MINUTES OF THE
SENATE Committee on Finance
Seventy-second Session
March 24, 2003
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Monday, March 24, 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
GUEST LEGISLATORS PRESENT:
Senator Mark E. Amodei, Capital Senatorial District
Senator Maurice E. Washington, Washoe County Senatorial District No. 2
STAFF MEMBERS PRESENT:
Gary L. Ghiggeri, Senate Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
H. Pepper Sturm, Chief Principal Research Analyst
James D. Earl, Committee Secretary
OTHERS PRESENT:
Michael J. Willden, Director, Department of Human Resources
Daniel G. Miles, Vice Chancellor, Finance and Administration, University and Community College System of Nevada
John P. Comeaux, Director, Department of Administration
Pamela B. Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Resources
Jim Lawrence, Lake Tahoe Program Coordinator, Division of State Lands, State Department of Conservation and Natural Resources
Dr. Alan Rice, Assistant Professor and Division Director, Pediatric Endocrinology and Diabetes, University of Nevada School of Medicine
Lonnie F. Shields, Lobbyist, Washoe County School District
Keith W. Rheault, Deputy Superintendent for Instructional, Research, and Evaluative Services, Department of Education
Dr. Craig Kadlub, Lobbyist, Clark County School District
Dr. Stephen McFarlane, Dean, University of Nevada School of Medicine
Philip Weyrick, Administrative Services Officer, Health Division, Department of Human Resources
Dr. Jane A. Nichols, Chancellor, University and Community College System of Nevada
Dr. John Lilley, President, University of Nevada, Reno
Richard C. Bostdorff, President, Tech Alliance
Rick Bennett, Lobbyist, Director of Government Relations, University of Nevada, Las Vegas
James T. Richardson, Lobbyist, Nevada Faculty Alliance
Rick E. Gimlin, Administrative Services Officer, State Department of Agriculture
John L. Wagner, Lobbyist, The Burke Consortium of Carson City
Stephen W. Driscoll, Lobbyist, City of Sparks
Robert F. Joiner, Advance Planning Manager, City of Sparks
Kevin Quint, Chair, Bureau of Alcohol and Drug Abuse Advisory Committee
Tom Bolan, Chief Executive Officer, Step 2
Senator Raggio:
This is the last day for committee introduction of bills. Before beginning, would staff please give us a status report? I think this is important since it may inform us of future difficulties.
Gary L. Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
You have a finance committee status report (Exhibit C). At the end of this week, the committee and subcommittees will have completed 99.3 percent of the budget assigned for review. You will have reviewed 405 of the 408 budgets in the Executive Budget.
You also have a comparison of the General Fund balances showing the Governor’s recommendation as compared to the current scenario (Exhibit D). The first change worthy of note involves the revenue line item “Additional General Fund Reversions – One-Shots, Etc.” The Governor initially recommended $61.2 million. That has recently been reduced to $60.7 million. Some $500,000 reserved for reversion by the Division of Child and Family Services is going to be released by the Governor to address funding shortfalls this year. Additionally, $15,000 for the Department of Motor Vehicles has been reduced.
Under the “Governor’s Recommended Supplemental Appropriations,” the supplemental for the electronic benefits transfer in the Welfare Division was recommended by the Governor in the amount of $132,000. The bill draft request (BDR) to be introduced in the Assembly is for $122,000. This represents a savings of $10,000. However, the Medicaid line item as recommended by the Governor was $7.3 million, while the bill to be introduced in the Assembly is for slightly over $9 million. This represents approximately $1.7 million more than recommended.
The next line item, “MH/DS – Rural Clinics”, is about $1000 less than what was recommended by the Governor. That bill will be introduced this morning in senate finance.
Regarding “Youth Community Services,” nothing was recommended in the Governor’s budget for this supplemental. A bill will be introduced in the Assembly this morning for $1.1 million.
Regarding line item “Department of Agriculture,” the committee is scheduled to hear that bill this morning. Nothing was recommended by the Governor as a supplemental. The bill as written provides for a $53,000 supplemental this year.
In summary, the supplemental appropriations have increased approximately $2.9 million over the level recommended by the Governor. The reversions have been reduced by approximately $515,000. This has a negative impact on the ending fund balance of approximately $3.4 million. Near the bottom of the page you will see “Ending Fund Balance with Revenue Enhancements” available as approximately $102.8 million. This figure includes a transfer of $135 million from the “rainy day fund.”
Senator Raggio:
Is the net difference down $2.2 million?
Mr. Ghiggeri:
Yes.
Senator Raggio:
Committee, that means our financial hole is about $2.5 million deeper.
Senator Tiffany:
The Medicaid account seems to be a major contributor to that $2.5 million. Do you know if we are paying down some of our past Medicaid debt faster than anticipated, in connection with bringing on the new medical management system?
Mr. Ghiggeri:
Part of the difference is attributed to that change. Staff has no information as to why that number increased. We first saw it when the bill draft was released to us over the weekend. We have nothing to support that increase at this time.
Senator Tiffany:
Who is making the decision to pay back Medicaid faster than anticipated? This impacts our ending fund balance.
Mr. Ghiggeri:
It will impact the ending fund balance this year; hopefully it will have a positive effect next year because those bills will be paid this year rather than next year.
Senator Tiffany:
We are concerned about the present. Can someone send the message to the Welfare Division to stop this?
Senator Raggio:
We discussed this in previous meetings. I believe we wanted to pay this debt down faster than we had been in light of a significant backlog.
Michael J. Willden, Director, Department of Human Resources:
The question deals not with the Welfare Division but rather with the Medicaid Services unit within the Division of Health Care Financing and Policy. The issue involves our current fiscal intermediary, Blue Cross Blue Shield Anthem. It has a significant backlog of claims. We need to get those claims cleared out before we convert to the new system being run by First Health. If we do not pay down now, we will have a large number of claims we will have to transfer to a new provider. This will cause a mess. Doctors and hospitals submitted claims to the Blue Cross system, and we will have to transfer them. We are trying to pay them down so we will have a minimum number of claims we have to transfer from one data processing system to the other data processing system. If we pay them now, while there will be an adverse impact this fiscal year (FY), we will save money in FY 2004 and FY 2005. This is a matter of timing, not the cash involved.
Senator Raggio:
Let us turn to BDRs. Mr. Miles, would you speak to the BDRs of interest to the university?
BILL DRAFT REQUEST S-1034: Makes various changes concerning securities issued by University and Community College System of Nevada. (Later introduced as Senate Bill 413.)
Daniel G. Miles, Vice Chancellor, Finance and Administration, University and Community College System of Nevada:
This bill has been brought forward in the last several sessions. The intent is to adjust the level at which we can issue revenue bonds at both University of Nevada, Reno (UNR) and University of Nevada, Las Vegas (UNLV). This raises the level as shown on page 4 of the bill. There are several projects in the planning stage at both campuses requiring higher bonding authority.
Senator Raggio:
Would this increase the authorized amount to $135.5 million for UNR and $182.5 million for UNLV? What particular projects are involved?
Mr. Miles:
In the last session, authority was provided to UNR for the university’s share of the library project, some $22 million. The UNR now finds it needs to construct a parking garage very quickly. The bonds would be repaid by parking fees. I would like to see the bill introduced, and, during the hearing, we will probably bring adjusted figures for both campuses.
Senator Raggio:
Is the increase for UNLV for specific purposes?
Mr. Miles:
There is a new student-housing unit planned. Also, the Governor’s budget recommends a science and engineering technology building, which may require up to $25 million in revenue bonds. We will bring a final reconciliation to the hearing.
SENATOR TIFFANY MOVED FOR INTRODUCTION OF BDR 34‑1034.
SENATOR RAWSON SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
*****
BILL DRAFT REQUEST 31-1035: Allows University and Community College System of Nevada to carry forward 50 percent of unexpended appropriations from one fiscal year to the following fiscal year. (Later introduced as Senate Bill 418.)
Senator Raggio:
Bill draft request 10-1035 would carry forward 50 percent of unexpended appropriations. I believe we have seen this before.
Mr. Miles:
This bill is supported and brought forward by the Board of Regents. A bill last session would have allowed 100 percent of unexpended state funds to remain within the system. This bill would allow only 50 percent of the unexpended funds to remain.
SENATOR RAWSON MOVED FOR INTRODUCTION OF BDR 31‑1035.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Senator Mathews:
Will this come back to us as a bill?
Senator Raggio:
Yes. These bills are being introduced today.
BILL DRAFT REQUEST S-1267: Makes supplemental appropriation to Department of Motor Vehicles for unanticipated shortfall in money for Fiscal Year 2002-2003 resulting from increased postage rates and mailing requirements. (Later introduced as Senate Bill 410.)
Senator Raggio:
This BDR involves a supplemental appropriation from the State Highway Fund of $600,000 to cover a shortfall. There is a note on the bill, “Contains Appropriation not included in Executive Budget.” Staff indicates this is not the case; the appropriation is not so included. An amended bill will come back with an asterisk on it indicating that the appropriation is not included in the Executive Budget. I will entertain a motion to introduce the corrected BDR.
SENATOR RAWSON MOVED FOR THE INTRODUCTION OF BDR S‑1267 AS CORRECTED.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
BILL DRAFT REQUEST 58-1255: Repeals prospective increase in number of commissioners comprising Public Utilities Commission of Nevada. (Later introduced as Senate Bill 414.)
SENATOR RAWSON MOVED FOR INTRODUCTION OF BDR S‑1255.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
BILL DRAFT REQUEST 40-1243: Revises certain provisions relating to qualifications and appointment of State Health Officer. (Later introduced as Senate Bill 411.)
Senator Raggio:
There were difficulties in appointing a State Health Officer because of certain qualifications relating to education and work experience. This BDR also places the position in the unqualified service.
SENATOR RAWSON MOVED FOR INTRODUCTION OF BDR 40‑1243.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
BILL DRAFT REQUEST S-1225: Makes supplemental appropriation to Western Interstate Commission for Higher Education for unanticipated shortfall in money for Fiscal Year 2002-2003 resulting from reclassification of position. (Later introduced as Senate Bill 407.)
Senator Raggio:
This BDR makes a supplemental appropriation of $3800 for an unanticipated shortfall in the reclassification of a position.
SENATOR RAWSON MOVED FOR INTRODUCTION OF BDR S‑1225.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
BILL DRAFT REQUEST 24-1265: Creates Election Fund to receive money pursuant to Help America Vote Act of 2002. (Later introduced as Senate Bill 417.)
SENATOR RAWSON MOVED FOR INTRODUCTION OF BDR 24‑1265.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
BILL DRAFT REQUEST 40-1244: Authorizes State Board of Health to allow or require payment of fees for licensing medical and other related facilities in installments. (Later introduced as Senate Bill 412.)
SENATOR RAWSON MOVED FOR INTRODUCTION OF BDR 40‑1244
SENATOR COFFIN SECONDED THE MOTION
THE MOTION CARRIED UNANIMOUSLY.
*****
BILL DRAFT REQUEST S-1212: Authorizes issuance of bonds and other securities for completion of Fish Hatchery Refurbishment Project. (Later introduced as Senate Bill 416.)
SENATOR RAWSON MOVED FOR INTRODUCTION OF BDR S‑1212.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
BILL DRAFT REQUEST S-1229: Makes supplemental appropriation to Division of Mental Health and Developmental Services of Department of Human Resources for unanticipated shortfall in Fiscal Year 2002-2003 for expenditures relating to psychiatric services and clinical hours at rural clinics. (Later introduced as Senate Bill 408.)
Senator Raggio:
The supplemental appropriation associated with this BDR is $613,557 for a shortfall related to psychiatric services.
SENATOR COFFIN MOVED FOR INTRODUCTION OF BDR S‑1229.
SENATOR RAWSON SECONDED THE MOTION.
THE MOTION PASSED UNANIMOUSLY.
*****
BILL DRAFT REQUEST 40-1266: Makes various changes to provisions governing Pollution Control Account administered by Department of Motor Vehicles. (Later introduced as Senate Bill 419.)
SENATOR RAWSON MOVED FOR INTRODUCTION OF BDR 40‑1266.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
BILL DRAFT REQUEST 32-1264: Removes certain restrictions on use of money in Estate Tax Account in Endowment Fund of University and Community College System of Nevada. (Later introduced as Senate Bill 415.)
Senator Raggio:
This bill allows use of Estate Tax Account money in the university and community college system endowment fund.
SENATOR RAWSON MOVED FOR INTRODUCTION OF BDR 32‑1264.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
BILL DRAFT REQUEST 45-1254: Makes various changes relating to Division of Wildlife of State Department of Conservation and Natural Resources. (Later introduced as Senate Bill 420.)
Senator Raggio:
This BDR relates to the Division of Wildlife. It makes adjustments in fees pursuant to the consumer price index. It authorizes the division to suspend, revoke, or refuse to issue licenses if a person does not pay civil penalties.
SENATOR RAWSON MOVED FOR INTRODUCTION OF BDR 45‑1254.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
BILL DRAFT REQUEST 1-414: Authorizes justices of the peace and municipal judges to participate in Judicial Retirement Plan under certain circumstances. (Later introduced as Senate Bill 409.)
Senator Raggio:
The Nevada Judges Association requested this BDR.
SENATOR RAWSON MOVED FOR INTRODUCTION OF BDR 1‑414.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Senator Raggio:
Before we hear the scheduled bills, let us look at several others. First, let us turn to S.B. 164. This committee heard this bill on March 3, 2003. It was referred here because of the fiscal note.
SENATE BILL 164: Creates the Office of Disability Services within Department of Human Resources to coordinate and administer certain services and programs for persons with disabilities. (BDR 38-701)
Michael J. Willden, Director, Department of Human Resources:
I understand consideration is being given to removing the portion of S.B. 164 dealing with the ombudsman. That section has a fiscal impact of about $130,000 annually.
Senator Raggio:
Section 28 of the bill appropriates $130,000 each year for legal services. Is that the ombudsman provision?
Mr. Willden:
That is correct.
Senator Raggio:
Is this bill useable if that provision is removed?
Mr. Willden:
Yes, it is. We do have a few amendments we could make available.
Senator Raggio:
I would like staff to comment on whether this is consistent with the Governor’s budget.
Mr. Ghiggeri:
The Governor’s recommended budget provides for the transfer of this office from the Department of Employment, Training and Rehabilitation to the Department of Human Resources. This legislation is consistent with that recommendation. The amendment makes some technical changes human resources has requested.
Mr. Willden:
The amendments (Exhibit E) begin in section 21 of the bill. Because the Office of Community-Based Services will be moving from the Department of Employment, Training and Rehabilitation into the director’s office of the Department of Human Resources, we simply need to clean up text describing the director. I become the relevant director. Additionally, we need to make text changes relating to advisory committees. Instead of having the administrator of the Rehabilitation Division make appointments from that staff, I will be making the appointments from the office of disability services. There are some additional technical changes reflecting the change in umbrella organizations. Lastly, we ask for clarifying language to ensure certain functions are included in our governing statutes to reflect the reorganization. The bill is useful without the ombudsman portion and is necessary to implement the organizational transfer.
Senator Raggio:
Would the amendment include both your proposal (Exhibit E) and the deletion of section 28?
Mr. Willden:
That is correct.
Senator Rawson:
I think this is a wise move. Senator Mathews and I were approached recently by the deaf community. They proposed an amendment drawing attention to the problems of the aurally impaired (Exhibit F).
Senator Raggio:
Does this proposal cover that issue?
Senator Rawson:
I do not believe so. The best approach might be to pass additional proposals to Mr. Willden to see whether they can be incorporated without adding a fiscal note.
Senator Raggio:
Let us do that and delay taking action on S.B. 164.
Senator Coffin:
Is the definition of “traumatic brain injury” on page 6, line 9, a new definition? Does it narrow the class of people having traumatic brain injuries, thereby affecting the number of people being provided assistance?
Mr. Willden:
It is my understanding we do not intend to limit the scope of application of the statute. This is the language produced by the interim strategic planning committee for the disabled. It is part of the effort to move personal assistance issues into the Office of Community-Based Services. I do not understand what you see in the text that might suggest a limitation.
Senator Coffin:
The modifying language lists three categories as exclusions. Are there people now receiving treatment, perhaps in these three categories, who will be excluded from treatment in the future?
Mr. Willden:
I do not know. I will have to provide that information later.
Senator Raggio:
Since we are not going to process the bill today, please get that information to us.
Further, to the concerns of Senators Mathews and Rawson, section 11 of the bill deals with a telecommunications surcharge. Originally that was to be used to distribute TDDs (telephone devices for the deaf). I think the concern of the deaf community is that money is being collected by the surcharge, and yet the need for new devices has diminished because so many have already been distributed. The surcharge money should be dedicated, so far as possible, to the needs of the hearing impaired community. I would like to have you provide us a report on this issue, specifically how that money will be used in the future. I was responsible for the surcharge. I took a lot of heat about it, and I want to ensure it is used for an appropriate purpose.
Mr. Willden:
I will do that.
Senator Raggio:
Let us move on to address S.B. 198. This bill was also heard in this committee on March 12. Are there any amendments to this bill?
SENATE BILL 198: Clarifies provision governing advances to budget accounts supported by administrative assessments. (BDR 31-604)
Mr. Ghiggeri:
There are no amendments. I would like to clarify a proposal rendering this account similar to fee-funded accounts. When this bill was heard, you heard testimony from the criminal history repository expressing concern that it would have no access to the Interim Finance Committee (IFC) because its funding comes solely from administrative assessments. Other budgets funded by fees, such as that of the State Fire Marshal Division, contain a nominal appropriation from the General Fund of $100 to provide access to the IFC. A similar arrangement would satisfy the needs of the repository in the event it has a funding need during the interim.
Senator Raggio:
I think that would be the better way to address the problem. Is there any problem foreseen by the Department of Administration?
John P. Comeaux, Director, Department of Administration:
We have no objection.
Senator Raggio:
In that case, we will process the bill, noting the modest change in the budget.
SENATOR RAWSON MOVED TO DO PASS S.B. 198.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Senator Cegavske:
I have a question for staff regarding S.B 164. Will the Governor’s rehabilitation council come within the scope of its provision?
Bob Guernsey, Principal Deputy Fiscal Analyst, Legislative Counsel Bureau:
The intent of that bill, with that recommendation from the disability study committee, is to move the agencies providing direct service to clients into the Department of Human Resources. All employment services would remain with the Department of Training, Employment and Rehabilitation. My understanding is that vocational rehabilitation would continue to reside in the Department of Human Resources, but I would like to confirm that.
Senator Cegavske:
I would like to have clarification on that issue.
Senator Raggio:
I would like to allow Senator Amodei to speak to S.B. 46.
SENATE BILL 46: Authorizes issuance of general obligation bonds to carry out Environmental Improvement Program in Lake Tahoe Basin. (BDR S-174)
Senator Mark E. Amodei, Capital Senatorial District:
I am here in my capacity as one of the last members of the interim committee to review programs in the Lake Tahoe Basin. This bill is a recommendation from that committee to continue the bond program enacted in 2001. In 1999 the Legislature provided for the periodic issue of up to $53.2 million in bonds to implement the environmental protection program in the basin over the 6-year period between 2001 and 2007. The bill before you today approves an installment toward that end of $9.7 million for the next biennium. In 1999 we approved the immediate issuance of $3.2 million of bonds. In 2001 a subsequent measure approved an additional $16.2 million in bonds for this biennium. Although Nevada has led the way in the provision of funds to implement the environmental improvement program within the basin, the other partners, including California, the federal government, local entities, and private sector participants have also come up to speed in discharging their obligations. We urge your approval of this installment of the bonds.
Senator Tiffany:
What projects are funded by the $16.2 million you mentioned?
Pamela B. Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Resources:
We have prepared a PowerPoint presentation summarizing our programs and the expenditure of the $16.2 million of funding from last session and the $3.2 million before that (Exhibit G. Original is on file in the Research Library.). You also have a paper summarizing different projects and their funding years; the last three pages detail projects and their current status (Exhibit H). We have completed 30 projects during the last 5 years. I am very proud of the interagency team. We have 10 projects scheduled for completion this year; 12 projects are in design and scheduled for completion in 2004. We have 12 long‑term, continuing projects, and 17 projects identified for the future.
Jim Lawrence, Lake Tahoe Program Coordinator, Division of State Lands, State Department of Conservation and Natural Resources:
I know the committee is pressed for time, so I will address key points included in our visual presentation. Environmental problems associated with Lake Tahoe are well documented. On average, Lake Tahoe has lost about a foot of clarity each year over the last 30 years. Scientific research shows that clarity is improving over the last several years. Clarity is now the best it has been in the last 10 years. However, continued action is needed to reverse longer-term degradation. Environmental problems shown on page 3 include erosion, loss of stream zones, urban runoff, poor forest health, and loss of wildlife habitat. Bare slopes allow sediment to flow directly into the lake with a corresponding lack of clarity.
There was a presidential summit in 1997. California and Nevada pledged support for an environmental improvement program, calling for $908 million in capital projects. Nevada was the first to commit its full share. California and the federal government are also committing their full shares. Recently, at the federal level, the Lake Tahoe Restoration Act was passed enabling full federal funding. Additionally, we have gotten money from the Environmental Protection Agency (EPA) and the Army Corps of Engineers. The table on page 5 shows the source of Nevada funding.
The table on page 6 shows how we intend to spend the $82 million across eight environmental thresholds identified by the Tahoe Regional Planning Agency (TRPA): water quality, soils, vegetation, fisheries, recreation, wildlife, air quality, and scenic quality. The lead agencies are also identified, and the financial distribution is shown in the resulting matrix. The $26 million associated with State lands and water quality involves primarily grants to local governments for environment retrofits along roads.
Senator Raggio:
Is $7.3 million of the request designated for water quality? How will it be utilized?
Mr. Lawrence:
That is the correct amount. It involves a grant program to local governments, the counties, and general improvement districts for road improvements around the lake. The roads were originally constructed without slope control allowing snowmelt to carry sediment directly into the streams that feed the lake. The money is used to stabilize soil on the slopes.
Senator Raggio:
Is there a specific plan as to the distribution of this $7.3 million?
Mr. Lawrence:
We have a breakdown of projects and subdivisions.
Senator Raggio:
Please present that plan.
Mr. Lawrence:
Our regional coordination involves a number of partnerships with the entities listed on page 8. We also involve a variety of scientific communities to ensure we get the most for our dollars.
Senator Raggio:
How does the Desert Research Institute (DRI) fit into your plan relating to this particular authorization? I see it listed.
Mr. Lawrence:
The DRI is not part of this particular authorization. We work with the DRI to ensure we incorporate its research results into our projects.
Senator Mathews:
The funding matrix on page 5 shows no funding from the Lake Tahoe license plate program in FY 2002 but income of $194,000 in FY2000. Has the program expired?
Mr. Lawrence:
That program generates about $300,000 in funds annually. Not all of that goes directly to identified environmental improvement projects. The $194,000 you refer to involved a specific parking lot and water quality projects. The other funds are used for important programs; we may fund DRI research to determine the effectiveness of our projects. However, funds of that nature are not counted as contributing to a specific project.
Senator Mathews:
Can you show me where in your documentation I can find the total amount of revenue generated by that license plate program?
Mr. Lawrence:
I will be glad to provide that information.
The slide on page 9 shows the work the Nevada Department of Transportation (NDOT) has completed. It has done a tremendous amount of work on the roads near the lake, completing some 11 projects involving $23.5 million. The slide shows a list of improvements, which includes revegetation of slopes and drop inlets, as well as other devices, for sediment filtration. The slide on page 10 illustrates NDOT’s future 18 projects, involving some 29 miles of roadway and a cost of $78.6 million. The work focuses on drainage issues.
Our water quality program involves grants to local governments; 28 projects have been identified as high priority. Eleven have been completed; twelve are either ready to go to bid or are in conceptual planning; five are scheduled for future years. There are pictures on page 12 illustrating some of the project facilities.
Stream restoration is focused in two geographical areas, one in Incline Village, one in south Stateline. Research shows these areas to be prime conduits for sediment runoff.
Senator Raggio:
What are you doing in the Tahoe Marina area in California?
Mr. Lawrence:
The California Tahoe Conservancy recently completed a large project in the Tahoe Keys area. I can get you additional information.
Senator Raggio:
We have the remainder of your presentation and will include it in the record in the interests of time.
Ms. Wilcox:
I need to point out how this bill differs from its counterpart in 2001. Section 3 deals with fund allocation if there are insufficient funds for a project. The text on page 4, lines 1 through 7, combines contingency monies. Separate acts have been passed by the Legislature; each set up its own contingency fund. This has resulted in an accounting nightmare. This provision combines the contingency money provided by this fund with the funds provided previously.
Senator Raggio:
I ask staff to review this provision. We will close the hearing on S.B 46 and move on to S.B. 34, coming from the education committee.
SENATE BILL 34: Revises provisions governing pupils in public schools. (BDR 34-639)
H. Pepper Sturm, Chief Principal Research Analyst, Research Division, Legislative Counsel Bureau:
This bill deals with two recommendations from the interim Legislative Committee on Education: early admission of pupils into kindergarten, and a technical correction dealing with student promotion to Grade 8. My written testimony (Exhibit I) expands on the following summary.
Current statutes limit entrance to kindergarten and first grade to children reaching a certain age by September 30. There is no provision for exceptions and no appeals process for parents who believe their child is developmentally prepared. This legislation provides for the school district to conduct a developmental screening assessment upon parental request to determine if a child is ready for school despite having a birthday after the cutoff date.
The bill also resolves potential conflicts in two existing statutes. One statute prohibits social promotion from Grade 8 into high school. Another statute prohibits retaining a student in a grade for more than 1 year. Although the attorney general’s office has issued an opinion reconciling the two statutes, the interim committee recommended an amendment in order to resolve any conflict. The bill clarifies that the requirements to be promoted to high school supersede the prohibition against retention in a grade for more than 1 year.
Since there is a substantial fiscal note associated with this bill, I have examined the practice of some other states. A mock-up of a proposed amendment to S.B. 34 has been distributed (Exhibit J). The permissive language to be added beginning on page 1, line 12, is based on similar language in a Delaware statute. The intent of the Delaware provision is to allow early kindergarten admission for gifted children. My contact suggested somehow memorializing such legislative intent, and taking regulatory action to further define a gifted child to ensure consistent application across school districts.
Senator Raggio:
Does Delaware use a particular definition?
Mr. Sturm:
A proposal will be forthcoming in the near future to address implementation problems.
Senator Raggio:
Before taking questions, I want to indicate this issue came before the committee on education where it has been addressed a number of times. We have heard from parents over the years who described their frustrations at the inability to enroll their child because the child’s birthday was beyond the cutoff date of September 30. Some parents said they started their children in California schools and then transferred them to Nevada to circumvent this situation. This is the reason for committee consideration. There is an understanding that children develop at different rates. This is the committee’s response. The bill would allow parents to seek an assessment within 6 months of the child’s fifth birthday. As with other well-intentioned ideas, the committee was unaware of any potential fiscal impact. The fiscal impact, depending on which note you review, could be considerable. Estimates include additional classrooms, furnishings, teachers’ salaries and benefits, tests, and instruction materials. Clark County School District had a fiscal note of almost $16 million. Washoe County School District’s fiscal impact would be $4.8 million. The numbers speak for themselves; this would be impossible this session if the fiscal impacts were of that magnitude. This is why I asked Mr. Sturm to investigate the actions of other states. The distributed amendment does make admission permissive. Additionally, there is an attempt to limit application to children who are developing faster to be considered for early admission.
Senator Tiffany:
I appreciate this being brought to us. One of my constituents had a gifted child who had been schooled since age 2. I have two questions. These parents claimed that somehow other children were admitted where their child was not. Is there a way to circumvent the age requirement? Second, I asked the school district for its best estimate of the numbers involved. The response seemed arbitrary. Do you have a nonarbitrary estimate of the number of children affected?
Mr. Sturm:
I know of no allowance for exceptions. While some parents in northern Nevada have taken children to South Lake Tahoe or Truckee to attend kindergarten under California’s early entry practices, there is a provision in our statute prohibiting transfers into Nevada schools if the district determines it is done to circumvent Nevada law.
I talked to officials in Delaware about the impact of the change in its state law. I was told that the provision had been in place for so long that they could not evaluate the initial impact. They reported the current impact was not huge. Delaware officials are preparing to define “gifted” as a child with an IQ (intelligence quotient) of 130 or more. Apparently less than 2 percent of children nationally meet that standard.
Senator Tiffany:
If we were to establish that as a standard for early entry, could the parents pay for the testing?
Mr. Sturm:
Staff indicated that the screening cost, even under the existing provisions, is not extremely high.
Senator Raggio:
What we have before us in the fiscal note is based on a $31 price for a 30-pack of tests and $90 for a 120-pack of tests. This would not exceed $20,000 statewide annually.
Senator Tiffany:
I do not see why parents should not pay.
Senator Raggio:
This is only a very small part of the fiscal costs.
Dr. Alan Rice, Assistant Professor and Division Director, Pediatric Endocrinology and Diabetes, University of Nevada School of Medicine:
I had not intended to speak on this bill. I only want to point out that, to my knowledge, it is not possible to accurately test a child’s IQ before age 6.
Senator Raggio:
Thank you. We appreciate your testimony.
Lonnie F. Shields, Lobbyist, Washoe County School District:
I want to express concern about the fiscal impact S.B. 34 could have on the Washoe County School District. We estimate the impact at about $4,863,866 for the first year. The methodology behind this estimate is explained in my written testimony (Exhibit K). In short, we assumed about half the children in kindergarten and first grade have birthdays that would be affected by this proposal. Our calculations also assumed that 25 percent of those children affected would likely pass an assessment test. Our projected costs include new portable classrooms, including setup and furnishings; additional teachers, 8 for kindergarten and 37 for first grade; supplies and instructional materials; and transportation of additional children to their schools.
If the intent of this proposal is to devise some kind of appeal process for parents wishing to circumvent the dates specified in law, then we would like to have an opportunity to participate in the development of such an appeal process.
As written, the Washoe County School District cannot support this legislation.
Senator Raggio:
Would section 2, dealing with high school admission, have any fiscal impact?
Mr. Shields:
To my knowledge, there would be no fiscal impact flowing from that provision.
Senator Tiffany:
You estimated that 25 percent of the children applying for early entry would pass the test. Where does this figure come from?
Mr. Shields:
That is the best estimate of our psychological department.
Senator Tiffany:
Was the $8 million you say you lost due to binding arbitration?
Mr. Shields:
Last year we cut about $8.5 million from our budget. This was not due to binding arbitration. This was due to the increased costs of providing the programs necessary to educate children. There were simply not enough dollars in the pot.
Keith W. Rheault, Deputy Superintendent for Instructional, Research, and Evaluative Services, Department of Education:
I want to clarify the fiscal note the department submitted. The fiscal cost we identified for the assessments included only materials to train individuals within the school districts to use the test validated for kindergarten students. It does not include costs to purchase materials.
Dr. Craig Kadlub, Lobbyist, Clark County School District:
We feel the current statutory threshold is concise, definitive, and serves us well. Moving the threshold back 6 months would only move the debate back 6 months. There will always be someone who misses an age cutoff. Rather than expanding the window of eligibility for students who may be able to attend kindergarten on a half-day basis, we believe it would be more beneficial to offer a full-day program to the kindergartners we already have.
Senator Raggio:
We will close the hearing on S.B. 34 and address S.B. 258.
SENATE BILL 258: Makes appropriations to University of Nevada, Reno, for continuation of Pediatric Diabetes and Endocrinology Center at its School of Medicine. (BDR S-1204)
Senator Rawson:
I would like to make introductory remarks. We have dealt with this issue for several sessions. It has been the source of major testimony during two interim sessions. It is before us now because of cuts made during the budget process. Juvenile diabetes is manageable with early aggressive treatment. If unmanaged, there is a high mortality and a high morbidity entailing blindness, kidney failure, loss of limbs, and susceptibility to infection. This budget issue is literally a matter of life and death for the children affected. We keep fighting the battle for this bill.
This bill has two elements; there is also a necessary amendment. First, there is an appropriation for $59,000 to finish this budget year. The bill is active on July 1, 2003; this is too late for this year. The second issue is $413,000 covering the next biennium. This is an essential statewide program. We need to ensure this becomes part of the base budget so we do not have to deal with the issue year after year.
There are several things we could do. We could modify the bill if we were concerned about early money this session. We could probably handle the next biennium in the budget process rather than through this bill. It is possible there will be no appetite this year to process the matter at all. However, loss of this program would be a tremendous loss.
There are several people here to testify. I have asked that there not be a large show of parents despite this being an emotional issue.
Dr. Stephen McFarlane, Dean, University of Nevada School of Medicine:
This disease is particularly horrible and devastating. It can strike anywhere in the body. It can strike the brain, the eyes, the limbs, and the kidneys. If not managed, affected children can have a drop in blood sugar when sleeping and slip away in the night. They require constant monitoring. I speak with some knowledge as a grandparent of a child diagnosed with this disorder at age 5. He is now 7 and doing well. His parents manage him well.
If there is a silver lining, it is that the disease is treatable and manageable. That requires a team approach involving a physician, specially trained as a pediatric endocrinologist; a nurse practitioner, well trained in medical education for parents; and a dietician to train the parents in diet management. These people are on-call essentially 24 hours a day, 7 days a week. There are two board certified pediatric endocrinologists in Nevada.
This is an extremely important program for Nevada. It is small in both the north and south. Without this program hundreds of children would be doomed to an eventual death, while also suffering organ destruction. This program has been supported from various places in the past. I have used money from the dean’s contingency fund, committing that entire fund to make up for the budget cut of 3 percent. I urge your serious consideration.
Senator Raggio:
How is the amount calculated? Can you tell us the total operating expense for this program?
Dr. McFarlane:
The money goes for salaries for staff and operation including supplies. We can make that information available. There is also some rent involved.
Senator Raggio:
Is this the complete cost for this operation?
Dr. Rice:
Yes, it is.
Senator Cegavske:
What type of federal funds do we receive? I ask because I know Nevada has a high incidence of diabetes in young children. I understand that this is linked to increased obesity in children.
Dr. Rice:
The State has no federal funds for diabetes or obesity prevention programs. I plan to apply for federal and other grants for clinical research in those areas.
Senator Cegavske:
Are there federal dollars?
Dr. Rice:
Federal funding exists only for clinical resources in those areas.
Dr. McFarlane:
I would like to add a footnote. Some youngsters with this disorder are extremely fragile; their condition can change hourly. Their condition can depend on their activity level. Parents just learning how to manage a child have to be able to call someone night and day. This becomes very hard for the two pediatric endocrinologists in the State.
Senator Cegavske:
Is there a 24-hour hotline?
Dr. McFarlane:
There are numbers in both the north and south given to the parents to contact health professionals. This is a 24-hour job.
Senator Cegavske:
Do you get insurance reimbursement from the patients?
Dr. McFarlane:
Unfortunately, this is one of the lowest reimbursed areas. There often is not a lot that one can bill for. The time of a team social worker or a dietician giving information over the phone is not billable. So, the reimbursement rate is quite low. That is one of the problems with the program. Without total funding, trying to rely on reimbursements, we might collect only $50,000 or $60,000 a year.
Senator Cegavske:
Are you dealing with more uninsured children?
Dr. McFarlane:
Yes.
Senator Cegavske:
Have you found an increase in diabetes among the college population?
Dr. McFarlane:
I do not have data over time. Certainly there are a lot of affected individuals. We have the numbers broken down by counties. There is no surprise the highest occurrences are in Clark and Washoe Counties. The magnitude of the problem is great, not only because of the numbers, but also because of how a condition can change minute-by-minute.
Dr. Rice:
One reason for the great fear of parents of newly diagnosed diabetic children is the poor prognosis associated with non-intensively managed diabetes. Most parents know of an elder relative suffering from vision loss, kidney failure, limb loss, or premature death as a result of non-intensively managed diabetes. The results of the diabetes complications and control trial in 1995 demonstrated that the prognosis for diabetics is considerably improved when they are treated with an intensive management regimen.
In this study, researchers divided patients into two groups. The first group was conventionally managed according to the standards of the time. This meant less than four physician visits annually and infrequent insulin dose adjustments. The blood glucose levels in this group averaged in the 200 and 300 ranges, considerably above the normal nondiabetic range of 70 to 140 milligrams per deciliter. The second group was intensively managed. Patients were encouraged to visit their physicians frequently and also to contact diabetes teams for frequent dose adjustments with the aim of achieving near normal blood glucose levels. The results of this study reveal the risk for development of vision loss, kidney failure, and neurological damage that might lead to limb loss, was much greater in the conventionally managed group than in the intensively managed group. The risk for development of these problems in the intensively managed group was almost as low as nondiabetics.
Many diabetic children in Nevada do not have access to intensive diabetic management for the following reasons: distance, lack of insurance, and insufficiently trained caregivers. Many live in rural or urban areas where there are no pediatric diabetic centers, and where a long trip is required. Many parents are concerned about incurring an overwhelming bill. Also, there are an insufficient number of properly trained health care workers to take care of the intensive management needs of diabetic children. Intensive management is time consuming. Intervention such as telephone insulin dose adjustments and diabetes education are poorly reimbursed or not reimbursed at all by third-party payers. As a result, many non-pediatric endocrine physicians elect not to implement intensive diabetes management in their practices.
For these reasons, many children in Nevada are at great risk for the development of psychologically distressing, socially impairing, and, for the State, costly complications of diabetes including vision loss, life‑threatening kidney failure, and limb loss. They are also at increased risk for premature death. The pediatric diabetes program at the University of Nevada School of Medicine will overcome the barriers to intensive diabetes management by organizing outreach clinics in rural and underserved urban areas; utilizing telemedicine to complement these clinics; training physicians, dieticians, and nurses in intensive diabetes management; managing the diabetes care of patients with primary physicians unable to provide intensive management; and providing inpatient and outpatient telemedicine and telephone consultations for diabetic patients and their health care providers, families, and other caretakers.
Senator Coffin:
This program would be on my short list of appropriations if there is money at the end of the session. I hope you have enough to last the rest of the fiscal year. I want to ensure we are not talking only about diabetes. We should be talking about cancer, the symptoms oncologists do not deal with but which are dealt with by endocrinologists. We need to address mentally ill children with thyroid imbalances caused by medicines. I think there is a lot of burnout in this field. The men and women working in this field cannot work very long with dying and disabled children. How many people are we training in this field?
Dr. Rice:
You are correct; the field of pediatric endocrinology is very broad. I am grateful for the training to assist in the care of these children. It is not as distressful presently as it was 20 years ago when the prognosis for diabetics and children with other endocrine problems was much worse. I am available to my patients 24 hours a day, every day of the year. There is concern about burnout in that situation, but I do not find it overwhelming. I anticipate the needs of the State can be met through my efforts and, eventually, those of another physician.
Senator Coffin:
Is Dr. Artman still in the program?
Dr. Rice:
He is still in Las Vegas, but he is moving to New York in June.
Senator Coffin:
Burnout is one reason he is moving. He is not an old man and neither are you. You may be able to handle the hot line now, but you are not yet 40. It is critical we attract more people to the field. The school of medicine needs to train more people.
Dr. Rice:
As the needs of diabetic children in Nevada increase with State population growth, there will be a need for the diabetes program to expand.
Dr. McFarlane:
That is an important point. When creating this program, we had to bring Dr. Rice from out of state, and we had to partner with hospitals. Keeping the programs going has involved a balancing act because of the low reimbursement rate. Obviously, the need is real. While I know there are difficulties in maintaining a program like this, no one could really oppose it. The main point is that this disease is manageable when aggressively treated.
Senator Raggio:
This bill provides funding for only the first year.
Dr. McFarlane:
I think Senator Rawson addressed this earlier. We would like to see this program become part of the base budget.
Senator Raggio:
Is this the cost for one year? Would we need twice the amount to cover the biennium?
Dr. McFarlane:
Yes, the cost is for only a year; the cost would double over the biennium.
Senator Tiffany:
Do you have offices in both the north and south?
Dr. Rice:
I have an office in Las Vegas. Another doctor has been seeing patients in Reno. I just learned that the situation involving that doctor is in flux.
Senator Tiffany:
I am just trying to get the picture. You do have an office, with scheduled patients, attached to the school of medicine because physicians are trained in rotation. Is that correct?
Dr. Rice:
I am on the faculty.
Senator Tiffany:
I used to be married to a doctor. Part of his problem was running the office efficiently. Billing was a big problem. I was trying to copy some of this down. I do not know what “intensive diabetes management” means, but it involves a dietician, education, and some social services. You said these were not billable. Is there something we could do that would make billable services and reimbursement rates increase instead of our simply throwing more money at the problem? Doctors can always use efficiency in their offices.
Dr. Rice:
Dietary services and nurse education services are billable to some extent when the patient has health insurance or is covered by Medicaid, although not always to the extent needed to achieve intensive diabetes education. Intensive diabetes management, as defined by the American Diabetes Association, requires visits every 3 months with a physician specializing in diabetes care. The diabetes team should have, as a minimum, a registered dietician and a nurse who is a certified diabetes educator or is well along that path.
Senator Tiffany:
Are you saying you are as efficient as you are going to be in your office?
Dr. Rice:
I just moved to Nevada from North Carolina last May. I think we are quite efficient and becoming more so.
Senator Tiffany:
I understand that billing from the school of medicine, particularly the Las Vegas offices, has to be sent to Reno. This would push your cash flow back a minimum of 120 days.
Dr. McFarlane:
I do not believe the billing has to go to Reno. We have three practice plan operations: one in the south, one in the north, and one statewide. Billing in the south is managed by the practice plan located in Las Vegas.
Senator Tiffany:
I will check my references again. I am trying to get at office efficiency. We want you to stay alive. Perhaps we need to do other things; $850,000 is a lot of money for our budget currently. We do not want you to go away.
Dr. McFarlane:
One of the things you mentioned is certainly true. There are a lot of billing restrictions in medicine today. Additionally, even though one can bill, recovery is another issue. The more procedures there are available, the more things to bill for. In pediatric endocrinology, specifically diabetes treatment, there are not many procedures. Surgery, by contrast, recovers more because it is largely procedure‑based.
Senator Tiffany:
Are the patients you see mostly private pay and Medicaid?
Dr. McFarlane:
We see all comers.
Dr. Rice:
I would like to provide another example. One aspect of pediatric diabetes is helping with child weight control programs. Obese children are more likely to become obese adults and to develop problems associated with obesity including childhood diabetes and cardiovascular complications. When insurance companies see a diagnosis of obesity, they often refuse to reimburse.
Senator Raggio:
We are going to have to move along. Mr. Weyrick, do you have something to add?
Philip Weyrick, Administrative Services Officer, Health Division, Department of Human Resources:
The Health Division currently has a federal grant for the prevention of diabetes. It is about $240,000 for education and prevention. We are currently applying for a $400,000 federal grant for obesity management and other chronic diseases.
Senator Raggio:
Could that be directed to alleviate this situation?
Mr. Weyrick:
It could certainly help, although the money is not for treatment.
Senator Raggio:
Dr. McFarlane, this money may be available for the education component. I think you should discuss that.
Dr. Rice:
We have problems getting reimbursement for diabetes education from Nevada Medicaid for reasons unclear to me. How much of that money can be directed to pediatric diabetes care?
Mr. Weyrick:
The federal grant we have is for education and prevention, not for any type of treatment.
Senator Raggio:
In the interest of time, I ask that you contact one another to see whether there are accommodations that might alleviate the funding necessary to address this situation.
We will close the hearing on S.B. 258 and open the hearing on Senate Bill (S.B.) 259.
SENATE BILL 259: Authorizes University and Community College System of Nevada to retain reimbursement for indirect costs generated by institutions within System. (BDR 34-1067)
Dr. Jane A. Nichols, Chancellor, University and Community College System of Nevada:
This bill reflects a budget request, priority four, on the enhancement list of the Board of Regents. None of those enhancement items were part of the Governor’s recommended budget. The context for this bill is the historic return of 25 percent of indirect cost recovery on sponsored research. This item was placed on the enhancement list because it is designed to increase economic diversity and development as well as to support technology transfers. It allows the State to invest more in research and research facilities.
Mr. Miles:
As you know, 25 percent of the indirect cost recovery is now budget revenue, flowing into the State-supported budget. This bill would allow that money to remain with the institution. I draw your attention to page 1 of the bill, line 6: the revenue retained may be used for capital construction and infrastructure construction of research facilities, as pledged revenues for the support of the university securities law, or for such other purposes as authorized by law. The first two possible uses are important since the proposed use of these funds is for capital construction devoted to new projects in the area of research.
The bill would eliminate revenue flowing into the State’s budget of about $4.2 million in the first year and $4.6 million in the second year.
Senator Raggio:
The numbers we had as of August 15 showed something on the order of $7 million for the biennium.
Mr. Miles:
There is a difference I would like to explain. The $7 million figure was based on last year’s actual activities. While building our budget, the Governor’s office requested an update of that revenue source, which was plugged into the budget that came forward. Those amounts are $4.2 million and $4.6 million, or about $8.8 million over the biennium based on more current information.
Senator Raggio:
As of August 15, about $4.6 million would flow to the University of Nevada, Reno (UNR), about $2.4 million would flow to the University of Nevada, Las Vegas (UNLV), and about $130,000 would go to the community college system. How have those numbers changed?
Mr. Miles:
The updated numbers are $5.1 million to UNR, $3.6 million to UNLV, and $130,000 for the Community College of Southern Nevada.
Senator Raggio:
The bill involves broad‑based authority since subsection two, paragraph (c) allows “for such other purposes as are authorized by law.”
Mr. Miles:
That is correct.
Senator Raggio:
At one time all of this money went into the General Fund. That was based on the view the State was funding this type of expenditure through the budget. Over the years, a fourth of this income was retained by the university, then one‑half, and eventually three-fourths was retained. The last time we discussed the issue, several sessions ago, that was to be the final resolution. Welcome back.
Mr. Miles:
In preparation for our last budget hearing before the joint subcommittee on higher education, one of the questions asked by your staff was that we look at the practice of other states. We undertook a study of about a dozen universities. In only two instances did the states require a portion of the money go into the state-funded budget.
Senator Raggio:
Please make that list available to us. Do those other states fund the university system in the way Nevada does? Theoretically, we fund this when we fund the budget.
Chancellor Nichols:
It is common in many states to directly fund research at a higher level than does Nevada. This is simply one method of supporting research used by some states rather than direct allocations. The level of higher education in each state obviously varies. It is one mechanism used by some states.
Dr. John Lilley, President, University of Nevada, Reno:
Both research universities in the State are judged, in part, by the success of faculty members in competition for federally funded research programs. When that happens, good things happen in terms of economic development and the prestige of the universities and their graduate programs. Both universities are in desperate need of space renovation and new construction to support research. We run the risk of having a plateau in external funding. This past year, our university had over $110 million in external funding. We want to see that continue to grow. The UNLV has made major progress in its external funding. We think this is a terrific opportunity to strengthen both universities in this important research area.
Richard C. Bostdorff, President, Tech Alliance:
Well-funded research is extraordinarily important when looking at university systems that have contributed significantly to their states. It is important the funding be reliable. I support this legislation because it encourages the university to obtain grants and invest the money from the indirect cost portion into facilities that will attract more money. As the research base expands, resources are available in the community that can be drawn on by businesses. This is a long-term, systemic way to grow our State. In the long run, this grows State revenues through all of the things businesses bring to us. We strongly support the bill.
Dr. McFarlane:
The school of medicine has a substantial portion of the research on campus. Our research facilities are totally committed. If we were able to hire a Nobel Prize winner, we would be unable to do so because we could not offer them laboratory space. The return of that portion of the indirect cost money now given to the State would be used to construct a building earmarked for biotechnology. In 2001, UNR moved into the highest tier in the Carnegie classification of doctoral research. Fewer than five schools were moved into that category. One of the things necessary for further advancement within the category would be additional research. The only mechanism currently available is indirect cost recovery. Looking at the 126 schools of medicine in the United States, Nevada competes favorably with other schools in most basic science departments, in the top 25 percent of those schools per capita for researchers, and in the top 10 in two of those departments.
Senator Raggio:
That is very impressive. Are there other comments?
Dr. Lilley:
With income as we currently project it, this would give us a chance to build a very large building for biotechnology. It would not only support the school of medicine, it would support biology and our college of agriculture, and the high‑tech things happening there. It is a wonderful opportunity to reinvest this money. We would not be using general obligation bonds; this would be a revenue bond for this purpose. It would produce in excess of $25 million for us, and something in excess of $17 million for UNLV.
Rick Bennett, Lobbyist, Director of Government Relations, University of Nevada, Las Vegas:
President Carol Harter could not be here today. I think it useful to mention some of the current uses of the indirect recovery revenue. The UNLV has seen its research grow over 200 percent during the last 6 years. Growth has been achieved primarily by using the indirect cost-recovery revenues to provide the following: competitive start‑up packages enabling new faculty to develop independent research programs; professional research staff to work with faculty in the conduct of nationally competitive research programs; matching dollars necessary to obtain certain federal grants; renovation of labs, studios, and other research-based facilities; major equipment items to conduct research programs; and sufficient administrative support for management of research.
Retention of 100 percent of the indirect cost-recovery revenues will significantly enhance the research productivity of UNLV as well as support the economic diversification of Nevada.
James T. Richardson, Lobbyist, Nevada Faculty Alliance:
I represent the Nevada Faculty Alliance chapters. I would like to stress the importance of start-up packages. We simply cannot compete for the type of faculty we must hire at both universities if we do not have adequate start-up package money. This bill would be a major shot in the arm towards that end. I would also reiterate the importance of needed buildings. There is a major building under construction at UNLV. We desperately need it to house faculty and encourage economic diversification in the State. We have a building being planned at UNR. No major research facilities have been built at UNR for the past 20 years. The language in this bill may facilitate that building. I encourage your support.
Senator Rawson:
We will close the hearing on S.B.259 and open the hearing on S.B. 263, which makes a supplemental appropriation to the State Department of Agriculture.
SENATE BILL 263: Makes supplemental appropriation to State Department of Agriculture for unanticipated shortfall in money for Fiscal Year 2002-2003 resulting from unexpected increase in expenses. (BDR S-1268)
Rick Gimlin, Administrative Services Officer, State Department of Agriculture:
The amount of the proposed appropriation is $53,309 to cover an expected shortfall this year. I would like to request an amendment to this bill in order to decrease the amount from $53,309 to $29,309. The account in need of this supplemental appropriation already has a 3 percent budget reduction in it of $24,000. Budget division practice has been to net out any supplemental appropriations against the 3 percent budget reductions. I contacted the budget division and it concurs with this amendment.
Senator Raggio:
I note this is not included in the Executive Budget. Is there other testimony?
John L. Wagner, Lobbyist, The Burke Consortium of Carson City:
I represent The Burke Consortium of Carson City. We oppose the bill. Everyone has shortfalls. When I have a shortfall at home, I take a look at what I have to do to make ends meet. This amount is now down to $29,000. There are so many appropriations being heard in addition to the Governor’s bloated budget that next session we will have a $2 billion shortfall. I think we need to stop somewhere.
Senator Raggio:
Would you repeat the need for the $29,309?
Mr. Gimlin:
This is driven by several factors, but primarily by reclassification of staff due to changes in duties that resulted from an increase in the department’s customer base.
Senator Raggio:
Have you furnished backup information to the staff?
Mr. Gimlin:
I thought it had been provided, but, evidently, that is not the case.
Senator Raggio:
Please do that as soon as possible.
Mr. Gimlin:
I will, by all means.
Senator Raggio:
We will close the hearing on S.B. 263 and open the hearing on S.B. 296.
SENATE BILL 296: Makes appropriation for preparation of plans and federal and private funding requests for conversion of historic machine shop located in City of Sparks into regional science center, Amtrak station and tourist information center. (BDR S-51)
Senator Maurice E. Washington, Washoe County Senatorial District No. 2:
This bill concerns the roundhouse adjacent to the property of John Ascuaga’s Nugget Hotel-Casino. Most of us living in northern Nevada realize this historical building needs a little help. It has been used for various events and occasions. During World War II it was instrumental in the movement of men and equipment. This bill asks for $300,000 to do site environmental inspections and testing so that it can be restored. Future uses might include an Amtrak station or storage of memorabilia.
Stephen W. Driscoll, Lobbyist, City of Sparks:
I have led the restoration project for this building for the last 2 years. We were originally approached by the university in its search for a new site for the planetarium in order to expand it into a full science center. We did an original study to determine what future use would make sense. We determined significant money was needed for restoration. There were both seismic and tourist considerations. We also foresaw numerous uses including an Amtrak station in the south portion of the building next to the railroad yard. We are currently investigating whether such a station would eliminate the need for a station elsewhere in the region. Additionally, we have contacted the chamber of commerce and others about the placement of a tourist information center on the north side of the building, next to I-80. Such a center would be the only tourist center in the region’s I-80 corridor adjacent to an exit. Presently, the Sparks Chamber of Commerce is the nearest tourist center; however, getting to it from the freeway involves nine turns. The center of the building would hold the combination science center, exploratorium, and planetarium. Everyone will be aware that the planetarium building no longer houses a current facility. An expansion and upgrade is needed. The science community would like to add an interactive component to the planetarium as well as a teaching center. This building would provide that site.
This appropriation is designed as a primer. The city has expended some money, but we are looking for assistance in engineering and environmental matters to ensure there are no surprises related to the viability of the building.
Senator Raggio:
Who owns the building?
Mr. Driscoll:
The land is owned by the railroad, and a private party owns 80 percent of the building. The railroad owns the remaining 20 percent of the building.
Senator Raggio:
Who is the private party?
Mr. Driscoll:
The 80 percent interest is owned by a Mr. Hart; I believe his first name is Robert. He is associated with a construction company in town.
Senator Raggio:
Is the company involved in the project?
Mr. Driscoll:
Q&D Construction has an option on the building to do development. That company has been actively involved, and has done preliminary engineering based on the discussions we have had. It was the consultant who hosted several informal planning sessions that brought together the city, the State, State education, State science, as well as Washoe County School District, and the development community.
Senator Raggio:
What is the estimated total cost of the project?
Mr. Driscoll:
The engineering study done by Q&D Construction estimated about $20 million to stabilize the building and bring in all the infrastructure that could then be used for adaptive reuse. As originally discussed in the informal planning sessions, if the full science center, including a museum and interactive display space, were included, it would entail an additional $20 million in tenant improvements. The total cost would be just below $40 million.
Senator Raggio:
What are the plans for raising that amount of money?
Mr. Driscoll:
At this point, we are trying to get a feel for what the possible uses could be and what possible restrictions there might be on the building. After that is done, there is a nonprofit group organized through association with the science community called “The Great Basin Exploration Center.” It is currently having conversations with the Reynolds organization and looking at the other alternatives necessary to develop different fund-raising scenarios for the different components of the building as it is being discussed currently.
What is the building used for now?
Mr. Driscoll:
The front portion of the building houses a business selling hot tubs and spas. The middle of the building is being used to store recreational vehicles. The back of the building, hopefully, is empty; it has been used by the railroad for storage from time to time. The back portion is the most dilapidated. There are holes in the roof. Consequently, our fire marshal walks through continually to ensure there is nothing there that could be a danger.
Senator Raggio:
Will the railroad continue to own the land under the building, even after construction?
Mr. Driscoll:
The railroad has made it clear it would be in the business of selling the property to a viable concern, particularly one that would rehabilitate the building and include an adaptive reuse sharing the history of this 100-year old building. The railroad has communicated to us that it would be very reasonable and cooperative in the sale of the land.
Senator Raggio:
Would the railroad be involved in the construction of an Amtrak station?
Mr. Driscoll:
Based on our conversation to date, it appears that, as part of the overall project, the railroad station would be part of the tenant improvements. The railroad would enter a long-term lease with the owner and operator of the building.
Robert F. Joiner, Advance Planning Manager, City of Sparks:
I want to place this project within the context of our redevelopment efforts. We spent tens of millions of dollars in the City of Sparks to improve the Victorian Square. The Ascuaga family has committed resources towards that effort. The intersection at Pyramid Way and I-80 is strategically placed at this building. The Nugget Avenue improvements and those along the railroad make this a perfect place to add to our economic diversification efforts. This is a regional draw; we would provide a home for regional resources, providing a mixture of uses that would tie to our regional development. It would be a very good fit.
Senator Raggio:
What is available now? Have you developed a long-range plan? Do you have schematics?
Mr. Driscoll:
We have a conceptual plan with artist’s renditions and a general architecture design for the building. The building has a single floor. There is an option of adding a mezzanine area. This is based on the informal discussions we have had with the organizations that might be involved. We have active conversations with the university, the Great Basin Exploration Committee, and the cities of Reno and Sparks. We all view this as a viable regional alternative and a way for the region to have one more component that brings in both the education process as well a tourist draw.
Senator Raggio:
I think you need to assemble that material as coherently as you can and submit it to us. You should focus on how the $300,000 would be used, and how that money would fit into the overall funding. You mentioned a phase I of $20 million and a phase II of another $20 million. We need to see the overall picture of your developmental concept.
Mr. Driscoll:
We will be happy to do that. We do have a presentational package we put together a year ago on the overall concept. I will get copies to the committee.
Senator Raggio:
We are particularly interested in the $300,000 cost and your potential funding sources. Are you looking for the university to provide development money in connection with the planetarium?
Mr. Driscoll:
It is our desire to have a full conversation with all the parties. The university would be included. What each party brings to the table will certainly be part of those conversations.
Senator Raggio:
Okay, I think that is guarded enough. We will close the hearing on S.B. 296 and turn to S.B. 396.
SENATE BILL 396: Makes supplemental appropriation to Health Division of Department of Human Resources for unanticipated shortfall in money for Fiscal Year 2002-2003 resulting from increased cost of maintenance of effort requirement for Substance Abuse and Treatment Block Grant. (BDR S-1226)
Mr. Weyrick:
The Health Division supports the passage of S.B. 396. It will allow the Bureau of Alcohol and Drug Abuse to meet its maintenance of effort requirement for State expenditures, as required for the federal block grant.
Senator Raggio:
Is the appropriation required to meet maintenance of effort (MOE)?
Mr. Weyrick:
That is correct.
Senator Raggio:
What is the sanction if you fail to meet MOE?
Mr. Weyrick:
There are three impacts. First, the federal block grant
could be reduced dollar‑for‑dollar by the amount of the shortfall.
Second, the Health Division has requested a waiver to exclude the MAXIMUS
funding we have had in our
budget for the last two sessions. We have requested a waiver to exclude the
MAXIMUS funding from the MOE calculation. Under federal regulations, should we
fail to meet the MOE, we cannot request such a waiver. If we lack the waiver,
MAXIMUS funds would have to be included in the MOE calculation. This would lead
to an increased MOE requirement in future years. Our average expenditures of
MAXIMUS have been about $500,000 annually. The third impact is almost as
severe. Whenever we fail to meet the MOE, there is a significant delay in the
processing of the federal grant. This causes cash flow problems in the budget.
Conceivably, we would have to request a loan from the General Fund in order to
make vendor payments until we receive the grant money.
Senator Raggio:
Was there previous IFC action on this matter?
Mr. Weyrick:
Yes. This situation occurred last year as well when the biennium was short on the MOE.
Senator Raggio:
Is this more of the same?
Mr. Weyrick:
Yes, it is. Last year we addressed FY 2002. This appropriation deals with FY 2003. We have included the required level of effort in the current budget request, dealing with the next biennium.
Senator Raggio:
We will make Mr. Weyrick’s written testimony part of the record (Exhibit L).
Kevin Quint, Chair, Bureau of Alcohol and Drug Abuse Advisory Committee:
If the MOE is not met, the message sent is that Nevada does not need all the money in the federal block grant. This is the wrong message. Moreover, there would be an impact on the amount of money Nevada is entitled to receive in the future. The spending of the Bureau of Alcohol and Drug Abuse (BADA) is relatively flat with only a 1.3 percent increase in General Funds over the last 6 years, but an 83 percent increase in funding from federal block grants. The federal government is clearly doing its share. Even in extremely lean economic times, the amount of $38,915 is a small price to ensure almost $12 million annually in federal funding continues to flow to Nevada. This money is used for infrastructure to treat people with drug and alcohol problems; it also helps prevent those problems from arising in our communities.
Tom Bolan, Chief Executive Officer, Step 2:
In addition to Step 2, I also represent Nevada the, Alliance
for Addictive Disorders Advocacy Prevention and Treatment Services (AADAPTS).
We are a statewide organization representing over 25 community-based substance
abuse and prevention treatment providers. We support S.B 396. We
ask that you not
put the block grant at risk, thereby allowing Nevada to receive the resources
available to prove these valuable services.
Senator Raggio:
We have a number of bills to hear in our next several sessions. We stand adjourned at 10:30 a.m.
RESPECTFULLY SUBMITTED:
James D. Earl,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE: