed not to have adequate resources. Many people, including the Labor Commissioner, made requests for more than four new positions to her as Director of the Department of Business and Industry. She said the Labor Commissioner had expressed a need for six or seven additional positions. She recommended three new positions, and after discussion with the Governor's Office, the Governor recommended four positions. Ms. McKinney-James stated the enthusiasm for the positions exhibited by the lobbyist was simply representative of the strong feelings of the labor community that the Labor Commissioner have adequate resources to perform its statutory responsibility. She noted a variety of interest groups had expressed their opinions to the Governor. She reiterated the Executive Budget reflected positions which were requested by the Labor Commissioner. Senator O'Donnell said this was not a labor-management issue. He said management was equally as concerned as labor about prevailing wage rates. He suggested government should be an entity which functioned as efficiently as possible and it was wasteful to have four staff positions devoted to determining the prevailing wage and not in the best interests of the taxpayers. Computer programs could be developed to serve that function or contracts could be made with accounting firms for those services. Ms. McKinney-James responded the positions requested would serve a prevailing wage enforcement function. They would not only be responsible for calculation of the prevailing wage rates. Ms. McKinney-James stated the agency was willing to accept Senator O'Donnell's challenge to look at how resources are currently distributed. She suggested placing funding for the four positions in reserve until the agency could demonstrate to the Interim Finance Committee the need for the positions and their function. She expressed concern that funding would be eliminated from the budget. Ms. Giunchigliani said she did not object to funding the four positions, but she would like to see measurement indicators which more accurately reflected the performance of the agency. She pointed out in 1978 there were 17 positions in the budget. In 1995 the budget had one less position than the 1978 budget. She said the agency had done a good job in light of the limited resources provided to it. Ms. Giunchigliani stated the Labor Commission affected both the labor and business communities. She also pointed out it was providing services statewide and was impacted by population growth. She said the positions were needed. Ms. Giunchigliani asked Ms. McKinney-James if she was planning some internal restructuring of the agency. Ms. McKinney-James said the manner in which both the Las Vegas and Carson City offices functioned should be revisited. Her preference would be to secure funding for the four positions with the understanding the agency would develop measurement indicators which demonstrated the positions were functioning properly. Ms. Giunchigliani noted the subcommittee had previously held action on this budget because of the inference that the Labor Commissioner was exceeding his responsibility. She noted he was, in fact, carrying out his responsibility as set forth in statute. Ms. McKinney-James stated the agency had requested a one-time appropriation which would provide it with the ability to participate in business process reengineering (BPR) as recommended by the Budget Director. She said it was critical to have the assistance developed through the BPR effort to assist the Labor Commissioner's Office in becoming more efficient. While it was clear the agency needed additional resources, there was some debate about how the resources would be deployed. The BPR would provide the ability to make that determination. Mr. Price echoed Ms. Giunchigliani's concerns. He noted he had heard several complaints from the construction industry about the inability of the Labor Commission to handle complaints. He said the office had a history of being underfunded. He expressed support for the agency requests. Ms. McKinney-James said it was important to note that from an enforcement standpoint, it was the presence of the agency which served as a deterrent, and there had to be a sufficient presence to send the message that violations would incur penalties. To some degree the Labor Commissioner's Office lacked credibility and effectiveness because of its limited resources. Mr. Price noted having the Labor Commissioner determining and enforcing prevailing wages and other applicable laws created an equal playing field for competing businesses. Mrs. Evans pointed out the Labor Commissioner had previously testified his office was monitoring over 1,400 projects. She expressed concern about its ability to fulfill its statutory responsibility and keeping up with its workload. She questioned how the office could perform its function without additional resources. She said she could not support simply placing