MINUTES OF THE SENATE COMMITTEE ON GOVERNMENT AFFAIRS Sixty-eighth Session March 27, 1995 The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 2:00 p.m., on Monday, March 27, 1995, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Ann O'Connell, Chairman Senator Randolph J. Townsend, Vice Chairman Senator Jon C. Porter Senator William J. Raggio Senator William R. O'Donnell Senator Dina Titus Senator Raymond C. Shaffer STAFF MEMBERS PRESENT: Dana Bennett, Senior Research Analyst Teri J. Spraggins, Committee Secretary OTHERS PRESENT: Susan Boskoff, Executive Director, Nevada State Council on the Arts Mark Zachman, Lobbyist, Nevada Alliance for the Arts Don Clark, Vice Chairman, Nevada State Council on the Arts Mike Meizel, Department of Administration, Buildings and Grounds Division Dean Borges, Acting Manager, State Public Works Board Pam Miller, Lobbyist, Association of General Contractors Tom Grady, Lobbyist, Nevada League of Cities Carole Vilardo, Lobbyist, Nevada Taxpayers Association Lucille K. Lusk, Lobbyist, Nevada Concerned Citizens Darrel Daines, State Controller, Office of the State Controller Ken West, Chief Deputy Controller, Office of the State Controller Dale Erquiaga, Chief Deputy, Office of the Secretary of State Ande Engleman, Executive Director, Nevada State Press Association Steve Tackes, Legal Counsel, Nevada Communications Industry Galen D. Denio, Commissioner, Public Service Commission of Nevada Todd Russell, Legal Counsel, Nevada State Board of Accountancy Marvin Leavitt, Legislative Coordinator, City of Las Vegas Senator O'Connell opened the hearing on Senate Bill (S.B.) 265. SENATE BILL 265: Requires percentage of amount appropriated or authorized for certain public works for construction or renovation of state buildings to be allocated for works of art for such buildings. (BDR 28-125) Susan Boskoff, Executive Director, Nevada State Council on the Arts, presented a slide show, Art in Public Places, to the committee and the audience (Exhibit C). The presentation consisted of several slides. She explained each art project the slide represented, where the art project was located, and how it was funded. Mark Zachman, Lobbyist, Nevada Alliance for the Arts, testified for S.B. 265. He stated the cultural influences of our communities is a key point when people relocate. He explained to the committee that art in public places is a way of preserving history and enhances multicultural amenities in different areas of the communities. He distributed a printout to the committee on State Arts Agencies' Percent for Art Programs (Exhibit D) which showed 29 states having mandatory or permissive art programs. He advised that impending jeopardy to federal funding of art programs makes it imperative for the states to accept some of the responsibility for continuing their communities' quality of life through art enhancement. He asserted art stabilizes communities by providing a uniqueness that is their own. He encouraged the committee to pass S.B. 265. Don Clark, Vice Chairman, Nevada State Council on the Arts, explained to the committee that he is also an architect from Reno and his firm employs 27 people. He told the committee there is a specific process which incorporates the users of the building, the community, the maintenance personnel, the construction company, and the project designers. He noted a committee comes together to select artists through an established process. He added each project pays for part of the funding for the artists. He explained the process, if it is integrated early in the project, works very well. He testified to the committee it is a specific controlled process which must begin at the start of the building, not as an afterthought when the building is almost complete. Mr. Clark commented on one of the projects in the slide show. The bridge design had a clear span. The artist came into the process and told the construction company he wanted to incorporate lizards into the span. When that part of the project was reengineered to incorporate the artist's ideas, it saved $1 million in the cost of the project due to shorter spans in the bridge. He stated it is important to incorporate artists in the design process. He emphasized public works projects which integrate the community into the design process are much more successful. Both the private and public sector see the community input as a tool in the process. Mike Meizel, Department of Administration, Buildings and Grounds Division, testified in favor of S.B. 265. He told the committee that a precedent has been set for doing art work in building. He stated the difference is that it has been taken out of the construction budget. He explained the Sawyer Building in Las Vegas integrated artists early in the building stage. He added the intent is to develop the budget for the building or project and then add 1 percent as a stand-alone amount for the art. He said when the 1 percent is not stand-alone revenue, but taken from the construction costs, sometimes "you do not do quite what you wanted to do as far as art expression." He asserted artistic expression in buildings will not go away. He stated the difficulty with the bill will be how to fund buildings during this biennium that already have construction costs projected. He urged the committee to write the bill only to affect state constructed buildings. Senator Titus admitted the bill is broadly written, but has been amended to only include state building construction. She stated the part of the fiscal note for municipalities is no longer relevant as the bill has been amended. Senator Raggio expressed his concern over the mandatory nature of the bill and the 1 percent cost to any and all public works projects. He stated it is difficult to conceive $300,000 in acquisition, installation and maintenance of art works for the $30 million Lovelock Phase 2 prison project. He said this would be difficult for him to support. Mr. Meizel stated his department had discussed this and feels there needs to be some discretion within the capital improvement projects. He testified he does not think every capital improvement project should have 1 percent attached to it. He noted the "high profile" buildings should have art projects. Senator Raggio asked if this discretion is already part of the law? Senator Titus suggested having a couple of demonstration projects before putting this law into effect. She stated some art appropriations have required special legislation be passed. She told the committee this bill is amending one piece of legislation which previously passed. Ms. Boskoff stated there are two projects, one for the State Library and one for the Supreme Court Building. She told the committee the State Library art work is in process and will be completed in 1 year. She testified the fountain which was to be included in front of the Supreme Court Building has been terminated and the committee is looking at a different piece of art for the front of the building. She presented handouts to the committee regarding art, a call for art in Salt Lake, and letters of support (Exhibit E). She stated many states do not put art in prison or detention facilities. She noted the highway beautification in Wyoming and Nebraska have a positive tourist effect on the states. Mr. Clark stated he feels the most important part of the bill is not the discretion in choosing projects, but the process be ironed out before construction starts. Dean Borges, Acting Manager, State Public Works Board, stressed to the committee that sometimes art work enhances the projects. He stated his support the bill, but emphasized he does not want to affect projects in process this biennium. He said it is important to have the art council involved rather than leaving it in the hands of the administrator of the agency occupying the building. Senator Raggio asked if Mr. Borges supports a mandatory 1 percent on every project in excess of $200,000? Mr. Borges responded that the State Public Works Board is reluctant to include this on every project on the list. He stated highly public buildings are appropriate and this bill should not apply to maintenance projects. Senator Raggio asked Mr. Borges if he supports adding a 1 percent cost to public works projects. Mr. Borges responded that art is a reflection of our culture and it should be considered for high profile buildings. Senator Titus asked Mr. Borges to provide the committee with a list of projects which are on the list to be funded which have art projects incorporated into the project. Mr. Borges responded he does not have the list with him and will provide it in the near future to the committee. He told the committee the Education Building at the University of Nevada, Reno, has art projects incorporated into the funding. Senator Titus mentioned if the discretion is in the law and it is not being used, it points out the need to state the position, even if it is not mandatory. She asked Mr. Borges if there is a 10 percent contingency fund built into every project? Mr. Borges responded there is a 10 percent contingency budget for every project. He stated they do not necessarily use it because projects vary. He asked Senator Titus if she wants to take the 1 percent for art out of the 10 percent planned for contingency use? He said it should not be allocated out of the 10 percent because they might need the entire 10 percent to finish the project. Senator Titus asked if there is ever money left in the 10 percent contingency fund or did contractors manage to "eat that extra money?" Mr. Borges responded there is about 2 or 3 percent of their budget which they revert back to the state, which is unused. Senator O'Connell asked Mr. Borges if that unused contingency money is put into operating or maintenance programs for those buildings? Mr. Borges replied there is a fund for maintenance of roofs, and heating and air-conditioning systems, but not for normal funding of operations and maintenance. A discussion of biennium projects and whether art projects were appropriate or not ensued. Ms. Boskoff explained it depends on how the legislation is written for the final bill. She reminded the committee that some states include parks and parking lots and prisons and highways. She stated Senator Titus's intent is for high profile buildings. She said some states have « percent for art and some have 2 percent. Senator O'Donnell asserted he is in support of control of where the money is spent. He stated he could not support art in boot camps and prisons. Ms. Boskoff testified, as evidenced in her slide show, each community determines what is "appropriate" for that community or state. She stated Wyoming and Nebraska have a large percentage for art on their highways. She said the parameters change. She provided examples of who might be on the committee to choose the artwork for the project. She emphasized it is important that the perception is not that money is being taken away from contractors or architects, but a line item is included in the construction budget so it is obvious there is a commitment for some type of art work funding. She stated it must be up-front for the public to observe. Pam Miller, Association of General Contractors, testified against S.B. 265. She expressed the association's concerns about a mandatory set aside amount of 1 percent. She stated the shrinking capital works project budget is not keeping up with the infrastructure needs. She asserted it would take money away from the construction budget. She expressed concern over the definition of "art" in the projects. She declared the contingency budget is an inappropriate place to take money from for art, because the contingency budget normally pays for things (like forgotten light switches) which are forgotten in the construction estimates. Tom Grady, Lobbyist, Nevada League of Cities, expressed concern about the effect of this bill on local governments. He pointed out to the committee the bill states "art in the building" and it sounds like the intent is "art around the outside of the building." He stated the bill sounds limited. Senator Titus responded the bill would have to be rewritten to incorporate that intent. Carole Vilardo, Lobbyist, Nevada Taxpayers Association, testified against S.B. 265. She stated she appreciates art and the intention of the bill, but cannot support mandatory appropriations. Lucille K. Lusk, Lobbyist, Nevada Concerned Citizens, testified against S.B. 265 by saying there is not an unlimited supply of money. She asked if the money is not being taken from the contractors and the architects, who is the money being taken from? She reminded the committee every financial decision they make takes money away from another project and urged the committee to make those decisions in the interest of the taxpayers. Senator O'Connell closed the hearing on S.B. 265 and opened the hearing on Senate Bill (S.B.) 288. SENATE BILL 288: Revises requirements for annual report of state controller. Darrel Daines, State Controller, Office of the State Controller, testified in favor of S.B. 288. He stated both S.B. 288 and S.B. 289 are housekeeping bills. SENATE BILL 289: Revises authority of state board of examiners regarding payment of claims from money appropriated or authorized by Legislature. Ken West, Chief Deputy Controller, Office of the State Controller, testified S.B. 289 would change obsolete language. He stated the State Controller and the Board of Examiners have a dual responsibility. He explained to the committee that PreAudit and the Board of Examiners had to look at every voucher and claim from every agency in the state. He said the language in the bill would allow them to use modern sampling and post audit techniques to determine the acceptable quality level of the process of claims being paid. He added another part of the bill removes the language where the Board of Examiners checks for availability of money before a claim is processed. He told the committee this function is performed by an algorithm in the computer under the State Controller. He emphasized that no person could physically do this task anymore. He stated it is an unnecessary responsibility for the Board of Examiners. Mr. Daines explained to the committee that the computer does much of the work and will not allow a claim to be paid if there is insufficient funds with which to pay the claim. He stated the computer stopps paying claims on an appropriation when funding runs out. Senator O'Connell asked Mr. Daines if the computer waits until there is a zero balance or is there a warning when appropriations get below a certain point. Mr. Daines responded if a claim comes in for $100 and there is only $99 in the account, the computer would not pay the claim. Mr. West compared the computer to a bank teller. He explained the process is analogous to standing in a bank line where people are putting money in and people are taking money out. The customer does not know what his status is until it is his turn. He emphasized the Office of the State Controller does not know the status of an account until they are crediting or debiting the account. Senator O'Connell closed the hearing on S.B. 288 and S.B. 289 and opened the hearing on Senate Bill (S.B.) 277. SENATE BILL 277: Revises administrative procedure for adopting and amending administrative rules and regulations. Senator O'Connell reminded the committee this is Senate Bill (S.B.) 370 of the Sixty-seventh Session which the Governor vetoed. She explained it had been rewritten. She explained there are three sections which are different from the bill of last session and some language changes have been incorporated. SENATE BILL 370 OF THE SIXTY-SEVENTH SESSION: An act relating to administrative procedure; making various changes relating to the adoption and amendment of administrative rules and regulations; and providing other matters properly relating thereto. Dale Erquiaga, Chief Deputy, Office of the Secretary of State, provided the committee with a listing of the agencies who have not updated their regulations (Exhibit F). He reminded the committee, last session Secretary of State Lau reported on agencies who filed a statement pursuant to Nevada Revised Statutes (NRS) 233B.050 in section 2 of the bill. He stated agencies are required to currently audit their own regulations every 6 years and file a statement of that audit with the Office of the Secretary of State. He said last session a random sampling was conducted and the finding was that agencies do not follow this section of the law. He rechecked the six agencies reported on from last session and the finding still holds true. Senator O'Connell asked, "So if we look at those six agencies, we would find nothing has changed?" Mr. Erquiaga responded, "That is correct." Senator O'Connell called the committee's attention to the changes from S.B. 370 of the Sixty-seventh Session to S.B. 277. Ande Engleman, Executive Director, Nevada State Press Association, testified that the press association supports S.B. 277. She told the committee there will be an amendment which will provide a new section 3. She stated she had seen the amendment and approved it. Steve Tackes, Legal Counsel, Nevada Communications Industry, spoke in support of the amendment (Exhibit G) and the bill. He stated it takes two hearings to adopt a resolution at the Public Service Commission (PSC) of Nevada. He explained the first hearing is when the proposal is presented and usually amended; and the second hearing is to ratify the resolution. Galen D. Denio, Commissioner, PSC, testified the PSC supports the amendment. He explained the amendment to the committee. He told the committee it is unusual for the PSC to adopt a rule after the first hearing. He stated in his experience it usually takes three or four meetings. Senator Townsend asked, if the committee adopted the amendment, would it interfere with the current telecommunications regulations? Mr. Denio responded it would not interfere, it would assist. He stated the PSC does not want to get caught in a situation where they has gone through an 18- to 20-month process and then have to hold another hearing for the sake of holding a hearing. Senator Porter asked Senator O'Connell to provide him with some of the history of S.B. 370 of the Sixty-seventh Session. Todd Russell, Legal Counsel, Nevada State Board of Accountancy, explained the exception in the law to Senator Porter. He asserted they have a higher standard of rules of conduct than is set in the law. He stated there are rules of professional conduct for certain boards which have been exempted since some of the agencies are under regulations with the administrative procedures act. Senator Porter responded his concern is with the notification period. He wanted assurance that the affected businesses and ancillary services receive proper notification. Ms. Vilardo explained the various reasons the entities listed in lines a-j of S.B. 370 of the Sixty-seventh Session were exempted. She explained the importance of the mailing lists for notification of regulation changes. Senator O'Connell closed the hearing on S.B. 277 and opened the hearing on Senate Bill (S.B.) 304 and Senate Bill (S.B.) 305. SENATOR TOWNSEND MOVED TO CONSIDER BOTH S.B. 304 AND S.B. 305 AS EMERGENCY MEASURES. SENATOR SHAFFER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** SENATE BILL 304: Provides for preliminary review and audit of White Pine County School District. (BDR S- 1875) SENATOR TOWNSEND MOVED TO DO PASS S.B. 304. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** SENATE BILL 305: Directs immediate analysis of cash flow of White Pine County School District. (BDR S- 1874) SENATOR TOWNSEND MOVED TO DO PASS S.B. 305. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Senator O'Connell closed the hearing on S.B. 304 and S.B. 305 and reopened the hearing on Senate Bill (S.B.) 277. Senator Porter asked if the language in S.B. 277 answered the concerns of the Governor. Senator O'Connell replied the concerns the Governor raised were taken out of the bill and he has no problems with the rest of the bill. She stated there were three hearings on the bill last session trying to accommodate all of the agencies who had problems with the bill and to accomodate the concerns of the business community. She explained the bill is written in as strong a language as possible via consensus from last session. Senator Porter asked if the committee is confident from prior discussions that a-j should be excluded from the bill. Senator O'Connell replied she wants to include them, but it did not work out that way. She stated the committee did not vote to include them last session. She said the language would ensure that the public and businesses receives better notification than before. Senator Porter stated he has concerns on the "failure to mail" section of the bill. He said he interprets this as saying if the correct people do not receive notification then it does not matter. He noted he does not know how to change the language. Senator O'Connell stated this is current language in the law, it is not new language. Ms. Vilardo explained the regulations go into the Nevada Administrative Code as an extension of law. She said ignorance of the law is no excuse if a citizen violates the law. She explained this language is in effect the explanation of that ruling. Senator Porter asserted it is difficult to tell 100 constituents that they should not be ignorant of the law if agencies have to find ways to contact them. Ms. Vilardo explained that there were two other bills from last session which would help identify the business which would be contacted. She added the Department of Taxation is working on a form for every state agency to identify every form required by the agency, who the form impacts and the fees; to begin the process of eliminating duplication of efforts among state agencies. She stated this will create more current and appropriate mailing lists for agencies. Ms. Vilardo restated her support of the bill and the proposed amendment. Senator O'Connell closed the hearing on S.B. 277 and opened the hearing on the third bill draft request for White Pine County. Marvin Leavitt, Legislative Coordinator, City of Las Vegas, explained the third bill draft request to the committee, (Exhibit G). He explained this bill draft request is to continue the work begun in White Pine County. Senator O'Connell asked if this language will be included in the law to address future problems or if it is specific to White Pine County? Mr. Leavitt stated it is specific to alleviate the immediate cash flow problem in White Pine County. He explained it gives the authorization for White Pine County to seek funding from a private source to offset the cash debit for operating expenses for the months of April, May and June at the White Pine County School District. He told the committee the amount section was left blank as numbers will not be available until April 10th. He specifically noted in the bill draft request that these funds only be used to provide for operating expenses and not be available to pay capital expenses either incurred during the period of April through June, nor incurred before that. He emphasized he wants no doubts that this loan money is strictly for operating expenses to keep the schools operating until the end of the fiscal year. He commented the revenue is not for building, nor for supplies or books. Mr. Leavitt stated he placed in the bill draft request that White Pine County School District has a directive to state they are unable to meet their obligations due to a cash flow problem for this period. He stressed this statement will put White Pine County School District on the record so there is no doubt in anyone's mind concerning the reasons for the loan. He explained it will probably take 3 to 5 years to pay off this loan. He read paragraph 7 to the committee and explained the intent and purpose of the paragraph in the bill draft request. Mr. Leavitt stated the time to address the budget and potential operating problems of White Pine County School District will be after the May 17th financial analysis date. He explained this bill draft request is to give validity to the obligation which must be issued. He emphasized it is known that White Pine County School District co-mingles funds and does not use revenue as it is originally intended. He asserted this would give the private financier of this operating revenue some feeling of security that the money will be used for its intended purpose. Senator O'Donnell told Mr. Leavitt he is uncomfortable with the language, "The school district may by resolution approve at a regular or special meeting after giving notice [as required under provision of NRS chapter 241], the borrowing of these funds after finding in a separate resolution that without the use of these funds they would be unable to pay for expenses incurred...." He said, "We are putting the same people, that were responsible for this fiasco, responsible for voting on this resolution to borrow money. What kind of assurances do we have that the interest rates would be appropriate, the source of funds would be identified to pay back this loan, or by this resolution, are we giving them the noose to hang themselves?" Mr. Leavitt responded the cash flow problem is compounded by the time factor in announcing a meeting, writing the resolution, holding meetings, and endeavoring to make payroll. He said, "The ideal situation is that we would have the budget for next year available to look at before they borrow the money to solve their short-term cash problems. But, given the timing, there's no way we are going to have a budget for next year before we have a cash crunch. The ideal thing would be to have all of these fall due on exactly the same date, say the 17th of May, but I think the problem is that they do not have that luxury." Senator O'Donnell interjected, "The way this resolution is drafted, it allows the school district to go out and borrow money from somebody. At what interest rate, this Legislature has no clue." Mr. Leavitt responded, "That is right." Senator O'Donnell stated, "And we do not know if White Pine County knows what kind of interest rate they are going to be paying back. This allows the school district to say in a panic situation 'We do not have enough money to make payroll, we'll take your 25 percent.' Thereby committing $1.3 million at a 25 percent interest rate? Can they pay it back? Well, we do not know. Well, we hope we can. We are giving them the noose to hang themselves." Mr. Leavitt responded if the committee is concerned about the interest rate, the bill could provide a reference regarding interest rate requirements relating to no more than 3 percent over the interest rate of 20 bonds. He stated that would control the maximum interest rate. Senator O'Donnell said this would make him more comfortable, but he still does not know if White Pine County School District can repay the loan. He asked if anyone on the committee knew if there would be lending institutions who would do it for that rate? Mr. Leavitt stressed there is no hesitation about their ability to repay this loan because the money would come directly from the state treasurer to make the payments. He said the loan would be repaid, however the school district may not be able to operate if they do not get more revenue in the years the loan is being repaid. He stated the bill guarantees the payment and feels because there is a guarantee, a lending institution will see that as security. He commented his plan is to give a lending institution enough of a guarantee that they would lend. Tom Grady, Lobbyist, Nevada League of Cities, said looking at it from a lending institution's viewpoint, one lending institution has already given $975,000; they may be willing to come in and protect that investment. He stated the lending institution will have the state's guarantee that they will have the first repayment of the money. Senator O'Donnell asked what guarantees the state, that with principal and interest, White Pine County School District can make the payments? Mr. Grady replied the Department of Taxation has looked at the situation and feels comfortable with the 3-year projection figures. He stated there are people in White Pine County now verifying those figures. He commented the committee will know shortly if the original projections will hold true. Senator O'Donnell responded, "But they still do not know what interest rate." Mr. Grady stated, "No." Mr. Leavitt assured the committee by the time they pass this bill, they will know the maximum amount to be borrowed, the interest rate at that point of time, and can compute the maximum amount of payment. He said they can compare that to the amount coming out of the state distributive school fund. He said this information is not known now, but will be known when the bill becomes effective. Senator O'Connell stated the committee will also know which contracts have been stopped, which items have been returned, and other cost savings. Mr. Leavitt noted that the committee will not know the budget for the 1995-1996 school year, but they know the other items. Senator Shaffer referred to the $975,000 White Pine County School District already owes to a lending institution. "Will that be incorporated into a new loan? Is that a possibility?" Mr. Leavitt responded, "I suppose it would be a possibility, but I think we are wanting to make this a new loan, especially when we are paying it out of money coming from the state for operating purposes normally. We would not be wanting to mix debt service-type payments." Senator Shaffer stated the current lender would probably want the security of the state, but guaranteeing the $975,000 is not a good idea. Mr. Leavitt responded if a lender is willing to lend money to White Pine County School District under the terms they settled on, then they should have to keep that obligation. Senator Porter asked if any representatives from White Pine County had contacted members of the committee regarding possible legislation. Senator O'Connell stated after the hearing last week, both Assemblywoman de Braga and Senator McGinness were contacted by White Pine County constituents. She told the committee the White Pine County School District had sent a member of the school board to a meeting in Washington, D.C. on a noncritical topic. Mr. Grady told the committee he had received a phone call from someone in the city of Ely offices and they asked if they should be here for these meetings. He said he told them only if they brought someone from the White Pine County School District with them. He said he told them that it is not necessary for the city of Ely to have representatives right now, but someone from the school district should be here. Ms. Vilardo reminded the committee that the Nevada Taxpayers Association will be asking for two more bills to close loopholes in the general statute which allowed this situation to happen. She added with the finding of financial difficulty with White Pine County the statute needs to be cleaned up to better accomodate these kind of situations. She announced there will be a request for oversight to ensure this kind of defaulting does not occur again. Mr. Leavitt drew the committee's attention to the close of the bill draft request. He suggested the committee put some "teeth" into the bill to impose sanctions for breaking the law. Senator O'Donnell reminded the committee the school district is voting to approve a loan. He stated he is not sure the commitee wants to give the school district that authority. He emphasized the students in Ely are going to be affected by these finances. He wanted to know what would happen if there is a mass exodus of teachers in White Pine County School District? He commented the committee is working with extreme circumstances. Senator O'Connell asserted this bill has to be passed so that the teachers will be paid. Senator O'Donnell stated he understands that, but the committee is having the wrong people making decisions again. Senator O'Connell emphasized the intent of the language is to put the school district on record that they recognize the problem. Senator O'Donnell responded there is not one school board member from the White Pine County here to testify. Mr. Leavitt asked if the Nevada Tax Commission should provide confirmation of the findings and resolution of White Pine County School District? Senator O'Donnell admonished Ms. Vilardo, Mr. Leavitt and Mr. Grady, "You three cannot save White Pine County by yourselves. It is not your responsibility to save White Pine County. I think the Legislature, if we have to subpoena these people [White Pine County] to get them here, to [have them] put down on record as approving and supporting this measure." Ms. Vilardo stated none of them disagreed with him. However, she commented, the problem is they [White Pine County School District] cannot meet payroll and the constitution says the Legislature must provide an education. She reminded the committee, again, of the tight-time constraints. She suggested the numbers could be plugged by adding "determined by the audit performed...etc." She said that is what they are waiting for. She suggested that the repayment period be either 5 or 10 years when they know the actual financing. She stated this will get revenue in place so that the payroll can be met. She reminded the committee they have a 2-week window. Senator O'Connell asked if Mr. Grady knew the amount needed to make the April payroll? Ms. Vilardo stated she believes the White Pine County School District pays their employees twice a month which means all of the work has to be done, including getting a loan, by the 13th, 14th, or 15th of April. Senator O'Connell asked Mr. Grady to get this information for the committee. Senator Shaffer reminded the committee all of this bill hinges on whether they get a lender. He posed the question, "What would happen if the lender wants repayment in 2 years instead of 5 or 10?" He said the lender has to be a key player. Senator O'Donnell asked who would be doing the negotiations with the lender, "The school district?" Ms. Vilardo suggested the negotiations be handled by the chairman of the local government advisory committee, which is sanctioned by statute. Mr. Leavitt stated a member of the school district board would be the one negotiating for the loan. Senator Shaffer commented he would like to see a commitment from a lender. Mr. Leavitt suggested they contact some lenders, apprise them of the situation, and ask if they would be willing to lend and at what interest rate? Senator O'Connell asked if Mr. Leavitt could include language which would require the Local Government Advisory Committee be the one to negotiate. Mr. Leavitt assured her it could be written that way. Senator Porter suggested, "I would encourage that they may be present. It is going to 90 days 'Well, we had nothing to do with that. Marvin did that.' or 'The state did that, we did not cut this deal.' As far as negotiations, they will be pointing fingers 6 months from now when they cannot pay the bill." Senator O'Connell asked if it would be possible to include the chairman of the tax commission in the negotiations. Mr. Leavitt stated they could write a formal process where a number of institutions would write the figures. Then the committee could relate to that and then modify the terms. Senator O'Connell reminded Mr. Leavitt that they need to be looking at payroll for teachers. A discussion ensued on contracts and when teachers are paid. Mr. Grady stated he thought the contracts were paid through September when a new year's contract would begin. Senator O'Connell asked if they need to figure the payroll from April to September. Mr. Leavitt responded a new fiscal year began July 1; and the July, August and September payroll would be paid out of the new fiscal year. He reminded the committee the short-term cash flow problems are April to June. Ms. Vilardo stated it is important that the bill include that there are no more grand pianos or trips to Washington; that the bill only allow for operating expenses to meet payroll and utility bills. Senator O'Connell asked Mr. Leavitt and Mr. Grady to bring back language and figures to the next meeting. Senator Titus asked Ms. Vilardo if there is a recall effort going on in White Pine County against the school board? Ms. Vilardo responded there is nothing on a grand jury or recall. Senator Porter commented the committee needs to monitor the situation and if a grand jury investigation does not happen soon, then the committee needs to implement other steps. Ms. Vilardo stated there is absolutely no indication this will happen in the local community. She added the requirements on a recall are 25 percent of the registered voters. She said, "It is difficult to understand why somebody hasn't wanted to lynch somebody." She told the committee there have been stories on the Legislature in the Ely local paper. The meeting adjourned at 4:10 p.m. RESPECTFULLY SUBMITTED: Teri J. Spraggins, Committee Secretary APPROVED BY: Senator Ann O'Connell, Chairman DATE: Senate Committee on Government Affairs March 27, 1995 Page