MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session June 7, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:05 a.m., on Wednesday, June 7, 1995, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator William J. Raggio, Chairman Senator Raymond D. Rawson, Vice Chairman Senator Lawrence E. Jacobsen Senator Bob Coffin Senator William R. O'Donnell Senator Dean A. Rhoads Senator Bernice Mathews GUEST LEGISLATORS PRESENT: Senator Mike McGinness Assemblyman Dennis L. Allard STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Brian M. Burke, Program Analyst Sue Parkhurst, Committee Secretary OTHERS PRESENT: John P. Comeaux, Director, Department of Administration Keith Rheault, Ph.D., Deputy Superintendent, Instructional, Research and Evaluative Services, State Department of Education Harvey Whittemore, Lobbyist, Nevada Resort Association Ray Bacon, Lobbyist, Nevada Manufacturers Association Myla C. Florence, Administrator, Welfare Division, Department of Human Resources Michael J. Willden, Deputy Administrator, Administrative Services, Welfare Division, Department of Human Resources Mary L. Peterson, Superintendent of Public Instruction, State Department of Education Granville Gage, Superintendent, Mineral County School District Ben Leyva, Vice Chairman, Walker River Paiute Tribe Genia M. Frank, Member, Walker River Paiute Tribe Board of Education Elveda Martinez, Chairman, Walker River Paiute Tribe Board of Education Paula Berkley, Lobbyist, Reno-Sparks Indian Colony Juliana Castillo, Member, Walker River Paiute Tribe Board of Education Tidudzi Hoferer, Student, Schurz Elementary School Tyson Nez, Student, Schurz Elementary School Carlos Olmedo, Student, Schurz Elementary School Drug Commission - Technical Adjustments - Page 1461 Brian M. Burke, Program Analyst, said the joint subcommittee on general government did not prepare closing recommendations for this budget account. He said adjustments to the Governor's recommended budget are necessary due to the loss of Byrne Memorial grant funding. He directed the committee's attention to the closing sheets (Exhibit C), which contain three suggested options discussed by the subcommittee for replacement of the Byrne grant revenues (scenarios 1, 2 and 3 on pages 3 through 5, summarized on page 1). Senator O'Donnell said scenario 3, which would transfer the drug coordinator to the Division of Parole and Probation, is consistent with the action taken by the Joint Subcommittee on Public Safety and is the option favored by the Joint Subcommittee on General Government. He requested Mr. Burke to review this scenario for the committee. Mr. Burke said in scenario 3 the drug coordinator position would be transferred to the parole and probation division to assist with Lifeskills' efforts. This scenario does not require the replacement of lost Byrne grant funding and in fact results in a reduction to the transfer of program funds from the Bureau of Alcohol and Drug Abuse (BADA). He pointed out that if this option is chosen, it will be necessary to modify Nevada Revised Statutes (NRS) 453.430, which specifies the duties of the coordinators of the program for substance abuse, education, prevention, enforcement and treatment. A fourth alternative discussed by the subcommittee was to fund the Drug Commission entirely with state General Fund appropriation, Mr. Burke said. SENATOR O'DONNELL MOVED TO APPROVE SCENARIO 3 AS OUTLINED ABOVE AND AS PRESENTED ON PAGE 5 OF EXHIBIT C, TRANSFERRING THE DRUG COORDINATOR TO THE DIVISION OF PAROLE AND PROBATION. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR O'DONNELL MOVED TO ADJUST THIS BUDGET WITH THE TECHNICAL ADJUSTMENTS RECOMMENDED BY STAFF AND THE ADOPTION OF SCENARIO 3, AND TO CLOSE THE BUDGET ACCORDINGLY. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Senator Raggio commended Mr. Burke for the manner in which the recommendations and adjustments for this budget were displayed for the committee. Employment Security Special Fund - Page 1433 Senator Raggio noted this budget was heard in the Senate Committee on Finance on February 28. Mr. Burke said the Executive Budget eliminates private counsel for the Employment Security Division (ESD) and replaces it with attorney general support centralized in the Director's Office of the Department of Employment, Training and Rehabilitation (DETR). Subsequent to submittal of the Governor's budget, the agency requested that outside legal representation be retained and that the $100,143 annual cost be funded through the Employment Security Special Fund. The joint subcommittee recommended denial of the agency's proposal to retain outside counsel. Continuing, Mr. Burke said that at the May 15, 1995 meeting of the Senate Committee on Finance, this account was held pending further consideration of the private counsel issue. Senator Raggio asked John P. Comeaux, Director, Department of Administration, if the agency's request for the authority to retain outside counsel meets with the approval of the administration. Mr. Comeaux replied yes. SENATOR O'DONNELL MOVED TO APPROVE THE TECHNICAL ADJUSTMENTS MADE BY STAFF, TO ADD THE AMOUNT OF FUNDING RECOMMENDED FOR AUTHORITY TO RETAIN OUTSIDE LEGAL COUNSEL, AND TO CLOSE THE BUDGET ACCORDINGLY. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Employment Security Division - Page 1413 Senator Raggio noted this budget was heard on February 28. Mr. Burke said the Senate Committee on Finance reviewed the recommendations of the joint subcommittee on general government on May 15. He reminded the committee the subcommittee had concurred with the Governor's proposal to return six auditors from the combined audit program to the ESD. He said the subcommittee did not agree, however, with the proposal to provide $12,595 per year to continue a scaled-down version of the combined audit program. The budget was held pending further consideration of the combined audit program. Mr. Burke reviewed the other recommendations of the subcommittee as outlined on pages 7 and 8 of the budget closing sheets (Exhibit C). Item 1 on page 8 pertains to the changes in the statewide cost allocation plan assessments pursuant to the current schedule prepared by the Budget Division. Item 2 describes an adjustment that eliminates non-holiday overtime pay in module M- 200. No vacancy savings are included in the Governor's budget, creating the capacity to pay overtime without augmenting the budget for overtime costs. Item 3 concerns the subcommittee's recommendation to approve the addition of nine positions and associated support cost to establish a prototype One-Stop Career Service Center in Reno. Mr. Burke said the service delivery design for the center will be seamless, in that job seekers, employers and those seeking any service offered by the department will find the service available in the center. The department anticipates establishing up to 35 one-stop centers within the next 5 years. Mr. Burke said the agency will use federal Job Training Partnership Act (JTPA) funds to operate the center. Senator Raggio asked when the center is expected to begin operating. Mr. Burke replied the agency wants it to begin as soon as possible. He said the subcommittee's approval of this proposal was partially contingent upon the agency approaching the Interim Finance Committee (IFC) prior to beginning to operate the center. Item 4 explains the adjustment in the attorney general costs to fund the 2.25 FTE (full- time equivalency) attorney staff. The costs in decision unit E-912 reflect ESD's share of the funding for these positions. Item 5 describes the adjustment that delays the transfer of the Mail Services Supervisor position from the ESD to the State Mailroom from FY 1996 until FY 1997. Item 6 pertains to the adjustment in module E-961 presented at the beginning of Mr. Burke's narrative on the subcommittee recommendations relative to the Governor's proposal to continue a scaled-back combined audit program. Observing that the executive director of the Department of Taxation, Michael Pitlock, had strongly recommended a reduced version of the combined audit program in his presentation before the committee, Senator Raggio asked the reason for the subcommittee's recommendation with regard to this request. Senator O'Donnell responded the subcommittee felt that based on testimony regarding this request, the combined audit program is not workable, was not effective during the entire interim, and was costly in terms of not allowing full audits in the sales tax component of the agency, resulting in a significant cost to the General Fund. He said it was felt that to approve the scaled-down request would merely perpetuate an unworkable program. Senator Raggio asked if action inconsistent with the subcommittee's recommendation on this proposal has been taken in any other budgets. Mr. Miles said there is a corresponding entry in the budget for the Department of Taxation, which was closed without taking action on the proposal regarding the combined audit pilot project. Should the funds for the program be deleted as recommended by the subcommittee, staff would need to make a similar adjustment in the taxation budget. Senator Raggio inquired as to Mr. Comeaux's position on the proposal to deny the request for the reduced version of the combined audit program. Mr. Comeaux indicated it is acceptable to the Department of Administration. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AND THE ADJUSTMENTS MADE BY STAFF AS PRESENTED ON PAGES 7 AND 8 OF EXHIBIT C, AND TO AUTHORIZE STAFF TO DELETE THE FUNDS FOR THE COMBINED AUDIT PROGRAM IN THE BUDGET FOR THE DEPARTMENT OF TAXATION TO CORRESPOND WITH THE ACTION TAKEN IN THIS BUDGET. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Community Based Services - Page 1527 Mr. Burke said the joint subcommittee on general government recommended technical adjustments to the Governor's budget in addition to equally dividing the operating funds for the American Sign Language program between both years of the biennium. Previously no appropriation was provided for FY 1997. The budget was previously held pending action on a related legislative measure, which has been approved. SENATOR MATHEWS MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 9 OF EXHIBIT C. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Communications Division - Page 647 Mr. Burke reported the Senate members of the joint subcommittee on general government did not prepare a closing recommendation on the budget for the Communications Division, which was held pending further consideration of funding for the proposed microwave study. He said the Governor's budget recommended $150,000 in each year of the biennium for a microwave system study. The study would include an evaluation of the existing microwave system, the existing mobile radio systems and the extent to which they can be included in the communications infrastructure. Mr. Burke said the study would address 800MHz (megahertz) technology, other mobile communications alternatives, continuing viability of the microwave system, alternatives to the microwave system and recommendations for future direction. Continuing, Mr. Burke said that because the sources of revenue in the Executive Budget were insufficient to fund this endeavor, the Budget Division revised the request, proposing to fund the study entirely with state Highway Fund appropriation. It was subsequently learned the Highway Fund could legally provide only 62.5 percent of the required funding. The Assembly Committee on Ways and Means approved funding the study with an allocation from the Highway Fund amounting to $93,828 per year, with the remaining $56,172 to be appropriated from the state General Fund. Mr. Burke said the Governor also recommended several additional enhancements to the budget for the Communications Division in decision modules E-125 and E-710. To fully fund these enhancements, corresponding fee increases should have been included in the budgets of the state agency customers. The corresponding increases were not made, and as a result revenue is not sufficient to fund the proposed enhancements. A scaled-down version of the Governor's enhancement request was developed which would be supported by revenue growth through the addition of new users rather than increasing the fees of existing users. The revised plan funds the replacement vehicles and battery banks proposed in the Executive Budget. Site refurbishment funding is reduced from $92,700 to $62,700 per year, which will allow the agency to perform limited rebuild at one mountain-top site per year. Mr. Burke further related the revised plan includes the mechanic and electrician positions requested in the Governor's budget; however, operating and equipment funding are reduced. He said one new vehicle for the positions, rather than the two requested in the Executive Budget, is recommended by the subcommittee. Referencing the recommended closing actions for this budget (pages 10 through 13, Exhibit C), Mr. Burke said the closing sheets reflect the scaled-down microwave study request. Page 10 reflects closing the budget without the microwave study (scenario 1), and page 12 reflects closing with the microwave study funded similarly to the manner recommended by the Assembly (scenario 2). Mr. Burke called attention to the fact the Governor's budget merges the Communications Division with the Facility Management Division, and this proposal has already been approved by this committee. He said it will be necessary to modify the Facility Management budget to correspond with the action taken on the budget for the Communications Division. Senator Raggio requested Senator O'Donnell, as Senate chairman of the Joint Subcommittee on General Government, to provide the committee with the subcommittee's recommendation with regard to whether or not to add the microwave study and to fund it with appropriations from the General Fund and the Highway Fund. Senator O'Donnell said the microwave study must be undertaken, and what is at issue is which entity should perform the study. He noted there has already been some movement toward selecting a vendor and deciding what type of system to purchase. He suggested that if the same agency requesting the study will also be performing the study, the existing problems in this area will continue. He said there may be legal challenges associated with the selection of vendors. The senator said it is his intention that an objective approach be taken in addressing this issue. He voiced uncertainty regarding which course of action should be taken, although he reiterated the study is necessary. Senator Raggio asked who would perform the study, as contemplated by the Assembly Committee on Ways and Means. Mr. Burke said the ways and means committee included in its approval a plan to involve a number of the users of the system in the preparation of the request for proposal (RFP) to facilitate a more objective process. Senator O'Donnell affirmed this but noted the Department of Information Services (DIS) is the agency that oversees the study. He remarked the DIS is the entity that has initiated what he termed a ratchet approach toward implementing changes in the system. He questioned the ability of that agency to conduct an objective study, commenting, "I've been through the SPIRIT [Strategic Plan for Information Resources and Information Technology] thing and I know how that went, and I don't want to go through that again." Senator Raggio repeated his request for a recommendation from the joint subcommittee. Senator O'Donnell proposed funding the study with an appropriation of $93,828 from the Highway Fund, augmented with a $56,172 appropriation from the General Fund. He stressed the study should be monitored during the interim by a standing oversight committee on computer applications. Senator Raggio asked Senator O'Donnell if his proposal is that a letter of intent be prepared specifying the expenditure of funds allocated for the microwave study is subject to oversight by an official legislative committee. Senator O'Donnell said it is. Senator Raggio requested Senator O'Donnell to provide the committee with recommendations as to the composition of the proposed oversight committee for inclusion in a letter of intent, if the committee approves the letter. SENATOR O'DONNELL MOVED TO APPROVE THE ADJUSTMENTS MADE BY STAFF AND ITEMIZED ON PAGE 12 OF EXHIBIT C; TO ADOPT SCENARIO 2 AS OUTLINED ON PAGE 13 OF EXHIBIT C, AND TO AUTHORIZE A LETTER OF INTENT TO PROVIDE FOR LEGISLATIVE OVERSIGHT OF THE MICROWAVE STUDY DURING THE INTERIM. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Raggio announced Assembly Bill (A.B.) 69 would be heard first to accommodate the testimony of Assemblyman Allard. ASSEMBLY BILL 69: Provides partial exemption from business tax for businesses that employ certain pupils. Assemblyman Dennis L. Allard, Assembly District 20, testified in support of this measure. He said A.B. 69 is an important first step in addressing three major concerns of voters today: crime, education and taxes. He explained the measure provides a tax incentive to businesses for hiring high school students in that if a business hires a student, the number of hours worked by that student are exempt from the business activity tax (BAT). Additionally, the business can deduct every hour worked by that student from the pool of hours used in calculating the total number of hours worked by all employees pursuant to NRS 364a.150. Mr. Allard delineated the manner in which A.B. 69 would address the concerns mentioned above. He said while it is generally acknowledged that crime is "a voracious leech that is preying on our youth and society in general," building new prisons is not enough; instead, crime prevention must be the goal and is the objective of A.B. 69. Mr. Allard said studies show that if children are taught skills that will enable them to gain employment, the chances of their becoming involved in crime are virtually zero. Approximately 70 percent of the students in Nevada do not go on to college, and if the needs of this group are not addressed the costs will be reflected in the level of criminal incarceration. Continuing, Mr. Allard said in addressing education the sponsors of this bill purposely allowed as much leeway as possible for school district involvement, and there are many representatives of education who support A.B. 69. There are currently school- to-work programs in place, he stated, but one basic obstacle to the programs is the need for employer involvement. He said A.B. 69 would facilitate such involvement and would allow employers to benefit the community in a much more direct way than by merely paying taxes. He said the involvement of employers is necessary in order for school-to-work programs to be effective and to enable educators to address the needs of the 70 percent of students who do not attend college. In further testimony Mr. Allard said A.B. 69 addresses the issue of taxes in a very obvious way, but also offers less obvious benefits. If the measure passes, he said, the potential savings in facilities, utilities and faculty as well as in costs associated with juvenile incarceration and the court system are much more than enough to offset the loss in revenue. He maintained the bill is a win-win proposition for schools, employers, students and the state. It benefits schools by helping to involve employers in the school-to-work programs and helping to address the problem of the high drop-out rate among high school students, because the student's job depends on his remaining in school. For employers, the benefits would be in tax savings and in the development of a more qualified, better educated work force. The benefits to students would be the income they receive as well as the development of skills for the future and a work ethic. The state would benefit because of the savings in education, court costs and juvenile incarceration. Mr. Allard noted A.B. 69 was passed unanimously by the Assembly Committee on Taxation and by the entire Assembly with only one dissenting vote. He urged passage of this measure. Senator Raggio asked if the concept proposed in this bill is that employers would have an incentive to employ pupils because they would receive credit against their BAT payment for the number of hours the pupils are employed. Mr. Allard said this is correct. He explained the reason for exempting hours from the hours worked by existing employees is that it was felt there was not enough incentive to hire pupils because there are costs (for example, training) associated with hiring. It is anticipated that at best the employer will break even, but it is hoped the incentives provided in the bill will encourage employer involvement, Mr. Allard stated. Senator Coffin said when the BAT legislation was enacted in 1991 it contained a number of inequitable provisions that were subsequently resolved with the removal of all exemptions and differentials. He voiced the opinion the incentive to employers that A.B. 69 would provide is not significant enough to be effective, and he expressed opposition to allowing any exemptions whatsoever with regard to payment of the BAT. He suggested the proposed measure would overcomplicate the existing law, which he noted is unpopular and runs the risk of being repealed. Mr. Allard responded it is his opinion the incentive in A.B. 69 is not adequate, but represents "a foot in the door." He said the publicity generated by the proposal would help get employers involved in the school-to-work programs. He emphasized it is necessary to begin thinking along the lines of promoting employer involvement in these programs and helping students to gain employment. He repeated his earlier remarks that the bill represents a beginning and an important first step, and might provide sufficient incentive to obtain the support of some employers. Keith Rheault, Ph.D., Deputy Superintendent, Instructional, Research and Evaluative Services, State Department of Education, testified in favor of A.B. 69. He said the United States is the only industrialized nation that lacks a comprehensive system to help its youth acquire knowledge and skills necessary to make an effective transition from school to work. Only 8 percent of the high school students nationally have work experience during their school years, and Nevada's statistics are almost identical. Approximately 8 percent of the state's students are involved in some work experience, youth apprenticeship or job shadowing. Continuing, Dr. Rheault said Nevada's future economic stability will depend on its educational system to provide a quality work force for jobs created by its businesses. During the past year, hundreds of people have been involved in what the education department refers to as the framework for a school-to-work transition system in Nevada. The aim of the system is to better prepare all youth for the transition from school to work. For the system to be successful, Dr. Rheault continued, business and industry must form a partnership with education. A missing element to the school-to- work system has been the identification of any fiscal incentive for businesses to assume the responsibility of providing more work experience opportunities for Nevada's students. Dr. Rheault said A.B. 69 recognizes the need for this incentive for business to become more involved in the partnerships. He said the key word is "supervised," which means that a student, to participate in the program, would have to be supervised by the school district. In most cases currently that entails a signed agreement between the school district, the parent, the student and the business that outlines the responsibilities of the parties involved. Dr. Rheault further stated the bill has been kept simple in terms of the language and the requirements, and the program can be implemented simply. Since the students would be supervised by the school district, all that would be required for audit purposes would be a certificate signed by the school district stating the student is fully enrolled in a supervised work experience program. A copy of the certificate could be kept in the school district records and provided to the participating business. Dr. Rheault stressed the need to keep the program simple, because research indicates that excessive "red tape" reduces the effectiveness of an incentive program. He noted the proposal appeared workable to the director of the Department of Taxation, according to testimony at a hearing of the Assembly Committee on Ways and Means. The State Department of Education strongly supports A.B. 69 for the reasons stated above, Dr. Rheault continued, and because of the timeliness of the bill with the development of the school-to-work transition system and the fact that the program is needed within the state to provide more opportunities for students to receive the benefits of a planned program of on-the-job training. Concluding, Dr. Rheault said the cost of the bill is small in comparison with the potential impact these well-trained students could have on Nevada's economy. (A copy of Dr. Rheault's written testimony is attached to these minutes as Exhibit D.) Senator Raggio inquired whether the revised fiscal note attached to this measure (Exhibit E), indicating a loss of approximately $190,000 in FY 1996 and $166,000 in FY 1997, remains operative. Mr. Allard replied in the affirmative. He remarked, "We hope it's higher; that means there are more employers involved." Senator Jacobsen questioned Dr. Rheault regarding on-site supervision of the employed students by school personnel. Dr. Rheault said there would be someone on staff with the school district who would supervise the program. This would include occasional on-site visits and obtaining reports from the employer. Senator Rhoads questioned Dr. Rheault's statement that only 8 percent of students, nationally, work before leaving high school. Dr. Rheault explained the statistic refers to supervised work experience. He said there may be as many as 60 percent of students who become employed, but the employment is "not related to their education or training" and is not supervised. Senator O'Donnell remarked that A.B. 69 would allow a student to gain experience in the field of study they intend to pursue in college through employment with a business in the same field, during the summer or while they are attending college. Dr. Rheault replied that is what was envisioned in proposing A.B. 69, although the bill is limited to high school students at this time. He indicated the program would apply to any field of study, and the intent is that students would be introduced to the requirements for successful employment. He said what is lacking at this time is a sufficient number of businesses to support all of the students in Nevada; there are currently only approximately 2,000 employees participating in the school-to-work program. Saying she has worked with cooperative programs in the past, Senator Mathews voiced support for A.B. 69 as a measure which will expand such programs in high schools. She said anything that will "help [students] get into a job situation and help get them in the direction of work" will be beneficial. Mr. Allard agreed. He commented Nevada has one of the highest dropout rates in the nation, if not the highest. He