MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session June 10, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:40 a.m., on Saturday, June 10, 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 Maurice E. Washington, Washoe County Senatorial District No. 2 STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Steve Abba, Program Analyst Cristin Buchanan, Committee Secretary OTHERS PRESENT: Christopher Thompson, Chief, Health Care Financial Analysis Unit, Department of Human Resources Bob Barengo, Lobbyist, Sunrise Hospital and Medical Center May Shelton, Director, Washoe County Social Services Robert S. Hadfield, Lobbyist, Nevada Association of Counties H. Pepper Sturm, Chief Principal Research Analyst, Research Division, Legislative Counsel Bureau Myla C. Florence, Administrator, Welfare Division, Department of Human Resources John Orr, Assistant Director, Department of Employment, Training and Rehabilitation Senator Raggio opened the hearing for discussion of Senate Bill (S.B.) 547 which addresses the disproportionate share of Medicaid patients. SENATE BILL 547: Repeals tax on hospitals. Senator Raggio asked Senator Rawson, who chaired the Joint Subcommittee on Human Resources, if S.B. 547 conforms to the recommendations of the joint subcommittee. Senator Rawson replied to his knowledge the measure, as written, does conform to the joint subcommittee's recommendations. Senator Raggio indicated since the Medicaid budget has already been closed based upon the recommendations of the joint subcommittee, any changes contained within the language of S.B. 547 should be pointed out to the committee. Christopher Thompson, Chief, Health Care Financial Analysis Unit, Department of Human Resources, provided testimony by reading from prepared text (Exhibit C), and highlighting the graphs illustrated in Exhibit D. Mr. Thompson called the committee's attention to the table shown on page 3 of Exhibit D and reported that some of the information displaying a breakdown of benefits by hospitals contain inaccurate data. He stated he will provide a revised schedule to the committee members, but for the enlightenment of the committee members verbally provided the correct amount of benefits, by hospital, that should be shown. (Note: Exhibit E was distributed to the committee as a replacement of page 3 of Exhibit D.) Mr. Thompson pointed out under federal law the state is required to pay a disproportionate share to hospitals that provide approximately 18 percent of their business to Medicaid patients, even if the hospital is a private facility. Disproportionate share is the payment methodology used to reimburse participating hospitals their portion of taxes paid to the state. He remarked: There is no transfer that comes back to the hospital, and under the state's program, the hospital is reimbursed at a much lower rate of $10 per day. This is not contained in S.B. 547, but will be a part of our disproportionate share program in the state's plan for Medicaid. In order to create an accurate record of the aforementioned statement, Senator Rawson asked Mr. Thompson to amplify his remarks. Mr. Thompson repeated: In general, the state will be paying for the disproportionate share to non- public hospitals, excluding Washoe Medical Center, at the rate of $10 per day for all Medicaid business they provide. We [the state] will only pay this amount to the hospitals which we [the state] are required to pay disproportionate share to under federal laws. We will have the most restrictive definition as possible, and we will only pay them at that limited rate. We have done this to come into compliance with federal law. These are actual expenses of the Medicaid program and will be there regardless if we had this expanded disproportionate share program. Senator Raggio asked how the limited rate compares to the rates otherwise. Mr. Thompson responded the $10 per day rate is over and above the overall rate the state currently pays for Medicaid services. This limited amount is an add on. Mr. Thompson illustrated at the present time, the state pays approximately $1,000 per day for general accute care, and the additional $10 will be a 1 percent increase. Mr. Thompson said because Washoe County and Washoe Medical Center are in a unique position of not having a public hospital, the state had to determine the amount of benefits that should be provided to them. He referred the committee to page 5 of Exhibit D which indicates a comparison of benefits. He said the state reviewed the amount of revenue Washoe County has available for indigent care and is paying to Washoe Medical Center, and based upon those numbers, Washoe Medical Center will receive a disproportionate share of $4,800,000, and Washoe County will make a transfer of $1,550,000 as set forth in section 8 and 9 of S.B. 547. In determining the amount of net benefit that should be paid to the county and the hospital, the state looked at a comparison of the benefit based upon overall population versus how much benefit will go to the county. It should be noted, he said, that Clark County will be receiving a total benefit of $15,319,000 which represents 73 percent of the total benefit for the program. Mr. Thompson pointed out Clark County has approximately 65 percent of the total population in the state. By this measure, Washoe County will receive approximately $3.3 million as shown on page 5 of Exhibit D. Senator Rawson inquired how the population figures correlate with the Medicaid treatment figures. Mr. Thompson replied the Medicaid figures tend to be higher in Clark County. Senator Mathews reviewed the list of hospitals reflected in Exhibit D and noted that Saint Mary's Regional Medical Center is not shown. She asked how benefits are paid for Medicaid patients treated in that facility. Mr. Thompson clarified the schedule of hospitals included in the exhibit are only the public hospitals that will be affected by the disproportionate share program. All hospitals in the state, including Saint Mary's Regional Medical Center, do have Medicaid patients and are paid according to the treatment rendered. Senator Rhoads noted that the President of the United States recently vetoed a bill for which Medicaid is involved. He asked if this veto action will have an affect on the state and the Medicaid program. Mr. Thompson said the vetoed bill relates to federal spending cuts in the 1995 appropriations bill and will not have an impact on the Medicaid program. However, the agency is carefully monitoring the actions taking place on the federal level at this time due to pending proposals that will have a dramatic impact on Medicaid funding. Addressing his question to Mr. Thompson, Senator Rawson asked, "What if we removed the assessment penalty that is written into law imposed upon the hospitals who do not meet their free-care obligation?" Mr. Thompson replied if the penalty is removed, there will be no requirement for hospitals to provide free care. He opined the private hospitals would not be as forthcoming in providing this care, and the burden will fall upon the public hospitals. Senator Rawson pointed out there is a provision in the law that would prohibit a hospital from transferring a patient that is in an emergency condition requiring immediate treatment. Mr. Thompson affirmed this law is a federal as well as a state law, and requires all hospitals to render emergency treatment to any patient requiring it. Senator Rawson recalled when the state began developing plans for the Medicaid program, an indigent requirement was established for hospitals. As a part of the disproportionate share program, the state set the indigent requirement aside. Now, he said, the state is faced with the situation that non-public hospitals may be required to comply with a law requiring that a percentage of Medicaid care be rendered as free care or indigent care. He stated, "There is also a line in that law that allows the county to look at how much they have provided and assess the difference." The non-public hospitals are raising questions about the disproportionate share program, he remarked, because very little or no funding will be provided to them. Mr. Thompson answered the indigent care obligation was placed in the law in 1987 as part of cost containment legislation. The reason for the free-care obligation was to spread the burden of caring for indigent patients beyond just the one major hospital in Clark and Washoe County. Mr. Thompson further remarked: In 1993 when the state revised the tax program, we found it beneficial...rather than having what can be considered an indirect service tax on indigent care where hospitals had to provide these services without compensation....Instead what we did was we put that right into the formula to assure that hospitals would not lose money under the tax program. It was never the intention of the state to remove that free-care obligation. It was merely a matter of making the tax program work in an appropriate way. Essentially what happened was for the last 2-years if hospitals did not meet their free-care obligation, then they lost money directly under the tax and intergovernmental transfer bill, because we calculated into the amount of money coming out what they would have otherwise had to serve in a free-care obligation. Since the tax program is going away, it is appropriate that the indigent-care obligation be reinstated. In fact, as the law was written in 1993 we did not repeal that statute, but placed it in abeyance for 2 years. Mr. Thompson pointed out the free-care obligation does not in any way impact upon the state's budget, because it is an obligation to the counties. He stipulated there will be a major impact placed on the budget of the counties starting July 1, 1995. The indigent- care obligation currently amounts to approximately $4.3 million in southern Nevada, Mr. Thompson said, and if lifted, the budget of the Clark County Social Service will have to be supplemented by an additional $4.3 million. In Washoe County the impact will be significantly less, he reported, due to an arrangement made with Washoe Medical Center under the provisions contained in S.B. 547. However, Mr. Thompson pointed out the impact to Washoe County will still amount to approximately $700,000. Senator Rawson indicated this is as complex an issue as any the committee has been faced with this session, and an evaluation will have to be made regarding the impact the passage of S.B. 547 will have on private hospitals. He acknowledged there is a tendency to protect public hospitals who must carry the major burden for indigent and Medicaid care, but some of the private hospitals have also been involved with a significant number of patients that require this type of care. Mr. Thompson said it is important to stress that all hospitals who serve Medicaid patients will be paid for the care rendered in accordance with existing Medicaid rates. Disproportionate share, particularly as it has been utilized in the last 4 years, is used primarily to "make up" for the additional expenses incurred in treating individuals who do not have any payment source such as Medicaid, county, or indigent care. He referenced page 5 of Exhibit D that illustrates public hospitals, such as the University Medical Center in Clark County, will only receive 25 cents for each $1 of their uncompensated costs. Senator Rawson inquired regarding the amount of revenue received by public hospitals. Specifically, he wanted to know if the revenue coming in replaces existing budget revenue, or is actually "new money." Addressing his response regarding Clark County, Mr. Thompson said for the last several years Clark County has had to use a large amount of its general fund revenue to support their public hospital, over and above the payments for specific indigent-care patients and the other services they provide. He said since Clark County is the owner of the medical facility, the receipt of an additional $10 million in benefits in the next biennium will enable them to lower the amount of funds they are currently contributing from their own general fund requirement. Referring to page 3 of S.B. 547, Mr. Thompson pointed out line 17, of section 4 should be corrected to omit the language, "As of July 1, 1993." Senator Raggio asked if there will be other amendments required, and Mr. Thompson responded, "No." Senator Raggio once again inquired if S.B. 547, as amended, will now conform to the action taken by the committee when the Medicaid budget was closed. Mr. Thompson replied, "Yes it does." Bob Barengo, Lobbyist, Sunrise Hospital and Medical Center, testified the Sunrise Hospital advocated a different use for $10 million of the $15 million that will be appropriated to the University Medical Center in Las Vegas. He pointed out in 1994, the University Medical Center admitted 3,500 Medicaid patients, Washoe Medical Center admitted 2,300 Medicaid patients, and Sunrise Hospital admitted 3,200. He said the Sunrise Hospital's Medicaid- patient workload is second only to the University Medical Center, yet this facility will receive no additional revenue. Even though he understands the federal law, he believes equity should be granted to some of the private facilities in the state. Senator Raggio asked the percentage of indigent patients the Sunrise Hospital processed in 1994. Mr. Barengo indicated he did not have the percentage available. Senator Raggio reminded Mr. Barengo that under federal law, the state is required to pay a disproportionate share to hospitals based on the percentage of their business attributable to indigent care. Mr. Barengo countered the disproportionate share percentage refers to Medicaid patients, not to indigent patients. Senator Rawson clarified although the disproportionate share is structured based on Medicaid patients, it should also assist those hospitals that process a disproportionate share of indigent patients. He stated it would be of assistance to the committee to know the percentage of indigent patients that were processed by the Sunrise Hospital in 1994, and Mr. Barengo agreed to furnish the percentage to the committee. Senator Rawson questioned, "If the requirement for the free-care remains, but the assessment in the charge back of the difference between the two is smoothed out, would that help?" Mr. Barengo responded that suggestion would financially assist the hospital. Senator Coffin stated he had forgotten about the free-care requirement for private hospitals. He asked if this requirement will still be necessary if S.B. 547 is passed. Mr. Barengo replied: The way the hospital industry is going now this free care...so much of our business is at a capitated rate that we are giving this cost shifting...is going farther over to a much narrower band of folks, and we are being paid on a Medicaid basis which is a capitated rate so we have to pick up some other costs for those patients. It gets pushed on to those who are paying the full share. Then the burden of having the .06 percent comes back on us again or will shift to those who are paying the full charges. Senator Coffin inquired, "Do we still need the .06 free care because of the reality of the changes that have happened since 1987?" Senator Rawson responded, "It depends upon who you ask. If you ask the counties they will tell you they need it desperately." Senator Coffin asked if the .06 percent rate becomes an imposition on all hospitals, or only the private hospitals. Mr. Thompson interjected that all hospitals are affected. Senator Rawson answered it is a requirement in all of the hospitals, but the largest (five) hospitals in the state are impacted the most. May Shelton, Director, Washoe County Social Services, urged the committee to pass S.B. 547. She stressed the county wants the free-care obligation to continue, and the proposed Intergovernmental Transfer Program to be implemented. She continued her testimony by reading from written text (Exhibit F). Ms. Shelton also highlighted a spreadsheet included in Exhibit F that depicts Washoe County's cost projections with and without the inclusion of the proposed Intergovernmental Transfer Program. Senator Raggio noted that even if the Intergovernmental Transfer Program is approved, the county will still suffer a $1.5 million shortfall in Fiscal Year 1997. Ms. Shelton concurred that is the amount of shortfall the county has projected. After listening to Ms. Shelton's presentation, Senator Coffin concluded the free-care obligation should be continued. He inquired, "If it were to be phased out over a period of time, how much time would be needed for the phasing-out process to take place?" Ms. Shelton responded she does not have an answer to this question. She opined the entire indigent program needs to be reviewed due to proposed welfare reform and the amount of block grants that are being allowed. Robert S. Hadfield, Lobbyist, Nevada Association of Counties, echoed the comments made by Ms. Shelton. He affirmed that all of Nevada's counties need the passage of S.B. 547 and the continuance of the free-care obligation in order to remain "above water" financially. He further commented, "To make any changes other than to pass S.B. 547 with the proposed amendment by Mr. Thompson would devastate a lot of Nevada counties." Senator Rawson asked if S.B. 547 contains language pertaining to the free-care obligation. Ms. Shelton responded when legislation that was previously passed sunsets on June 30, 1995, the free-care obligation will "kick back in." Senator Raggio clarified no action will have to be taken by the committee since the free-care obligation will automatically commence on July 1, 1995. Senator Rawson questioned if S.B. 547 will be the measure in which to include any possible modifications to the free-care obligation, or if there is another instrument that will address the issue. Discussion ensued between the committee and the aforementioned testifiers, and it was concluded other legislation exists that will address the free-care obligation issue. Senator Coffin remarked The shifting that goes on, which a hospital naturally does...there is no free-care. That cost is passed on to other people. It is not passed on to those that have capitated programs. It is passed on further to those that have fee-for-service type of payment contracts which then reflects a higher cost of care that we advertise to the rest of the