funding in reserve and leaving staffing authorization to the Interim Finance Committee. She suggested the subcommittee seriously consider funding the positions requested. Chairman Tiffany said not adding the four positions now would allow the agency a chance to first restructure. She noted Senator O'Donnell had made a valid point about utilizing automation rather than staff. The subcommittee had previously discussed shifting the agency's emphasis to oversight. She pointed out the current Labor Commissioner would be retiring soon and the agency would be undergoing a restructuring under a new Commissioner. Mrs. Brower said she was inclined to hold funding for the positions in reserve until the new Labor Commissioner had an opportunity to determine how the agency would be restructured. Senator O'Donnell reminded the subcommittee prevailing wages were only paid on projects which were subject to the provisions of the Meany-Davis-Bacon Act and the Davis-Bacon Act. He acknowledged there was a lot of work involved in calculating the prevailing wage (i.e., the market rate for labor). Bids on government projects were required to disclose prevailing wage rates. He suggested a compromise on this budget by funding a BPR to determine how the prevailing wage was being calculated and if there was a better way to do it, placing funding for the four positions in reserve, and allowing the agency to approach the Interim Finance Committee to present its case for filling the positions as required. MS. GIUNCHIGLIANI MOVED TO SET ASIDE FUNDING FOR THE FOUR POSITIONS IN THE RESERVE ACCOUNT, AND ALLOW THE LABOR COMMISSIONER TO PRESENT TO THE INTERIM FINANCE COMMITTEE A PLAN FOR UTILIZING THOSE POSITIONS, INCLUDING UPDATED MEASUREMENT INDICATORS, AND PROPOSALS FOR RESTRUCTURING THE AGENCY, INCLUDING SHIFTING STAFFING FROM NORTHERN NEVADA TO SOUTHERN NEVADA. MR. PRICE SECONDED THE MOTION. Mrs. Evans noted the agency would be without positions until the BPR was complete. She asked what the timetable for completion would be. Ms. McKinney- James said the estimated timetable was six months. She noted in the meantime existing positions would be serving dual functions. She said her comment about the need to restructure the agency referred to the manner in which the current employees were deployed and the nature of their work. MRS. EVANS MOVED TO AMEND THE MOTION ON THE FLOOR TO FUND TWO POSITIONS AND HOLD FUNDING FOR TWO POSITIONS IN RESERVE. MR. PRICE SECONDED THE MOTION. Senator O'Donnell said he appreciated Mrs. Evans' determination to ensure adequate staffing for the agency to perform its job. He noted, however, it was uncertain what the two positions would be doing or where they would be located, the audit report on this agency was less than admirable, and following the BPR, the office could be totally restructured to include automation as a prevalent component, resulting in the reassigning of staff positions. He noted the Director had indicated her willingness to hold funding for the four positions in reserve, and doing so would allow the new Labor Commissioner to assign the positions where they were most needed. He suggested this would be the most prudent route for the subcommittee to take. Ms. Giunchigliani asked if staff members could be shifted from northern Nevada to southern Nevada. Ms. McKinney-James responded affirmatively. The Labor Commissioner had indicated he would find a way to make that shift given the significant activity in southern Nevada. She asked the subcommittee to allow her and the Labor Commissioner the flexibility to make the decision of how to deploy any positions which were moved to southern Nevada. THE MOTION TO AMEND FAILED. MRS. BROWER, MS. GIUNCHIGLIANI, AND CHAIRMAN TIFFANY WERE OPPOSED. MR. ALLARD WAS ABSENT FOR THE VOTE. THE MOTION ON THE FLOOR CARRIED UNANIMOUSLY. MR. ALLARD WAS ABSENT FOR THE VOTE. * * * * * SENATOR O'DONNELL MOVED TO CONCUR WITH THE ASSEMBLY MOTION. SENATOR JACOBSEN SECONDED THE MOTION. Senator Jacobsen asked that the motion include that the agency be required to address the recommendations of the Audit Committee. THE MOTION CARRIED. SENATOR MATHEWS ABSTAINED. * * * * * Mr. Steele reported fiscal staff had initially recommended reducing travel funding by $25,900 over the biennium. That amount was determined by providing for a 13 percent increase in travel for Fiscal Year 1996 over the base and an additional 13 percent increase in travel over Fiscal Year 1996 in Fiscal Year 1997. The 13 percent figure was obtained from the agency's reported 130 percent growth rate in the past 10 years. In subsequent discussions with the Labor Commissioner it became apparent travel funding requested in decision unit M-200 was disproportional and should be reduced. Ms. Erickson noted a portion of the funding request was for motor pool expenses. Cutting the funding would curtail the agency's ability to utilize motor pool vehicles. Mr. Steele stated his calculations did include motor pool costs. Ms. Giunchigliani asked what the motor pool costs were. Ms. Erickson stated the cost of motor pool vehicles was approximately $12,000 for vehicles and mileage. Ms. Giunchigliani asked how many staff positions the $15,000 travel expenses was associated with. Ms. Erickson said the $15,000 was incremental for the new auditors. The reason it appeared higher than the amount in the base budget was because it included funding for motor pool costs. Ms. Giunchigliani asked if motor pool costs had not been included in the base budget. Ms. Erickson stated she would have to review the base budget to make that determination. Ms. Giunchigliani said she wanted to be sure the subcommittee gave the agency the tools to do its job. She asked where motor pool costs were currently reflected. Ms. Erickson stated staff might have used their personal vehicles and received a per diem for that use. She noted there was a potential for conflict associated with the use of personal vehicles. Ms. McKinney-James asked Mr. Steele to explain the reduction contemplated by fiscal staff. Mr. Steele said his calculations were based on number of staff who traveled and the growth rate indicated by the Labor Commissioner. He noted the base travel was disproportional to the number of employees who traveled. Ms. McKinney-James asked what Mr. Steele proposed the travel funding be reduced to. Mr. Steele said the fiscal staff recommendation was for $15,050 in Fiscal Year 1996 and $10,851 in Fiscal Year 1997. He noted those calculations were based on the assumption the decision unit would be approved as recommended in the Executive Budget, which did not occur. He said he would review the figures again. Chairman Tiffany suggested, in light of not funding the additional four positions, it would be reasonable to accept the $25,900 as the travel budget. MS. GIUNCHIGLIANI MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH THE GOVERNOR'S RECOMMENDATION REGARDING FUNDING FOR TRAVEL EXPENSE. MRS. BROWER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. MR. ALLARD WAS ABSENT FOR THE VOTE. BUDGET CLOSED. * * * * * SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET, SETTING ASIDE ACTION ON TRAVEL EXPENSE PENDING RECALCULATION BY THE BUDGET DIVISION AND FISCAL STAFF. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. SENATOR MATHEWS WAS ABSENT FOR THE VOTE. BUDGET CLOSED. CONSUMER AFFAIRS - PAGE 811 Mr. Steele said a budget revision to decision unit E-914 relating to the Automotive Repair Fraud Unit had recently been received by the Budget Division. The main change to the Executive Budget was the Budget Division recommended substituting the previously proposed $200 annual fee for auto repair shops with a General Fund appropriation to fund the proposed fraud unit. The new recommended General Fund appropriation was $117,388 in Fiscal Year 1996 and $125,683 in Fiscal Year 1997, replacing the previously requested $200,000 General Fund loan and automotive repair trade fee revenue totaling $250,000 in Fiscal Year 1996 and $375,000 in Fiscal Year 1997. It was now proposed to transfer one Chief Compliance Investigator and upgrade and transfer one Staff Professional Trainee from the Telemarketing budget to the main Consumer Affairs account. The budget revision would also result in a reduction of the Attorney General's telemarketing staff from 10 positions to 4.5 positions. The remaining 5.5 positions were recommended to be transferred to the consumer protection fraud unit. The Governor also recommended a General Fund appropriation to offset a shortfall in transfers from the Telemarketing budget. Ms. Giunchigliani said it was her understanding there would be no references to specific fraudulent practices and the Consumer Advocate would deal with issues around fraud. She asked if fraud units were still being segregated. Ms. McKinney- James answered to the extent the agency was bound by the budget process, the uses of funds had to be identified. Ms. Giunchigliani asked why it was necessary to identify the use of funds. Ms. McKinney-James said identification was needed in order to track expenditures in order to allocate funds to assist the Consumer Affairs Division in dealing with specific deceptive trade practices (e.g., automotive repair fraud). Ms. Giunchigliani stated deceptive trade was deceptive trade. While she appreciated the need for accountability, she suggested tracking procedures could be developed internally rather than establishing separate units to deal with specific types of deceptive trade practices. Ms. McKinney-James responded she shared Ms. Giunchigliani's desire to have the Consumer Affairs Division function within the bounds of its statutory authority, which allows it to pursue all deceptive trade practices. She noted the automotive repair fraud unit was tied to pending legislation which dealt specifically with automotive repair fraud. Ms. McKinney-James stated if there was a commitment to support efforts against deceptive trade and fund those efforts from the General Fund or other appropriate sources, then the funding would not have to be specifically identified. Ms. Giunchigliani pointed out if funds were earmarked, it would be difficult to shift staff from one unit to another to accommodate changes in need. Ms. McKinney- James stated that was the essence of the problem. The agency would like to secure support for a policy decision from the Legislature which would allow the agency the flexibility to deal with all issues which surface under the area of deceptive trade. Senator O'Donnell expressed agreement with Ms. Giunchigliani. He noted deceptive trade knows no bounds and to label a specific industry as a deceptive trade industry was not in the best interests of Nevada. He agreed it would be appropriate to fund a consumer protection program from the General Fund and identify revenue derived from specific fines and fees which is deposited into the General Fund. He said it was poor government policy to assess a blanket fee to a specific industry because it deemed that industry to have a propensity for deceptive trade. Ms. McKinney-James said she agreed with Senator O'Donnell. She stated it was better public policy to address any and all incidents of deceptive trade. She pointed out the agency had been reluctant to move in that direction because it would require substantial General Fund infusion, and it was the responsibility of the Legislature to make that policy decision. She indicated she would absolutely support that position, and had, in fact, calculated what the cost to the General Fund would be. Senator O'Donnell reiterated it was poor public policy to fund a fraud unit from revenue collected from one industry, and sent a threatening message to that industry. Ms. McKinney-James said there was no attempt to send that message, and there was no intent to allow the fraud unit to address areas of deceptive trade beyond the auto repair industry. Historically, the regulatory response to deceptive trade practices was that when a segment of the industry was identified which appeared to be creating a public policy problem with respect to consumer protection, that industry would be targeted to pay for the oversight in order to give them an economic investment in industry reforms. This strategy was accepted in the industry. Ms. McKinney-James pointed out the Consumer Affairs Division was another division which historically had not had sufficient resources to perform its job. Its operational structure also needed to be revisited, and there were audit findings which required attention. The ability to deal with fraud and deceptive trade generally would help the division improve its overall performance because resources would not be limited to specific programs. Senator O'Donnell said he would entertain the idea of issuing a letter of intent to allow the Consumer Affairs Division to work in cooperation with the Attorney General's Office and other organizations, federal or state, in enforcement efforts to remove barriers to its efficient operation. Chairman Tiffany asked for a representative from the Attorney General's Office to set forth the goals of its fraud units and an explanation of its relationship with the Consumer Affairs Division deceptive trade unit, including delineation of responsibilities. Chairman Tiffany requested an explanation of the technical aspects of creating a general deceptive trade unit funded from the General Fund. Ms. Baker stated two issues were being discussed: 1) funding two additional investigator positions for deceptive trade which were presented as the automotive repair fraud investigation unit, and 2) substituting a General Fund appropriation for telemarketing funds which are spread throughout several budgets. Chairman Tiffany said she would like clarification about where those telemarketing funds were located in this budget. Ms. Baker stated it would take General Fund appropriations of $117,388 in the first year of the biennium and $125,683 in the second year to support two additional investigator positions. She explained the two positions were currently vacant in the Telemarketing budget because of a funding shortfall. The positions would be relocated within the deceptive trade budget. The funding request was developed to become effective October 1, 1995, which was the reason for the reduction in costs in the first year. Ms. Baker explained travel costs associated with the two positions were calculated with emphasis on auto repair investigation. It was requested the Chief Investigator be allowed to travel to one or two other neighboring states to review programs in those states with a view toward enhancing Nevada's program. Mr. Steele asked if those travel expenses could be reduced if the focus on the automotive repair industry was eliminated. Ms. McKinney-James pointed out the automotive repair aspect of deceptive trade