MINUTES OF THE meeting

of the

ASSEMBLY Committee on Ways and Means

 

Seventy-Second Session

May 16, 2003

 

 

The Committee on Ways and Meanswas called to order at 7:51 a.m., on Friday, May 16, 2003.  Chairman Morse Arberry Jr. presided in Room 3137 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

COMMITTEE MEMBERS PRESENT:

 

Mr. Morse Arberry Jr., Chairman

Ms. Chris Giunchigliani, Vice Chairwoman

Mr. Walter Andonov

Mr. Bob Beers

Mrs. Vonne Chowning

Mrs. Dawn Gibbons

Mr. David Goldwater

Mr. Josh Griffin

Mr. Lynn Hettrick

Ms. Sheila Leslie

Mr. John Marvel

Ms. Kathy McClain

Mr. David Parks

Mr. Richard Perkins

 

STAFF MEMBERS PRESENT:

 

Mark Stevens, Assembly Fiscal Analyst

Julie Brand, Program Analyst

Susan Cherpeski, Committee Secretary

Lila Clark, Committee Secretary

 

 

Senate Bill 439:  Makes various changes concerning Public Employees’ Retirement System and Judicial Retirement System. (BDR 23-563)

 

George Pyne, Executive Officer, Public Employees’ Retirement System (PERS), presented S.B. 439 and read the following statement into the record:

 

Senate Bill 439 is the Retirement System’s technical, or “housekeeping,” proposed legislation.  This bill carries with it no fiscal note as the modifications proposed carry no additional cost.  They merely reflect language modifications or in some instances benefit restrictions.  I will address each proposed modification in the order they appear in the bill.

 

First, approximately 23 sections of the bill change the term “fireman” to “firefighter.”  This change was requested to make the Retirement Act gender neutral, as is the case with the use of the term “police officer.”

 

Section 3 of the bill deletes language relating to nonprofit corporations to which a public hospital has been conveyed or leased pursuant to Nevada Revised Statutes (NRS) 450.500 within the definition of the public employer found in NRS 286.070.  This language conflicts with the requirements of NRS 286.486 prohibiting dual coverage in the PERS and the Social Security System.  Employees of nonprofit corporations are required by federal law to participate in Social Security.

 

Moving to Section 6 of the bill, which is the next substantive change, the Retirement Board is requesting that, in keeping with the requirement of a four-year degree for the Executive Officer, Operations Officer, and Investment Officer, three additional executives: the Assistant Investment Officer, Manager of Information Systems, and the Administrative Analyst also must be graduates of a four-year college or university.  Each of the positions mentioned is unclassified and serves at the pleasure of the Executive Officer.  They play essential roles in the PERS’ administration and are likely to be considered for future service as the Executive Officer, Operations Officer, or Investment Officer.  Therefore, a four-year degree is critical for each of these positions from a succession planning perspective.  The current incumbents in these positions all hold such degrees.

 

Section 12, page 7, line 38 of the bill deletes language currently contained in the statute, which has no substantive meaning, i.e., “whose occupant is thereby.”

 

Turning to Section 20 found on page 16 of the bill, this language has to do with the exemptions to the PERS reemployment restrictions passed in the 2001 Legislative Session.  Beginning at line 11 and again at line 15, we are requesting the change to clearly state that the member must be fully eligible to retire as to age and service.  The language currently contained in this section, that the member receive “an unmodified benefit” is actually a term that has specific meaning within our statute—and it means that the member has not chosen an optional benefit form to protect a beneficiary.  It does not mean that a person is fully eligible to retire as to both age and service.  The proposed language change clears up this confusion.

 

Also contained in Section 20, page 17, line 3, is a proposed limitation to the exemption from our reemployment restrictions passed in Assembly Bill 555 of the 2001 Legislative Session.  If the Committee will recall, in the 2001 Legislative Session, the PERS requested passage of certain exemptions to the PERS reemployment restrictions to assist our employers with recruitment in positions that were deemed by the employers to be positions of critical labor shortage.

 

This exemption has been working well in that approximately 65 PERS retirees have returned to work in critical labor shortage positions, the lion’s share of which are in the school districts.  Speech pathologists, math teachers, psychologists, and several other types of positions have been filled using this able group of candidates.

 

The Retirement Board is seeking to add on more limitation to the determination process used by our employers when making determinations as to which positions will be certified as critical labor shortage positions.  We are seeking to limit the designation of a critical labor shortage to a two-year period after which the employer would have to re-designate the position as one of critical need if the employer determines again that the critical shortage exists. 

 

This recommended change is consistent with the rationale for providing an exemption in times of critical labor shortage.  Our retirees are filling positions in urgent need of occupancy but the duration of the critical need may be for a limited period of time.  Two years is a reasonable time frame for the employer to reexamine the positions and re-designate the position as meeting the critical labor shortage criteria if necessary.  This change is not anticipated to have any cost impact to the plan and would be incorporated into the actuary’s experience study scheduled for 2004.  The critical labor shortage exemption sunsets in 2005 unless the System’s actuary determines there is no cost associated with this legislation or the funding is recognized in the contribution rate.

 

Moving on, the next substantive request is on page 20, Section 27, beginning at line 43, and Sections 28, 29, 30, and 31.  Looking back again to the 2001 session, the PERS requested a benefit change in our survivor benefit program that was designed to provide unmarried members with a survivor benefit for an individual of their choice in the event of their death before retirement.  All members of the System, regardless of marital status, have been encouraged to make this designation.

 

Since inception of this new benefit, the System received several member and legislator inquiries to allow for more flexibility in the designation of a single survivor beneficiary.  The primary request is to allow for multiple named beneficiaries.  For example, an individual with three children might want to name all three as single survivor beneficiaries, as opposed to just one child.  The PERS’ benefits are annuities that, by definition, are paid based on the life expectancy of a member and/or an individual beneficiary.  Therefore, it becomes problematic to determine annuity amounts on what could be numerous beneficiary lives.