said an important aspect of this bill is that it encourages students to remain in high school because their employment is linked to the school's supervised program and will therefore depend on their remaining in school. He maintained the employer would be supportive of the student's continued education, as well, because of the tax incentives for the business and the prospect of having better qualified employees. He said a representative of a retail association testified at a recent legislative hearing the association strongly advocates being able to train high school students for management positions over a 2-year period. He predicted that if the proposal in A.B. 69 proves successful, the Legislature may be requested in the next legislative session to extend coverage to community college students. Continuing, Mr. Allard said a wealth of knowledge and facilities is available, and "experience is the best teacher." He further commented that if the employers do not hire students, the money expended on school-to-work programs will go for naught, and it is this problem A.B. 69 attempts to address. Senator O'Donnell commented he hears constantly about the need for job training as a solution to reducing the welfare rolls. He suggested the 12 years of elementary and secondary education required of students, and 4 years of college should be regarded as one source of job training. He voiced support for A.B. 69 as "a very good start on job training." Senator Jacobsen asked if the provisions in A.B. 69 would be applicable to juveniles in the Nevada Youth Training Center (NYTC) for boys and the Caliente Youth Center (CYC) for girls. Dr. Rheault replied that if such a student has the opportunity to participate in a supervised program at a business, the legislation should apply to them, as well. Senator Jacobsen noted the children attend public school and expressed the opinion the school-to-work program would be an ideal situation for them. Harvey Whittemore, Lobbyist, Nevada Resort Association (NRA), stated the association's support, through its Partners in Education program, for A.B. 69. He noted the exemption in the bill is qualified and does not apply to an entire class of business, but is a limited program designed for those students involved in school-to- work programs approved by the school districts. He maintained this would preclude the misuse of the exemption by businesses merely seeking to pay a smaller BAT. Senator Coffin commented there have been several pages of exemptions added to the sales tax provisions since the law was passed 40 years ago. He asked why, if the NRA supported the creation of the BAT in order to help broaden the tax base "and divert attention away from the constant quest for funds from the gaming tax," the association would now support the weakening of this attempt to broaden the tax base. He stated his willingness to repeal the business tax and rely on gaming taxes. Mr. Whittemore averred his testimony had been mischaracterized. He clarified the reason for the NRA's support of A.B. 69 as being that the bill does not exempt any particular class of business, but exempts a particular work program that the association believes will promote business support of school-to-work efforts. He said the association believes the measure will have limited application because the program would be conducted in concert with the school district. He further responded that each particular measure will need to be evaluated separately, but the NRA's support for A.B. 69 should not be viewed as the resort association backing away from its commitment to the business tax or its belief that a broadened tax base is an appropriate tax policy for the state. He stressed the provisions in A.B. 69 represent a very limited pilot program to promote the participation of businesses and students in the school-to-work programs. Senator Coffin maintained the appropriate vehicle to promote such programs is A.B. 303 rather than A.B. 69. ASSEMBLY BILL 303: Requires state board of education to adopt program to provide pupils with skills to make transition from school to work. Mr. Whittemore responded the NRA is following that measure as well. The senator said he did not recall Mr. Whittemore testifying on A.B. 303. Mr. Whittemore said the NRA did not provide testimony on that measure, but has been involved in discussions on the bill from the outset. Senator Raggio limited discussion at this time to A.B. 69. Senator Coffin said the point is that this measure is being used as a vehicle for school- to-work efforts. Mr. Whittemore replied the NRA was offering its support based on the simple concept this is a limited pilot program that might prove valuable. Senator Mathews commented that in reading A.B. 69 she concluded it would enhance the other measure, A.B. 303. Ray Bacon, Lobbyist, Nevada Manufacturers Association (NMA), stated for the record the association's support for A.B. 69. SENATE BILL 214: Makes appropriation to welfare division of department of human resources for Nevada Medicaid managed care program. Myla C. Florence, Administrator, Welfare Division, Department of Human Resources, testified that Senate Bill 214 provides for a one-time appropriation of $13,417,225 to the division's Medicaid budget to pay for what is known as the Medicaid Managed Care "tail." She reminded the committee the 1993 Legislature passed Senate Bill 559 of the Sixty-seventh Session, which required the Welfare Division to establish a mandatory managed care program. Initially, the division must enroll individuals who are recipients of the Aid to Families with Dependent Children [AFDC], Child Health Assurance Program [CHAP], or Child Welfare program, and later must phase in the aged, blind and disabled populations. 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. Ms. Florence noted the costs associated with converting from a fee-for-service program to a mandatory managed care program are itemized on pages 1221 and 1222 of the Executive Budget, within module E-401 of the Medicaid budget. Continuing, Ms. Florence said the Medicaid program, through its fee-for-service program, has historically paid for costs over a 3-year period. For example, costs incurred in Fiscal Year (FY) 1995 may be paid in FY 1995, FY 1996 or FY 1997. This occurs because providers have up until 120 days to bill for services provided after an eligibility determination is made. Sometimes it may take months, particularly for the disabled population, to obtain a determination. Ms. Florence testified that switching from a fee-for-service program to a capitated rate does not eliminate the fact there will be a trailing cost for the fee-for-service recipients. As recipients are enrolled, the state will continue to pay for the care they receive for fee-for-service while simultaneously paying a monthly capitated rate for their managed care. The trailing fee, known as the tail, constitutes a onetime cost, whereas managed care savings will continue through the following bienniums. The appropriation requested in S.B. 214 was based on information available in December of 1994, Ms. Florence continued. The Welfare Division has updated its caseload and cost projections, and the appropriation request has been revised to $12,854,622 from the original request for $13,417,225. (A copy of Ms. Florence's written testimony is attached to these minutes as Exhibit F.) Senator Rhoads asked Ms. Florence to comment on President Clinton's recent statement indicating he may not support congressional proposals to send block grants to the states for welfare programs because the states might not use the funds appropriately. Ms. Florence responded she had not heard the President's statement, but it was her understanding his concern is that under current congressional proposals, "block granting" to states will adversely affect women and children by virtue of the time limitation of benefits and the family caps. Senator Rhoads asked Ms. Florence if she regards the President's concerns as valid. Ms. Florence replied that unless other components of welfare reform are implemented, which some states may not choose to do, there would be a negative impact on low income women and children. She said this does not relate to the Medicaid proposal under discussion, although discussions are taking place at the national level with regard to sending block grants to states for Medicaid funding, as well. Senator Rhoads inquired whether any of the welfare proposals currently pending in the Legislature might resolve some of the concerns expressed by the President, in terms of establishing parameters for the use of the block grant funds. Ms. Florence said it is her understanding some of the discussions in the Legislature model some of the national proposals, although with regard to the Governor's proposal Nevada "may be going a little bit further than other states in assuring there are adequate funds for job training." Senator Rawson said staff has provided him with technical language regarding the managed care program which he suggested could be included in S.B. 214, since the language relates directly to the issues in that bill. Senator Raggio suggested the senator highlight the proposed amending language. Senator Rawson explained that managed care organizations are governed by certain provisions of state law that allow a choice among different plans. He said one provision of the federal waiver the state is pursuing (a federal program waiver in the Social Security Act, 42 U.S. Code, section 1315, subsection 1915[b]) requires that there not be a choice; it is therefore necessary to make minor changes in the Nevada Revised Statutes, particularly with regard to those persons who are involved in the Medicaid program. He stated a health management organization (HMO) that is involved in this waiver "should not be construed to violate any of the laws regarding advertising which are on the books now, but [under the law as currently written] they might be considered in violation." Continuing, Senator Rawson said there is also an issue regarding the possibility of the managed care organizations being considered physicians, because of the manner in which they will receive patients. Under current interpretations, any organization that would be a successful bidder might be considered a physician, and this issue must be addressed. He said he would review the technical changes with the Welfare Division and then give them to the fiscal analysis staff. SENATE BILL 444: Makes contingent appropriation to Mineral County School District for portion of costs of construction of school to replace Schurz School. Senator Mike McGinness testified in support of S.B. 444. He said the situation at the Schurz School has been difficult for a number of years, and this legislative proposal is not the first attempt to solve the problem, but takes an approach that is different from previous efforts. He further stated he envisions the measure as a partnership solution involving the State of Nevada, Mineral County, the federal government and the Walker River Paiute Tribe. The senator said he has been in contact with the office of U.S. Senator Harry Reid, and there is uncertainty with regard to whether federal funds will be forthcoming. He said the only funds that are certain at this time are those committed by the Walker River Paiute Tribe (WRPT) for the project. Continuing, Senator McGinness said if he has any conflict of interest with reference to S.B. 444 it is that he attended Schurz Elementary School for 4 years and graduated from 8th grade there. He remarked the school was not in good shape at that time, which was quite a few years ago. He said at present the school is definitely in very poor shape and has been condemned. The pupils have been moved to portable facilities, and the buildings in which the teachers once lived are now classrooms. Senator McGinness said the situation is untenable, and the community has just been getting by with what currently exists. He urged the committee's close consideration of this measure. Mary L. Peterson, Superintendent of Public Instruction, State Department of Education, spoke next in support of S.B. 444, reading from written testimony (Exhibit G). She provided a review of several efforts undertaken with regard to the Schurz school in the last 2 years and stated that after personally visiting the school she believes there is indeed a desperate need for a new facility. Senator Rhoads inquired whether in other areas, such as Owyhee, the school buildings have been built by the local school district or by the Bureau of Indian Affairs (BIA) instead. Ms. Peterson said it depends and that in the case of the Schurz school, BIA funds were used to construct the original facility. The senator asked if there is a policy whereby most school districts do or do not build school facilities on reservations. Granville Gage, Superintendent, Mineral County School District (MCSD), responded the school districts do build school facilities on reservations, and in Nevada it is the districts' responsibility to provide the facilities. Senator Mathews asked whether only reservation children attend the Schurz Elementary School or if other children in Mineral County attend, as well. Mr. Gage replied the school is attended by the children residing on the reservation, whether or not they are Indian. Senator O'Donnell inquired as to the tax structure for Mineral County and what percentage of the land in the county is owned by the county versus the portion owned by the federal government. Mr. Gage said federal control of approximately 94 percent of the land in Mineral County complicates the county's situation in a number of ways. Senator O'Donnell observed the county's tax base is limited by the fact the federal government owns a substantial portion of the land in Mineral County, which affects the assessed value (on which taxes can be collected; the tax base). He asked if the federal government pays any taxes. Mr. Gage said the (most recent) assessed value for Mineral County was approximately $160 million, and $57 million of that was for the land held by DZB (an army ammunition depot and the main employer in the county). He said the fact DZB refuses to pay any taxes to the county, and the problem is compounded with the loss of the $57 million from the tax base. He further stated the matter is in court at this time. The tax has not been paid for 3 years because DZB, a contractor, has taken the position that since the land is federally owned it does not need to pay taxes on the land, yet the land must be carried on the county's tax rolls and the tax must be carried in the county's budget as revenue. Senator O'Donnell asked if the county provides any infrastructure for the land used by DZB. Mr. Gage replied no. The senator inquired whether the Indian reservation pays any property taxes. Mr. Gage answered the Indian reservation pays very little tax. The school district's share from the reservation's ad valorem taxes is only $1,900; the total taxes paid by the reservation to the county total approximately $7,000. Senator O'Donnell commented they have serious financial problems in terms of revenue and apparently have constraints that cannot be overcome. Mr. Gage agreed there are few sources of revenue for a new school at Schurz and the general financing of the district. He said the distributive school account (DSA) in the Nevada Plan also "falls into" the ad valorem taxes, and under the current tax structure the district is losing revenues from the DSA as well as from the failure of DZB to pay property taxes. Senator O'Donnell further inquired whether the fact that Mineral County is 94 percent federally owned has been factored into the county's allocation from the DSA. Mr. Gage said the factor is based on the county's Impact Aid Construction (Title XII) funds. The senator asked if the reservation has been factored in. Mr. Gage replied no. Senator asked at what level of the $3.64 property tax cap the school district is at this time. Mr. Gage estimated the level at $2.67. He noted the school district is one of only two counties in the state that has no bond indebtedness whatsoever. Referencing Ms. Peterson's testimony regarding two bond issues that would have generated funds for a new school at Schurz (page 2, Exhibit F), Mr. Gage said the most recent attempt was in December 1993. He reminded the committee the measure approved by the Legislature contained a three-tiered tax structure consisting of ad valorem, motor vehicle and sales taxes. He said the Legislature's action was based on the belief this would make it easier to pass a bond issue within the county. Mr. Gage said the bond issue in 1993 failed by a vote of 1554 to 795, a ratio of more than two to one, and 325 of the votes in favor of passage were cast by members of the reservation. He said the results of the vote are indicative of the feelings of the Hawthorne community with respect to supporting any kind of school at Schurz. Senator O'Donnell concluded the problem with regard to funding a new school at Schurz is that residents of Hawthorne are determining the educational level there. Mr. Gage said this is essentially correct; the community will not support any kind of bond issue involving new school facilities at Schurz. Senator Rawson inquired as to the amount of federal Impact Aid Construction funds received by the county. Mr. Gage said the school district has budgeted this year an estimated $250,000 of impact aid, although the actual revenues received could range from $250,000 to $300,000. The senator asked how the impact aid funds are used, primarily. Mr. Gage replied the revenues are deposited in the general fund. He said the district also uses the impact aid revenues to increase the per pupil expenditure at Schurz by 25 percent. Senator Rawson asked what the school population is at Schurz. Mr. Gage answered it is currently 124 students. He said the district school population is 1,199 students, and the population at Schurz for the next school year is estimated at 150. Observing the ammunition depot has been at Hawthorne for a long period of time, Senator Rawson asked if the contractor at that facility is new. Mr. Gage said the contractor has been there since the early 1980s. The senator inquired whether the contractor had paid taxes previously. Mr. Gage replied the taxes had been paid up until 3 years ago. Senator Rawson asked if there is any question as to DZB's financial viability and whether or not the firm will continue as contractor for some time. Mr. Gage said there is no question that DZB will remain as contractor at the ammunition depot. Continuing, Senator Rawson inquired whether there is precedent elsewhere that a contractor for the federal government would not be required to pay taxes. Mr. Gage said a similar situation has existed in Nye County, and it is that case and the court ruling on the case that has provided the impetus for Mineral County's legal challenge. He said according to the district attorney, Mineral County's case is substantially different from Nye County's, and in his opinion the situation in Mineral County can eventually be corrected; however, it may take several years. Senator Rawson asked whether, if the state were to provide some assistance in financing the new school and assuming other anticipated revenues are forthcoming, it would be possible to structure a loan agreement to finance a new school at Schurz. Mr. Gage responded with a delineation of the financing alternatives, the first being a combination of an appropriation from the state to the extent requested in S.B. 444, tribal funds, possible federal funds, and any one-shot funding, whether from military impact aid or through the state. The last alternative would be a loan, he indicated. He said it would be a waste of time to attempt passage of another bond issue because it will not pass, although another attempt might be made in the next general election. Senator Rawson remarked the Legislature had left this problem unresolved at the end of the 1993 legislative session with the expectation the situation might be addressed through some of the other avenues to obtain financing for the Schurz school. While there may have been some progress, he stated, there has essentially been none, because the situation has deteriorated and has become worse. He further stated he is unwilling to leave the current legislative session without a resolution having been achieved. While this does not mean the state can simply appropriate the funds, the senator continued, the Legislature should facilitate resolution of the problem. He said he wished to have on record the position of the school district with regard to the possibility of structuring a loan arrangement in the event the anticipated funds are received. Mr. Gage said if the funding is realized he would probably support the loan proposal and, if so, he would seek a commitment from the county's board of education. Senator Mathews inquired as to the amount of funds committed by the tribe for the Schurz school. Ben Leyva, Vice Chairman, WRPT, said the tribe has committed $600,000 toward building a new school. Senator Mathews commented it is the children who are suffering because of the deficient facilities, and the amount being requested in state funds is small compared with the costs of failing to address their needs. She stated, "Sometimes, we're going to have to help these kids, and I'm ready to do whatever this committee is willing to do to try to help this situation. It's unfortunate it has gone on this long. Somebody has lost already." Ms. Peterson called attention to photographs of the school that were distributed to the committee members to graphically depict the conditions under which the children at Schurz are attending school. Senator Rawson said Ms. Peterson has described the situation accurately and has not sensationalized it. He emphasized the situation is one that cannot be allowed to continue. Ms. Peterson said she intentionally had not sensationalized the situation at the Schurz school but could have, based on the conditions that exist there. Senator Jacobsen requested a more comprehensive illustration of the situation at Schurz in terms of the population, the number of classes, the number of teachers, square footage of the current facilities, the relationship with high school students and the feasibility of busing students to Hawthorne rather than building a school at Schurz. Mr. Gage responded with a detailed description of the existing facilities. He said in 1992 the main structure, which houses the cafeteria, was closed due to structural engineering reports pronouncing the structure unsafe for student use. The cooking facilities were kept open, he stated, and the students eat their lunches in the classroom. Mr. Gage said there are no physical education facilities at the school site. With regard to the reservation population, Mr. Leyva said the most recent count was 1,400 residents on the reservation and 1,700 enrolled tribal members living away from the reservation. Senator Jacobsen asked if there is anything the state can do on a temporary basis, realizing it will take time to construct new facilities. Mr. Gage replied the district has temporary facilities that can be used for 1 more year, including two recently acquired 14'x70' trailers that were donated to the district by a mining operation. He said the trailers will be moved to Schurz for use as backup facilities until such time as a permanent facility is in place. Senator Jacobsen suggested there may be equipment available from the state for use at the Schurz school as a temporary measure. Mr. Gage said the school district's intention is to keep the K-8 students at Schurz. He said busing is always an issue, and the tribe is totally opposed to busing the students to Hawthorne. When the students leave Schurz after the 8th grade they have the option of attending high school in Lyon County or Mineral County. Senator Jacobsen said he intends to visit the Schurz school for a firsthand look at the conditions there. Mr. Gage invited all of the committee members to visit the facility. Senator Raggio noted the committee had previously viewed large photographs of the school. Senator O'Donnell asked if there is an air strip at Schurz. Mr. Gage replied no. He said there is one at Hawthorne, and there may be a dirt strip at Schurz. Ben Leyva, Vice Chairman, Walker River Paiute Tribe (WRPT) told the committee the WRPT has committed land, water and sewer facilities at no cost to the county. Senator Rawson asked if the only funds received to date are the funds committed by the tribe. Mr. Leyva replied yes. He said the tribal funds have been in place for a number of years. The senator inquired whether it is anticipated the new school facility at Schurz will be equivalent to other school facilities in the state. Mr. Leyva and Mr. Gage replied yes. Mr. Leyva provided written testimony in behalf of Raymond Hoferer, Chairman, Walker River Paiute Tribe, a copy of which is attached to these minutes (Exhibit H). Genia M. Frank, Member, WRPT Tribal Council and WRPT Board of Education, testified in support of S.B. 444. A copy of her prepared remarks are attached hereto (Exhibit I). Elveda Martinez, Chairman, WRPT Board of Education, spoke next in support of this measure. She highlighted portions of her written testimony (Exhibit J). She emphasized the safety issues concerning parents of the children attending the Schurz school. Ms. Martinez noted the school is located on a fault zone, 50 feet from the railroad carrying live ammunition and below a high hazard dam. She said Weber Dam is almost filled to capacity, and if the dam should burst a 25-foot wall of water would hit the school within 45 minutes. Senator Raggio asked where the new school is to be constructed. Ms. Martinez said it would be constructed out of the flood plain at Schurz on 40 acres set aside for the school. In addition to the $600,000 committed by the tribe for construction of the new school and the donation of land, water and sewer facilities, the tribe would provide a substantial amount of the labor, she said. Ms. Martinez said the tribe has contacted the Indian Health Service to help with the water and sewer lines and is constantly seeking other avenues of assistance to build the new school. The BIA has been contacted, but funding support from that agency is not an option because the school at Schurz is not a BIA school but a county school. Federal Impact Aid Construction funds have been sought, but as a non-BIA facility the Schurz school is not eligible for the funds. Ms. Martinez said the tribal community has done a great deal of fund-raising, and the local tribal staff donates regularly to a special school fund; but despite its numerous efforts, the tribe has fallen far short of its goal of $3.5 million (compared to $1.9 million proposed by the school district) to provide a school that will last "for a hundred years." She said the tribe realizes that when the new school is built it will be a long time before another one is provided by any source other than the tribe itself. She stressed the tribe's desire for a school that is equal to other county and state school facilities. She indicated the tribe equates equal school facilities with equal education. Continuing, Ms. Martinez stated the tribal members do not want their children riding the bus from Schurz to Hawthorne, traveling along the lake in high wind conditions. She said busing will never be considered an option. In conclusion, Ms. Martinez said until 2 years ago the Walker River Indian reservation had more college graduates than any other reservation in Nevada. She said the tribe is proud of the fact it is graduating many productive citizens into the state, among them medical doctors, lawyers, civil engineers and mathematicians. She remarked many of the tribe's high school graduates are entering the technical fields. Ms. Martinez asserted the tribe is not a parasite on the State of Nevada or Mineral County but instead contributes to both. Paula Berkley, Lobbyist, Reno-Sparks Indian Colony, testified that during the early part of the current legislative session, the results of an economy analysis of the six western Indian tribes were presented. The report reveals that for every dollar the State of Nevada spends on Indian tribes, the tribes spend $87 in the state. Ms. Berkley said this refutes a statement made in the previous legislative session that the Indian tribes are parasites. She said the tribes definitely make a positive economic contribution to the state. She offered to furnish the committee members with a copy of the economic analysis of the western tribes. Senator Raggio requested clarification of Ms. Martinez's comment that the tribe is not satisfied with the size of the school proposed by the MCSD. Ms. Martinez replied the tribe is prepared to accept the facility as proposed by the school district, but intends to enhance the new facilities to achieve a school that will be equal to other school facilities in Mineral County and elsewhere in the state. At present the design does not include a gymnasium, she noted. Senator Raggio said the difficulty with the request for a state General Fund appropriation is the precedent involved. He said under the school funding policy in this state the responsibility for construction of schools has been with the local school districts; the state does not fund for construction of schools, and has not, historically. The proposal in S.B. 444 would require the Legislature to revisit that principle. He further remarked the tribal representatives have made a very compelling case for approval of the proposed legislation. Ms. Martinez commented that according to Assemblyman Joseph E. Dini, Jr., there has been such precedent. Senator Raggio replied if there is a precedent it occurred many years ago; and while approval of the requested appropriation is not out of the question, the basic problem concerns the deviation from the existing policy that would be entailed in S.B. 444. He noted there have also been requests from other school districts for assistance from the state. He said the committee will examine the measure closely in the remaining days of the session. Ms. Berkley pointed out the Legislative Counsel Bureau (LCB) has recently issued a legal opinion regarding the funding of schools in the state, based on a recent court case involving an Indian reservation. Senator Raggio said he is aware of the LCB opinion, but is also aware of the distinction between policies in the State of Nevada versus those of the state involved in the court case referenced by Ms. Berkley. Mr. Leyva offered to show the committee members the location of the new school site when they visit Schurz. Senator Raggio said because of time constraints it is unlikely the committee as a whole could visit the site, but individual committee members may wish to do so. Juliana Castillo, Member, WRPT Board of Education, testified in support of S.B. 444. She reiterated testimony by other tribal representatives regarding the need for a safe environment for the children attending the Schurz school. Testimony in favor of S.B. 444 was provided by several pupils from the Schurz school: Tidudzi Hoferer, Tyson Nez, and Carlos Olmedo. Copies of essays from which the students testified are attached to these minutes as Exhibit K, Exhibit L and Exhibit M, respectively. Additionally, written testimony was submitted by Jenifer Arthur, also a student at the school. A copy of her remarks is attached hereto as Exhibit N. Noting he was absent during part of Mr. Gage's testimony, Senator Raggio asked the superintendent what the MCSD's financial commitment is with regard to the new school. Mr. Gage responded the school district has very few financial resources to contribute for the new school, due to the dire financial straits the district has experienced as a result of nonpayment of property taxes by DZB. He noted the district had a reduction in force (RIF) during the past year to submit a balanced budget. He said the district's commitment might be provided through some portion of one-shot appropriations received from the federal government (in the form of military or defense impact aid funds) or from the state. He emphasized the district is not in a position to make an outright financial commitment unless funds are made available from other sources. Seeking clarification of the school district's financial participation in constructing new school facilities at Schurz, Senator Raggio asked if the situation is that the MCSD is unable at this time to make a specific financial commitment to the project. Mr. Gage replied the district has few resources to commit at this time. In response to further questioning from the senator, Mr. Gage noted the last two bond issues were defeated, and the voters in the county have indicated they will not approve funding of a new school at Schurz. Senator Rawson asked how much outstanding tax money from the army ammunition depot is in question. Mr. Gage said the amount of the past year was approximately $300,000, and the amount for the 3 years could approach $1 million. Written testimony in support of S.B. 444 was submitted for the record by Charlotte Brothwell, Executive Director, Nevada Classified School Employees and is attached to these minutes as Exhibit O. ASSEMBLY BILL 315: Makes supplemental appropriation to School of Medical Sciences of the University and Community College System of Nevada for certain unforeseen expenses relating to Family Practice Residency Program and Family Medicine Center. Senator Rawson asked Mr. Comeaux if the supplemental appropriation in A.B. 315 is in the Executive Budget. Mr. Comeaux replied it was inadvertently omitted from the Governor's budget, but the Budget Division had notified the Senate Committee on Finance and the Assembly Committee on Ways and Means and had recommended the supplemental appropriation within several weeks after submitting the budget to the Legislature. Senator Rawson summarized the history behind the request for the supplemental appropriation in A.B. 315. He stated the following: In the 1991 [legislative] session the state General Fund in each year was $326,000; this was their Medicaid program at the time. They were to balance the rest of that with a Medicaid fee of another $326,000, and that represented $7 a patient. That totaled $652,000. They actually collected $883,000, so they returned to the state a quarter of a million dollars each year. In 1991 the budget was in trouble by then, and they cut the $326,000 to $99,000 with the idea that they would make up the rest out of the Medicaid fee. Then in May of that year the welfare budget office reduced the Medicaid fee from $7 to $3.15, and that left a shortfall of $188,000 that they were not able to make in their budget. That's basically how it's budgeted now. In other words, they took a double hit in that they cut them, and then they cut them again, and I think it was inadvertent... Senator Raggio asked Mr. Comeaux if the administration supports this request. Mr. Comeaux replied yes. SENATE BILL 214: Makes appropriation to welfare division of department of human resources for Nevada Medicaid managed care program. SENATOR RAWSON MOVED TO AMEND AND DO PASS S.B. 214, THE AMENDMENTS BEING: TO REDUCE THE AMOUNT OF APPROPRIATION FOR THE NEVADA MEDICAID MANAGED CARE PROGRAM TO $12,854,622; TO AMEND NRS 695c.050 TO ACHIEVE COMPLIANCE WITH THE FEDERAL WAIVER [1915b] BEING PURSUED BY THE STATE BY ELIMINATING A CHOICE AMONG DIFFERENT MANAGED CARE PLANS; AND TO CLARIFY THE ISSUE REGARDING THE INTER- PRETATION OF A MANAGED CARE ENTITY AS A PHYSICIAN, THE AMENDING LANGUAGE BEING SUBJECT TO STAFF APPROVAL. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAGGIO ABSTAINED FROM THE VOTE.) * * * * * SENATE BILL 444: Makes contingent appropriation to Mineral County School District for a portion of the costs of construction of a school to replace Schurz School; and providing other matters properly relating thereto. Senator Raggio said action on this measure will be held pending receipt of additional recommendations and discussion with the Assembly Committee on Ways and Means, and examination of alternatives to an outright appropriation from the state. He said there may be some means to provide state support subject to reimbursement if the school district can provide funds that are apparently unavailable at this time. He voiced concern with respect to the precedent involved as well as the fact the Mineral County School District has been unable to gain public support on this issue. Senator Jacobsen offered to telephone Nevada's congressional representatives to determine the status of possible federal funding for this project. Senator Raggio observed the issue appears to be that since the school is not under the auspices of the BIA it is not eligible for the usual funding. This observation was affirmed by Mr. Comeaux. Senator Mathews noted the school has been under county control since the 1950s. Senator Raggio requested Senator Jacobsen and Senator Mathews to serve as a special subcommittee to obtain additional information regarding the issues relating to S.B. 444. ASSEMBLY BILL 69: Provides partial exemption from business tax for businesses that employ certain pupils. SENATOR RHOADS MOVED TO DO PASS A.B. 69. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN VOTED NO.) * * * * * ASSEMBLY BILL 315: Makes supplemental appropriation to School of Medical Sciences of the University and Community College System of Nevada for certain unforeseen expenses relating to Family Practice Residency Program and Family Medicine Center. Senator Raggio asked Mr. Comeaux if the amount of the appropriation in A.B. 315 is still viable. Mr. Comeaux replied yes. SENATOR RAWSON MOVED TO DO PASS A.B. 315. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 16: Increases compensation of supreme court justices and district judges. Senator Raggio noted this bill was heard by the committee on March 16. He said it is his understanding this measure incorporates the recommendation that the special salaries used for the purpose of equalization will no longer be included. Mr. Miles said this is correct; there is no provision in S.B. 16 for the Board of Law Library Trustees nor for the Board of Pardons Commissioners, which was the mechanism that was used for equalization. Senator Raggio observed that all of the district judges are now elected at the same time, except for family court judges, and the supreme court judges are elected in staggered terms. Mr. Miles affirmed this. The senator asked when the salary increases in S.B. 16 become effective. Mr. Miles said the effective date is January 1997. Senator Mathews asked if the measure contains a provision to increase the salaries of the family court judges midterm for the purpose of equalizing the judicial salaries. She commented this would be her only concern with regard to the bill. She was informed there was no such provision. Senator O'Donnell remarked S.B. 16 is a better instrument for equalizing salaries than the proposed mechanism in the Executive Budget. Dan Miles, Fiscal Analyst, noted the measure must be amended to provide the appropriations for salary increases that were eliminated from the court budgets during the budget closing actions. The amount of the appropriation is $684,072. (A copy of a handout indicating the estimated fiscal impact of S.B. 16 is attached hereto as Exhibit P.) SENATOR O'DONNELL MOVED TO AMEND AND DO PASS S.B. 16, THE AMENDMENT BEING TO ADD AN APPROPRIATION OF $684,072 TO FUND THE JUDICIAL SALARY INCREASES ($29,883 FOR THE SUPREME COURT AND $654,189 FOR THE DISTRICT COURT JUDGES) EFFECTIVE IN FY 1997. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS JACOBSEN AND COFFIN VOTED NO.) * * * * * Prior to the vote on the above motion, the committee discussed the size of the proposed salary increases in S.B. 16 and the possibility of setting precedent with its passage. Senator Jacobsen suggested approval of S.B. 16 might establish a precedent with regard to increases in unclassified salaries. He said the proposed increases are too large. Senator Raggio pointed out that whereas the unclassified salaries are considered every 2 years, judicial salaries are reviewed every 4 years. Senator Coffin stated his opposition to the bill. He said based on his observation of the work effort of Clark County judges, in some cases the judges appear to be shirking their duties and he therefore cannot support the size of increase proposed in S.B. 16. Senator Rawson inquired as to the current level of the judicial salaries. Mr. Miles responded the salary for a supreme court justice is currently $85,000; this does not include the longevity payment of 1 percent per year for which a justice would be eligible after a specified number of years in office. The senator asked if the justices receive remuneration for duties associated with the library or other functions. Mr. Miles said that is not included in the bill. Senator Rawson said it appears the effective level of the proposed salary increase averages approximately 7 percent. He indicated he could support an increase this size because it is consistent with other salary increases approved by the Legislature, whereas he would not support an increase that might be as large as 25 percent. Senator Raggio indicated the difference in the perception of the relative size of the proposed increase depends on whether or not one is taking into account the fact the salary increase covers a 6-year period. Senator Rawson stated his intention to vote for S.B. 16 based on the idea it will facilitate "cleaning up, straightening out and consolidating the system. He said he would otherwise not support the proposed level of salary increase. Senator Mathews concurred with his comments. She said her concern has always been the granting of salary increases to elected officials in midterm and the possible setting of precedent. Senator O'Donnell observed that if the amount of the proposed salary increase is indexed to the 1989 figure, the raise equates merely to a maintenance or cost-of-living increase. Senator Raggio asked staff when the judicial salaries were last raised. Mr. Miles said the last increase was in 1991. Given the effective date of January 1997 in S.B. 16, this represents a 6-year interval between salary increases. Following the vote, Senator Raggio read from a letter from Justice Cliff Young dated March 24 in which additional compensation for the chief justice of the Nevada Supreme Court is recommended, as follows: This may not be a good time to consider the possibility of additional compensation for Nevada's chief justice. However, it seems to me it would be appropriate in view of the additional duties of the chief justice that some additional compensation be authorized. I presume this would require a constitutional amendment. I'm sure that some taxpayers would say we should not use the device of compensation for service on the pardons board or other duties to equalize. If that device were not used we would have the unusual situation with the chief, who could be the senior in tenure, performing additional duties and actually getting less money than someone recently elected who would have run for the office after a pay raise had been authorized. ...but whatever the salary, I believe it would be fair for some additional amount to be paid to the chief. Noting Justice Young's comment that the additional compensation for the chief justice would probably require a constitutional amendment, Senator Raggio indicated this would probably preclude consideration of the request as an amendment to S.B. 16. Board of Pardons Commissioners - Page 111 SENATOR O'DONNELL MOVED TO DELETE THE FUNDING FROM THIS BUDGET TO CORRESPOND WITH THE COMMITTEE'S ACTIONS WITH REFERENCE TO S.B. 16. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Board of Law Library Trustees - Page 137 SENATOR O'DONNELL MOVED TO DELETE THE FUNDING FROM THIS BUDGET TO CORRESPOND WITH THE COMMITTEE'S ACTIONS WITH REFERENCE TO S.B. 16. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Raggio noted the effect of removing the funding from the budgets for the Board of Pardons Commissioners and the Board of Law Library Trustees is to eliminate those budget accounts. SENATE BILL 526: Revises duties and authorized activities of director of office of science, engineering and technology. Senator Rawson explained the amendment to S.B. 526 (Amendment No. 800, Exhibit Q). SENATOR RAWSON MOVED TO AMEND S.B. 526 WITH AMENDMENT NO. 800, AND DO PASS AS AMENDED. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * ASSEMBLY BILL 182: Makes supplemental appropriation to supreme court for anticipated shortfall in revenue from administrative assessments. Mr. Miles informed the committee the requested amendment to A.B. 182 has been received (Exhibit R). Senator Raggio noted the committee previously acted to amend and do pass this measure. Mr. Miles explained Amendment No. 782, which replaces Amendment No. 685. He said the initial amendment had a reversion date of 1997, and it was necessary to amend the date to 1995 because the appropriation in A.B. 182 is a supplemental appropriation. There being no objection from the committee, Senator Raggio said this measure will be reported out of committee with Amendment No. 782. The meeting was adjourned at 10:25 a.m. RESPECTFULLY SUBMITTED: Sue Parkhurst, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance June 7, 1995 Page