investigation would remain a significant function of the Consumer Affairs Division, and that interaction with other states would still be required. Ms. Baker said in-state travel was projected to allow the investigators to travel throughout the state to conduct deceptive trade investigations. She noted the agency had one agency-owned vehicle and would request funding to lease an additional motor pool vehicle. Ms. Baker stated the positions would continue to be housed where they were previously located. Therefore, one-half of the operating expenses from the Telemarketing budget were transferred to the deceptive trade unit account. Additional operating expenses were anticipated to be incurred as a result of the emphasis on the automotive repair investigations, including consumer rights posters, a consumer hot line for complaints, a complaint tracking system, and computers for the new positions. Funding was also requested for a used automobile for sting operations. Chairman Tiffany said the desire of the subcommittee was to deemphasize the focus on the automobile repair industry and emphasize deceptive trade, which would mean costs specifically associated with auto repair fraud could be eliminated from the budget. Ms. McKinney-James stated the budget was developed to outline the resources necessary to deal with automotive repair fraud. She did not understand the deemphasis on automotive repair would mean an exchange of investigations from automotive repair to some other area. She explained automotive repair fraud would continue to represent a significant aspect of the function of the Consumer Affairs Division, and the budget reflected the minimum resources necessary to perform that function. If the Consumer Affairs Division was to be allowed to deal more generally with deceptive trade, other areas of need would have to be assessed. She asked that the resources necessary for dealing with automotive repair fraud not be eliminated from the budget. Chairman Tiffany reiterated the subcommittee wished to deemphasize the focus on a single business. Ms. Giunchigliani suggested renaming the division from Consumer Affairs to something which would denote the focus on deceptive trade practices. She also pointed out the subcommittee needed to see a budget which set forth the resources necessary to conduct investigations of deceptive business practices without segregating those resources according to specific industries. Ms. McKinney-James reiterated the budget presented was developed with a focus on automotive repair fraud and she did not want to suggest that this budget was adequate to deal broadly with deceptive trade practices. Ms. Giunchigliani asked how long it would take to develop a budget which would create a comprehensive deceptive trade practices unit. Ms. McKinney-James replied she could respond back to the subcommittee by Friday, May 19, 1995. Chairman Tiffany stated discussion on this budget would be held until the revised budget was developed. She asked Ms. McKinney-James to work with fiscal staff and the Attorney General in developing the new budget. Senator O'Donnell concurred with Chairman Tiffany's decision to hold discussion on this budget. He inquired whether there was authority for the Consumer Affairs Division to assess fines high enough to pay for ongoing operations to offset the required General Fund allocation. Mrs. Brower asked if making the focus of the division more general would facilitate its operations. Ms. McKinney-James responded affirmatively. CONSUMER AFFAIRS - RESTITUTION - PAGE 817 Mr. Steele stated fiscal staff concurred with the Governor's recommendation on this account. MRS. BROWER MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY THE GOVERNOR. MR. PRICE SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. MS. GIUNCHIGLIANI WAS ABSENT FOR THE VOTE. BUDGET CLOSED. * * * * * SENATOR O'DONNELL MOVED TO CONCUR WITH THE ASSEMBLY MOTION. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. SENATOR MATHEWS WAS ABSENT FOR THE VOTE. BUDGET CLOSED. * * * * * CONSUMER AFFAIRS - TELEMARKETING - PAGE 819 Mr. Steele indicated the subcommittee's earlier action to hold the Consumer Affairs account pending modification of the deceptive trade practices unit should not have an impact on this account as long as two positions were transferred out of the Telemarketing account to the Consumer Affairs account. Ms. Baker said her understanding was to combine the Telemarketing account with the Consumer Affairs account to develop one deceptive trade practices unit. Chairman Tiffany agreed to hold discussion on this budget. Senator O'Donnell concurred with Chairman Tiffany. BOARD OF CONTRACTORS - PAGE 2081 BOARD OF PSYCHOLOGICAL EXAMINERS - PAGE 2143 Chairman Tiffany noted Ms. Giunchigliani wanted to engage in discussion on these two budget accounts. She suggested holding these accounts since Ms. Giunchigliani was temporarily absent from the hearing. INSURANCE REGULATION - PAGE 709 Ms. Botts also pointed out an Actuary I position had been vacant since August 1992. Fiscal staff recommended deleting that position for a savings of approximately $50,000 per year. She noted the division had expressed some confusion about whether or not the position was authorized in the budget, but even when that authorization was confirmed, the division failed to fill the position. Ms. Botts stated the Governor recommended a downward reclassification of a Compliance/Audit Investigator II to a Staff Professional Trainee for an underfilled position. Ms. Botts said fiscal staff recommended increasing non-state owned building rent pursuant to a recently renegotiated lease. She added the budget included funding for a subscription to Nevada Magazine which seemed excessive ($489 per year). She recommended deleting that funding. Other adjustments reflected the most recent information received regarding the statewide cost allocation and the Attorney General's cost allocation. Ms. Botts noted prior to 1993-95 the account was supported primarily from the General Fund. In some years funds were transferred from the Insurance Examiner's Fund to cover identified expenditures, i.e., salaries. The 1991 Legislature increased annual license fees paid by insurers by nearly five times from approximately $500 to nearly $2,500 to generate enough revenue to offset the cost of the agency. In 1993 a significant shift occurred in the operating budget. To reduce General Fund allocations the transfers in from the Insurance Examiner's Fund were increased dramatically. The balance in the Insurance Examiner's Fund has now been reduced considerably, and that source of funding has been diminished. The Governor recommended increasing General Fund appropriations to replace the revenue which formerly was transferred in from the Insurance Examiner's Fund. Fiscal staff concurred with the Governor's position. Ms. Botts stated the Governor recommended an additional Management Assistant I position for the Las Vegas office. The Governor previously recommended abolishing a Consumer Advocate for Auto Insurance position, but now recommended restoring that position in a separate budget account. Ms. Botts noted the subcommittee may wish to issue a letter of intent directing the Insurance Division to report quarterly to the Interim Finance Committee on the status of the Insurance Examiner's Fund. Fiscal staff also recommended the measurement indicators for each of the agency's budget accounts be revised to focus on outcomes rather than process. Ms. McKinney-James stated she appreciated Ms. Botts' concern about the Actuary I position remaining vacant for so long. She noted, however, the Insurance Division's responsibilities were likely to increase significantly as a result of new legislation regarding workers' compensation reform. She indicated the division had developed a proposed job description for that vacant position and said the position should be reserved in the budget. Chairman Tiffany said there was no doubt the division was understaffed. She asked when the division proposed to fill the position. Ms. McKinney-James stated the division was prepared to fill the position but had been undergoing a transition as the result of management changes. She said the new Insurance Commissioner felt strongly about utilizing that resource. Senator Jacobsen expressed concern about indications in the Insurance Division audit report regarding lack of management control and reports that the Las Vegas office was more productive than the Carson City office. He said there appeared to be little direction from management. Mr. David Hall, Deputy Commissioner, Division of Insurance, responded there was formerly no funding to fill the Actuary position. A recruitment has since been completed and the division is prepared to fill the position as soon as funding is available. A portion of that position's responsibilities will be supervising the Consumer Services Section, which deals with the problem identified in the audit report. He said filling the position would allow the division to catch up with its backlog and provide support for other areas of the division. Chairman Tiffany echoed Senator Jacobsen's concerns about the audit report and the organization of the division. Ms. McKinney-James stated she and the Insurance Commissioner were committed to reorganizing the division. Ms. Botts asked if one of the responsibilities of the Actuary would be supervising consumer sections. Mr. Hall said responsibilities would be shifted to allow the position to work closely with the consumer investigators to address the recommendation of the audit report. Ms. Botts questioned whether the position would be acting as supervisor. Mr. Hall stated the position would act as supervisor. Ms. Botts stated in the past Actuaries had not served in a supervisory capacity. She noted Actuaries had specific technical expertise. Generally, an administrator would supervise the consumer section. If technical expertise was required, the administrator would consult with the Actuaries. Ms. McKinney-James said the division was attempting to explore the best use of the Actuary positions. She requested that it be retained in the budget. To the extent the consumer section dealt with technical issues, someone with technical training was required. She would like to explore what was the best use of the position and report back to the committee. Chairman Tiffany asked how that position might be reclassified. Ms. McKinney- James said she did not intend to reclassify the position since the actuarial expertise was what was needed. Ms. Giunchigliani suggested removing the reference to auto insurance associated with the Consumer Advocate position. Ms. McKinney-James said in considering the best and highest use of the function it was her view the position should continue to be housed within the Insurance Division. Senator O'Donnell questioned whether any adjustments were required in the proposed workers' compensation legislation or in the State Industrial Insurance System (SIIS) budget to allocate funding for Actuary positions. Ms. McKinney- James said the vacant Actuary position would not be utilized in association with workers' compensation. Ms. McKinney-James noted Senator Townsend had expressed a desire for staff assistance from the Insurance Division in preparing a request for proposals for the Medicaid managed care program and to manage increased workload associated with possible legislative action taken with regard to workers' compensation. The proposed focus of this position would be market conduct, but generally, the division would require all the resources at its disposal to deal with current and potential responsibilities. Senator O'Donnell asked if SIIS liability was reflected in the budget. Ms. McKinney-James said it was not. Senator O'Donnell asked if the division would be obtaining additional positions as a result of workers' compensation legislation. Ms. McKinney-James said there were ongoing discussions related to increasing staffing. MS. BROWER MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS, HOLDING FUNDING FOR THE ACTUARY I POSITION IN RESERVE PENDING AUTHORIZATION TO HIRE FROM THE INTERIM FINANCE COMMITTEE, RESTORING THE CONSUMER ADVOCATE POSITION TO BE ASSIGNED TO DEAL GENERALLY WITH DECEPTIVE TRADE PRACTICES, ISSUING A LETTER OF INTENT DIRECTING THE DIVISION TO REPORT QUARTERLY TO THE INTERIM FINANCE COMMITTEE AND ENCOURAGING INTERNAL REORGANIZATION. Ms. Botts noted the Consumer Advocate position was included in another budget account. She noted legislation might be required if the duties of the position were to be altered. Ms. McKinney-James stated a bill was pending in the Senate Finance Committee which would be the appropriate vehicle to make structural adjustments in the position. Mr. Allard asked if the Actuary position would be necessary regardless of actions taken on pending workers' compensation legislation. Ms. McKinney-James responded affirmatively. Ms. Giunchigliani suggested an adjustment to the motion to fill the Actuary position. MRS. BROWER REVISED THE MOTION RESTORE THE ACTUARY I POSITION. MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. * * * ** SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS, DELETING THE ACTUARY I POSITION UNTIL ACTION HAS BEEN TAKEN ON PENDING WORKERS' COMPENSATION LEGISLATION. SENATOR JACOBSEN SECONDED THE MOTION. Senator Mathews questioned the prudence of deleting the Actuary I position. Ms. Giunchigliani said she hoped the subcommittee would not confuse the division's budget and the need for an Actuary with possible actions related to SIIS. If pending legislation was approved, additional positions would be dedicated to specific areas and funding for those positions would come from assessments, not from the General Fund. Therefore, that pending legislation had no effect on the Insurance Regulation budget. Senator Mathews asked Senator O'Donnell if he would be willing to amend his motion to place funding for the Actuary I position in reserve. Senator O'Donnell asked Ms. McKinney-James to comment on this issue. Ms. McKinney-James said there was a distinction between this Actuary I position, which would deal with life and health insurance, and actuarial assistance which would be required as the result of pending workers' compensation legislation (i.e., property and casualty). Ms. Botts stated the positions designated to deal with workers' compensation were included in another budget account. Ms. McKinney-James acknowledged the division had erred by not filling the position in a timely manner. She noted she had been contacted by members of the business community who felt they were not being well served by the division. The division was now asking that the position be funded to allow it to function more effectively. SENATOR O'DONNELL WITHDREW THE MOTION. SENATOR JACOBSEN WITHDREW THE SECOND. * * * * * SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS, RESTORING THE ACTUARY I POSITION WITH THE STIPULATION THAT IN THE FUTURE THE DIVISION PAY CLOSER ATTENTION TO STAFFING LEVELS. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS - PAGE 715 Ms. Botts explained this budget account received $15 annually from each authorized insurer to pay reasonable and necessary travel and related expenses incurred by staff of the division attending National Association of Insurance Commissioners (NAIC) meetings and trainings. Fiscal staff suggested issuing a letter of intent directing the Commissioner to use a portion of the funds available in this account for staff training to meet accreditation standards. She noted technical adjustments were recommended to incorporate the latest information on the statewide cost allocation plan and the Attorney General's cost allocation. MRS. EVANS MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS. MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. * * * * * SENATOR O'DONNELL MOVED TO CONCUR WITH THE ASSEMBLY MOTION. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. * * * * * INSURANCE COST STABILIZATION - PAGE 717 Ms. Botts explained fiscal staff recommended technical adjustments to incorporate recent information on the Attorney General's cost allocation, the statewide cost allocation plan, and non-state owned building rent. MS. GIUNCHIGLIANI MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS. MRS. EVANS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. * * * * * SENATOR O'DONNELL MOVED TO CONCUR WITH THE ASSEMBLY MOTION. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. * * * * * SELF-INSURED WORKERS' COMPENSATION - PAGE 721 Ms. Botts explained this was the budget account which dealt with employers who were self-insured for workers' compensation. The Senate Finance Committee had asked the division to submit a request for necessary additional help. The division requested 3.5 new positions. A Management Analyst II was requested to begin in the first year of the biennium to handle increased caseload. She noted the number of self-insured employers had increased from 67 in 1984 to 201 as of May 1995. The program currently employed only one Coordinator and one Management Analyst. A clerical position was added to the budget in 1992. Fiscal staff recommended adding the Management Analyst II position. Ms. Botts noted S.B. 316 of the Sixty-seventh Legislative Session authorized groups of five or more public and/or private employers to band together to form associations for self-insurance for workers' compensation, effective July 1, 1995. SIIS predicts a loss of premium as smaller employers group together to self-insure. She stated there had been discussion of a moratorium being placed on the formation of those associations, but there was currently no proposed legislation which would delay implementation of the law. However, if the law is allowed to become effective on July 1, 1995, the division anticipates 2.5 additional employees (a Management Analyst II, a half-time Actuary I, and a Management Analyst II to begin in the second year of the biennium) will be needed to handle the workload related to implementation of the new associations. She noted travel and operating costs would also be associated with the new positions. She suggested the subcommittee authorize funding for the new positions and associated expenditures contingent upon the establishment of the associations, with no authorization being given in the event of a moratorium on self-insurance associations. She advised the subcommittee to issue a letter of intent directing the division to monitor the workload in the Self-Insured Worker's Compensation program and only fill positions as necessary. Ms. Botts noted the positions would be funded from an increased allocation from the Workers' Compensation Fund. Ms. Giunchigliani suggested holding action on this account pending the outcome of proposed legislation which would have an impact on the structure of this program. She stated she would also like to hear from SIIS what the impact on its budget would be of shifting dollars for new positions from the Workers' Compensation Fund. SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET, INCLUDING TECHNICAL ADJUSTMENTS RECOMMENDED BY STAFF, AUTHORIZING FUNDING FOR 2.5 NEW POSITIONS IN THE EVENT OF WORKLOAD INCREASES RESULTING FROM PASSAGE OF PROPOSED LEGISLATION. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED. * * * * * MR. ALLARD MOVED TO CONCUR WITH THE SENATE MOTION. MRS. EVANS SECONDED THE MOTION. THE MOTION FAILED. MRS. BROWER, MS. GIUNCHIGLIANI, AND MR. PRICE WERE OPPOSED. * * * * * There being no further business, the meeting was adjourned at 11:00 a.m. RESPECTFULLY SUBMITTED: Dale Gray, Committee Secretary Joint Subcommittee on General Government Assembly Committee on Ways and Means and Senate Committee on Finance May 16, 1995 Page