 

A simple approach to rectify this situation is to continue designation of a single individual upon whose expected life benefits would be paid as the single survivor beneficiary, and allow for multiple alternate payees who could receive certain predetermined percentages of the benefit as designated by the member.  The benefit would cease, as it does today, upon the death of the named single survivor beneficiary.  There would be no funding impact to the System, as the duration of the benefit would remain tied to the named single survivor beneficiary.

 

As an example, consider a single member with three children.  Under today’s law, he or she may be unsure as to which child to name as single survivor beneficiary because that person is not legally obligated to share any portion of the survivor benefit with the other siblings.  If this proposal becomes law, the member can further designate the portion of the benefit each alternate payee, the other children, is to receive.  In this case, the member might have the oldest child named as single survivor beneficiary and the other two children designated to receive one-third of each benefit.  This would guarantee an equal division of the benefit between the three children.  Again, there would be no funding impact to the System as the benefit is actuarially calculated based on the age and life expectancy of the one child named single survivor beneficiary.

 

Moving on, Section 33 of the bill deals with the newly created Judicial Retirement System.

 

When the Legislature passed the Judicial Retirement Act last session an important piece of that Act was left out that has to do with the setting of the contribution rate for that System.  Section 33 of the bill adds language virtually identical to language in the Retirement Act providing the rate setting mechanism, and that it be based upon the biennial actuarial valuation and rounded to the nearest one-quarter of 1 percent.  It also provides that the rate will not be adjusted if the existing rate is within one-half of 1 percent of the actuarially determined rate.

 

Section 36 of the bill contains language mirroring the two-year restriction on designations of critical labor shortage previously discussed.

 

Section 37 of the bill corrects an issue relating to service accumulation under the Judicial Retirement System (JRS).  Under the provisions of the new JRS, members may accrue up to a maximum of 75 percent of average compensation with 22 years of service.  This equates to a benefit multiplier, also known as a service time factor, of 3.4091 percent for each year of judicial service.

 

The JRS also allows current PERS’ judges to transfer to the JRS provided their prior PERS’ service remains credited at the lower PERS’ multipler of 2.5 percent or 2.67 percent for service after July 1, 2001.  Because of the lower PERS’ multiplier, a judge who transfers to the JRS from the PERS will not reach the 75 percent maximum benefit accrual prior to attaining 22 years of service.  As an example, a judge who transfers to the JRS with 21 years of PERS’ service would be limited to approximately 56 percent of his average compensation with 22 years of service versus 75 percent if all service were credited at 3.4091 percent under the JRS.

 

The System does not believe it was the intent of the Legislature to limit benefit accruals to less than 75 percent of average compensation.  Unfortunately, the actual reading of the statute limits benefit accruals to 22 years of service.  Therefore, the PERS is recommending language in the Judicial Retirement Act be modified to reflect a 75 percent service credit accrual maximum regardless of years of service.  This would enable a judge who transfers from the PERS’ fund, to work beyond 22 years and continue to add to his service credit accrual until attaining the 75 percent maximum.

 

Mr. Pyne indicated that he had concluded his prepared remarks and would be willing to answer any questions.

 

Chairman Arberry asked which section related to the JRS benefit accrual, and Mr. Pyne referred him to Section 37 on page 27, lines 33 and 34.

 

Mark Stevens, Assembly Fiscal Analyst, Fiscal Analysis Division, LCB, said there had been a question regarding a potential amendment to S.B. 439.  The language of the amendment was not yet finished, but Mr. Stevens reminded the Committee that there was a deadline and the bill had to be passed.  As soon as the amendment was ready, the Committee would revisit the bill and could then decide whether to amend and do pass S.B. 439.

 

Assemblyman Hettrick interjected that he had e-mailed the Legal Division regarding the amendment and had been informed that the amendment would be brought to the Committee as soon as the amendment was written.  He indicated that the bill had been referred to the Committee on Ways and Means because the amendment appeared to do more than was originally intended.  The intent of the amendment had been to allow some of the judges to choose to enter the JRS, which previously had not been permitted.

 

Mr. Stevens said he had not recognized some of the language included in the amendment and was not sure if that language was contained in the original legislation.  He indicated that he had spoken with Mr. Pyne and that issue had been resolved, but the Committee needed to read the amendment to ensure the language was consistent with the intent. 

 

Marty Bibb, Retired Public Employees of Nevada, spoke in favor of S.B. 439 and said the Retired Public Employees of Nevada had supported the provision in 2001 that permitted a member to designate a survivor beneficiary in advance of that person’s retirement in order to obtain the benefit.  He opined that the expansion of that single survivor benefit to account for more than one payee made sense, and he supported that provision. 

 

Chairman Arberry asked if there were any further questions or comments, there being none, he closed the hearing on S.B. 439.

 

Mr. Stevens reminded the Committee that May 16 was the deadline for non-exempt bills to be moved so the Committee would be voting on several bills as well as reviewing a closing report.

 

Senate Bill 72:  Authorizes State Forester Firewarden of Division of Forestry of State Department of Conservation and Natural Resources to determine amount of wages paid to certain offenders in conservation camps. (BDR 16-1005)

 

Ms. Giunchigliani said she had originally had some concern regarding the funding of S.B. 72, but she had discovered that monies from the Fire Suppression Fund would be used to pay those wages and then would be reimbursed by the federal government.  She stated that she no longer had any objections to the bill. 

 

ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO DO PASS S.B. 72.

 

ASSEMBLYMAN HETTRICK SECONDED THE MOTION.

 

MOTION CARRIED. (Mr. Goldwater was not present for the vote.)

 

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Senate Bill 276:  Makes various changes to provisions relating to California-Nevada Super Speed Ground Transportation Commission. (BDR 58-820)

 

Mr. Stevens commented that there had been questions regarding page 1 of the bill, which had indicated that the Commission would be designated as an agency of the state for purposes of carrying out the provisions of the bill.

 

Mr. Hettrick acknowledged that there had been concerns about making the Commission a state agency, but he pointed out that the Commission would not be able to obtain federal funding without being designated as a state agency.  He stated that the designation would not obligate the Legislature to provide funding.

 

Chairman Arberry asked if designating the Commission as an agency would mean it would be included as a line item in The Executive Budget.  Mr. Stevens said he did not think that would be necessary, but if it were included in the Governor’s budget, it would probably be treated like the Colorado River Commission, which was a quasi-state agency.  He reiterated that he did not think it would be included in The Executive Budget.

 

ASSEMBLYMAN MARVEL MOVED TO DO PASS S.B. 276.

 

ASSEMBLYWOMAN CHOWNING SECONDED THE MOTION.

 

MOTION CARRIED.  (Mr. Goldwater was not present for the vote.)

 

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Senate Bill 401:  Revises provisions concerning disposition of money received from concessions on property within state park or property controlled or administered by Division of State Parks of State Department of Conservation and Natural Resources. (BDR 35-1262)

 

Mr. Stevens explained that the bill involved “cleanup” language as a result of findings by the legislative auditor, and the legislative auditor had recommended the statutory change in the bill.

 

ASSEMBLYMAN MARVEL MOVED TO DO PASS S.B. 401.

 

ASSEMBLYMAN HETTRICK SECONDED THE MOTION.

 

MOTION CARRIED.  (Mr. Goldwater was not present for the vote.)

 

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Assembly Bill 537 (1st Reprint):  Revises provisions regarding state personnel. (BDR 23-1155)

 

Mr. Stevens indicated that representatives from the Department of Personnel were present to answer any questions.  He explained that there were four items in the fiscal note that had been listed as costs: additional holiday pay for approximately $460,000 per year, additional catastrophic leave for approximately $392,000 per year, arbitration for approximately $15,000 per year, and increased salaries for Department of Corrections’ maintenance employees for approximately $386,000 per year. 

 

In response to Chairman Arberry’s question regarding the status of the bill, Mr. Stevens said the bill was exempt and therefore not subject to the current deadline.  Mr. Stevens said there had been questions about the different areas of the bill that had a fiscal impact, and he indicated that he had previously provided the Committee with a packet of information that explained the fiscal impact as well as correspondence received from the Department of Personnel.

 

Assembly Bill 29 (1st Reprint):  Makes various changes concerning administrative assessments and forfeiture of bail. (BDR 14-130)

 

Mr. Stevens indicated that the Committee had discussed A.B. 29 several times.  He explained that A.B. 29 involved a $15 increase in the administrative assessment, of which $5 would fund specialty courts, and the remaining $10 would be split with 51 percent going to the courts and 49 percent to the Executive Branch.  In addition, the court had submitted various amendments involving bail forfeitures, and within those amendments was a request to change language in the bill and allocate 90 percent of the administrative assessments received to the Victims of Crime Fund and 10 percent to specialty courts, rather than the 50 percent split currently in the bill. 

 

Mrs. Chowning requested clarification of the 10 percent the specialty courts would receive.  She said that the courts had indicated that the increased assessment would generate approximately $5 million over the biennium, and she questioned how the 10 percent would affect the total amount received for specialty courts.  Mr. Stevens explained that the $5 million was based on the $5 assessment and the 10 percent only applied to bail forfeitures so that would be revenue in addition to the $5 million.  Mrs. Chowning asked how much the 10 percent in bail forfeitures would generate.

 

Ron Titus, Court Administrator and Director of the Administrative Office of the Courts, responded to Mrs. Chowning’s question and said the bail forfeitures generated approximately $1 million, and the specialty courts would receive approximately $100,000. 

 

Mrs. Chowning said that would mean the specialty courts would receive approximately $5.2 million over the biennium.  She noted that during discussions regarding specialty court funding in the Joint Subcommittee on General Government the Subcommittee had made the decision to eliminate $1.3 million in the General Fund that had been allocated in the Governor’s budget.  A.B. 29 had seemed to be a fairly stable funding source so the request for General Fund monies had been denied.  Mrs. Chowning said she had asked the courts to detail the needs of the specialty courts, and the courts had indicated a need of approximately $1.8 million beyond the $5 million that would be generated from the increased assessments in A.B. 29.

 

Mrs. Chowning said she had received a report (Exhibit C) from the courts that had indicated the need was between $2.4 million and $2.9 million, and she opined that it was difficult to determine the need as it was a “moving target.” 

 

Mrs. Chowning continued and stated that the amendment to A.B. 29 would provide an additional $200,000 over the biennium, and the Subcommittee had agreed to provide six-month start-up costs in the amount of approximately $500,000.  Mrs. Chowning emphasized that she supported the specialty courts as she believed that it lowered Department of Corrections’ costs by keeping offenders out of prisons, but the main issue was how to fund the shortfall.  Mrs. Chowning said that Mr. Stevens had indicated that every $1 increase in assessment fees would generate approximately $0.5 million, and she suggested that the Committee raise the assessment in A.B. 29 an additional $3 in order to fund the shortfall. 

 

Ms. Giunchigliani noted that a $3 increase would help the specialty courts initially but was not needed beyond the biennium.  She commented that the increase should be carried through the biennium, and then the assessment would return to the $15 agreed upon in A.B. 29.  Mrs. Chowning agreed that a sunset date for the increase would be a good solution. 

 

Assemblyman Griffin requested clarification of the increase, and Mrs. Chowning said the $3 would be in addition to the $5 in A.B. 29.

 

Assemblywoman Leslie disclosed that she worked for specialty courts and said she would be abstaining from voting on the bill.  She commented that the municipal and justice court judges, after much negotiation, had agreed to the current version of A.B. 29 and any substantive amendments would be unacceptable.  Ms. Leslie pointed out that the Senate had not closed the budget account yet, and she was under the impression that the Senate would be including the $1.3 million in the Governor’s budget.  If that were the case, Ms. Leslie suggested that the increase in assessment fees be left as they were in A.B. 29 and the Assembly could choose to agree with the Senate’s budget closing in order to sufficiently fund the specialty courts. 

 

ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS A.B. 29 AS AMENDED WITH TECHNICAL AMENDMENTS AND WITHOUT AN ADDITIONAL $3 INCREASE.

 

ASSEMBLYMAN MARVEL SECONDED THE MOTION.

 

MOTION CARRIED WITH MS. LESLIE ABSTAINING. (Mr. Goldwater was not present for the vote.)

 

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Senate Bill 439:  Makes various changes concerning Public Employees’ Retirement System and Judicial Retirement System. (BDR 23-563)

 

Mr. Hettrick indicated that the Committee had received the amendment to S.B. 439 (Exhibit D) and explained that the amendment language was on page 2.  He said the amendment would affect approximately 12 judges currently in the PERS and would give those judges the opportunity to opt into the JRS. 

 

ASSEMBLYMAN MARVEL MOVED TO AMEND AND DO PASS S.B. 439.

 

ASSEMBLYMAN HETTRICK SECONDED THE MOTION.

 

Mrs. Gibbons questioned the difference between the Judicial Retirement System (JRS) and the Public Employees’ Retirement System (PERS).  In response, Mr. Pyne supplied a brief history of the JRS.  He explained that prior to 2001, approximately half of the district court judges and the Supreme Court justices were in the PERS and were in a Judicial Retirement System, which was not a funded system, it was a “pay as you go” retirement system.  In 2001, the Legislature created a new trust fund, which was the current Judicial Retirement System (JRS).  When the JRS had been created, the judges had been given the opportunity to opt into the JRS; however, the way the law had been worded had prevented 13 judges from making that choice, and that would be remedied by the amendment. 

 

In response to Mrs. Gibbons’ question regarding the difference in benefits, Mr. Pyne explained the difference was the accrual rate—the PERS accrual rate was 2.5 percent or 2.67 percent after July 2001, and the JRS accrual rate was 3.4091 percent.  Mrs. Gibbons asked if that meant the JRS cost the state more money, and Mr. Pyne said that the JRS was funded through a separate funding mechanism, but there was a higher normal cost for the JRS than the PERS.  The percentage of payroll cost to the state in the JRS was approximately 25.6 percent of payroll and approximately 18.75 percent in the PERS.  Mrs. Gibbons asked what the Supreme Court justices’ salary was, taking into account benefits, and Mr. Pyne indicated that he did not have that information. 

 

Mr. Hettrick further clarified the situation that had prompted the amendment and said that prior to 2001, there was no pension fund for judges, and the benefits were paid from the General Fund.  The establishment of the JRS, which was an accrual plan, allowed the money to be placed in a bank and earn interest.  The judges themselves were still receiving the same rate of benefit that they had been under the “pay as you go” plan.  Mr. Hettrick emphasized that S.B. 439 and the amendment merely allowed the 13 judges mentioned earlier to opt into the JRS.  He indicated that there had been an actuarial study that showed the state would accrue approximately $200 million over 40 years with the JRS.  He emphasized that benefits were not being increased and it would not cost the state any additional money. 

 

Mrs. Gibbons repeated her question regarding the Supreme Court justices’ salaries, and Chairman Arberry said there was no one present to answer her question, but the Committee would address that issue at a later time.  Chairman Arberry called for a vote.

 

MOTION CARRIED. (Mr. Goldwater was not present for the vote.)

 

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Assemblywoman Chowning, Chairwoman of the Joint Subcommittee on General Government, read the following closing report:

 

THE JOINT SUBCOMMITTEE ON GENERAL GOVERNMENT DEVELOPED RECOMMENDATIONS FOR THE FOLLOWING BUDGETS OF THE DEPARTMENT OF ADMINISTRATION:  BUDGET AND PLANNING, INFORMATION TECHNOLOGY PROJECTS, INSURANCE AND LOSS PREVENTION, MOTOR POOL, MOTOR POOL VEHICLE PURCHASE, MAIL SERVICES, ADMINISTRATIVE SERVICES, HEARINGS DIVISION, VICTIMS OF CRIME, TECHNOLOGY IMPROVEMENT PLAN, AND THE DEPARTMENT OF PERSONNEL.  

 

WHILE MOST OF THE ACCOUNTS OF THE DEPARTMENT OF ADMINISTRATION ARE FUNDED THROUGH FEES OR ASSESSMENTS, THE SUBCOMMITTEE’S RECOMMENDATIONS RESULTED IN GENERAL FUND SAVINGS OF $628,134 IN FY 2004 AND $147,704 IN FY 2005.

 

BUDGET AND PLANNING DIVISION (101-1340)

THE SUBCOMMITTEE CONCURS WITH THE GOVERNOR’S RECOMMENDATION TO FUND $125,000 IN FY 2004 FOR AN EXTERNAL CONTRACTOR EVALUATION OF CURRENT INFORMATION TECHNOLOGY SERVICES THROUGHOUT THE EXECUTIVE BRANCH.  

 

ADDITIONALLY, THE SUBCOMMITTEE CONCURS WITH THE GOVERNOR’S RECOMMENDATION TO FUND A $225,000 ENHANCEMENT IN FY 2004 FOR THE NEVADA EXECUTIVE BUDGET SYSTEM (NEBS) WITH A CONDITION THAT THE CHANGES TO THE NEBS SYSTEM NOT RESULT IN THE NEED FOR THE LEGISLATURE’S BASN SYSTEM TO BE CHANGED, AS THE TWO SYSTEMS WILL REMAIN COMPATIBLE.  IN ADDITION, THE SUBCOMMITTEE RECOMMENDED THE LEGISLATIVE COUNSEL BUREAU STAFF ATTEND WEEKLY PROJECT STATUS MEETINGS.  THIS FUNDING WILL ADD FUNDING SOURCE MAPS, INTERNAL SERVICE FUND RATE STRUCTURES, AND PROVIDE MORE FLEXIBLE REPORTING.

 

THE SUBCOMMITTEE ALSO CONCURS WITH THE GOVERNOR’S RECOMMENDATION TO TRANSFER THE ONGOING SYSTEM OPERATION AND MAINTENANCE COSTS OF THE INTEGRATED FINANCIAL SYSTEM ALLOCATED TO THE BUDGET AND PLANNING DIVISION IN THE AMOUNT OF $95,346 IN FY 2004 AND $95,894 IN FY 2005.

 

INFORMATION TECHNOLOGY PROJECTS (101-1325)

THE SUBCOMMITTEE RECOMMENDS FUNDING THE IMPLEMENTATION OF A NEW CLIENT INFORMATION AND BILLING SYSTEM FOR THE MENTAL HEALTH DEVELOPMENTAL SERVICES DIVISION IN THE AMOUNT OF $1.8 MILLION IN FY 2004 AND $708,000 IN FY 2005.  FUNDING AS RECOMMENDED WILL ENABLE THE MENTAL HEALTH DEVELOPMENTAL SERVICES DIVISION TO TRANSITION FROM THE AIMS SYSTEM TO AN AVATAR SYSTEM.  ADDITIONALLY, THE SUBCOMMITTEE RECOMMENDED A LETTER OF INTENT DIRECTING THE DIVISION TO PROVIDE QUARTERLY REPORTS, INCLUDING PROJECT COST INFORMATION, TO THE INTERIM FINANCE COMMITTEE.

 

THE SUBCOMMITTEE ALSO RECOMMENDS FUNDING THE REPLACEMENT OF THE AIMS BILLING AND DATA COLLECTION SYSTEM FOR SOUTHERN NEVADA CHILD AND ADOLESCENT SERVICES WITH THE AVATAR SYSTEM FOR $817,649 OVER THE BIENNIUM ADJUSTED FOR TECHNICAL CORRECTIONS, AND THE REPLACEMENT OF THE SYNERGISTIC OFFICE SOLUTIONS BILLING SYSTEM FOR NORTHERN NEVADA CHILD AND ADOLESCENT SERVICES WITH THE AVATAR SYSTEM FOR $747,828 OVER THE BIENNIUM, ALSO ADJUSTED FOR TECHNICAL CORRECTIONS.

 

THE SUBCOMMITTEE REDUCED THE GOVERNOR’S RECOMMENDATION TO FUND AN INTEGRATED LICENSING SYSTEM FOR THE REAL ESTATE DIVISION TO $500,000 OVER THE BIENNIUM, RECOMMENDED THE ADDITION OF A TECHNICAL STAFF POSITION ALLOCATED TO THE BUSINESS AND INDUSTRY ADMINISTRATIVE BUDGET, AND RECOMMENDED THE DIVISION REPORT TO THE INTERIM FINANCE COMMITTEE IN SEPTEMBER 2003 WITH AN IMPLEMENTATION PLAN FOR THE SYSTEM.

 

THE SUBCOMMITTEE CONCURRED WITH THE GOVERNOR’S RECOMMENDATION TO FUND $6.8 MILLION FROM THE STATE HIGHWAY FUND OVER THE BIENNIUM FOR THE COMPLETION OF THE STATE MICROWAVE SYSTEM UPGRADE.

 

INSURANCE AND LOSS PREVENTION (715-1352) 

THE SUBCOMMITTEE CONCURRED WITH THE GOVERNOR’S RECOMMENDATION TO INCREASE RATES OVER THE BIENNIUM FOR BOTH THE WORKERS’ COMPENSATION INSURANCE PREMIUM AND PROPERTY AND CONTENTS INSURANCE PREMIUM. HOWEVER, THE SUBCOMMITTEE ALSO RECOMMENDS THE DEPARTMENT CONDUCT A THOROUGH EVALUATION OF THE RATE MODELS FOR FUTURE BIENNIA. 

 

PRINTING OFFICE (741-1330)

THE SUBCOMMITTEE CONCURS WITH THE GOVERNOR’S RECOMMENDATION FOR FUNDING THE PRINTING OFFICE, HOWEVER RECOMMENDS A LEGISLATIVE LETTER OF INTENT FOR THE DEPARTMENT TO REPORT QUARTERLY TO THE INTERIM FINANCE COMMITTEE ON THE STATUS OF ITS OPERATIONS REGARDING THE GENERAL FUND REPAYMENT, MARKETING EFFORTS, INVENTORY AND RATES.

 

MOTOR POOL (711-1354)

THE SUBCOMMITTEE RECOMMENDS FUNDING THE MOTOR POOL WITH INCREASED RATES NECESSARY TO FUND CURRENT OPERATIONS AND RELOCATION COSTS ASSOCIATED WITH THE LAS VEGAS MOTOR POOL FACILITY. THE SUBCOMMITTEE REDUCED THE GOVERNOR’S RECOMMENDATION TO AMEND THE CURRENT LEASE RATE FOR THE LAS VEGAS FACILITY FROM $10,000 PER MONTH TO $8,167 PER MONTH WITH A LEGISLATIVE LETTER OF INTENT TO REPORT TO THE INTERIM FINANCE COMMITTEE THE STATUS OF AN INTENDED RELOCATION IN LAS VEGAS AS WELL AS AN UPDATED COST BENEFIT ANALYSIS ASSOCIATED WITH PRIVATIZATION. 

 

THE SUBCOMMITTEE CONCURS WITH THE GOVERNOR’S RECOMMENDATION TO TRANSFER DEPRECIATION EXPENSE TO THE MOTOR POOL VEHICLE PURCHASE BUDGET ASSOCIATED WITH THE ADDITION OF 104 REPLACEMENT VEHICLES AND 23 ADDITIONAL VEHICLES.  THE SUBCOMMITTEE APPROVED REDUCTIONS TO THIS EXPENSE CONTINGENT UPON APPROVAL OF FUNDING IN RELATED BUDGET ACCOUNTS.

 

MAIL SERVICES (713-1346)

THE SUBCOMMITTEE CONCURRED WITH THE GOVERNOR’S RECOMMENDATION FOR FUNDING THE MAIL SERVICES DIVISION INCLUDING THE GOVERNOR’S RECOMMENDATION FOR A TECHNICAL ADJUSTMENT OF $151,500 PER YEAR IN THE TREASURER’S BUDGET FOR POSTAGE CHARGED ON THE MAILING OF VENDOR CHECKS FORMERLY CAPTURED WITHIN MAIL SERVICES’ OVERHEAD RATE.  IT SHOULD BE NOTED THAT THE TECHNICAL ADJUSTMENT OF $151,500 PER YEAR REFLECTED AS EXPENSE IN THE TREASURER’S BUDGET WAS APPROVED AS RECOMMENDED BY THE SENATE FINANCE COMMITTEE, HOWEVER, THE ASSEMBLY COMMITTEE ON WAYS AND MEANS RETAINED THE $151,500 WITHIN THE MAIL SERVICES OVERHEAD RATE.

 

HEARINGS DIVISION (101-1015)

THE SUBCOMMITTEE RECOMMENDS THE APPROVAL FOR THE DIVISION TO RELOCATE THE LAS VEGAS OFFICE EFFECTIVE SEPTEMBER 2003 FROM STATE OWNED PROPERTY TO NON-STATE OWNED PROPERTY.  ADDITIONALLY, THE SUBCOMMITTEE REDUCED THE FUNDING FOR EQUIPMENT REPAIR DUE TO DUPLICATE FUNDING IN THE DIVISION’S BASE BUDGET.

 

VICTIMS OF CRIME (287-4895)

THE SUBCOMMITTEE RECOMMENDS THE APPROVAL TO INCREASE FEDERAL FUNDING FOR THIS PROGRAM IN THE AMOUNT OF $908,000 PER YEAR AS PER RECENT NOTIFICATION OF AN INCREASE IN THE CURRENT GRANT AWARD.  ADDITIONALLY, THE SUBCOMMITTEE RECOMMENDS INCREASING COURT ASSESSMENT REVENUE IN THE AMOUNT OF $12,000 IN FY 2004 AND $13,000 IN FY 2005 CONTINGENT UPON PASSAGE OF A.B. 29.

 

THE SUBCOMMITTEE ALSO RECOMMENDS FUNDING THE RELOCATION OF THE VICTIMS OF CRIME OFFICE IN LAS VEGAS IN CONJUNCTION WITH THE APPROVED RELOCATION OF THE HEARINGS DIVISION.

 

TECHNOLOGY IMPROVEMENT PLAN (101-1320)

THE SUBCOMMITTEE CONCURS WITH THE GOVERNOR’S RECOMMENDATION TO FUND THE ONGOING SUPPORT OF THE INTEGRATED FINANCIAL SYSTEM.  TOTAL GENERAL FUND SUPPORT RECOMMENDED AND ADJUSTED FOR TECHNICAL CORRECTIONS, IS $943,514 IN FY 2004 AND $907,516 IN FY 2005.

 

DEPARTMENT OF PERSONNEL (717-1363)

THE SUBCOMMITTEE CONCURS WITH THE GOVERNOR’S RECOMMENDATION TO INCREASE THE PAYROLL AND PERSONNEL ASSESSMENT RATES FOR THE 2003-05 BIENNIUM. 

 

THE SUBCOMMITTEE CONCURS WITH THE GOVERNOR’S RECOMMENDATION TO FUND THE ESTABLISHMENT OF A DISCRIMINATION/HARASSMENT UNIT INCLUDING THE ADDITION OF ONE NEW PERSONNEL ANALYST III POSITION AND THE RECLASSIFICATION OF AN EXISTING COMPUTER SYSTEMS TECH III TO A PERSONNEL ANALYST III.  ADDITIONALLY, THE SUBCOMMITTEE CONCURRED WITH THE GOVERNOR’S RECOMMENDATION TO INCREASE THE CURRENT EQUAL EMPLOYMENT OPPORTUNITY OFFICER FROM A PART-TIME POSITION TO A FULL‑TIME POSITION TO SUPPORT ADDITIONAL SEXUAL HARASSMENT TRAINING CLASSES IN RURAL AREAS.

 

THE SUBCOMMITTEE REDUCED FUNDING BY 50 PERCENT EACH YEAR OF THE BIENNIUM FOR THE ESTABLISHMENT OF A CERTIFIED PUBLIC MANAGER PROGRAM.  THE SUBCOMMITTEE RECOMMENDS THE DEPARTMENT REPORT TO THE INTERIM FINANCE COMMITTEE IN DECEMBER 2003, JUNE 2004, AND SEPTEMBER 2004, ON THE RESULTS OF THIS TRAINING PROGRAM AS IMPLEMENTED.

 

THE SUBCOMMITTEE ALSO ELIMINATED THE FUNDING FOR AN OUTSIDE CONSULTANT TO PROVIDE CONSULTING SERVICES IN RELATION TO WORKFORCE PLANNING IN THE AMOUNT OF $100,000 OVER THE BIENNIUM, AND RECOMMENDED THE DEPARTMENT IMPLEMENT SIMILAR EFFORTS WITH EXISTING STAFF.

 

THE SUBCOMMITTEE ALSO CONCURRED WITH THE GOVERNOR’S RECOMMENDATION TO FUND THE TRANSFER OF ONE PROGRAM OFFICER I POSITION FROM THE DEPARTMENT OF INFORMATION TECHNOLOGY TO PERFORM HELP DESK RESPONSIBILITIES FOR THE PERSONNEL/PAYROLL SYSTEM.  ADDITIONALLY, THE SUBCOMMITTEE CONCURRED WITH THE GOVERNOR’S RECOMMENDATION TO FUND ONGOING SUPPORT COSTS OF THE PERSONNEL / PAYROLL SYSTEM IN THE AMOUNT OF $532,675 IN FY 2004 AND $541,032 IN FY 2005.

 

OTHER DEPARTMENT OF ADMINISTRATION BUDGET ACCOUNTS

THE SUBCOMMITTEE ALSO REVIEWED THE BUDGETS FOR THE DIVISION OF INTERNAL AUDITS, PURCHASING, ADMINISTRATIVE SERVICES, MOTOR POOL VEHICLE PURCHASE, AND STATE UNEMPLOYMENT COMPENSATION.  THE SUBCOMMITTEE RECOMMENDS THAT THESE ACCOUNTS BE CLOSED WITH MINOR TECHNICAL ADJUSTMENTS.

 

Mrs. Chowning thanked the staff and the Subcommittee members for their hard work.

 

ASSEMBLYWOMAN McCLAIN MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY THE SUBCOMMITTEE.

 

ASSEMBLYMAN GRIFFIN SECONDED THE MOTION.

 

MOTION CARRIED.  (Mr. Andonov, Mrs. Gibbons, and Mr. Perkins were not present for the vote.)

 

BUDGET CLOSED.

 

********

 

Senate Bill 439:  Makes various changes concerning Public Employees’ Retirement System and Judicial Retirement System. (BDR 23-563)

 

Chairman Arberry indicated that S.B. 439 needed to be reopened as there had been a technical oversight.

 

ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO RECONSIDER S.B. 439.

 

ASSEMBLYMAN HETTRICK SECONDED THE MOTION.

 

MOTION CARRIED. (Mr. Andonov, Mrs. Gibbons, and Mr. Perkins were not present for the vote.)

 

********

 

Chairman Arberry and Mr. Parks disclosed that they received payment from the Public Employees’ Retirement System, and Ms. Giunchigliani, Ms. Leslie, Ms. McClain, Mr. Beers, and Speaker Perkins disclosed that they, or their spouses, were members of the PERS.  They indicated they would be voting on the bill as they would not be affected any differently than any other participant in the program.   

 

ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS S.B. 439.

 

ASSEMBLYMAN MARVEL SECONDED THE MOTION.

 

MOTION CARRIED. (Mr. Andonov, Mrs. Chowning, Mrs. Gibbons, and Mr. Perkins were not present for the vote.)

 

********

 

Assembly Bill 490 (1st Reprint):  Revises provisions governing mortgage brokers and mortgage agents. (BDR 54-998)

 

Assemblyman Goldwater explained that A.B. 490, which had previously been discussed, would create a mortgage commission for the purpose of licensing mortgage agents.  He said it had been difficult to devise a budget because the information received from the Division of Financial Institutions was inconsistent.  The fiscal note claimed two Deputy Attorney Generals would be needed, although Mr. Goldwater said he felt that was excessive.  The revenue portion of the fiscal note claimed there were approximately 4,500 new agents being licensed per year; however, additional research showed that number to be closer to 1,900.  Mr. Goldwater indicated there was an issue of new licensees versus renewals because the fees went into different accounts: the investigatory account or the ongoing account.  The Division had indicated that 20 percent of licensing transactions were renewals; further research had shown that number was approximately 50 percent. 

 

Mr. Goldwater suggested that the Committee pass the bill and include certain limits dictating that either the commissioner or the director, depending on whether a commission or an agency was formed, set a fee limit and return to the Interim Finance Committee with the suggested budget.  At that point, a determination could be made, based on the budget, in which account renewal fees should be placed.

 

Mr. Stevens further clarified and said that he had spoken with the agency and the agency had indicated that the expectation was that there would be 4,500 new agents by the end of the year.  There were some issues relating to the fees for initial application and renewal.  The current language of the bill directed that the initial application fees be deposited directly in the investigative fund.  As far as renewal fees, the Division had indicated that the percentage of renewals was approximately 20 percent, and the revenue from those renewal fees was to be deposited in the General Fund. 

 

Mr. Stevens pointed out that there was no General Fund appropriation to finance the additional expenses that the agency would incur as a result of A.B. 490.  He said that if there was enough revenue to finance a reasonable amount of expenses for the administrative costs of the program, which would not be put into effect until July 1, 2004, the Division could return to the Interim Finance Committee with a work program that would implement the revenue authority and expenditures that were needed to implement the commission.  That commission would be within the Division of Financial Institutions, but would have regulatory authority over mortgage brokers and agents.

 

Mr. Stevens added that the bill and the amendments would require further work with the agency to determine a revenue source, and the Committee would need to decide whether or not to pursue that course of action. 

 

Chairman Arberry questioned a proposed amendment that would equalize fees.  Mr. Goldwater explained that companies which were exempt from regulation paid lower fees, but there was an amendment regarding net branches that would cause some exempt companies to pay the fees.  Mr. Goldwater said he would prefer to continue working on the bill and its amendments before taking action.

 

Mr. Stevens informed the Committee that there would be a meeting to discuss differences in budget closings between the Assembly Committee on Ways and Means and the Senate Committee on Finance, and he provided the following overview of those differences: 

 

• Washington Office: the Assembly eliminated funding for the office while the Senate closed the budget as recommended by the Governor.
• Office of Consumer Health: the Assembly retained the General Fund repayment amount recommended by the Governor, which would reduce the payback period from 10 to 6 years.  The Assembly also did not approve E-600, which would have eliminated one of the ombudsman positions.  The Senate paid the General Fund loan in full and eliminated the ombudsman position. 
• Lieutenant Governor:  The Senate approved only minor changes from the Governor’s recommendation; the Assembly did not approve E-500, which would have increased funding for travel.  The Assembly’s decision would still provide an increase for in-state travel, and out-of-state travel would be funded at the same level as had been budgeted in the current fiscal year, which was approximately $3,000 less than had been budgeted in FY2002.
• Controller’s Office:  The Assembly did not approve E-275, which would have made two positions permanent that were currently funded with a one-shot appropriation.  Those two positions were related to the Integrated Financial System (IFS).  One was an accountant who would test for changes to the system as well as add functionality to the system, and the other was a management analyst who would become a full-time trainer for the IFS.  The Senate approved E-275.
• State Treasurer’s Office:  The Assembly did not approve mail costs at $151,500 in each year.  The recommendation had been to keep that expense as an overhead charge within the mailroom budget. 
• Prepaid Tuition Account:  The Assembly did not approve $205,000 per year in funding for marketing and advertising and redirected that funding to the program’s unfunded liability. 
• Millennium Scholarship:  The 2 percent administrative limit in the budget had been exceeded so staff had asked the Treasurer to submit reductions to expenses if the administrative cap was not adjusted in some fashion.  The Assembly had approved the reductions outlined by the Treasurer, while the Senate approved the Governor’s recommendation with small adjustments for technology equipment pricing. 
• College Savings Trust:  The Assembly had eliminated $165,000 per year for marketing and advertising and had redirected that amount to the Prepaid Tuition Program’s unfunded liability. 
• Judicial Selection:  The Assembly had reduced funding in the base budget by $1,722.  That amount had been appropriated in FY2002 for a judicial selection workshop; however, that money had been spent in other areas.  The agency had then requested funding for the other areas as well as for the workshop, and the Assembly had made corrections so the funds would not be “doubled up.” 
• University of Nevada – Reno:  The Assembly eliminated funding to finance operation and maintenance costs at the Fire Academy in Carlin.
• Nevada Arts Council:  The Assembly had approved $250,000 in room tax funds for planning and design of a performing arts center in Las Vegas. 
• Merit Award Board:  The Assembly, upon noting that no funds had been expended in FY2002, eliminated funding for the Board, which was $5,000 per year.
• Predatory Animal and Rodent Control:  The Assembly eliminated E-500, which provided for a salary increase for a federal employee of the program; the Senate did not concur. 

 

Mrs. Chowning interjected that it was a cost-of-living increase rather than a salary increase, and Mr. Stevens agreed.  Mr. Stevens continued his presentation:

 

• National Association of Insurance Commissioners:  The Assembly approved the budget as recommended by the Governor, while the Senate extracted an increase in the budget based on A.B. 453, which increased a fee.  A.B. 453 passed the Senate Committee on Commerce on May 13, 2003, and it would seem that the Governor’s recommendation would be appropriate. 
• Commission on Tourism:  The Assembly approved $250,000 to assist in the planning and design of a performing arts facility in Las Vegas, which the Senate had not approved.  The Senate utilized $206,425 to offset General Fund dollars with additional room tax funds. 
• Vital Statistics:  The Assembly approved staff and operating costs related to medical errors pursuant to A.B. 1 of the 17^th Special Session; the Senate closed the budget as recommended by the Governor.
• Health Aid to Counties:  The Senate had included $100 in each year of the biennium in order to provide access to the Interim Finance Committee’s contingency fund.
• Prison Budget Accounts:  The Senate and Assembly did not agree on the issue of food inflation costs.
• State Parks:  The Senate had used $206,425 in the second year of the biennium in room tax funds to offset General Fund and the Assembly had not taken that action.
• Department of Wildlife:  The Governor had recommended $200,000 in each year of the biennium in General Fund dollars to replace room tax funds that were provided in the current biennium.  The Senate extracted that $200,000 and did not approve it, while the Assembly did approve it.
• Veterans Home Account:  The Senate closed the account as recommended by the Governor, while the Assembly had removed approximately $97,000 in license plate charge revenues related to A.B. 192.  A.B. 192 had been signed by the Governor and provided that license plate revenues must be used for a program related to a veterans’ home—to solicit other sources of money to fund the veterans’ home, or to inform the public about issues concerning the establishment and uses of the veterans’ home.  It would seem that as the bill had passed, it would be appropriate to eliminate that license fee revenue, which the Assembly had done, but the Senate had not. 

 

Mr. Stevens indicated there were additional areas of conflict including the Distributive School Account (DSA), and he outlined the following differences:

 

• Full-day kindergarten:  The Senate eliminated full-day kindergarten from the budget, while the Assembly eliminated the Governor’s proposal but added $2.8 million the first year and $3.2 million the second year for a full-day kindergarten pilot program. 
• Class-size reduction:  The Senate reduced funding recommended by the Governor by $22 million the first year and $24 million the second year to implement mandatory pupil teacher ratios at 22 to 1 in grades K-5 with flexibility for grade 6.  The Assembly followed the Governor’s recommendation but instituted class-size reduction in kindergarten at a 16 to 1 ratio. 
• Stipend programs:  The Assembly eliminated the three different stipend programs: the high-impact, at-risk, and signing bonus programs.  The funding was then utilized to expand the purchase of retirement credits for teachers in at-risk schools as well as schools designated as in need of improvement.  The Assembly had provided $9 million each year for negotiation and implementation of skill-based pay, and another $15 million over the biennium was applied toward increasing beginning teachers’ salaries to $30,000. 
• Textbooks, instructional supplies, and software funding:  The Assembly had included a “supplement not supplant” clause so that what was currently being spent would not be supplanted.  The Senate had approved “fencing off” all the textbooks, instructional supplies, and software funding so it would not be available for collective bargaining. 
• Health insurance costs:  The Governor recommended a 10 percent increase in each year for health insurance costs.  The Assembly increased that amount to 15 percent each year, but the Senate did not.
• Salary increases:  The Executive Budget had included a 2 percent salary cost-of-living raise in the first year of the biennium.  The Assembly provided for an additional 2 percent increase in the first year and an additional 4 percent in the second year of the biennium.  The Senate approved the 2 percent salary cost-of-living raise in The Executive Budget and nothing more. 

 

Mr. Stevens said those were the major differences, although there were a few other items in education that would need to be discussed as well as in the DMV field services budget. 

 

Mrs. Chowning requested clarification of the $97,000 license plate revenue in the Veterans Home Account.  She pointed out there were several bills including language to alter the Veterans Home Account and start a Veterans Gift Account, and she asked how that would affect the budget. 

 

Mr. Stevens said there were several bills with that language, and the effect would depend upon which legislation was passed.  There was some legislation that would counteract the provisions of A.B. 192, which had already been signed by the Governor.  Because A.B. 192 had been signed, the Legislature was operating under the assumptions of that bill.  Mr. Stevens offered to provide a list of legislation that might affect the account, but he did not know which, if any, of the other bills would pass. 

 

Mr. Stevens explained that A.B. 192 was a license plate bill, and a section had been added to the bill that restricted the use of license plate revenues related to the veterans’ license plate.  The closing action taken by the Assembly would be consistent—removing the license plate revenue from the budget and replacing it with General Fund monies.  The Senate, on the other hand, had approved the Governor’s recommendation to utilize license plate revenue to offset the General Fund.

 

Chairman Arberry reminded the Committee there would be a joint meeting between the Assembly Committee on Ways and Means and the Senate Committee on Finance to resolve budget differences immediately after the current meeting.   

 

The meeting was recessed at 9:22 a.m., and due to time constraints, was not reconvened.

 

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Susan Cherpeski

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Assemblyman Morse Arberry Jr., Chairman

 

 

DATE: