MINUTES OF THE
SENATE Committee on Finance
Seventy-second Session
March 17, 2003
The Senate Committee on Finance was called to order by Chairman William J. Raggio at 7:44 a.m. on Monday, March 17, 2003, in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Dean A. Rhoads
Senator Barbara K. Cegavske
Senator Sandra J. Tiffany
Senator Bob Coffin
Senator Bernice Mathews
STAFF MEMBERS PRESENT:
Gary L. Ghiggeri, Senate Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Michael J. Chapman, Program Analyst
Jeffrey A. Ferguson, Program Analyst
Judy Coolbaugh, Committee Secretary
OTHERS PRESENT:
Don Soderberg, Chairman, Public Utilities Commission of Nevada
Crystal Jackson, Commission Secretary, Public Utilities Commission of Nevada
John R. Mundy, Executive Director, Nevada Council on Economic Education
Dana R. Bennett, Lobbyist, The Grow Network
Craig Kadlub, Lobbyist, Clark County School District
Deborah K. Cahill, Lobbyist, Nevada State Education Association
Terry L. Hickman, Lobbyist, Nevada State Education Association
Rick Bennett, Lobbyist, University of Nevada, Las Vegas
Dennis K. Neilander, Chairman, State Gaming Control Board
Scott Scherer, Board Member, State Gaming Control Board
Peter C. Bernhard, Chairman, Nevada Gaming Commission
Mike Pieper, Director, Nevada State Office, Division of Economic Development
Gary L. Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
A current budget status report entitled “Senate Committee on Finance Progress Report as of March 17, 2003” (Exhibit C) has been distributed. By the end of this week, the committees and subcommittees will have reviewed 97.5 percent of the Executive Budget. By March 28, 2003, the committees and subcommittees will have finished reviewing the entire Executive Budget. We are tentatively scheduled to start closing budgets on March 26.
Another handout entitled “Executive Budget Amendments” (Exhibit D) was received from the budget office last Friday, detailing amendments 47 through 63. It appears there is no difference between fiscal year (FY) 2004 and FY 2005 on General Fund appropriations. Apparently some costs are being transferred from FY 2005 to FY 2004. There are additional supplemental appropriations requested for the Department of Motor Vehicles (DMV) in the amount of $693,000. In response to questions raised by the Senate Committee on Finance on the hearing for Senate Bill (S.B.) 214, a memorandum handout entitled ”S.B. 214” (Exhibit E) has been distributed. The information from DMV provides information regarding increases in driver’s license cost and vehicle registration.
SENATE BILL 214: Revises provisions concerning enforcement of requirement of registration of motor vehicle by new resident of this state. (BDR 43‑1058)
Senator Raggio:
Is this amendment in addition to the first list received?
Mr. Ghiggeri:
Yes, these amendments are in addition. The first list went from 1 to 46.
Senator Raggio:
What is the net increase to the General Fund?
Mr. Ghiggeri:
The largest single increase in the first list was the additional $10 million per year to fund the entire retirement increase for the Distributive School Account.
Senator Raggio:
What is the total?
Mr. Ghiggeri:
The first list has a total increase of $9.6 million in FY 2004 over what was originally recommended in the Executive Budget. In FY 2005, the increase is for an additional $10.5 million.
Senator Raggio:
Is that about a $20 million increase?
Mr. Ghiggeri:
Yes, it is, if the policy decision is to fund 100 percent of the retirement increases. A letter from Marcus Hodges who testified on S.B. 45 (Exhibit F) has been distributed. Mr. Hodges requests that the record shows he did not testify in his official capacity.
SENATE BILL 45: Revises requirements concerning eligibility to participate in Public Employees’ Retirement System as police officer under certain early retirement provisions. (BDR 23-307)
Senator Raggio:
I am going to request the chairman of the subcommittees to submit in writing any recommended cuts before budget closings begin on April 1.
Public Utilities Commission – Budget Page PUC-1 (Volume 1)
Budget Account 224-3920
Don Soderberg, Chairman, Public Utilities Commission of Nevada:
The budget requested for the Public Utilities Commission (PUC) is flat. It is designed to meet the needs of the PUC, reduce the PUC surplus, and provide a stable mill assessment. The primary source of funding is the mill assessment, and the projected mill assessment in this budget is 2.25 mills, as opposed to the 2.50 mills recommended by the Executive Budget. The PUC hopes by lowering the mill assessment, money can be returned to those who previously overpaid. The overpayments are reflected in the large budget surplus in this account.
Senator Raggio:
Does the Executive Budget recommend retaining the 2.50 mill assessment?
Mr. Soderberg:
Yes, that is correct. We have submitted information to staff to project the budget using a lower mill assessment.
Senator Raggio:
Is there an additional assessment for the Bureau of Consumer Protection (BCP)?
Mr. Soderberg:
Yes, the assessment is on top of the PUC mill assessment.
Senator Raggio:
Is the BCP 0.75 mills? Does that make the total collection 3.25 mills, which is the total of 2.50 and 0.75 mill assessments?
Mr. Soderberg:
Yes, that is correct.
Senator Raggio:
What is the status of the reserve balance in this account? The Governor recommended an ending reserve balance of $615,031 for FY 2002-2003. The FY 2002-2003 work program as displayed in the Executive Budget estimates an ending reserve balance of $5 million. For the FY 2003-2005 biennium, the Governor recommends an ending reserve of $3.8 million. Is that a sufficient reserve balance to cut the mill assessment?
Mr. Soderberg:
Yes, and that is the reason we have requested the lower mill assessment to cut into the reserve, which has been growing despite our efforts to the contrary.
Senator Raggio:
What do you believe is the optimum reserve for this account?
Mr. Soderberg:
Based on our current expenses, we would project an adequate reserve to be between $1.8 million and $2.4 million.
Senator Raggio:
What is the status of the legislation authorizing expansion of the PUC commissioners from the current three positions to five?
Mr. Soderberg:
During the last session an Assembly Bill (A.B.) stated the PUC would go to 5 commissioners on October 1, 2003. That was in A.B. No. 661 of the 71st Session. Bill Draft Request (BDR) 58-1255 coming from the Department of Administration requests a repeal of A.B. No. 661 of the 71st Session, so the level will remain at 3 commissioners.
BILL DRAFT REQUEST (BDR) 58-1255: Repeal prospective increase in number of Commissioners of the Public Utilities Commission of Nevada. (Later introduced as Senate Bill 414.)
Senator Raggio:
What is the reason for the change?
Mr. Soderberg:
In the 71st Session of the Legislature the expansion of the commissioners was recommended to promote a diversity of opinion. Over the last year and a half, our observations have been that the increase would not be wise from a budget perspective. We currently have a workload for 3.5 to 3.75 commissioners. The PUC believes we can stem the extra workload by hiring a utility hearing officer, as opposed to hiring the 2 additional commissioners and the staff to support them, which would total 8 employees.
Senator Raggio:
Is the request for the new hearing officer position included in enhancement unit 501 (E‑501)?
E-501 Accessible, Flexible, Cost-Efficient Government – Page PUC-3
Mr. Soderberg:
Yes, that is correct. This decision unit identifies the resources required should this session of the Legislature repeal A.B. 661.
Senator Raggio:
What functions will the new hearing officer position perform?
Mr. Soderberg:
We envision the hearing officer will conduct hearings that are time-consuming, but not representative of major cases.
Senator Raggio:
Who performs these functions now?
Mr. Soderberg:
Commissioners are currently performing these functions. They have to juggle their schedules to handle those types of cases while, at the same time, they are working on major rate cases and other items that have bigger policy implications. We do have two lawyers through our general counsel office who have been picking up some of the cases as hearing officers.
Senator Raggio:
Is the caseload sufficient to justify the new position?
Mr. Soderberg:
Yes, it is.