country, which I think is false advertising. Mr. Thompson concurred with Senator Coffin `s statement. He said hospitals, whether private or public, that treat patients for whom they will receive no reimbursement will pay for this amount in some manner, and it is usually through a cost-shifting mechanism. He commented: The .06 of 1 percent obligation is not strictly cost containment in the sense that those costs are having to be paid by somebody. At that level of .06 of 1 percent, it is not a significant cost shift for the hospitals themselves. It is less than 1 percent. On the other hand, what it truly is doing is providing a better balance for all hospitals as far as providing this indigent care. I am sure the University Medical Center will tell you it should be more like 2 percent. The.06 of one percent is what is in the law and I see no reason for changing that at this time. Senator Coffin said .06 of 1 percent does not sound like a lot of money, but if it is only applied to the noncapitated segment of a hospital's revenue, it might become a larger figure. Mr. Thomson interjected that using Senator Coffin's figures, the impact would be closer to 3 percent. He said if the .06 of 1 percent factor is removed, the care will still be delivered. Senator Rawson concluded that the .06 of 1 percent issue may have to be brought before the Interim Finance Committee (IFC) due to restructuring measures that may be needed as a medically needy program is developed in the state. He pointed out in place of a hospital provider tax, S.B. 547 proposes to use intergovernmental transfers from public hospitals as the sole revenue source for leveraging federal Title XIX funds. Under current federal law, states are allowed to receive intergovernmental transfers only from public hospitals or public agencies. He determined a motion should be taken regarding the passage of S.B. 547 at this time. SENATOR RAWSON MOVED TO AMEND AND DO PASS S.B. 547. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAGGIO ABSTAINED FROM THE VOTE.) * * * * * Senator Raggio opened the hearing for discussion of Senate Bill (S.B.) 428 that was previously heard before the committee on May 17, 1995. SENATE BILL 428: Requires establishment of program for self- sufficiency of applicants for and recipients of aid to families with dependent children. Senator Rawson indicated the joint subcommittee held a work session pertaining to this measure, and as a result of this session the Fiscal Analysis Division prepared a document (Exhibit G) containing proposed amendments to S.B. 428. H. Pepper Sturm, Chief Principal Research Analyst, Research Division, Legislative Counsel Bureau, distributed Exhibit G to the committee. He pointed out that an amendment to section 1 of S.B. 428 will reference the measure as the "Nevada Self-Reliance Act of 1995", and that section 4 has been redefined to clarify the limitations on benefits referenced throughout S.B. 428 will be applicable only to Aid to Families with Dependent Children (AFDC). He continued his testimony by highlighting the major components of the proposed amendments to S.B. 428. Because of the intense opposition directed towards the passage of S.B. 428, Senator Coffin asked that Mr. Sturm point out how the proposed new amendments will address the concerns that were brought out at the subcommittee meeting. Senator Rawson also requested that Mr. Sturm advise the committee of the issues that may still be considered controversial. Although he was not present during the subcommittee hearing, Mr. Sturm stated he is aware of the sections that are controversial. During his presentation today, Mr Sturm agreed to call these areas to the committee's attention. Mr. Sturm stated the definition of a household contained in section 5 of S.B. 428 is potentially controversial because it will include, for the first time, groups of individuals that hold themselves out as married couples for one purpose, but not for the purpose of receiving AFDC. He stated an amendment to this section is necessary to more closely align the program with current federal statutory requirements. Sections 11 and 12 reflected on pages 2 and 3 of S.B. 428 are also an area of contention, Mr. Sturm said. These sections specify that AFDC cash benefits are only available for a 24-month period (during a 5-year period) with the possibility of a onetime extension of 6 months. He indicated the 12-month transition period pertains only to the self-sufficiency plan mentioned in section 5. A 3-month grace period mentioned in section 3, subsection 3(f), on page 3, line 13, does not apply to any extension of cash assistance or to the transition period, he said. Mr. Sturm indicated that an amendment was needed to clarify that 24 months is the maximum time for which cash benefits may be received in any 60-month period. Continuing his coverage of Exhibit G, Mr. Sturm stated an amendment to section 13, subsection 2, will delete this paragraph and replace it with the wording, "Exclude the value of one vehicle used by the household." He pointed out this provision will make the bill consistent with the Governor's proposed plan. Mr. Sturm advised the committee section 13 contains the "family cap" provision which is also considered to be controversial. This will place a cap on any future benefits for a child born to a person on AFDC after the tenth month. Mr. Sturm stated an amendment is proposed to delete section 17 of the measure to impose a "thirty and a third" disregard on persons involved in the transition period after employment and training has been achieved. The income disregards and related provisions from the Governor's proposed plan will be used instead, Mr. Sturm stated. Senator O'Donnell remarked he is not familiar with the terminology,"thirty and a third disregard." Mr. Sturm responded the Welfare Division calculates a person's income while they are employed by disregarding $30 and one-third of their income for the purpose of determining if they are still eligible to receive benefits. Steve Abba, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, interjected under current policy this formula will be imposed for 4 months after which, for eligibility purposes, all income is counted. The proposal in the Governor's plan will continue the disregard up through a period of one year during which time 100 percent of the income will be disregarded for the first 3 months, and 50 percent of the income will be disregarded for the remaining 9 months, after which the old standard of eligibility rules will apply. Mr. Sturm continued his discussion by referencing the proposed amendment to section 18 of S.B. 428 to clarify that the presumptive father present in the home may participate in the self-sufficiency plan, but not in the AFDC program. He stated the presumptive- father component will be limited to the extent that funding will be available. The proposed amendment to section 23 will require that at the time of certification and at all subsequent reviews or recertifications, the AFDC recipient provide proof of enrollment and school attendance for each dependent child in kindergarten through grade 6 for whom the participant is receiving benefits. Mr. Sturm said although section 23 is considered to be a controversial area, the amendment to this section will address some of the concerns expressed by those opposed to the passage of S.B. 428. Mr. Sturm stated the Welfare Division has asked for three technical amendments to section 24 of S.B. 428 that pertain to childhood immunizations. The proposed technical adjustments will shift the burden of proving that the immunizations have been done to the recipient, and will make use of existing certificates of immunization and schedules of immunizations for preschool children that exist in statute. He stated the amendment to this section will also make it consistent with Assembly Bill (A.B.) 522. ASSEMBLY BILL 522: Requires welfare division of department of human resources to establish programs to impose certain responsibilities for academic attendance and immunization of dependent children on certain recipients of aid to families with dependent children. Section 25 pertaining to the requirement for education for AFDC recipients is another controversial area, Mr. Sturm reported. The proposed amendment to this section will limit the provision to recipients who are 18 years of age and under. The joint subcommittee concluded that instead of applying the provision to all recipients, the younger ones would be more likely to benefit from an education requirement in order to complete their high- school education. The amendment to this section will also allow the Welfare Division, at their discretion, to include this component in the self-sufficiency plan of those 19 years of age and older. Mr. Sturm reviewed the amendment to section 27 with the committee that refers to recipients who participate in the Job Training Program, a target group for the self-sufficiency plan. The amendments reflected on page 3 of Exhibit G allow for a phase-in segment to the Job Training Program that will cushion the fiscal impact by spreading the related caseload across several years to more efficiently utilize staff resources. According to Mr. Sturm, there were some concerns raised by the county welfare departments regarding section 38 of S.B. 428. He explained the counties are afraid the IFC may withdraw the state match from federal funding to the counties due to federal block grant changes. The amendment to this section will alleviate this concern by taking out the word "withdraw" and replacing it with the word "adjust" on line 41, page 8. In conclusion of his coverage of Exhibit G, Mr. Sturm stated an amendment has been proposed to create a new section 45.5 to specify that the Welfare Division will provide the services required to carry out the self-sufficiency program as specified in S.B. 428, to the extent that funding is available. He stated this will permit flexibility in the self-sufficiency program to allow for fiscal constraints due to unforeseen economic problems, or from program funding changes mandated by the United States (U.S.) Congress. Section 48 should be amended, he pointed out, to have the self- sufficiency provisions take effect January 1, 1997. The Welfare Division's NOMADS (Nevada Operations Multi Automated Data Systems) computer system will be needed to effectively design the self- sufficiency plan and monitor the program. Senator Raggio asked Mr. Abba to provide information pertaining to the fiscal impact of the proposed amendments to S.B. 428. Mr. Abba distributed Exhibit H, a revised fiscal note prepared by the Welfare Division based upon the aforementioned amendments, and the decision points the joint subcommittee determined the full committee should consider. Referring to Exhibit H, Mr. Abba reported that the General Fund cost for Fiscal Year 1997 is $1.9 million for 6 months of operation. He stated this amount includes all of the additional costs for implementing the self-sufficiency plan that will require new staff, and the amendments proposed that will significantly increase the numbers of AFDC recipients that will have to mandatorily complete the jobs program. There also will be savings in terms of sanctions and diversion costs for some of the program components, Mr. Abba said. In Fiscal Year 1998, Mr. Abba said the additional cost to the General Fund is estimated at $3.2 million, and in Fiscal Year 1999, the additional cost is estimated to be $3.4 million. He noted that Fiscal Year 2000 will reflect the impact of the proposals contained in S.B. 428 resulting in a savings to the General Fund of $6 million as recipients fall off the rolls due to time limitations. In Fiscal Year 2001, Mr. Abba pointed out there will be a savings of $6.8 million. The total savings covering a 5-year proposal will amount to approximately $4.3 million to the General Fund, Mr. Abba reported. Mr. Abba distributed a work session document, Exhibit I. He indicated the subcommittee arrived at approximately 10 policy recommendations to be considered by the full committee, and some of the recommendations refer to controversial issues previously mentioned. He said there are a number of areas in the 10 decision points in which the subcommittee could not arrive at a recommendation. Senator Coffin asked the chairman if there is a format the committee can follow to review the proposals contained in Exhibit I. He specifically asked if the chairman proposed to hold a hearing regarding the proposals. Senator Raggio replied the information was just received in the committee today and is new to him as well. He is concerned because of the lack of time remaining to spend on controversial issues. He pointed out S.B. 428 has to be reviewed in the Assembly. Senator Raggio turned the meeting over to Senator Rawson, as chairman of the subcommittee instrumental in the preparation of Exhibit I, to review the proposals contained in Exhibit I. Senator Coffin remarked, "If you are pushing on votes on these policy issues today, I will object because I feel we have a new bill, and I would like to hear how the public feels about these issues." Senator Rawson responded he would like to have a vote on the issues that can be clarified, and will hold any of the issues that cannot be resolved for further consideration. Senator Coffin continued his objections based on the fact he is interested in hearing what the public has to say. Referencing Exhibit I, Mr. Abba stated that Policy Issue No. 1 deals with the most costly component of S.B. 428. As originally drafted, the bill required that all AFDC recipients receive job training through the Welfare Division's employment and training program unless the caretaker has a child under the age of 6 months. Mr. Abba indicated the Welfare Division's current policy exempts caretakers if the youngest child is under 3 years of age, and there would be a significant fiscal impact by reducing the exemption to age 6 months. The current employment and training program does not have the funding available to provide employment and training to all AFDC recipients who are mandated to receive it, he said. Mr. Abba pointed out that in addition to lowering the age group, S.B. 428 requires those who are mandated to receive training. Based on the significant cost impact, the subcommittee looked at a number of options of phasing in the age group on an incremental basis. In doing so, they determined that a phase-in process, effective January 1, 1996, will allow the division to retain a current policy exempting caretakers if their youngest child is 3 years old. Mr. Abba stated this will add approximately 3,000 additional recipients to the Job Opportunities and Basic Skills Training Program (JOBS) to receive employment and training services. Effective January, 1998, the age group exemption will be lowered to age 2; effective January, 1999, it will be lowered to age 1; and effective January, 2000, the age group will be lowered to 6 months, the original intention of the bill. Mr. Abba reported that the fiscal impact in Fiscal Year 1997 is $3.8 million, which is not reflected in the Welfare Division's fiscal note of cost savings and projections (Exhibit H). Mr. Abba continued to report the fiscal impact costs by reading from Exhibit I, page 1. He stated the reason the state costs exhibited are not funded on a 50-50 basis is that the JOBS funding, provided by the federal government, is currently capped. Once the cap is reached, the additional costs will become a total state obligation. After determining there was no opposition to the subcommittee's "phase-in" recommendation, Senator Rawson asked for a motion from the committee regarding Policy Option No. 1. SENATOR O'DONNELL MOVED TO ACCEPT POLICY ISSUE NO. 1 REFLECTED IN EXHIBIT I. SENATOR MATHEWS SECONDED THE MOTION. Senator Coffin asked the amount of the fiscal impact for this biennium for this aforementioned policy issue. Mr. Abba repeated the fiscal impact amounts to total funding of $3.8 million for Fiscal Year 1997 of which $1.6 million is the state's obligation. Senator Coffin asked the additional amount of the fiscal impact over and above what was recommended by the Governor, and Mr. Abba responded the additional amount is $1.6 million for Fiscal Year 1997 and $4.4 million for Fiscal Year 1998. Senator Coffin indicated he will oppose this proposal. For clarification purposes, Senator O'Donnell inquired regarding the amount of the overall savings in the third year of the biennium. Mr. Abba answered starting in the fourth year of the project, or Fiscal Year 2000, the overall savings to the state will amount to approximately $6 million. The combined state and federal savings will amount to over $12 million. Senator O'Donnell remarked the state will be looking at spending a little bit more in the short term, but in the long term the state will be saving a lot. Mr. Abba replied, "That is correct." Senator Mathews inquired if the recommendation by the subcommittee meets with the approval of the Welfare Division. Myla C. Florence, Administrator, Welfare Division, Department of Human Resources, responded the division will support any enhancement to the employment and training program. She indicated the recommendation of the subcommittee contained in Policy Issue No. 1 will broaden the program, and if the division will be placing time limitations on benefits, it will be imperative to make training and job opportunities available. Senator Coffin said he understands there may be savings in the next biennium, as pointed out by Senator O'Donnell, but he is concerned with the current biennium. Senator Rawson replied, "Your concern is noted." THE MOTION CARRIED. (SENATOR COFFIN VOTED NO.) * * * * * Senator Raggio recessed the meeting at 10:20 a.m.and reconvened the meeting at 12:40 p.m. Reading from Exhibit I, Mr. Abba indicated that S.B. 428 requires all non-exempted households to have self-sufficiency plans developed and reviewed every 3 months. The Welfare Division has estimated this provision will require 13 new positions at a total cost of approximately $492,000 to be split between the federal government and the state. The division believes a self-sufficiency plan will take on the average of 1 hour to develop, but it is anticipated fewer staff will be required for this purpose starting in Fiscal Year 1998. Senator Raggio asked who will actually prepare the plans. Mr. Abba replied in putting the fiscal note together, the division used a "generic" grade 31 level position. He said there has been a significant amount of testimony regarding the type of position that should be used. Some feel the plan should be put together by a social worker, but others feel it can be completed by the combination of an eligibility worker, an employment and training specialist, and a social worker to handle the more complex self- sufficiency plans. He said the subcommittee has supported the self-sufficiency plan and periodic review requirements, but did not make a staffing recommendation. Senator O'Donnell asked what the staff or the division have recommended regarding the Welfare Division's staffing requirements. Mr. Abba repeated the division feels a minimum of 13 new positions will be needed over and above what is recommended in the Welfare Division's budgets, but did not specify a level of those positions. The assumptions the division used to support the positions appeared reasonable to the Fiscal Analysis Division, he said. Senator O'Donnell asked Ms. Florence if the 13 positions are necessary, and if so, if $492,000 will be sufficient funding to support the activities involved with the development of self- sufficiency plans. Ms. Florence replied the positions are necessary based on the amount of time that will be required for the review of the self-sufficiency plan. Regarding the issue of the level of expertise required, she reminded the committee that during budget closing hearings, they recommended 10 social workers for intensive case management which will provide the division with the ability to manage about 500 cases at any point with that level of staffing. She indicated the division anticipates there will be a greater need for intensive case management. She remarked: On this issue my recommendation would be...since it is uncertain of that amount...to go with the eligibility [grade 31] level. If we find there is a greater demand we would have the ability to come to IFC and potentially reclassify some positions. The social worker entry level is a grade 33, which is about 10 percent higher than what we budgeted here. If the committee accepts the Welfare Division's recommendations, Senator Rawson asked what affect this will have on the estimates prepared by staff. Mr. Abba replied there will be no change in the estimates provided. SENATOR RAWSON MOVED TO ACCEPT POLICY ISSUE NO. 2 AS REFLECTED IN EXHIBIT I. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Mr. Abba said Policy Issue No. 3 refers to AFDC benefit time limitations shown in section 12 of S.B. 428 which would limit benefits to a 24-month period in any 5 year period that mirrors the bills that are currently in the United States Congress and Senate. The proposed amendment to S.B. 428 will exempt persons who are disabled, ill, incapacitated, aged, too remote from a JOBS area, or are children living with a non-needy caretaker. Mr. Abba continued his testimony regarding this issue by reading from page 2 of Exhibit I. Mr. Abba said the savings from this policy issue will start to accrue in Fiscal Year 1999 and are estimated to be approximately $4 million to be shared equally between the state and federal government. Mr. Abba said this amount will increase to $21 million in Fiscal Year 2000. Senator Raggio asked what the fiscal impact will be in the current biennium if this is enacted. Mr. Abba said there will be no fiscal impact in the current biennium. Mr. Abba advised the committee that during the subcommittee hearing, there was an abundance of testimony against Policy Issue No. 3. Senator Rawson pointed out this policy issue is one of the most significant ones the subcommittee had to deal with. He said the subcommittee tried to establish any reasonable exemption possible for those recipients who do not have the ability to "get off" the rolls. SENATOR RAWSON MOVED TO ACCEPT POLICY ISSUE NO. 3 REFLECTED IN EXHIBIT I. SENATOR JACOBSEN SECONDED THE MOTION. Senator Mathews stated she will reluctantly support the acceptance of Policy Issue No. 3 although she still has questions about how the proposals will work. Since she does not have a solution to offer, she wished to state for the record she is uncomfortable with the decision to accept the policy as written. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Mr. Abba said Policy Issue No. 4 is the family cap provision that prohibits providing additional AFDC assistance to a family currently on assistance or enrolls for assistance and has another child. The amount of assistance for the additional child of approximately $59 per month will not be allowed under the provisions of S.B. 428. He said passage of this measure will result in a savings of approximately $347,000 in Fiscal Year 1997 that will be shared between the state and the federal government, and the amount of savings will increase in future years. Mr. Abba stated Policy Issue No. 4 also received a significant amount of testimony, and he opined the Welfare Division also has some concerns about this issue as well. Senator Rawson said this policy issue was of particular importance to Senator Washington and is the "heart" of what is included in legislation he has introduced. Because this issue is of such importance to him, Senator Rawson stated he will make the motion to accept Policy Issue No. 4. SENATOR RAWSON MOVED TO ACCEPT POLICY ISSUE NO. 4 REFLECTED IN EXHIBIT I. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS MATHEWS AND RAGGIO VOTED NO. SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Referencing Exhibit I, Mr. Abba said Policy Issue No. 5 refers to section 16 of S.B. 428 regarding the Onetime Diversion Program. He said S.B. 428 will allow the Welfare Division to make a onetime payment to applicants not in need of long-term assistance. He said the applicants who receive the onetime payment, amounting to approximately $851, will become ineligible for AFDC benefits until 36 months have passed. He said there is a savings associated with this proposal because those individuals who receive the onetime payments will not come on the rolls, making it a cost-neutral proposal. Senator Mathews said if this policy is approved, careful screening will be needed to determine those eligible to receive the onetime payment, and it may result in specialized staffing for the Welfare Division. Senator Maurice E. Washington, Washoe County Senatorial District No. 2, testified this provision is intended to assist recipients to pay their bills. It is not intended to be used as a housing supplement or provide the individual with cash. Senator Rawson stated this proposal will be of assistance to many individuals, especially to those who do not require long-term assistance but are involved in a crisis situation that requires immediate assistance to get through a period of one or two months. SENATOR RAWSON MOVED TO ACCEPT POLICY ISSUE NO.5 REFLECTED IN EXHIBIT I FOR INCLUSION IN S.B 428. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Senator Raggio called the committee's attention to Policy Issue No. 6 regarding self-sufficiency program services to presumed fathers contained in section 18 of S.B. 428. Mr. Abba said the bill will allow absent fathers of AFDC children to participate in the self-sufficiency program and to receive employment and training services. It has been proposed to amend section 18 to establish a pilot project and to limit the participation in the program to 100 participants. If the absent fathers choose to participate, an increased AFDC benefit would be provided to the household which would average $59 per month, the value for one additional person. The fiscal impact for 100 participants is $136,500 for Fiscal Year 1997, which will be a state cost since the federal government has elected not to participate. Senator Raggio asked if there is an incentive for absent fathers to participate in the program. Senator Rawson replied in addition to being able to receive job training, the incentive is the increased stipend of $59 per month. Senator O'Donnell said he would like to receive a report on a periodic basis from the Welfare Division regarding the success of the pilot program. He opined the program will be successful and will result in recipients being taken off the welfare rolls. Senator Rhoads asked for the definition of an absent father. Mr. Sturm replied section 18 refers to a presumptive father, which is a classification used before paternity is established. It is a term the Welfare Division uses during the preliminary period before the birth of a child when the woman is receiving prenatal care. He clarified the proposal only applies to those presumptive fathers, and not to all absentee fathers. SENATOR RAWSON MOVED TO ACCEPT POLICY ISSUE NO. 6 REFLECTED IN EXHIBIT I FOR INCLUSION IN S.B. 428. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Policy Issue No. 7 refers to sections 23, 24, and 25 of S.B. 428 pertaining to school attendance and immunizations. Mr. Abba said S.B. 428 as originally drafted required all AFDC recipients to receive a high school degree or equivalency as a condition of receiving benefits. Also, as a condition of receiving benefits, all dependent children are required to receive the standard childhood series of immunizations. Mr. Abba stated the amendments to this bill clarify academic progress as proof of enrollment and school attendance. Also, the requirements for obtaining a high school degree or equivalency are proposed to be amended to those recipients who are 18 years of age and under. The estimated fiscal impact is $214,000 each fiscal year to be equally shared between the state and federal government. Mr. Abba said the fiscal note may require adjustments that may reduce the cost. He explained the Welfare Division had included some staff for monitoring the programs, but the amendments may decrease the need for some of the additional staff. The Fiscal Analysis Division will work with the Welfare Division regarding the staffing adjustments. Senator Rawson said this was a controversial issue and noted the State Department of Education opposed Policy Issue No. 7 since "it will require additional staff for them to produce other than the usual report card." He commented: This was an important item for the designer of the bill and it is an important issue. I believe with care it can be worked out with [the State Department of] Education. We do not need a bureaucracy established to accomplish this. I do have students in higher education that, to continue their grants, they ask me to sign a form they are making satisfactory progress. It takes no time to do that at all. SENATOR RAWSON MOVED TO ACCEPT POLICY ISSUE NO. 7 REFLECTED IN EXHIBIT I FOR INCLUSION IN S.B. 428. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Senator Raggio referred the committee to Policy Issue No. 8 regarding parenting skills contained in section 26 of S.B. 428. Mr. Abba said as a condition of receiving benefits, S.B. 428 requires each participant, if required as a part of the self- sufficiency plan, to attend parenting training and education classes. He said one of the more controversial aspects of the original measure is recommended to be amended to delete the requirement for the State Board of Education to approve the course content of parenting skills training and education classes. The subcommittee did not have an opportunity to review the various options for instituting a parenting skill program. The fiscal note that was prepared by the Welfare Division assumed that parenting skills would be best available to recipients 24 years of age and under. Mr. Abba said at the suggestion of the Fiscal Analysis Division, the Welfare Division will review options at different age groups that may have an impact on the total costs. The fiscal impact of providing parenting skills training to recipients age 24 and under is $341,500 for Fiscal Year 1997 to be shared equally between the state and federal government. Mr. Abba said as a second and third option, the committee can consider requiring parenting skills training to recipients age 20 and under or age 18 and under. He indicated the fiscal impact for each of these categories is reflected on page 4 of Exhibit I. He noted the fiscal note as currently developed includes the cost for recipients age 24 and under. Senator Raggio indicated his confusion, because he thought this issue pertained to parenting skills. Mr. Abba responded through the development of the self-sufficiency plan if the division feels it is essential that someone receive parenting skills and training, that it be provided through the self-sufficiency plan. He said there would be a cost for attending the course as well as a cost for child care while the parent is attending class. If necessary, this can be a requirement developed in the self-sufficiency plan. Senator Rawson said many of the welfare families have some serious problems regarding this issue. He recommended the committee accept Option No. 1 to Policy Issue No. 8 that is in accordance with the current fiscal note. SENATOR RAWSON MOVED TO ACCEPT PARENTING SKILLS OPTION NO. 1 OF POLICY ISSUE NO. 8 REFLECTED IN EXHIBIT I FOR INCLUSION IN S.B. 428. SENATOR JACOBSEN SECONDED THE MOTION. Senator Rhoads pointed out that all of the programs are new and the parenting skills program should be very successful. He suggested the committee accept the third option to provide parenting skill training to recipients age 18 and under. He said if this works, options 1 or 2 can then be considered. Senator Rawson asked what the fiscal impact will be if the third option is used. Mr. Abba said the impact will be substantial since it will reduce costs by approximately $150,000. Senator Rawson questioned if this will impact on individuals leaving the welfare rolls. Mr. Abba said it might have an impact regarding individuals having children while they are on the rolls, which is a part of the family cap issue. Senator Rawson suggested Senator Rhoads modify the motion as he suggested. SENATOR RHOADS MOVED TO ACCEPT OPTION NO. 3 OF POLICY ISSUE NO. 8 REFLECTED IN EXHIBIT I FOR INCLUSION IN S.B. 428. Senator Raggio requested clarification of the first motion as to the age group to be referenced. Senator Washington recommended the committee accept the division's suggested Option No. 1 that includes recipients age 24 and under. As a compromise, Senator Rawson revised his motion to accept the second option relative to recipients age 20 and under. Senator Jacobsen concurred with Senator Rawson `s revised motion. Mr. Abba reviewed the fiscal impact for the second option reflected in Exhibit I. SENATOR RAWSON MOVED TO ACCEPT PARENTING SKILLS OPTION NO. 2 OF POLICY ISSUE NO. 8 REFLECTED IN EXHIBIT I FOR INCLUSION IN S.B. 428. SENATOR J A C O B S E N S E C O N D E D T H E M O T I O N . THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Referring to Policy Issue No. 9 of Exhibit I regarding dental and vision care services, Mr. Abba said section 20 of S.B. 428 requires the Medicaid program to provide dental and vision care services that are considered necessary to correct problems which would be potential barriers to employment. Currently, Medicaid only provides for emergency dental care for adults, and vision services are allowed every 2 years with some exceptions. Mr. Abba said it is proposed to limit dental coverage for adults to a maximum of 500 recipients at an average cost of $500 per recipient for a total cost of $250,000 each fiscal year. He pointed out the total cost will be a state responsibility since the program will be limited and federal Title XIX match participation is not anticipated. Mr. Abba stated the subcommittee endorsed the concept of providing these services. Senator Rawson disclosed he is a practicing dentist, but will not receive any monetary gain by the inclusion of this provision in S.B. 428. SENATOR RAWSON MOVED TO ACCEPT POLICY ISSUE NO. 9 REFLECTED IN EXHIBIT I FOR INCLUSION IN S.B. 428. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION FAILED. (SENATORS MATHEWS, RAGGIO, AND RHOADS VOTED NO. SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Senator Raggio called the committee's attention to Policy Issue No. 10 that concerns violations and failure to comply sanctions included in section 33 of S.B. 428. Mr. Abba indicated that S.B. 428 requires the use of sanctions for those participants who fail to comply with terms of their self-sufficiency plan. For the first intentional violation, Mr. Abba said all cash benefits will be terminated for 1 month. For the second violation, all cash benefits will be terminated for 3 months. Finally, Mr. Abba indicated a third violation will result in a permanent loss of benefits and removal of the recipient from the program. He explained the sanctions included in the measure are more aggressive than those currently imposed, and include the entire household's grant payment rather than a single recipient's grant payment. He stated the fiscal impact of this measure will result in savings of $1.1 million for Fiscal Year 1997 and shared equally between the state and federal government. Mr. Abba reported there was significant testimony regarding this issue that the sanction criteria was too aggressive, and the subcommittee deferred action to the full committee. Senator Rawson concurred this policy is a controversial issue. He said, "Nobody wants to take food out of the mouths of children." Senator Washington explained the intent of the language contained in S.B. 428 is to impose sanctions and stiffen the penalties for non-compliance. The intention is not to take food out of the mouths of children, but to make the recipient responsible for compliance with the program. He opined there may be some recipients who will attempt to "test" the program to see if the sanctions will actually be imposed, but once it is determined they will be, other recipients will comply with the requirements. Senator O'Donnell asked for an example of the type of violation that will result in a sanction being imposed. Senator Rawson replied, "Will not attend job training." Senator O'Donnell asked if there is a requirement to stay drug free. Senator Washington indicated there is such a requirement, and the refusal to do so will be a violation resulting in a sanction being imposed against the household. Senator O'Donnell noticed individuals in the audience shaking their heads in disagreement with Senator Washington's statement. He concluded that welfare participants can be on drugs and not be sanctioned. Ms. Florence said section 22 of S.B. 428 indicates the division shall require, as a condition of receiving benefits, that every participant in the program must participate in an alcohol prevention and treatment program if the division determines that such treatment is necessary for the participant to fulfill the employment and training programs described in the plan for the household. The division envisions the detection of a drug or alcohol related problem will take place through assessments made by the social worker who would then refer the recipient to a community treatment program. Senator Mathews argued that although she believes some type of sanctions should be imposed for those participants that violate the terms of their self-sufficiency plan, she does not approve of placing a hardship on innocent children. Senator Washington interjected that most of the cash grants that are received by the recipients are not used for the children, but are used instead for their own consumption or personal needs. Senator Rawson remarked the Welfare Division advised the subcommittee they already have the ability to sanction recipients for failure to comply. He suggested that rather than taking action on this portion of S.B. 428, the Welfare Division should be charged with the responsibility for developing appropriate recommendations the committee can revisit at a future date. Ms. Florence does not anticipate the Welfare Division will be able to perform random testing of recipients. Senator O'Donnell asked what action is taken by the division when it is determined an individual assigned to a drug treatment program fails to participate in the program. Ms. Florence answered if the division receives verification the recipient is not participating in an assigned program, sanctions can be imposed, although due process notification must be given to the individual. SENATOR RAWSON MOVED TO ACCEPT POLICY DECISION NO. 10 REFLECTED IN EXHIBIT I FOR INCLUSION IN S.B. 428 WITH THE STIPULATION THE WELFARE DIVISION DEVELOP THE REGULATIONS UNDER WHICH SANCTIONS CAN BE IMPOSED, SUBJECT TO REVIEW BY THE IFC. Senator Raggio remarked he did not understand the aforementioned motion. He inquired, "In lieu of section 33, what is your motion?" Senator Rawson clarified the terms and conditions of section 33 should be further defined. He stressed that the purpose of imposing sanctions is not to cut individuals from the welfare rolls, but to motivate them to comply with the rules. He said if there are recalcitrant individuals that will not participate, there has to be a method to address the problem. Senator Raggio inquired if the motion is to delete section 33 from the S.B. 428. Senator Rawson replied the motion would leave section 33 in the bill, but would require the division to develop regulations regarding the issue to be reviewed by the IFC. SENATOR MATHEWS SECONDED THE MOTION. Senator O'Donnell argued: I think the taxpayers deserve more. To hear what I just heard that you can be a drug addict, have a drug problem, have children, be referred to a drug and alcohol treatment center, refuse to go, and on the third time you can still get your money. Senator Raggio inquired what the position of the Welfare Division is regarding this issue. Ms. Florence responded the division currently sanctions about 800 individuals each month. The majority of that number, about two-thirds, are first offense sanctions and the penalty is that the individual is given a warning for that first offense. She stated the individuals are usually quick to come back into compliance. The second offense would be denial of benefits until they come into compliance. Senator O'Donnell asked if the individuals are quick to come into compliance after the second offense, and Ms. Florence responded, "Not as quickly as after the first offense." Senator O'Donnell asked, "If they come into compliance after the first offense, why would there be a second offense?" Ms. Florence responded the division would then be dealing with a smaller number of individuals. She verbally provided statistics as follows: "Average monthly sanctions, first offense, a 1 month sanction, 519 individuals; second offense, a 3 month sanction, 159 individuals; and the third offense, a 6-month sanction, 37 individuals." Senator Rawson wished to modify his motion to include the retention of section 33 in S.B. 428 as follows: SENATOR RAWSON MOVED TO ACCEPT POLICY DECISION NO. 10 REFLECTED IN EXHIBIT I, INCLUDING THE RETENTION OF SECTION 33, FOR INCLUSION IN S.B. 428. SENATOR O'DONNELL SECONDED THE MOTION. Senator Mathews said she approves of having the Welfare Division determine the regulations under which sanctions can be imposed. She opined the first motion made by Senator Rawson should be used. Senator O'Donnell said he is sympathetic to those individuals who make mistakes, but when the second and third mistake is made, a "tough love" approach should be taken. He opined the taxpayer would want individuals to be sanctioned and penalized if they are not going to participate in getting off welfare. He stressed, "This is exactly what this [Policy Issue No. 10] is designed to do. It is not a handout. It is a helping hand towards getting people off welfare. If they are going to violate and abuse it for the third time, they should be off the rolls." Senator Mathews argued having the division develop regulations regarding sanctions to be used will in no way encourage individuals to remain on the welfare rolls. She repeated that the first motion made by Senator Rawson should be considered. Senator Washington interjected the intent of S.B. 428 is to develop self-sufficiency plans to assist individuals with social and economic problems to get off the welfare rolls. If these individuals fall out of compliance, they are sanctioned through a third level until they are out of the program. He indicated that regulations are built into the language of S.B. 428 requiring individuals to comply with the self-sufficiency plan assessed to their needs. Senator Rawson said he had forgotten that self-sufficiency plans will be established through a case manager under the direction of the Welfare Division. He said if individuals fail to comply with their self-sufficiency plans, sanctions should be imposed. He recommended a vote be taken on his revised motion, and that his first motion be disregarded. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Mr. Abba said although it is not reflected in the work-session document (Exhibit I), or the fiscal note prepared by the Welfare Division (Exhibit H), there are two other potential fiscal areas that should be considered. He explained S.B. 428 requires that participants, as a condition of receiving benefits, shall participate in an alcohol and drug abuse prevention program if it is determined to be necessary. The Bureau of Alcohol and Drug Abuse (BADA) has provided a fiscal note to that section of S.B. 428 and it is his understanding that additional funding was added to the BADA budgets for this purpose. He said the BADA's fiscal note for Fiscal Year 1997 is $10.2 million, $5.2 million for Fiscal Year 1998, and $5.7 million for Fiscal Year 1999. Senator Raggio inquired why the amounts are so high. Mr. Abba replied the Fiscal Analysis Division has not yet had the opportunity to review the fiscal note from BADA, and are uncertain regarding the assumptions the bureau used in developing their costs. He pointed out in the proposed amendments to S.B. 428 (Exhibit G) previously discussed, there is a new section that specifies that the BADA only provide those services they are able to provide within the funding made available. He opined this section will apply to section 22. Mr. Abba referred the committee to the proposed new section 45.5 to S.B. 428 on page 3 of Exhibit G. Mr. Abba indicated that section 28 of S.B. 428 requires that the Welfare Division provide job development skills. He pointed out the Welfare Division does not actually perform this function, and in the development of their fiscal note specified that those services would be performed by the Department of Employment, Training and Rehabilitation (DETR). He reported the Fiscal Analysis Division received a fiscal note (Exhibit J) from DETR that indicates they will incur a fiscal impact. Mr. Abba said the Fiscal Analysis Division has not yet had the opportunity to review the fiscal note, dated June 9, 1995, that estimates the cost to DETR to provide job training skills will be approximately $3.7 million to $5.7 million. The department has indicated they will be unable to assume this added training responsibility due to the cost involved. Senator Raggio asked if there is a proposal under the Governor's bill that individuals will have to be placed under employment status. Mr. Abba replied individuals will be required to complete a job training program, and if there are job development requirements to be met, the individuals would be referred to DETR for that type of activity. Senator Raggio asked, "There was no provision in the Governor's bill to place people that were found and trained to be employable?" Mr. Abba replied that would be part of what DETR does. However, in preparing their fiscal note, DETR looked at the additional people that may be forthcoming to receive training as a result of the mandatory job training requirements for welfare recipients. John Orr, Assistant Director, Department of Employment, Training and Rehabilitation, indicated that the fiscal note (Exhibit J) includes the additional 2,700 referrals from the Welfare Division who, by definition, are hard to train and hard to place individuals. He stated there was no allowance made within their budget to account for an additional 2,700 individuals to be trained. Senator Raggio asked Mr. Orr what services he would have provided to train individuals under the terms of the Governor's bill. Mr. Orr said DETR would have submitted a similar fiscal note regarding the Governor's bill. Senator Raggio interjected, "It is in the budget. Did you contemplate the impact of that in your budget?" Mr. Orr replied the department included services to the welfare population in their budget. Senator Raggio inquired how many individuals would be included in the Governor's program, and Mr. Orr replied approximately 600. Ms. Florence corrected the number to 6,000. Senator Raggio asked Mr. Abba to repeat the number of individuals that will be required to receive specialized training under the terms of S.B. 428, and Mr. Abba replied an additional 3,000 individuals for a total of 9,000. Addressing his inquiry to Mr. Orr, Senator Raggio asked, "Are you saying that your budget will only allow you to assist 6,000 people, and if we pass this legislation, 3,000 additional people will be involved that you might not be able to assist?" Mr. Orr responded he is not familiar with the 6,000 figure that was mentioned by Ms. Florence. He stated there is a capacity that was created in the public employment program that does not include the additional 2,700 or 3,000 mandatory AFDC recipients. Senator Raggio asked if the budget submitted by DETR, that has been approved by the committee, is adequate to handle the training and placement of approximately 6,000 additional individuals. Mr. Orr replied the approved budget will support the Governor's intentions, but it will not support the additional 3,000 contemplated as employable under the provisions of S.B. 428. Senator Raggio indicated the committee will not reopen the DETR budget at this time. The necessary appropriations will have to be added to S.B. 428 that will be amended in accordance with the proposed amendments referenced in Exhibit G and will include the actions that were taken on the policy issues previously discussed. He noted that Policy Issue No. 9 was not adopted by the committee. Mr. Abba pointed out that the fiscal note for Policy Issue No. 8 should be adjusted to reflect the cost for Option No. 2 to provide parenting skills for recipients age 20 and under. SENATOR RAWSON MOVED TO ACCEPT THE PROVISIONS OF POLICY ISSUES 1 - 7 REFLECTED IN EXHIBIT I, THE INCLUSION OF OPTION NO. 2 TO POLICY ISSUE NO. 8 REGARDING PARENTING SKILLS REFLECTED IN EXHIBIT I, AND THE APPROPRIATIONS REQUIRED TO ACCOMMODATE FUNDING THE AFOREMENTIONED POLICY ISSUES INCLUDING JOB DEVELOPMENT SKILLS CONTAINED IN SECTION 28 OF S.B. 428 FOR AFDC RECIPIENTS. SENATOR O'DONNELL SECONDED THE MOTION. Discussion ensued regarding the amount of funding that will be required after which Senator Raggio remarked he is not convinced the fiscal note that was presented by DETR is fully to the committee's understanding. He asked staff to review the fiscal note to determine the actual manner in which it was computed, and how it conforms to the Governor's reform proposals. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Mr. Abba said one issue that was not included in the closing documents or in the Governor's welfare reform proposals pertains to the potential additional costs to the NOMADS. He clarified there were no costs computed because the Welfare Division is currently working with the IFC to meet their milestones on the project that is in place at the present time. He said there also were no cost estimates provided for developing the Governor's proposals. He opined it will take time for NOMADS to be up and running, and the Welfare Division will appear before the IFC at a future time to indicate exactly what the costs will be. Senator Raggio suggested a letter of intent be issued by the Fiscal Analysis Division to the Welfare Division reminding them to appear before the IFC regarding the additional costs for NOMADS. SENATOR RAWSON MOVED TO AMEND AND DO PASS S.B. 428 IN ACCORDANCE WITH EXHIBIT G. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Dan Miles, Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, reported that during the budget closing actions between the Department of Information Services (DIS) and the Division of Environmental Protection, two Microcomputer Specialist positions were to be transferred from the Division of Environmental Protection to DIS and, he reported, the transfer was closed as taking place. The positions had been reclassified in the Division of Environmental Protection, but the budgets were closed for the division and the positions retained, resulting in two positions in two places. The Assembly Committee on Ways and Means approved the retention of the positions in the Division of Environmental Protection since they had been reclassified to their proper job duties. SENATOR O'DONNELL MOVED TO CONCUR WITH THE ASSEMBLY COMMITTEE ON WAYS AND MEANS TO RETAIN THE (TWO) MICROCOMPUTER SPECIALIST POSITIONS IN THE DIVISION OF ENVIRONMENTAL PROTECTION. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Subsequent to the closing of the budget for the Department of Transportation (NDOT), the budgets for the Program for Education of Bicycle Riders of the Department of Motor Vehicles and Public Safety (DMV&PS), and the Telecommunication Division of the DIS were closed. During the latter closing actions, adjustments were made that will impact the NDOT, Mr. Miles said. He explained the reversal of the funding ratio for the bicycle safety program will reduce funds of the NDOT, and the retention of Communication Technician positions in the NDOT budget will also affect their budget due to decisions that had been made regarding the DIS budget. Mr. Miles stated adjustments will now have to be made regarding the NDOT budget to reflect the adjustments to the budgets for the Telecommunications Division and the bicycle safety program of the DMV&PS. SENATOR O'DONNELL MOVED TO AMEND THE PREVIOUS CLOSING ACTION, AND TO REOPEN THE APPROPRIATE BUDGETS FOR THE PURPOSE OF ADJUSTING THE NDOT BUDGET TO INCLUDE THE RECOMMENDATIONS WHEREBY: (1) THE FORMULA FOR THE FUNDING OF THE BICYCLE SAFETY PROGRAM IS NOW REVERSED SO THAT 65 PERCENT OF THE FUNDING IS ALLOCATED TO THE BICYCLE SAFETY PROGRAM, AND 35 PERCENT IS ALLOCATED TO NDOT'S HIGHWAY PEDESTRIAN DESIGN; AND (2) THE COMMUNICATIONS TECHNICIANS REMAIN IN NDOT. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Mr. Miles indicated the Joint subcommittee on General Government requested that a bill draft request (BDR) be introduced to transfer excess funding in the Claimant Employment Program reflected in Nevada Revised Statutes (NRS) 612.607 to the Federal Unemployment Trust Fund for the State of Nevada. He indicated the suggestion to do so was initiated by the Senate Committee on Finance because the fund balance in the Claimant Employment Program has been growing. The subcommittee recommended that any excess over 90 days of required expenditures at the end of each year be transferred to the Federal Unemployment Trust Fund to reduce costs within that budget that may impact on the unemployment tax rate. In addition, Mr. Miles said the subcommittee requested the committee allow the expenditure of claimant employment funds on non-program participants which is associated with the Lifeskills Program under the Division of Parole and Probation. He further stated: Under the Governor's recommended Lifeskills Program, part of the effort to employ those people would be through the Claimant Employment Program, but currently the law limits the participation in that program. Therefore, the department had sent over recommended language which expands the Claimant Employment Program to other unemployed persons, which was intended to target the Lifeskills Program. What we do not have is a BDR to do that. Senator Raggio suggested either a BDR be drafted or the change be effectuated through an amendment to an existing bill. He advised staff to determine from the bill drafters which method should be used SENATOR O'DONNELL MOVED TO REQUEST A BDR OR AN AMENDMENT TO AN EXISTING BILL TO PROCESS REQUIRED REVISIONS TO THE CLAIMANT EMPLOYMENT PROGRAM CONTAINED IN NEVADA REVISED STATUTES (NRS) 612.607. SENATOR J A C O B S E N S E C O N D E D T H E M O T I O N . THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Senator Raggio adjourned the meeting at 2:00 p.m. RESPECTFULLY SUBMITTED: Marion Entrekin, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance June 10, 1995 Page