MINUTES OF THE SENATE COMMITTEE ON HUMAN RESOURCES AND FACILITIES Sixty-eighth Session May 26, 1995 The Senate Committee on Human Resources and Facilities was called to order by Chairman Raymond D. Rawson, at 12:50 p.m., on Friday, May 26, 1995, in Room 226 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Raymond D. Rawson, Chairman Senator Maurice Washington Senator Kathy M. Augustine Senator Joseph M. Neal, Jr. Senator Bob Coffin Senator Bernice Mathews COMMITTEE MEMBERS ABSENT: Senator Sue Lowden, Vice Chairman (Excused) GUEST LEGISLATORS PRESENT: Assemblywoman Barbara Buckley, Assembly District No. 8 STAFF MEMBERS PRESENT: Kerry Carroll Davis, Senior Research Analyst, Legislative Counsel Bureau Linda Chapman, Committee Secretary Mary Gavin, Committee Secretary OTHERS PRESENT: Jeffrey A. Fontaine, P.E., M.P.H., Health Division, Department of Human Resources Fred L. Hillerby, Lobbyist, Sun Valley General Improvement District David Perlman, Administrator, Commission on Postsecondary Education Chairman Rawson opened the hearing on Assembly Bill (A.B.) 367. ASSEMBLY BILL 367: Requires boards of health to avoid conflicts with statutory provisions governing general improvement districts when adopting regulations concerning disposal of sewage. (BDR 40-955) Jeffrey A. Fontaine, P.E., M.P.H., Health Division, Department of Human Resources, testified the Health Division understands the intent of this bill is to resolve a conflict between Nevada Administrative Code (NAC) chapter 444 regulations governing individual sewage disposal systems and Nevada Revised Statutes (NRS) chapter 318. He explained under NRS chapter 318, a property owner is compelled to connect to a community sewage disposal system which is owned or operated by a general improvement district if the sewer is available within 400 feet of the property dwelling. He further explained under NAC 444, which is adopted by the State Board of Health, the requirement is that a property owner is compelled to connect to a community sewer if it is within 400 feet of the property line. He pointed out therein lies the conflict. Mr. Fontaine said concern was raised during testimony before the Assembly so a subcommittee was appointed which worked with them to draft amendments which resolved those concerns. He said the bill was passed out of the Assembly committee, and amended back to its original state on the Assembly floor. Mr. Fontaine said that action was as recent as today, and stated the Health Division would like to have time to analyze the fiscal impact on the Health Division's operations in implementing the provisions of the bill. Chairman Rawson asked Mr. Fontaine to clarify for the committee how the passage of this bill will affect the Health Division's operations. Mr. Fontaine replied the passage of A.B. 367 will require the State Board of Health to change its regulation to be consistent with the statute. Chairman Rawson asked Mr. Fontaine what the statute does that he does not want to change. Mr. Fontaine explained it is a matter of process, and the Health Division believes it provides better public health protection. He explained, when an application is received by the Health Division for an on-site sewage disposal system, it can be processed without a site visit based on readily available public information such as assessor's parcel maps, etc. He said an inspection is required only after the system is constructed. He opined, if this bill is passed, it will require a pre-approval inspection by the Health Division to verify the actual or proposed location of the dwelling before the application can be approved, and a final inspection as well. He contends it will add expense to the Health Division, and possibly the property owner as well. Chairman Rawson commented there must have been some type of problem which precipitated the drafting of this bill, and asked Mr. Fontaine if he has knowledge of any such problem. Mr. Fontaine replied he is not sure that is necessarily the concern. He reiterated the Health Division understands the intent of this bill is simply to resolve the existing conflict between statute and State Board of Health regulations. Chairman Rawson asked Mr. Fontaine if the bill is not passed if it leaves the State Board of Health in the position of having to change their regulation. Mr. Fontaine answered in the negative. Chairman Rawson asked Mr. Fontaine if he would rather have the bill not passed or have it changed. Mr. Fontaine told the committee there will be further testimony reflecting the need to change the law to accomplish consistentcy and resolve the conflict. He said the amendment that was originally offered and passed out of committee would satisfy the Health Division's concerns. Fred L. Hillerby, Lobbyist, Sun Valley General Improvement District (SVGID), testified SVGID supports this bill because they see the need for consistency in the law. He stated Assemblywoman Buckley was a subcommittee of one and recommended an amendment to accomplish that. He explained Assemblywoman Lambert raised the issue of long narrow lots in some areas of the northern counties and felt this legislation could add considerable expense to property owners' development costs. Chairman Rawson asked Mr. Hillerby for his opinion on the action the committee should take regarding the bill. Mr. Hillerby replied he thinks it must be processed in its current form or amended so there is consistency. Chairman Rawson asked if the bill, in its current form, presents any problems for the SVGID. Mr. Hillerby answered in the negative. Senator Neal said, as he understands the bill, it requires boards of health to avoid conflict with NRS chapter 318 which addresses the improvement districts. He asked Mr. Hillerby, "What if the districts adopt regulations that endanger the public health?" Mr. Hillerby replied he would not expect the State Board of Health to adopt regulations which would endanger the public health. Senator Neal told Mr. Hillerby he was talking about the improvement districts. He said they are saying they want the boards of health to conform to whatever the improvement districts have. Mr. Hillerby told Senator Neal the statute states the general improvement district "must have," and is not a discretionary item for the districts. He cited NRS chapter 318.170, paragraph 1, subparagraph c: "service line is brought by the district to a point within 400 feet of the dwelling place." He said the regulation the State Board of Health adopted states "400 feet from the property line," and to confuse it further, Washoe County states "200 feet." He said the SVGID would like to have the two regulations and the statute conformed. Assemblywoman Barbara Buckley, Assembly District No. 8, told the committee the reason the bill was originally amended was because of testimony presented regarding disparity between regulations and statutes. She stated, when it reached the Assembly floor, Assemblywoman Joan Lambert and Assemblyman John Carpenter raised concern about the standard; they felt it injured people with large estates who did not know of the hearing, and offered the amendment. Chairman Rawson commented that seems a valid concern. Ms. Buckley concurred, and stated she advised Ms. Lambert they heard no testimony about the affect of the bill on large property owners relative to additional expense, but when the amendment was proposed on the floor, it was approved, and is incorporated in the current version of the bill. Chairman Rawson asked Mr. Fontaine to restate his final recommendation. Mr. Fontaine reiterated it is to either change the bill back to its first amended form, or to allow them an opportunity to examine the fiscal impact of the bill in its current form. Chairman Rawson asked Mr. Fontaine why the committee should not allow them the opportunity to change their health standard. Mr. Fontaine replied, in effect, that is what it would do. It would require them to change their health standard, but the Health Division believes that change will have a fiscal impact on their operations. Senator Augustine asked Mr. Fontaine if this bill originated in his division. Mr. Fontaine answered in the negative. Ms. Buckley explained it came out of a recommendation on a study chaired by former Assemblyman Val Garner who advised her it was introduced because of the conflict between the statute and the regulations. Chairman Rawson closed the hearing on A.B. 367, and opened the hearing on A.B. 411. ASSEMBLY BILL 411: Establishes account to indemnify students enrolled in licensed private postsecondary educational institutions that discontinue service or violate certain laws. (BDR 34- 1621) Ms. Buckley told the committee this bill concerns the issue of private, for profit, vocational schools. She said several students in Las Vegas came to her for relief from student loans related to their attendance at the Southern Technical Institute. She stated the institute recruited students by standing outside welfare offices and advertising on television, and made false claims to entice students to train for jobs that were never available. She insisted a review of the Southern Technical Institute's curriculum proved it to be substandard. She told the committee her investigation taught her much about private, for profit, vocational schools. She said she sued the Department of Education in Washington, D.C., and took depositions of those who run the certification program for vocational schools. She stated the findings appalled her. She said the students who attend those schools assume, since the schools are certified for government loans, the government must have reviewed the schools, when in fact they do not. She said the government has only two employees to review over 4,000 applications from vocational schools throughout the country. She asserted the real tragedy is that students contract to pay between $4,000 and $10,000 for an education when they could achieve a superior education at a community college or university. She said her investigation revealed a bond was available from the state of Nevada in the amount of $5,000 per institution. She said when the allegations of fraud began to circulate, the kingdom of vocational schools began to collapse, and the schools began to close, including the school in Nevada. She said many of the students were in the middle of their education, yet there was only a $5,000 bond available for all of the students, which was not even enough to compensate one student for the cost of tuition. Ms. Buckley told the committee she introduced A.B. 411 which requires private, for profit, vocational schools to post a bond in an amount either $10,000 or half the amount of the tuition collected by the school. She stated she later learned: the cost of the bonds was prohibitive, and the Commission on Postsecondary Education introduced a bill requiring a tuition indemnification fund which would be financed by a $5 per student fee up to a maximum of $250,000. Ms. Buckley testified she also learned a similar bill passed during the last session and was vetoed by the governor because of a concern that the state would have to guarantee reimbursement if the fund was inadequate. She said that clause has now been taken out, and the Assembly incorporated that bill into her bill to cover the same intent. She added there are a few other changes regarding refund policies. She asked for favorable consideration of A.B. 411 from the committee. Senator Augustine asked Ms. Buckley where the bill states it applies only to private, for profit, vocational schools. Ms. Buckley deferred to David Perlman, Administrator, Commission on Postsecondary Education. Mr. Perlman told Senator Augustine NRS chapter 394 pertains only to private secondary and postsecondary schools and the section that this bill would be under pertains only to private postsecondary schools. Senator Augustine asked if this bill would include all private, postsecondary institutions as well as vocational schools. Mr. Perlman answered in the affirmative, and referred Senator Augustine to the definition of licensees under NRS chapter 394, and stated it would pertain to both degree granting and vocational. Senator Washington asked Mr. Perlman if vocational and other private institutions are required to obtain bonding upon opening. Mr. Perlman replied, if this bill passes and becomes effective in July, the Commission on Postsecondary Education expects to collect about $100,000 by the end of 1996, and therefore existing schools, licensed before July 1, 1995, would not be required to be bonded. He explained a new school would be required to obtain a bond and pay into the fund as long as the fund had not been capped, and thereafter would be required to maintain the bond for the initial licensure period which could be up to 30 months. Senator Washington asked Mr. Perlman if the money would be paid into the General Fund. Mr. Perlman answered in the negative, and explained it would go into a tuition recovery fund which, in the event of a precipitous closure, would be applied to payment of loans, etc. Ms. Buckley added, in order to open this type of school, an application must be filed with the Commission on Postsecondary Education. She said although a $5,000 bond is currently required, the purpose of creating a supplemental system is the $5,000 bond has been proven to be woefully inadequate in closings which have occurred. Senator Augustine asked Mr. Perlman if private secondary schools are required to post a bond. Mr. Perlman replied he is unfamiliar with that area of the law. Senator Augustine stated she does not believe they are because there is a separation and there is no public education money going into private education. She asked for clarification of the bond amount. Mr. Perlman replied schools will be required to collect a $5 fee and deposit it into the fund whenever the fund is below $250,000, and the fund is held until it is needed. He asserted the new schools licensed after July 1, 1995, will be required to post a $10,000 bond for the initial licensure period. Senator Augustine asked Mr. Perlman how many private, postsecondary schools are currently operating in Nevada. Mr. Perlman replied 110 which enroll approximately 15,000 new students annually. He testified the average cost of tuition is presently about $2,400. Senator Augustine asked Mr. Perlman if this bill applies to beauty and barber schools. She opined the bond requirement may be quite exorbitant for some schools. Ms. Buckley replied it includes hairdressing, dog grooming, psychiatric assistance, and broadcasting schools, etc. She emphasized the bond amount is not $250,000. She said the payment of the $5 fee to the fund will add up to an aggregate amount of $250,000, and as long as the fund is capped the schools are not required to contribute to it. Senator Neal asked Mr. Perlman how students will access the fund. He further asked if they will be required to retain an attorney, or if they can just file a complaint. Mr. Perlman replied the Commission on Postsecondary Education will probably attempt to place the students in another school, and, in the absence of that, will prorate the $5,000 as required by the bonding company. Senator Neal asked Mr. Perlman to define the period of time within which the school must put up the bond. Mr. Perlman said the current provision for bonding would remain effective until December 31, 1996. He said at that point there will be approximately $100,000 in the fund, and the existing schools can discontinue their bonds, but continue to pay the $5 fee per enrollment into the fund until the fund reaches a maximum of $250,000. Senator Washington asked Ms. Buckley if the student, or the school is required to pay the $5 fee. Ms. Buckley replied the school is required to pay it on behalf of the student. Senator Washington asked Ms. Buckley if the fee would be passed on to the student. Ms. Buckley responded that is a possibility. She opined the fee would be negligible in relation to the amount charged for tuition since it will provide insurance against bankruptcy on the part of the school. Mr. Perlman advised the committee the Commission on Postsecondary Education unanimously supports the bill. Ms. Buckley added, "As did the Assembly." Chairman Rawson closed the hearing on A.B. 411. BILL DRAFT REQUEST 57-1238: Makes various changes related to small group health insurance. SENATOR WASHINGTON MOVED FOR COMMITTEE INTRODUCTION OF BILL DRAFT REQUEST (BDR) 57-1238. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.) * * * * * BILL DRAFT REQUEST 34-1671: Require drug testing and background investigation of potential employees of school districts. SENATOR AUGUSTINE MOVED FOR COMMITTEE INTRODUCTION OF BDR 34-1671. SENATOR WASHINGTON SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.) * * * * * SENATE BILL 31: Authorizes formation and operation of charter schools in Nevada. (BDR 34-291) SENATOR AUGUSTINE MOVED TO AMEND AND RE-REFER SENATE BILL 31. SENATOR WASHINGTON SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.) There being no further business before the committee, Chairman Rawson adjourned the meeting at 1:25 p.m. RESPECTFULLY SUBMITTED: Linda Chapman, Committee Secretary APPROVED BY: Senator Raymond D. Rawson, Chairman DATE: Senate Committee on Human Resources and Facilities May 26, 1995 Page