Senator Raggio:
What is the change in caseload? Does it represent the amount of cases or the complexity of them?
Mr. Soderberg:
It is a combination of both factors. We have a number of cases that are not extremely complex, but they actually take the most time for the commissioners. Many of our small water cases are rudimentary in terms of regulatory principles, but a lot of technical data is involved. Even though a commissioner is working exclusively on one of these cases, it sometimes takes a week or more to process. Occasionally travel is required to remote parts of the State, which adds to the time expended. If some of this burden can be lifted from the commissioners, they will be able to focus on the major cases.
Senator Raggio:
Who is on the policy analysis staff?
Mr. Soderberg:
We currently have a director of policy analysis who serves as the manager and is the lead policy advisor.
Senator Raggio:
Is the director the one who currently does the research and analysis of evidence in contested cases, and drafts opinions and orders for the commissioners’ consideration?
Mr. Soderberg:
Yes, the director and staff work with the individual commissioners to complete those functions.
Senator Raggio:
Will the new hearing officer position take over those functions from the policy analysis staff?
Mr. Soderberg:
Yes, the new position will perform those functions.
Senator Raggio:
In your estimation, is the new position required?
Mr. Soderberg:
Yes, it is.
Senator Cegavske:
I have proposed merging the Transportation Services Authority (TSA) back into the PUC. What are your thoughts on a possible merger? Would it help the agency handle the increased caseload?
Mr. Soderberg:
When I was at the former Public Service Commission (PSC) we also handled the TSA. The biggest complaint voiced by the transportation industry was it felt neglected. The TSA cases were extremely time-consuming, acrimonious, and contributed to a backlog of utility cases.
My agency has work for 3.5 to 3.75 commissioners, and TSA, with 2 commissioners, has work for 3. If the two agencies were combined, I would have 5 commissioners, which would leave the PUC short about 1.5 commissioners. If there were a merger, to handle the increased number of cases the agency would have to go from a 5- to a 7-commissioner basis with support staff. The more economic route would be to stem the caseload growth with hearing officers.
At one time, the PSC had a transportation hearing officer, but with federal deregulation, the transportation agency’s budget was cut accordingly, and the position was eliminated. Over time, the elimination of the position did not work, so the transportation industry asked for a separate agency.
Senator Cegavske:
In your opinion, could such a merger work?
Mr. Soderberg:
With the right resources, a merger could work.
Senator Tiffany:
If the mill assessment were eliminated by legislation, would those positions that worked on collection of assessments be available for other work assignments?
Mr. Soderberg:
I believe you are referring to the universal energy charge (UEC). When the UEC was adopted in the 71st Session of the Legislature, the agency acquired a financial analyst position. The position is less labor-intensive than our initial projection of the workload. We estimated 3 percent of the total collections would go for administrative costs, but in the first year start-up costs were a little more than 2 percent. We are now projecting the costs at 1 percent per year. In addition to handling the UEC workload, the position is assigned other duties. If the UEC were to be eliminated, the possibility for eliminating this position could also be considered.
Senator Tiffany:
Assuming the Nevada Power suit goes to court, what would be the agency’s participation in such an action?
Mr. Soderberg:
We are the defendants in the case. Nevada Power has filed suit for judicial review, which places the PUC in the mode of being a civil defendant in a civil case. The BCP also filed an appeal asking for the opposite of Nevada Power’s request. The case for various procedural reasons has been lengthy. Oral arguments were heard March 14, although some additional briefing may be involved. The judge has indicated a decision may come in the next 4 weeks.
Senator Tiffany:
Will the decision impact your budget?
Mr. Soderberg:
If Nevada Power receives more money than what we allowed, our budget would be impacted because the mill assessment goes on gross utility revenue. Any time a utility collects more money, the PUC collects more. Typically, a district court will remand a certain portion of an order, and ask the PUC to do more work on it. There is also the possibility that one of the parties could take the suit to the Nevada Supreme Court. If there is an additional allowance, over and above what the PUC set about a year ago, it would be some time before the monies filtered into the rates that people pay.
I feel confident in the PUC’s order and in its case, so I do not anticipate any increase in revenue pursuant to settling the suit.
Senator Tiffany:
Would additional staff be required for the PUC?
Mr. Soderberg:
I do not believe we would need additional staff if a portion of the case is remanded.
Senator Raggio:
Would the new position of hearing officer have to be an attorney?
Mr. Soderberg:
Yes, we believe we would have to hire someone with a legal background in order to eliminate the need for additional support staff.
Senator Raggio:
Will the PUC be able to fill the position at the requested salary of $89,092 per year plus fringe benefits?
Mr. Soderberg:
We believe so.
Senator Raggio:
Is that salary consistent with your staff and general counsel salaries?
Mr. Soderberg:
Yes, it is.
Senator Raggio:
What is the status on the surcharge for the telephone device for the deaf relay?
Crystal Jackson, Commission Secretary, Public Utilities Commission of Nevada:
The PUC is currently waiting for the Department of Employment, Training, and Rehabilitation’s (DETR) budget. The budget is expected this month, but may not be out until May.
Senator Raggio:
Where does the budget come from?
Ms. Jackson:
The budget comes from DETR, and they submit it to the PUC for review. The staff will analyze the budget for the telephone device for the deaf (TDD) program, and make a recommendation on the amount required for the access line charge. The charge is currently 8 cents per access line.
Senator Raggio:
Is that charge for a year?
Ms. Jackson:
Yes, the charge is for a fiscal year, and has been 8 cents since 1998.
Senator Raggio:
Do you have a breakdown, or should we contact DETR on how the fund has been utilized?
Ms. Jackson:
The breakdown would be more appropriately addressed by DETR.
Senator Raggio:
Staff will contact DETR to ensure the fund is being utilized for the hearing impaired and deaf. Advise this committee when the PUC determines the charge.
Mr. Soderberg:
In addition to the new utility hearing officer position, there are two salary increase adjustments in the budget, and one salary decrease. Under a compaction analysis completed by the Department of Administration, it was determined some supervisors were not making 5 percent more than their highest paid subordinate.
Senator Raggio:
Are these positions unclassified?
Mr. Soderberg:
Yes, they are. Classified employees receive salary increases from session to session, so the spread between supervisors and subordinates becomes wider. This requested salary adjustment would remove internal inequities. The PUC also has an administrative attorney position that originally was projected to perform supervisory duties. Those duties have not developed. A total decrease in the amount of $9800 is requested in agency personnel costs. The amount of the decrease is the total from combining the two requested increases and one decrease.
Senator Raggio:
The request needs to be made separately and in writing, so when the unclassified pay bill is considered, the staff will have the information itemized with the justification for each.
Mr. Soderberg:
We will provide the written request.
Senator Raggio:
What is the status of the provision in A.B. No. 661 of the 71st Session allowing large customers to leave the existing utility system?
Mr. Soderberg:
The PUC has had a number of applications and over 20 of those have been processed. No large customer has acted on any application approvals granted by the PUC. Therefore, all the large customers still receive utility service from Nevada Power or Sierra Pacific Power.
Senator Raggio:
Why have they not left the existing system when they have approval to do so?
Mr. Soderberg:
It is a combination of factors. The calamity being experienced in the energy and financial markets has made some of the potential suppliers less than attractive business partners. Some of the suppliers have left the business, and walked away from contracts made. Nevada Power and Sierra Pacific Power have successfully convinced some of the large customers they can be competitive. Another round of applications is coming through the PUC, and we have been informed these customers have more serious intentions of leaving the system. Some of them are building power plants in Nevada.
Senator Raggio:
Originally Nevada Power and Sierra Pacific Power companies were considered to be good investments, but recently their stock price has fallen to about $3.00 per share. What is the cause of this price decrease? I am asking for this appraisal because investors have expressed concerns about the lack of regulatory control that exists in this state. Why is the selling price per share so much lower than the actual book value?
Mr. Soderberg:
The situation represents another combination of factors. Each one can be separately weighed as to the amount of importance it has on market conditions. Clearly, in the 1990s, when utilities were trying to get out of the traditional utility business, a lot of management moves were made that seemed to be good ideas at the time. Hand-in-hand with competition nationwide, rate freezes or rate caps were statutorily imposed at the utility companies’ request. Such a forced decrease in the wholesale cost of power could potentially make the utility companies more money.
Closely after the imposition of rate freezes or caps, the wholesale cost for power skyrocketed in the western states. Those wholesale cost increases are still under investigation. Some believe the increase reflected a true shortage; other people believe it resulted from market manipulation by the power wholesalers; and still others believe it was a combination of these factors. Most traditional utility companies were badly hit by the increases. State regulatory boards now have to determine how much of the increase was due to market conditions versus how much was due to imprudent management.
Realizing the rate freeze situation did not work well, the Legislature passed A.B. No. 661 of the 71st Session and other measures that essentially brought us back to traditional regulation of utility companies. Utilities own their plants, and energy they cannot produce they buy on the wholesale market. Their fuel and purchase power costs are reviewed annually, and are called “deferred energy.” The utility companies make no profit, and presumably take no loss.
Included in the legislation was a “prudency standard” that directed the PUC to consider the prudency of each of the transactions made by the utility companies for the purchase of power. The PUC, after months of investigation, felt the evidence indicated a large amount of the losses occurred at the time by Nevada power companies was the result of management imprudence.
Senator Raggio:
Why then, at this stage, do the power companies still lack credibility? Is the reason the pending litigation?
Mr. Soderberg:
I believe the pending litigation is a part of the perception. The power companies entered the period with high debt levels, and when their bonding capacity is downgraded, problems are created. Nevada Power Company is in management transition, and many positive changes have occurred. The new hires have brought a higher level of sophistication to the power business in Nevada. I remain optimistic about the company’s future, but Wall Street is a tougher sell. Utilities and transitional managements are not generally favored until the transition is complete and results can be evaluated.
Senator Raggio:
If the PUC does go forward with five commissioners, will the utility hearing officer still be required?
Mr. Soderberg:
If we go to five commissioners, the new utility hearing officer position request is included in the classified pay bill, but it is not funded. At some future time, if the PUC needs to ask the Interim Finance Committee for the position, it can do so.
Senator Raggio:
The Legislative Committee on Education recommended S.B. 210. The bill provides for increased teacher salaries in the field of mathematics, science, and special education.
SENATE BILL 210: Makes various changes governing education and makes related appropriations. (BDR 34-636)
To obtain the salary increase, the State Board of Education is instructed to adopt regulations to identify teachers with endorsements in mathematics and science. Some changes are recommended for the regional training programs for professional development for teachers and administrators.
In Section 13, appropriations are included in the bill in the amount of $1.5 million in each year of the FY 2003-2005 biennium for remedial education and pupil tutoring. In Section 14, the Department of Education (DOE) is appropriated amounts of $1.25 million in each year of the FY 2003‑2005 biennium for allocation to the Clark County and the Washoe County School Districts to purchase brochures for the reporting of test scores of pupils and related services.
John R. Mundy, Executive Director, Nevada Council on Economic Education:
The Nevada Council on Economic Education (NVCEE) applauds the Legislative Committee of Education’s decision to consider a State match to the Excellence in Economic Education (EEE) Act of 2001. EEE is a subject of critical importance to the State and the future well being of its citizens, especially the K‑12 student population. The amendment to the No Child Left Behind Act (NCLBA) contains specific language calling for the NVCEE to join in a partnership with the State to foster economic education.
The 70th Session of the Legislature recommended economic education be listed as a core subject in the State. Standards were written and adopted in 2000. At this time, economic education is not being taught in State schools, because the education system lacks trained economics teachers. You have before you a handout entitled “Statement of John R. Mundy of the Nevada Council on Economic Education to the Nevada State Senate Committee on Finance” (Exhibit G).
At the high school level in Nevada, there are approximately 800 teachers with social studies endorsements, but they need training in how to teach economic education. The NVCEE is working to develop professional economic training programs for social studies teachers.
The NVCEE’s goal is to create a transformation in our society by embracing economic literacy. Economics is the quality of life issue for this millennium. Economic, entrepreneurial, and financial literacy are the vehicles that will make the difference.
Senator Raggio:
What is the likelihood of the State receiving federal funding for economic education?
Mr. Mundy:
The federal legislation has been approved, and is waiting for a Congressional appropriations committee hearing this spring. Nevada’s portion of the federal funds would be about $200,000 in this fiscal year. The DOE already has a federal Title V block grant, which specifically includes funds for innovations and improvements in economic education. The NVCEE has applied to the DOE for part of the block grant funds for training teachers in economic education techniques. These funds can be used as part of the required State match.
The NVCEE has been working for the last 2 years to develop a curriculum for entrepreneurship, which is listed in five of the nine State standards for economic education.
Senator Raggio:
The Legislative Committee on Education felt economic education should be implemented.
Additional General Fund appropriations are stipulated in Section 9, 10, and 11 of S.B. 210.
Dana R. Bennett, Lobbyist, The Grow Network:
I represent “The Grow Network” (Exhibit H), which is specifically in support of Section 14 of S.B. 210. The Grow Network is a company that takes the results from standardized tests, and places the data in a format useful to parents, teachers, administrators, and students. The Grow Network provides clear test reports, instructional tools, Web resources, and professional development all focused on linking data to the State’s established standards for instruction.
The Grow Network is currently being used by the New York City and Chicago school systems serving a combined total of 600,000 students. The assessment reporting data shows where a student needs remedial instruction or advanced placement work. The printed brochure serves as an invitation to the Web where the data is available for downloading. Lesson plans tied to the State’s curriculum standards, instructional tools, reading lists and suggestions for additional work are all available at the Web site.
Senator Rawson:
Out of all the vendor presentations heard before the Committee on Human Resources and Facilities, the Grow Network was deemed the best vehicle for assessment reporting.
Senator Raggio:
I urge any members of this committee who have not seen The Grow Network presentation to contact Ms. Bennett for a demonstration.
Senator Tiffany:
Does The Grow Network successfully interface with the Schools Administrative Student Information (SASI) system?
Craig Kadlub, Lobbyist, Clark County School District:
Yes, it would interface with SASI.
Senator Tiffany:
Would the data for The Grow Network Web site come from the SASI program and be available for downloading?
Dr. Kadlub:
It is my understanding the information for The Grow Network would be more reliant upon the data received from the test vendor. Some other information sources may be used.
Senator Tiffany:
I would like to know where the information for The Grow Network is obtained.
Ms. Bennett:
The data comes from the standardized test results, and the data is provided to the DOE in tape format, which is also made available to The Grow Network. I do not know whether the data goes directly from the test vendor to The Grow Network, or whether it is routed through the school district first. I will check on the procedure and report back.
Senator Tiffany:
Are the school districts also required to keep the data in their student information records?
Senator Raggio:
We would like to have answers for the procedures for storing the electronic student information data.
Ms. Bennett:
We will get the answers to you. If the Legislature approves S.B. 210, The Grow Network would be interested in providing bids for our services to the Clark County and Washoe County School Districts.
Senator Raggio:
What are the fees charged for The Grow Network services?
Ms. Bennett:
The appropriation in Section 14 of S.B. 210 is $1.25 million in each year of the FY 2003-2005 biennium. The cost of The Grow Network includes a $200,000 base fee and a per pupil fee of $7.00 per student in each of the five tested grades, which are grades 3, 4, 5, 7, and 8. In Clark and Washoe County School Districts the student testing population is 150,000.
Dr. Kadlub:
I representthe Clark County School District, and I offer qualified support of Section 2, subsections 3 and 4 of S.B. 210. The items covered in these sections are part of the iNVest program put forward by the State superintendent and school boards. The difficulty is the lack of appropriation to cover the recommendations.
The Clark County School District has no way of calculating the cost impact of subsection 3 since subsection 8 will determine the amount. With respect to subsection 4, the Clark County School District business manager estimates that, in order to provide the 5-percent salary stipend, the school district would experience about a $3 million unfunded impact.
Senator Raggio:
Is the quoted amount an annual figure, or is it for the biennium?
Dr. Kadlub:
The $3 million estimate is annual.
Senator Raggio:
Are you referring to Clark County?
Dr. Kadlub:
Yes, the figure is just for Clark County.
Senator Raggio:
Is that amount just for the special education teachers?
Dr. Kadlub:
Yes, that is correct.
Senator Raggio:
What is the projected cost for the mathematics and science teacher stipends?
Dr. Kadlub:
Clark County does not have a calculated amount for that stipend since payment will be based on criteria established by the DOE. Clark County does expect the amount to be substantial.
Senator Coffin:
I did not realize the financial impact would be so heavy on Clark County. What procedure do you follow for classrooms using team teaching? One teacher might be more specialized in one of the selected subjects and qualify for a bonus. The other teacher still supports the qualified teacher. Generally, other professionals are worried about the differential, and I have not received any comments in support of the stipend.
Dr. Kadlub:
I can speculate that, based on subsections 4 and 8, if teachers meet established criteria then they qualify for the salary stipends.
Senator Coffin:
Technically, you could have two teachers, one with an endorsement and one without, but the “qualified” teacher may be no more qualified than the “unqualified” teacher.
Dr. Kadlub:
I suppose that scenario is conceivable.
Senator Coffin:
Is there a way of working around the problem so funds could also be provided for the unqualified team teacher?
Dr. Kadlub:
The decision would have to be made by the DOE when it formulates its criteria, or through this legislative body by amendment.
Deborah K. Cahill, Lobbyist, Nevada State Education Association:
The Nevada State Education Association (NSEA) offers support for S.B. 210 with one major concern. The NSEA’s reservation is that pay increases are only for mathematics, science, and special education teachers. The NSEA strongly opposes the request for certain teachers to be paid more than others solely based on what they teach, not on how they teach.
Senator Raggio:
Senate Bill (S.B.) 190 provides for stipends in a professional development certificate program for teachers.
SENATE BILL 190: Makes appropriation for creation of certificate program and provision of stipends to certain teachers. (BDR S-894)
Ms. Cahill:
NSEA would prefer that the stipend money authorized in the Executive Budget be rolled into the second year of the FY 2003-2005 biennium to provide a 2‑percent across-the-board salary increase for all teachers.
NSEA also has reservations about the unfunded mandate in Sections 3 and 4 of S.B. 210. The NSEA estimates for the special education teachers alone the amount required for the stipend would be $4.1 million statewide. The NSEA was unable to determine the fiscal impact for the 5-percent stipend for all mathematics and science teachers, but believes almost all mathematics and science teachers would qualify for whatever certification the DOE develops.
Senator Raggio:
Other than cost considerations, what is the NSEA’s stand on the policy of stipends for qualified teachers in the fields of mathematics, science, and special education?
Ms. Cahill:
The NSEA understands that the intent of the legislation is to address subject areas where teacher shortages exist. As a group, teachers have not received substantial pay increases over the last several years, and pay raises received do not equal cost-of-living increases. There will be a detrimental financial impact on teachers not receiving the stipend. The NSEA does not believe the stipend provides an incentive to attract teachers to the shortage fields, or provide a reason for them to stay. Research from the Consortium for Professional Research in Education shows at least a 25-percent increase in pay would be necessary to attract and recruit teachers to the field of mathematics, because of private sector competition.
Terry L. Hickman, Lobbyist, Nevada State Education Association:
Special education has some unique issues. Unless those students are assigned to a self-contained classroom, they are in the general student population of all schools. The special education students are placed in regular classrooms with regular classroom teachers. Occasionally, the special education teacher will go into the regular classroom to give support to the special education students there. Special education teachers report their biggest concern about receiving a stipend is the time-consuming paperwork involved. There is a tremendous amount of preparation required to complete an Individual Education Plan for each special education student. Lack of administrative support and lack of supplies are two other areas of concern.
For the mathematics and science teachers, the number one concern is class size. In the State’s middle schools, the size of classes makes it very difficult to provide quality teaching for students. The pressure created by existing educational problems, such as lack of resources and supplies, and class size, has to be resolved before teachers can provide students quality education.
Senator Raggio:
What is your personal opinion on the requirement that teachers of mathematics, science, and special education have the appropriate endorsement in the subject area?
Mr. Hickman:
Are you referring to highly-qualified teachers?
Senator Raggio:
Should all teachers who teach mathematics, science, and special education have a special endorsement in those fields?
Mr. Hickman:
Every teacher should be teaching in his major or minor field of study. Under the NCLBA, there are provisions for veteran teachers, who may be teaching out of their field to fulfill the requirements necessary, to be rated as highly qualified. In my own opinion, and the NSEA’s opinion, all teachers should have the highly‑qualified rating for the field in which they are teaching.
Senator Raggio:
Should there be a pay differential for teachers who meet the highly-qualified classification as opposed to those who do not?
Mr. Hickman:
If teachers do not have the highly-qualified rating, they will not be able to teach beyond 2006.
Senator Raggio:
That answer begs the question. Should there be some pay differential for those who achieve the highly-qualified distinction?
Mr. Hickman:
Are you referring to National Board Certification?
Senator Raggio:
No, I am referring to their particular field endorsements.
Mr. Hickman:
Teachers have to have those endorsements.
Senator Raggio:
The problem is there are teachers teaching mathematics and science who are not qualified to be doing so. How do we reach the goal of having only subject‑matter qualified teachers teaching? Can we reach that goal without giving special stipends?
Mr. Hickman:
NCLBA states in 2006 every teacher must be highly qualified.
Senator Raggio:
That provision only applies to Title I schools, which are schools receiving federal funds.
Mr. Hickman:
I believe the highly qualified provision in the NCLBA applies to all schools.
Senator Raggio:
The provision does apply to all districts, but only those schools receiving Title I funds are required to have highly qualified teachers.
Mr. Hickman:
The DOE has informed the NSEA it intends to have every teacher achieve the highly-qualified rating.
Senator Raggio:
Do you personally believe teachers should have a pay differential for anything, or should all teachers be paid equally?
Mr. Hickman:
I believe, if all teachers have a major and minor field and have all requirements necessary to be highly qualified, all teachers should be paid equally.
Ms. Bennett:
In Nevada, most teachers are correctly assigned to their fields. The DOE, working through the Commission on Professional Standards, has an exceptional report for all teachers who are assigned to teach outside of their major fields. The NSEA supports a 5-percent stipend for teachers who receive National Board Certification because of the rigorous evaluation process necessary to achieve the certification.
Dr. Kadlub:
I would like to clarify my response to Senator Coffin’s question regarding team teaching. Section 3 of S.B. 210 relates specifically to junior and senior high schools. The team-taught classrooms are at elementary levels to meet class size reduction requirements.
Senator Cegavske:
Could staff tell us how many teachers are teaching out of their subject area?
Senator Raggio:
We will ask staff for the answer.
The hearing is open on S.B. 227, which is an appropriation to the Harry Reid Center for Environmental Studies at the University of Nevada, Las Vegas (UNLV).
SENATE BILL 227: Makes appropriation to Harry Reid Center for Environmental Studies at University of Nevada, Las Vegas, for support of its environmental research. (BDR S-1062)
Senator Rawson:
This appropriation was originally requested at the 71st Session of the Legislature, but the bill did not make it out of committee.
Senator Raggio:
The reason the bill did not make it out of the committee was because a commitment was received from the President of UNLV that the $250,000 would be provided by UNLV from other sources. That commitment is on the record.
Senator Rawson:
We have been informed that this appropriation can be used to obtain matching federal funds, which often doubles or triples the amount of money available. There is more land under cultivation in southern Nevada than in all the rest of the State combined. The State has environmental issues relating to salts, chemicals, insecticides, and invasive species, which impact the entire Colorado River system.
Rick Bennett, Lobbyist, University of Nevada, Las Vegas:
The appropriation request in this bill is primarily for the support of 2 to 2.5 positions within the Harry Reid Center for Environmental Studies at UNLV. The center funds are generated by grants and contracts, and the center receives additional support through indirect costs and other philanthropic sources.
Senator Raggio:
Why was the commitment to provide these funds not honored by UNLV?
Mr. Bennett:
I would like to review the record, but I believe the commitment was honored through the funding process I just presented.
Senator Raggio:
I will ask staff to research the funding commitment.
Mr. Bennett:
The UNLV administration would be extremely concerned about earmarking funds for any entity on the UNLV campus.
Senator Raggio:
In the 71st Session of the Legislature, it was the understanding the $250,000 commitment would be provided by UNLV.
Mr. Bennett:
I believe UNLV indicated it would make every effort to provide the funding, but, with the budget received, it was difficult to provide the funds.
Senator Raggio:
UNLV received a good budget in the 71st Session of the Legislature.
Mr. Bennett:
The budget turned out to be a little flat.
Senator Raggio:
Could this research be completed in cooperation with the Desert Research Institute (DRI)? Is the Harry Reid Center for Environmental Studies in direct funding competition with the DRI? We have invested a great deal of money and effort in DRI. Why do we need this center when we have the DRI?
Mr. Bennett:
I am not knowledgeable enough about the situation to answer those questions.
Senator Raggio:
We would like UNLV to provide this committee with some information about the possibility of the center working with the DRI.
Mr. Bennett:
The information will be provided.
Senator Raggio:
The staff has pulled up the letter drafted in the 71st Session of the Legislature. At the April 9, 2001, Senate Committee on Finance hearing, the director of the Harry Reid Center for Environmental Studies testified indirect cost recovery revenues funded the positions at the center. The Chancellor of UNLV confirmed that understanding, which resulted in S.B. No. 460 of the 71st Session not being processed. This letter affirms the funding is to come from the indirect cost-recovery revenues.
We are opening the hearing on S.B. 230, which came from the LegislativeCommittee on Education. The bill provides for changes in the transportation of pupils.
SENATE BILL 230: Makes various changes regarding transportation of pupils. (BDR 34-641)
Ms. Cahill:
I have distributed a handout entitled “Amendments to SB 230 Offered by the Nevada State Education Association” (Exhibit I).
The first amendment on the handout comes from the bus drivers in Clark County. They are requesting the training course be completed on an annual basis. Their rationale for the amendment request is that laws change all the time, as do DOE regulations and district policies. Bus drivers have no on-going staff development, and are not updated about changes that affect them. Many times they learn about a change in policy when they are disciplined for violating it.
The second amendment on the handout requests an insertion that cardiopulmonary resuscitation (CPR) training for bus drivers be provided by the district. The bus drivers believe the district should make the training available to the drivers at no cost. The CPR training must comply with the guidelines established by the American Red Cross or the American Heart Association.
Senator Raggio:
I thought there were groups willing to do the CPR training.
Ms. Cahill:
Yes, there are. Firefighters and emergency medical technicians have volunteered to bring CPR training to the schools to help teachers become certified in CPR at no cost. We believe bus drivers should be provided the same training. The bus drivers have no issue with maintaining CPR certification, and in Clark County they have “unassigned, paid days” that could be used for the training.
Senator Raggio:
I do not believe anyone can argue with the intent of this legislation. It provides safety for students being transported on school buses.
Ms. Cahill:
The third amendment requested is deletion of the entire Section 7, 2 (b) on page 9 at line 19 of S.B. 230. The rationale of leaving the decision to the bus drivers’ discretion, as to whether or not the safety of the pupil is compromised if the system of flashing red lights is not used, can lead to errors in judgment that jeopardize the safety of the student. The bus drivers do not want to make the determination of student safety. They are concerned about traffic flow, awareness of other drivers, and students with disabilities.
Senator Raggio:
Is this a situation where the student would not be walking in front of the bus?
Ms. Cahill:
That is correct.
Senator Raggio:
The existing law allows bus drivers to stop and unload pupils without flashing red lights under certain situations. Section 7 simply adds another situation. Are you saying bus drivers do not want this type of discretion?
Ms. Cahill:
That is correct.
Dr. Kadlub:
The Clark County School District supports this legislation with a funding qualification. In Section 5, subsection 3, the requirement for the school district to provide the CPR training would be an approximate $100,000 unfunded cost the first year, and an approximate $55,000 unfunded cost for renewal of CPR certification.
Senator Raggio:
Ms. Cahill referenced community groups who are willing to volunteer to give the CPR training without cost.
Dr. Kadlub:
Yes, but the district does not have an arrangement with them to complete the CPR training.
Senator Raggio:
We would like you to investigate the workability of such a volunteer arrangement.
Dr. Kadlub:
The bus drivers want the CPR training, but they do not want to pay for it.
Senator Raggio:
What would the cost be?
Dr. Kadlub:
If they have to take CPR classes on their own, they would have to pay for it.
Senator Raggio:
I do not believe the committee envisioned the bus drivers paying for their own training. If the CPR training is available at no cost, the time to complete the training is the only consideration. Would the bus drivers be willing to use their own time to take the training?
Dr. Kadlub:
I do not believe time would be an issue, if the training could be funded or provided for free.
Senator Coffin:
What do the bus drivers do between their peak periods of bus transporting?
Dr. Kadlub:
Some of the drivers are actually “off the clock.” Some of them do the kindergarten runs, which occur during the middle of the day. Some of them do field trips. There is a variety of scheduling combinations.
Senator Coffin:
The time for completing CPR training could be during the bus drivers “down” time.
Dr. Kadlub:
Yes, I do not believe the time would be an issue.
Senator Coffin:
Would the bus drivers stay on the clock?
Dr. Kadlub:
Yes, the bus drivers would be on the clock during any training periods.
Senator Coffin:
Where does the district stand on the issue of having seat belts on buses?
Dr. Kadlub:
Research has shown students in seat belts on school buses are probably not as safe as they are without them. Studies also show that more students get injured with seat belts being used as weapons by other kids on the bus. The district is not in favor of installing seat belts on school buses.
Senator Coffin:
In the case of a bus rollover or collision in which kids are seriously injured, is it possible the expense of paying for seat belt installation would be less than the expense of paying for lawsuits?
Dr. Kadlub:
We are aware there are two distinct sides to the issue. At this point, the district is still opposed to the installation of seat belts on buses.
Senator Coffin:
Students could be trained and drilled on how to safely release seat belts on the buses.
Senator Raggio:
I direct your attention to the “Executive Agency Fiscal Note on S.B. 230,” submitted by the DOE, that states there is no fiscal impact (Exhibit J). The DOE indicates that the bill increases the training from 10 hours to 20 hours, and CPR certification is required for all district bus drivers. In testimony given before the Legislative Committee on Education, it was pointed out that school districts in Nevada currently exceeded 20 hours of classroom and behind-the-wheel training for bus drivers. It would just be a technical adjustment to meet the requirements of this bill. Sometimes these regulations can be accommodated without additional funding. Half of the school districts reporting back on the fiscal note said there was no cost in providing the training, including Washoe County. Will you review the funding question with Clark County and see whether it can be more accommodating?
Dr. Kadlub:
Yes, I will do that.
Gaming Control Board – Budget Page GAMING-1 (Volume 1)
Budget Account 101-4061
Dennis K. Neilander, Chairman, State Gaming Control Board:
There are three primary areas where changes have been made to the budget. They are in-state travel, electronic services laboratory, and work permits.
The in-state travel adjustment is in maintenance unit 400 (M-400).
M-400 Travel & Training Adjustment – Page GAMING-3
The Executive Budget recommends an increase in General Fund appropriations totaling $90,000 in FY 2003-2004, and $74,000 in FY 2004-2005. The increase is necessitated by increases in per diem costs related to travel for the Audit Division. The value of the Audit Division’s travel budget has shrunk due to higher costs of traveling, and the expansion of the travel schedule.
Senator Raggio:
Can some of the audits be performed off-site to reduce the need for travel?
Mr. Neilander:
I do not believe it can be done because we have to rely on the site’s internal accounts and reports.
Senator Raggio:
I do not mean all audits need to be performed off-site. Can some of them be done off-site?
Mr. Neilander:
I can look into ways we could streamline the audit procedures. The records of the gaming companies are maintained in their totality at the various sites. A lot of the accounting information is not in electronic form, but remains as paper records. It would be cumbersome to be hauling the records back and forth.
Senator Raggio:
Do you charge off the total cost of the audits to the companies?
Mr. Neilander:
We do not charge for the audits. The reason for not charging for audits is that the audit greatly benefits the State, and ensures the State receives its fair portion of the tax revenue.
E-176 Increase Non-Gaming Business – Page GAMING-3
Two years ago the Legislature adopted A.B. No. 466 of the 71st Session which made changes to standardize the statewide gaming work permit program. The Executive Budget recommends $3.13 million during the FY 2003‑2005 biennium for personnel, facilities, and equipment required for the gaming board to issue gaming work permits in Las Vegas and Laughlin. Of this amount, $1.57 million is General Fund appropriations, and $1.56 million is investigation fees. Nevada Revised Statutes (NRS) 463.335 vests primary jurisdiction for the issuance of gaming work permits with the local authority, either city or county, where a gaming employee resides. However, if local entities choose not to issue work permits, the State Gaming Control Board is obligated to issue the gaming work permits. Both the City of Las Vegas and Clark County have indicated to the board they will cease offering work permits as of December 31, 2003. As a result, the board will be required to issue work permits to the residents of Clark County effective January 1, 2004.
Senator Raggio:
When will Clark County terminate its work permit program?
Mr. Neilander:
Las Vegas Metropolitan Police Department (LVMPD) will cease issuing work permits at the end of this calendar year. At that point, NRS 463.335 requires the board to pick up the program.
The board would like to change the current work permit program, and a bill will be forthcoming outlining the new plan. Work cards would no longer be issued. In its place would be a system whereby the board would register gaming employees. The registration process would first require the employee to get an application and a fingerprint card from the licensee with whom they are about to be employed. The licensee would check a list to make sure the person has not been previously objected to or denied a gaming work permit.
Senator Raggio:
How frequently will the list be updated?
Mr. Neilander:
We would update the list internally as names come in, and we would keep it in electronic format to make it accessible online immediately. Applicants for work permits would fill out work card applications, get their fingerprints rolled, and turn in the material to the board. The board sends the work permits to the Nevada Crime Information Center (NCIC) and the Federal Bureau of Investigation (FBI) for background checks.
Senator Raggio:
Would this procedure be used statewide?
Mr. Neilander:
Yes, the program would be statewide, which would provide consistency in registration.
If a work card applicant was objected to or denied, the processes in place now would still be used. An agent would review the file and make a determination. If the decision is adverse to the applicant, the applicant can appear in front of a hearing examiner for a review. The hearing examiner would make a decision, and if that decision is adverse, the full State Gaming Control Board would hear the case. If their decision is adverse, the case would go to the Nevada Gaming Commission. From that point forward there would be judicial review.
We are hopeful the entire program can be made “revenue-neutral,” meaning there will be no impact on the General Fund.
Senator Raggio:
According to our staffs’ analysis, originally Clark County was able to make money on the work permit program. With the increased cost for the criminal history check going from $15 to $21, a net loss of $5.00 per permit has been created for the LVMPD. Is the loss of revenue the reason the LVMPD no longer chooses to administer the work permit program?
Mr. Neilander:
Yes, that is correct.
Senator Raggio:
Currently, it costs the LVMPD $35 to process and issue a gaming work permit. In addition, there is a $15 charge for the NCIC criminal history check, and a $24 charge for the FBI criminal history check. The total charge is $74 per work permit. NRS 463.335 places a cap of $75 on the amount that can be charged for gaming work permits. What can we change to make this program revenue‑neutral?
Mr. Neilander:
By going to a registration process as opposed to using a physical card, the costs of the card itself are removed. Secondly, you cut out the physical facilities that are disbursed throughout the state. Currently, the applicant comes into an office where a clerk runs an immediate scope check with the LVMPD. There will also be a savings in personnel costs.
Senator Raggio:
Are you going to need to hire additional personnel if you make this program statewide?
Mr. Neilander:
We will have to hire at least eight full time employees (FTEs). There are 45,000 applications submitted annually throughout the state. This makes the NCIC increase of $6 per permit a significant dollar item on a yearly basis. We are planning to add the eight FTEs and still stay within the $35 figure mentioned earlier. The charge reflects the current cost of processing and issuing a gaming work permit.
Senator Raggio:
How frequently do gaming employees have to renew their work permits?
Mr. Neilander:
Our current proposal is to maintain the 71st Session of the Legislature’s decision to allow for a 5‑year work permit. If you amortize the total cost over the 5-year period at the current cap of $75, the cost would be $15 per year. If the cap were raised to $100, the amortized cost would still only be $20 per year for each work permit.
Senator Raggio:
Who pays the application fee?
Mr. Neilander:
The applicant pays the fee.
Senator Raggio:
Are you anticipating the cap would have to be raised from $75?
Mr. Neilander:
It is possible, but the board believes the cap will not have to be raised more than $5 to $10. The board would also like to have the ability to deal with cost increases by regulation.
Senator Raggio:
Is raising the cap in the board’s forthcoming bill?
Mr. Neilander:
It will be.
Senator Raggio:
Will you provide our staff with a breakdown of the numbers to make the work permit program revenue-neutral?”
Mr. Neilander:
Yes, I will.
Senator Rawson:
If the board is satisfied the work permit program is achieving its goals, then continuing the program is worthwhile. It seems like a great deal of hassle for prospective employees to get work permits.
Mr. Neilander:
The agency is sensitive to those concerns. With this proposal, the gaming employee would have the ability to transfer between gaming properties on a statewide basis with no additional fees. The registration is good for 5 years, and we would ensure our program maintains confidentiality of applicants’ records.
Senator Tiffany:
Would you have to develop a new system, and would you have it Web-enabled?
Mr. Neilander:
All the information is already entered into the statewide database.
Senator Tiffany:
How long are the work permits currently valid?
Mr. Neilander:
The time period for validity is up to the local government. The expiration dates are varied.
Senator Tiffany:
What if an applicant has an outstanding warrant within the 5-year period?
Mr. Neilander:
The employee will still be required to fill out a change of job notice, and at that time the board will do a sampling and checks will be ran.
Senator Tiffany:
Will the time frame for receiving a work permit be shortened with the new program?
Mr. Neilander:
Unfortunately, the time frame will not be shortened, because it takes from 30 to 90 days to complete all the background checks from the NCIC and the FBI.
Senator Tiffany:
Do prospective employees have to wait 90 days before they can start work?
Mr. Neilander:
No, employees can go to work immediately.
Senator Tiffany:
Do they receive a provisional work permit good for 90 days?
Mr. Neilander:
Yes, a temporary work permit is issued.
Senator Tiffany:
Will the waiting period be lengthened?
Mr. Neilander:
It should remain the same.
Senator Cegavske:
Convenience store employees experience financial hardship when they are required to provide application fees. Are the non-gaming permits still going to be required or will they be completely eliminated?
Mr. Neilander:
The State Gaming Control Board was never involved with non-gaming permits. They are subject to local requirements.
Senator Cegavske:
With the board taking over the permit program, would the non-gaming work permits be eliminated in Clark County? Would revenue be further impacted?
Mr. Neilander:
The proposal will only apply to those persons who, by definition in State law, are considered to be a gaming employee. We have no jurisdiction over non‑gaming employees.
Senator Cegavske:
Could the local governments still continue the non-gaming permit programs?
Mr. Neilander:
If local governments choose to continue the programs, they can.
Senator Cegavske:
For non-gaming permits, would the local government have access to the criminal background checks generated for the gaming work permit program?
Mr. Neilander:
I believe the local governments would still have access to those records.
Senator Cegavske:
Previously, there was no way of determining whether a person had a criminal record on a national or international basis. Would all arrest information be available?
Mr. Neilander:
If local governments chose to make a national and international check of a person’s criminal record, they would use the same method we do, which is checking through the NCIC and the FBI.
Senator Raggio:
If we approve this legislation for the new gaming work permit program, do we want the local governments to still require gaming work permits?
Mr. Neilander:
No, we do not.
Senator Raggio:
It should be made clear there will be no provision to allow two gaming work permits. The decision on non-gaming work permits should remain with the local governments.
Senator Coffin:
The FBI is currently overloaded, and I am concerned it will be unable to provide up-to-date background checks in a timely manner. With gaming establishments starting up all over the nation, gaming background checks have probably become a low priority for the FBI. Do we have arrangements with other gaming states in which we can exchange information on criminal records?
Mr. Neilander:
We do have memorandums of understanding (MOU) with other state gaming regulatory bodies. We typically have relied on the FBI for criminal history records, and on its listings of wants and warrants. We receive and share information with other agencies on a regular basis, but not specifically for gaming work permit applicants. Currently, the FBI turn-around time is a little less than 90 days. The FBI is the only depository used for national criminal records collection.
Senator Coffin:
Can we more formally explore the exchange of criminal record information with other states on a basis other than MOU?
Scott Scherer, Board Member, State Gaming Control Board:
Our enforcement division regularly shares information with other agencies, especially on cheating rings and cheaters.
Senator Raggio:
We would like your comments on the credential pay plan.
Mr. Neilander:
The State Gaming Control Board is requesting continued authorization of the credential pay program. The Executive Budget recommends $420,000 in FY 2003-2004, and $435,000 in FY 2004-2005 to provide credential pay for new employees. This program was initially authorized by the 68th Session of the Legislature to assist the board in recruiting and retaining personnel. The plan compensates employees of the board up to $5000 annually if they are certified public accountants, attorneys licensed to practice law in Nevada, or individuals who have a college degree in engineering or electrical engineering. It has been a critical program for our agency.
Senator Raggio:
Does the credential pay plan just request a continuum of pay for current employees or does it add additional funds to pay new employees?
Mr. Neilander:
The figures quoted represent the entire amount of funding.
Senator Raggio:
Is the entire amount of funding coming from the General Fund?
Mr. Neilander:
Only a portion of the amount is General Fund appropriation. The board is requesting $197,500 in FY 2003-2004, and the agency provides the additional funds from the investigative funds, if they are available.
Senator Raggio:
Do any of the qualified employees receive the maximum allowable pay incentive of $5000?
Mr. Neilander:
No, they do not. During the 71st Session of the Legislature, the agency cut the credential pay in half to meet budget cuts.
Senator Raggio:
We would like a memorandum showing the number of employees receiving the credential pay, the total amount paid in FY 2002, and the average amount that is paid to eligible employees.
E-177 Increase Non-Gaming Business – Page GAMING-3
This decision unit recommends an additional $30,000 in each year of the FY 2003-2005 biennium for the credential pay plan.
Senator Raggio:
Is the agency requesting more than an additional $30,000?
Mr. Neilander:
The $30,000 is just the increase necessary to cover credential pay for the six engineers we are adding to the staff.
Senator Raggio:
Has the credential pay plan reduced the agency‘s turnover rate?
Mr. Neilander:
Yes, it has. The credential pay plan has significantly contributed to the agency by reducing its avoidable turnover rate.
Senator Raggio:
Would you explain the E-177 request for new positions for testing electronic gaming devices?
Mr. Neilander:
The Legislature granted us authority to begin the process to hire four of the required six engineers. The board must be able to provide regulatory oversight to ensure the integrity and credibility of cashless wagering systems. Due to the increased complexity and volume of new gaming devices being submitted for approval to the State Gaming Control Board’s Electronic Services Division, the agency is unable to review and approve the devices in a timely manner. To date the review and approval process has nearly doubled in time from 30 days to 50 days. These delays have had a negative impact on the gaming industry’s ability to effectively compete. There is a backlog of gaming device approvals, which the new hires will reduce.
Senator Raggio:
To reduce the backlog of approvals back to 30 days, will the agency still require the additional new employees?
Mr. Neilander:
The first two positions will focus on reducing the backlog of approval, and the agency is expanding its ability to test electronic systems. In particular, we are focusing on cashless wagering systems, which interface with gaming devices. We also intend to provide more thorough reviews of modifications to gaming devices. We process anywhere from 1000 to 2000 gaming device modifications annually.
Senator Cegavske:
Will the fees be raised for the slot machines in convenience stores, and how many machines would an establishment be allowed? Also, does the lessor of the convenience store or supermarket charge space rent for slot machines?
Mr. Scherer:
The Legislature included a provision in A.B. No. 466 of the 71st Session for the agency to require applicants to get a signed statement under penalty of perjury from landlords if the rent was being increased because gaming was permitted on the premises. We are starting to compile the information to determine how many actually are increasing the rent when allowing gaming machines on the premises. It appears a number of landlords have required rent increases. A flat fee, rather than a percentage of revenue, is paid for each gaming machine in a convenience store or supermarket, so no gaming tax is charged on the amount.
Senator Cegavske:
Does the lessor of the establishment have to obtain a gaming license?
Mr. Scherer:
That is correct, unless the lessor receives a percentage of the revenue. We do a cursory background check on the landlord, and if red flags come up, the agency has the authority to call them forward for a finding of suitability.
The State Gaming Control Board’s regulation 3.015 sets forth the number of machines a restricted establishment can have. This regulation implements NRS 463.161, which states gaming at a restricted establishment must be incidental to the primary business. In determining what is incidental to the primary business, agency regulations limit a convenience store to seven gaming machines.
Whether this limitation should be increased is a policy decision for the Legislature and for local government zoning and gaming officials to determine. The agency is not opposed to an increase in the number of gaming machines, and it would be able to handle the additional regulation. The increase in the number of gaming machines would generate more revenue, because restricted establishments do pay a fee per gaming machine.
Most supermarkets and grocery stores have 15 gaming machines, which is the limit allowed for a restricted establishment. If they have more than 15 machines, the stores go into an unrestricted category, which in Clark and Washoe Counties would bring the stores under the resort/hotel requirements. Changes would be required in statutes to permit the stores to go above the 15 gaming machines limit and still remain in the restricted category.
Senator Cegavske:
Would it be more feasible to look at increasing the number of gaming machines in the convenience stores and bars? We could generate an additional $7.9 million annually just by raising the gaming machines limit to 15 from the current 7.
Senator Tiffany:
Where do the drug stores fit into the categorization?
Mr. Scherer:
Drug stores have the same limitations as supermarkets and grocery stores.
Senator Tiffany:
Drug stores can go to 15 gaming machines, but the convenience stores are limited to 7.
Mr. Scherer:
To exceed the limit of 7 up to the 15 maximum, the agency requires commission approval to show the gaming revenues are incidental to the primary business.
Gaming Control Board Investigation Fund – Budget Page GAMING-12 (Volume 1) Budget Account 244-4063
Mr. Neilander:
The State Gaming Control Board Investigative Fund, authorized by NRS 463.33, is an enterprise fund for the purposes of paying all expenses incurred by the board and the commission for investigations related to applications for gaming licenses, findings of suitability, or approvals. The special revenue of the investigative fund is the money received by the State from gaming license applicants.
Because of the unpredictable and fluctuating nature of the investigations, and the subsequent funding to pay for them, it is difficult to predict the amount of money that will pass through this account and the type of expenditures that will occur. Category controls serve no useful purpose in the administration of this budget account and may become impediments to quickly accessing funds to pay for investigations. Therefore, expenditures are only shown in two categories, as approved in the 69th Session of the Legislature.
Senator Coffin:
How far behind is the agency on key employee suitability application processing?
Mr. Neilander:
The agency has caught up on some of the applications backlog because it has not had as many new license applications coming in. The agency does not necessarily license every key employee but concentrates on the casino manager and on up the management ladder. At these levels, key employee applications are on file, and the agency completes cursory checks for any red flags. I can provide the committee with some up-to-date numbers.
Gaming Commission – Budget Page GAMING-8 (Volume 1)
Budget Account 101-4067
Senator Raggio:
It appears there is an incorrect number of FTEs in the Executive Budget, which lists zero FTEs. There are currently two FTEs in the State Gaming Commission budget.
Peter C. Bernhard, Chairman, Nevada Gaming Commission:
There were two positions authorized, but only one was filled, which was the senior research analyst. Administrative support was authorized for the position, but the need did not develop.
The commission has complied with the Governor’s guidelines, and this is a flat budget.
Senator Coffin:
Has the commission always been exempt from the open meeting law?
Mr. Bernhard:
Since I have been on the commission, all requirements of the open meeting law have strictly been followed. It is my understanding compliance is required.
Senator Raggio:
There are some special provisions in the open meeting law that permit the gaming commission to conduct closed meetings on confidential financial information. Is that correct?
Mr. Neilander:
Yes, there are some provisions in the open meeting law that allow for investigative hearings with or without public notice. The normal meetings are all posted 3 days in advance of the meeting. The commission uses a very detailed agenda, and all deliberations are conducted in the public forum.
Mr. Scherer:
Except for the closed confidential investigative hearings, all meetings are subject to the open meeting law. If there is a luncheon scheduled on meetings days, a deputy attorney general accompanies the commission to ensure there is no violation of the open meeting law. If a representative of the attorney general’s office does not oversee a lunch, an open meeting notice would have to be posted.
Mr. Neilander:
The agency requests maintenance of the current budget with adjustments being made when the bill is forthcoming.
Senator Raggio:
Budgets will be closing starting April 1.
Washington Office – Budget Page ELECTED-7 (Volume 1)
Budget Account 101-1011
Mike Pieper, Director, Nevada State Office, Division of Economic Development:
I have distributed a handout entitled “Testimony of Michael Pieper Director, Nevada Washington Office, Senate Finance Committee Assembly Committee on Ways and Means March 17, 2003” (Exhibit K). As an attachment to the handout, I have included a listing of the Washington Office accomplishments. The focus of the office is on transportation, tourism, and economic development. These are the agencies that fund the office’s budget. The top priority of the office is to bring more federal funding to the State.
Senator Raggio:
Can you work on getting more federal funding for the No Child Left Behind Act?
Mr. Pieper:
The request is on our list. I have attached a copy of the daily summary of grant opportunities sent to State agencies. An example of the office’s weekly summary is also included. This is a new service the office began this year.
The office has devoted much time and effort to the reauthorization of the Temporary Assistance to Needy Families (TANF) program. Nevada is experiencing large TANF caseload increases, which are driven by the population increases. The TANF program is currently operating under a temporary extension until June 2003 because Congress has not reauthorized the program.
Reauthorization of the federal highway program is another significant part of the office workload during this coming year. The federal highway program remains one of the leading sources of federal funds for the State. The State receives nearly $200 million annually with little or no required State match.
Senator Raggio:
Will the State be sanctioned on the availability of federal highway funds if the State does not reduce the driving under the influence intoxication level to .08?
Mr. Pieper:
Yes, that action is a certainty. The State has until October 1, 2003, to set the blood alcohol level at .08.
The office will be tracking a number of issues for the Nevada Commission on Tourism during the coming year. Last month, the office arranged meetings for the Lieutenant Governor with the Nevada congressional delegation to discuss funding for the Truckee River Recreation Plan. The congressional delegation was also asked to support tax incentives to keep the film industry in the United States. Canada and Mexico have begun to take a large portion of the film business away from the United States because those countries offer favorable tax treatment.
The office obtained approval for construction of a power plant and pipeline in Eureka County. The Federal Environmental Protection Agency (FEPA) held up approval of a new airshed designation for the Boulder Valley that would have prevented the project from moving forward. Approval of this new airshed was granted by the FEPA late last year.
A handout entitled “Nevada Washington Office Profit & Loss Budget Overview July 2003 through June 2004” (Exhibit L) has been distributed to you.
Senator Rawson:
The Medicaid and TANF funds definitely require a growth adjustment. The State has a high undocumented population, and for the last 40 years has experienced a high population growth.
The State has started a new dental school, and it is my understanding that New Mexico received federal funds to start its own dental school. We would like help in channeling federal funds to the development of Nevada’s dental school.
Mr. Pieper:
I will certainly look into the dental school funding. There is an existing high growth grant to help fund TANF, but unfortunately at this time the grant is frozen at the 2001 levels. It is not anticipated Congress will provide for any increases.
Senator Rawson:
If funds are going to be frozen at existing levels, the impact on the State with its growth could be devastating. We need all the influence possible to unfreeze the federal funds.
Senator Raggio:
Do you represent any other political entities in Washington?
Mr. Pieper:
I represent the City of Corona and the County of San Bernardino, which are small contracts.
Senator Tiffany:
What are the professional fees used for in this budget?
Mr. Pieper:
Those fees are for the contracted grant research staff I have.
Senator Tiffany:
What is the difference between conferences, and meetings and events?
Mr. Pieper:
I attend most of the National Governors’ Association meetings and the Western Governors’ Association meetings. Meetings and events are held in my office. Occasionally a conference room has to be rented as well as teleconferencing equipment.
Senator Tiffany:
What is the benefit for you in attending the governors’ conferences?
Mr. Pieper:
Typically, those meetings are focused on federal issues that affect all states. Governor Guinn is a member of both associations, and I act as staff for him in those meetings. Western Governors’ Association conferences focus on issues unique to the west. Energy and power issues have been areas of concentration.
Senator Tiffany:
Are you saying you go to the conferences, learn what the “hot buttons” are, then you go back to Congress and lobby in the interests of the State? Is that the benefit of attendance?
Mr. Pieper:
Yes, that is correct.
Senator Tiffany:
What is included in the entertainment portion of the budget?
Mr. Pieper:
I occasionally take the congressional staff or people who are in Washington to work on Nevada issues to lunch.
Senator Tiffany:
How much of the $6000 is for travel? How much is for entertainment?
Mr. Pieper:
Most of the amount is used for travel. I try to come back to Nevada bimonthly.
Senator Rhoads:
I would like to compliment Mr. Pieper on the job he is doing. The Legislative Committee on Public Lands goes to Washington once a year, and Mr. Pieper orchestrates the entire delegation.
Senator Raggio:
This meeting is adjourned at 10:35 a.m.
Judy Coolbaugh,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE: