MINUTES OF THE

SENATE Committee on Finance

 

Seventy-second Session

May 6, 2003

 

 

The Senate Committee on Finance was called to order by Chairman William J. Raggio at 4:13 p.m. on Tuesday, May 6, 2003, in Room 2134 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer State Office Building, Room 4401, 555 East Washington Avenue, Las Vegas, 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 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

Mindy Braun, Education Program Analyst

Judy Coolbaugh, Committee Secretary

 

OTHERS PRESENT:

 

Jim J. Avance, Lobbyist, Nevada Marine Trade Association

Linda Nelson, President, Nevada Marine Trade Association

Dino DiCianno, Deputy Executive Director, Department of Taxation

Terry R. Crawforth, Administrator, Division of Wildlife, State Department of Conservation and Natural Resources

Patty Wagner, Program Officer III, License Office Supervisor, Division of Wildlife, State Department of Conservation and Natural Resources

Kelly Clark, Conservation Education Chief, Division of Wildlife, State Department of Conservation and Natural Resources

Dr. James Hager, Superintendent, Washoe County School District; Chairman, Nevada Association of School Superintendents

Dorothy L. Merrill, Senior Director, Public Policy, Accountability and Assessment, Washoe County School District

Jack McLaughlin, Superintendent of Public Instruction, Department of Education

Keith Rheault, Deputy Superintendent for Instructional, Research, and Evaluative Services, Department of Education

Al Bellister, Lobbyist, Nevada State Education Association

Charles Duarte, Administrator, Division of Health Care Financing and Policy, Department of Human Resources

Lynn Fulstone. Lobbyist, MountainView Hospital, Sunrise Children’s Hospital, Sunrise Hospital and Medical Center

Denell Hahn, Lobbyist, Sunrise Hospital and Medical Center

Michael R. Alastuey, Lobbyist, University Medical Center

Danny L. Thompson, Executive Secretary-Treasurer, Nevada State AFL-CIO

Robert A. Ostrovsky, Lobbyist, Lake Mead Hospital (Tenet health Care)

Ben Contine, Representative, Las Vegans for Affordable Healthcare

Janice C. Pine, Lobbyist, St. Mary’s Health Network

Robin L. Keith, Lobbyist, Nevada Rural Hospital Partners Foundation

 

 

Senator Raggio:

For the record, show all committee members present except Senator Tiffany. We are going to consider Senate Bill (S.B.) 49.

 

SENATE BILL 49:  Creates Statewide Program for Suicide Prevention within Department of Human Resources. (BDR 40-288)

 

This bill was heard on March 31 in this committee. Today, in the joint subcommittee, the determination was made that any costs associated with this bill would be funded with MAXIMUS receipts, and only those funds, if the funds were available. An amendment is not required for this action.

 

SENATOR CEGAVSKE MOVED TO DO PASS S.B. 49.

 

SENATOR RAWSON SECONDED THE MOTION.

 

THE MOTION CARRIED. (SENATOR TIFFANY WAS ABSENT FOR THE VOTE.)

 

*****

 

Senator Raggio:

I refer you to S.B. 81.

 

SENATE BILL 81:  Makes appropriation to Aging Services Division of Department of Human Resources for development of statistics to determine priorities for funding programs for senior citizens and for publication of results in brochure entitled Nevada Elder Count. (BDR S‑930)

 

The committee heard this bill on February 24. The joint subcommittee indicated and recommended that the funding be provided from MAXIMUS receipts. There will have to be an amendment to the bill deleting the appropriation and a recommendation for do pass on the condition that it is funded by MAXIMUS receipts.

 

SENATOR COFFIN MOVED TO AMEND BY DELETING THE GENERAL FUND APPROPRIATION AND RECOMMEND THAT FUNDING BE PROVIDED FROM MAXIMUS RECEIPTS AND DO PASS AS AMENDED S.B. 81.

 

SENATOR MATHEWS SECONDED THE MOTION.

 

THE MOTION CARRIED. (SENATOR TIFFANY WAS ABSENT FOR THE VOTE.)

*****

Senator Raggio:

I refer the committee to S.B. 324.

 

SENATE BILL 324:  Makes various changes concerning Veterans’ HomeAccount and Gift Account for Veterans’ Home. (BDR 37-305)

 

The committee heard this bill on April 11. Is there any amendment required on this measure?

 

Gary L. Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:

As the bill is drafted, approximately $100,000 per year in license plate revenue would be removed from the Veterans’ Home account. To eliminate any fiscal impact, staff recommends an amendment to eliminate Section 3 of the bill, which redirects the revenue from the veterans’ license plate fees from the veterans’ home account to the veterans’ home gift account. At the time the veterans’ license plates were originally approved by the Legislature, it was stipulated the revenue from the sale of the veterans’ license plates would go to the veterans’ home account.

 

Senator Raggio:

If Section 3 is removed, will the revenue go to the veterans’ home account?

 

Mr. Ghiggeri:

Yes, that is correct.

 

SENATOR RAWSON MOVED TO AMEND BY DELETING SECTION 3 AND DO PASS AS AMENDED S.B. 324.

 

SENATOR CEGAVSKE SECONDED THE MOTION.

 

THE MOTION CARRIED. (SENATOR TIFFANY WAS ABSENT FOR THE VOTE.)

 

*****

 

Senator Raggio:

I refer the committee to S.B. 371.

 

SENATE BILL 371 (1st Reprint):  Creates Constructional Defect Commission and revises various provisions governing actions resulting from constructional defects. (BDR 54-251)

 

This committee heard this bill yesterday. The fiscal note states the cost to implement the program would come from the recovery fund. Is that correct?

 

Mr. Ghiggeri:

Yes, that is correct. The cost of implementation would be funded from the recovery fund. There is approximately $3 million available in the account.

 

Senator Raggio:

This bill was previously heard in the Senate Committee on Commerce and Labor and recommended for do pass, and it was referred to this committee because of the fiscal note.

 

SENATOR RAWSON MOVED TO DO PASS S.B. 371.

 

SENATOR MATHEWS SECONDED THE MOTION.

 

THE MOTION CARRIED. (SENATOR TIFFANY WAS ABSENT FOR THE VOTE.)

 

*****

 

Senator Raggio:

I refer the committee to S.B. 457. There is no fiscal note on the bill.

 

SENATE BILL 457 (1st Reprint):  Prohibits use of false or misleading educational credentials. (BDR 34-1311)

 

SENATOR RAWSON MOVED TO DO PASS S.B. 457.

 

SENATOR CEGAVSKE SECONDED THE MOTION.

 

THE MOTION CARRIED. (SENATOR TIFFANY WAS ABSENT FOR THE VOTE.)

 

*****

 

Senator Raggio:

I refer the committee to S.B. 464.

 

SENATE BILL 464 (1st Reprint): Revises provisions relating to vessels. (BDR 32‑1240)

 

Jim J. Avance, Lobbyist, Nevada Marine Trade Association:

This legislation has come before the Legislature for the last two sessions. This bill has four parts. First, it will place a sales tax on the sale of boats between private parties, in the same manner that is used for prior-owned automobiles. The basic appraisal would be done using a book that is similar to the Kelly Blue Book for cars. Second, it allows the sale of boats by Nevada dealers to out‑of‑state residents with no sales tax. The sales tax generated is then collected in the home state. Nevada dealers are losing sales because the sales tax is collected at the point of sale.

 

Third, it would allow for a deduction of the trade-in value of a used boat on a new boat, which would reduce the total sales tax liability. The sales tax is not lost because the State will collect the sales tax when the used boat is traded-in or sold. It would generate more boat sales for Nevada dealers. Fourth, it allows the State to collect a tax on documented boats, which are boats that are federally registered. The registered boats are assigned a number and a name. Currently, unless legislation is passed in each state, the state does not collect a sales tax.

 

This bill, as it was originally written, called for the Division of Wildlife to appraise the boat, if it was not listed in the appraisal book. The bill calls “boats” vessels. The term “vessel” was used so sailboats without motors could be included in the legislation.  The Division of Wildlife indicated it would require ten new positions to complete the appraisals, which created a large fiscal note. That section was eliminated from the bill, which now states the appraisal would be completed using the appraisal book or be determined by the bill of sale that is generated between the two parties. The Division of Wildlife revised its new positions estimate down to one, but it does not wish to take on the appraisal function. The Department of Taxation is agreeable to handling the procedure.

 

Senator Raggio:

I have read the bill, and I am unclear on its exact purpose. Does it impose a sales tax on every transaction between the owner and a purchaser regardless of whether or not the seller is a dealer?

 

Mr. Avance:

Yes, that is correct.

 

Senator Raggio:

I thought there was an exception in the Department of Motor Vehicle (DMV) code that permitted occasional sales to be free of sales tax.

 

Mr. Avance:

I am unaware of that provision.

 

Senator Raggio:

As a hypothetical example, if I own a boat and I sell it to Senator Rawson, there would be no sales tax generated. Is that correct?

 

Mr. Avance:

Yes, that is correct.

 

Senator Raggio:

This bill would impose a sales tax.

 

Mr. Avance:

Yes, that is correct.

 

Senator Raggio:

What is the real purpose of the legislation?

 

Mr. Avance:

The bill has a two-fold purpose. It will generate $3 million per year in sales tax for the State, and it puts the new boat dealers on an even level with private sellers. Currently, if a person goes to a new boat dealer, the individual has to pay the sales tax. The new boat dealers lose a lot of sales because the buyer saves the sales tax if the boat is purchased through a private party.

 

Senator Raggio:

Who is responsible for the sales tax in private party sales?

Mr. Avance:

The buyer pays the sales tax.

 

Senator Mathews:

If two parties negotiate a boat sale, the tax has to be paid at registration. The dealer is still not involved in the transaction. How does the dealer profit from this transaction?

 

Mr. Avance:

The dealer would be on an even level from the sales tax perspective. The person may decide to buy a new boat instead of buying a used one.

 

Linda Nelson, President, Nevada Marine Trade Association:

The new boat dealers are also used boat dealers. If a customer buys a used boat from a dealer, the buyer is required to pay sales tax. If the buyer purchases a used boat from a private party, no sales tax is paid.

 

Senator Raggio:

A private party seller may only have one boat to sell and the dealer may have a large inventory of used boats. I know we went through this procedure with the DMV, and at one point the occasional sale was exempted from sales tax. Would there be any objection if an occasional sales tax exemption were applied to private party transactions?

 

Mr. Avance:

Those are the sales this legislation is designed to capture. The intent is to charge sales tax on private party transactions.

 

Ms. Nelson:

Some private parties are claiming occasional boat sale transactions, but in reality the seller is operating as a dealer. The legislation would remove this circumstance. An amendment has already been removed from this legislation that taxed rubber rafts, float tubes, and kayaks, so only more expensive boats will be charged the sales tax.

 

Senator Raggio:

What is the definition of a vessel?

 

Mr. Avance:

The definition of a vessel is contained in an amendment the Department of Taxation is currently drawing up.

 

Senator Mathews:

The DMV has generated problems for private car sellers by not recognizing the Kelly Blue Book appraisal prices. The agency can choose to assign a higher value for sales tax collection. It seems this legislation would create the same problems for private parties selling boats.

 

Dino DiCianno, Deputy Executive Director, Department of Taxation:

The agency has had discussions with the Division of Wildlife and with the bill sponsors. The agency has been asked to develop some amendatory language that would meet the dealers’ needs. You are correct, Mr. Chairman, there are provisions in Nevada Revised Statutes (NRS) chapter 374, which relate to occasional automobile sales. The agency has been trying to come up with suitable language that would mirror the language used in the motor vehicle code. The agency is involved only to facilitate the needs of the parties. The Division of Wildlife is not set up to administer and collect sales taxes. The Department of Taxation is, which is why the bill sponsors came to us.

 

Senator Raggio:

Did the Senate Committee on Taxation recommend a do pass on this bill?

 

Mr. DiCianno:

The bill came out of the committee as a do pass as amended with referral to the Senate Committee on Finance.

 

Senator Raggio:

Was the amended form of the bill the same as this first reprint version?

 

Senator Coffin:

I believe so.

 

Senator Rawson:

The boat dealers immediately across the State borders are able to sell used boats at cheaper prices because there is no sales tax charged. It does create unfair competition for dealers in our State.

 

Ms. Nelson:

This legislation would try to keep the boat sales within our State.

 

Terry R. Crawforth, Administrator, Division of Wildlife, State Department of Conservation and Natural Resources:

The agency has some concerns about S.B. 464 as written. The division is not set up for sales tax collection, although it is the agency of boat authority for the State. The agency uses a combination of federal funds, State gasoline fuel taxes, and license and registration fees to fund the agency’s five-part boating program. The program includes the following responsibilities:  registering and titling boats, safety patrol, boater education, navigational aides, and boater access around the State. The agency has just instituted a new system statewide for registering boats on-line. If the agency takes on this additional function of sales tax collection, it will detract from its ability to properly administer the boating program. The agency is also concerned with the difference in definition between a vessel and a motorboat. The boat appraisal book used for boats is a little more complicated than the Kelly Blue Book used for automobiles. Most boat sales include a trailer, so the agency would have to separate out the trailer price from the boat value. Boat trailers are registered with the DMV. If S.B. 464 is amended as earlier discussed, having the Department of Taxation handle the sales tax collection and the Division of Wildlife do the registering of documented vessels, then the agency would be in support of S.B. 464.

 

Senator Raggio:

Is the fiscal note in the committee’s bill books based on the Department of Taxation taking over the sales tax collection, or is it based on the first reprint of the bill, which assigns that function to the Division of Wildlife?

Mr. DiCianno:

The fiscal note is based upon the first rendering of the bill and takes into consideration the revenue that would be generated from the sales tax collections.

 

Senator Raggio:

If S.B. 464 is amended as requested, the responsibility for sales tax collection is transferred from the Division of Wildlife to the Department of Taxation. How would that change the impact in the fiscal note?

 

Mr. DiCianno:

If the bill includes the proposed amendments, it would reduce the actual cost to the Department of Taxation. The agency would require one tax examiner position and costs for the boat appraisal books.

 

Senator Raggio:

Would you furnish the committee with a revised fiscal note?

 

Mr. DiCianno:

Yes, I will do so.

 

Senator Raggio:

The committee will also need an amendment in written form from Mr. Avance on the proposed amendment.

 

Mr. Crawforth:

The agency is sympathetic to the concerns of the boat dealers because the current situation does foster unfair competition.

 

Senator Raggio:

Are there separate issues here in trying to deal with the across state line boat sales versus the occasional boat sale?  Is there some distinction that can be made between the two situations?

 

Mr. Avance:

I would like to explore the situation and attempt to include suitable amendatory language in the proposed amendment to make the distinction between the two situations clear.

 

Senator Coffin:

If the bill were passed, would enforcement be a problem for the division?  

 

Mr. Crawforth:

When the boats are registered and their stickers are showing, motorboat enforcement is not a problem. The division does not register any boats that are non-motorized.

 

Senator Coffin:

Does the Nevada Department of Transportation have enforcement vessels in, around, or on the water?

 

Mr. Crawforth:

Yes, it does.

 

Senator Coffin:

Therefore, it is possible to enforce the registration because boat stickers are required to be visually displayed for identification. If the boat does not have a sticker, a citation can be issued. Is that correct?

 

Mr. Crawforth:

The agency already has that authority for motorboats.

 

Senator Coffin:

Would this legislation give you authority to enforce registration of all vessels?

 

Mr. Crawforth:

If there was a casual or occasional sale of a non-motorboat, the buyer would pay the sales tax under S.B. 464, but there would be no registration and, therefore, no identification sticker would be placed on the vessel. There would be no way to enforce required registration or to know whether or not the sales tax on the boat had been paid.

 

Patty Wagner, Program Officer III, License Office Supervisor, Division of Wildlife, State Department of Conservation and Natural Resources:

I have distributed handouts of my testimony entitled, “SENATE BILL NO.464 (and Amendment No. 469) – SENATE FINANCE, Nevada Division of Wildlife Testimony, May 6, 2003” (Exhibit C). The agency is only charged with the registering and titling of motorboats. The definition of vessel would include motorized and non-motorized boats.

 

Mr. Avance:

The Division of Wildlife documents virtually every boat on Lake Mead. Every sailboat on Lake Mead, with few exceptions, has a motor that gets the boat in and out of the slip. Therefore, the sailboats with motors would be registered and titled and have a sticker on them.

 

Senator Coffin:

This legislation could be advantageous to the Division of Wildlife, since it would provide a new source of revenue.

 

Mr. Crawforth:

As the bill is written, the additional revenues would only provide enough funds to cover the sales tax collection costs. The division would not receive all the taxes.

 

Senator Raggio:

The bill sponsors need to prepare an amendment to address some of the concerns that have been presented. Is that agreeable?

 

Mr. Avance:

Yes, we will do that.

 

Senator Mathews:

When the committee receives the fiscal note, would additional staff positions and associated costs be included?

Senator Raggio:

There will be some additional staffing costs, and the amounts will be shown in the revised fiscal note. I refer the committee to Assembly Bill (.A.B.) 71 (1st Reprint).

 

ASSEMBLY BILL 71 (1st Reprint): Authorizes Division of Wildlife of State Department of Conservation and Natural Resources to charge fees for advertisements on its website and in printed materials prepared by Division. (BDR 45-479)

 

Kelly Clark, Conservation Education Chief, Division of Wildlife, State Department of Conservation and Natural Resources:

I have distributed to the committee a number of handouts including the following Package of Division of Wildlife Educational Publications (Exhibit D), “Nevada Division of Wildlife Website” (Exhibit E), and “A.B. 71” (Exhibit F). Assembly Bill 71 would give the agency authority to accept advertisements in the agency’s printed materials and on its Web site. Any revenues from the advertising would be used to offset the agency’s printing costs, which average approximately $180,000 to $280,000 per year. The fiscal note that accompanied A.B. 71 prior to the amendment has been revised. A copy of the new fiscal note, entitled, “EXECUTIVE AGENCY, FISCAL NOTE” (Exhibit G), has been distributed to the committee. It shows that the previous fiscal request allowed outside contract printers rather than the State Printing Office permission to do the printing. That section has been deleted. The amended A.B. 71 would give the agency a small savings during the first 2 years. The agency anticipates additional revenues could be raised in the third and fourth year through advertisements.

 

Senator Raggio:

How many other states permit advertising in their agencies’ publications?

 

Ms. Clark:

Fourteen other states permit advertising in their printed publications and regulations.

 

Senator Mathews:

What is the agency’s estimated dollar amount of revenues that will be generated by advertisements in its publications?

 

Senator Raggio:

In Exhibit G, potential revenue of $7500 is estimated for fiscal year (FY) 2003‑2004 and FY 2004-2005. Anticipated advertising contracting costs in the 2003-2005 biennium are $7000. The net revenue for the 2003‑2005 biennium would be a total of $1000. In future biennia, revenue per year will increase to $11,000. The hearing is closed on A.B. 71, and we will open the hearing on S.B. 191.

 

SENATE BILL 191:  Makes various changes governing education to facilitate implementation of federal No Child Left Behind Act of 2001. (BDR 34‑635)

 

The committee has heard this bill on several occasions, beginning on March 10. A proposed amendment has been drafted and we are going to ask staff to summarize the key amended issues. Staff has distributed to the committee copies of the amendment entitled, Draft, Proposed Amendment to Senate Bill No. 191, Proposed by Senate Committee on Finance with cover letter  (Exhibit H. Original is on file in the Research Library.).

 

H. Pepper Sturm, Chief Principal Research Analyst, Research Division, Legislative Counsel Bureau:

The amendment document (Exhibit H) has been color coded to highlight the changes. Blue indicates new language and red indicates language deleted from the bill. I have distributed a handout entitled, “Explanation of Amendment to SENATE BILL 191, May 6, 2003,” (Exhibit I) which I will refer to as I review the major policy changes.

 

In the area of testing, dates are changed to accommodate spring administrations of the test. The norm referenced test (NRT) scores will not be a part of the designation of schools, and those tests will also be administered in the spring. Science, as a subject, will use the criterion referenced tests (CRTs) and the CRT exams in additional grades are added incrementally. The CRTs are to be obtained from a national vendor. For non-Title I schools, the school improvement and school planning provisions are simplified and clarified by using a simple checklist form. Schools and school districts must be designated as in need of improvement on the basis of 2 consecutive years of data. Only data for pupils who have attended the school or the district for a full academic year may be included in the computations. Charter school data will not be used in determining the school district’s adequate yearly progress (AYP) status.

 

Senator Coffin:

I would like staff to explain the acronyms as we cover the material.

 

Senator Raggio:

AYP means “adequate yearly progress” and is used in House Resolution (H.R.) 1, 107th Congress (2001), which is the No Child Left Behind Act (NCLBA).

 

Mr. Sturm:

Technical assistance partnerships shall provide technical assistance for schools in need of improvement in the first or second year of being designated as demonstrating need for improvement, replacing the support teams, which still must be formed at the third year of needing improvement. The amendment also deletes the alternative of converting public schools to charter schools as an option for restructuring. The requirement for statewide certification of paraprofessionals is deleted, although the State Board of Education is required to approve a single statewide test and set the passing score for the test. In compliance with the NCLBA, the school districts are now responsible for ensuring that paraprofessionals in Title I schools are qualified.

 

However, the amendment specifies that all accountability reports at school, district, and State levels must list the percentage of paraprofessionals not qualified pursuant to the federal law. The ratio of experienced to inexperienced teachers in low-performing schools is deleted and replaced with a requirement that each district develop a plan to ensure students in those schools are being taught by experienced teachers. Middle school licensing and implementation of “highly qualified” teacher requirements will become effective according to the deadlines set within the NCLBA. In addition, the amendment contains a statement that no provisions will supersede, negate, or limit collective bargaining agreements. Finally, stipends of $2000 each to teachers and administrators at schools in need of improvement are included, but the existing retirement incentive stipend is deleted.

 

I have covered the major issues in the amendment and will now discuss a section-by-section review of the key changes in S.B 191.

 

There is a new Section 3.5, which states the provisions of the bill do not supersede, negate, or limit collective bargaining or other employee rights specified in the NRS Chapters 288 and 391.

 

Section 6 refers to the annual State accountability report. The section is revised to require teacher qualification reports at the school, the district, and the State level. It requires all schools, school districts, and the State to report the percentage of classroom paraprofessionals not meeting Title I qualifications. It requires reports of the ratio of highly qualified teachers by school. It requires the use of a financial accounting system, if available, to report per pupil expenditures; and it makes certain other technical changes.

 

Section 8 refers to the annual school improvement plans. The section is amended to simplify school improvement planning and removes requirements for plan participants for non-Title I schools. It deletes requirements that the district improvement plan address information concerning higher education strategies. The annual due date for such plans is shifted from June 15 to December 15.

 

Section 9 refers to the annual school improvement plan. The section is extensively revised to simplify the school improvement planning process. The list of persons with whom a school principal must consult is reduced to employees of the school and others the principal deems appropriate. Further, it deletes the requirement for including in the plan a mentoring program and for information concerning certain higher education strategies for the school. This section also requires that a charter school governing body be responsible for carrying out the school improvement plan. This section also provides for the activities of a technical assistance partnership in preparing a school improvement plan for certain schools needing improvement. The improvement plan must be implemented by January 1 instead of the start of the next school year.

 

Because of bill drafting conventions, Section 10 through Section 37 are completely deleted in the old bill, but are extensively re-written in this amendment. Section 13 is the old Section 12. It contains consequences for failing to test 95 percent or more of the students. It amends those provisions in the old Section 12 to specify that the Department of Education (DOE) will monitor re-testing to the extent funding is available for that purpose.

 

Section 14 refers to categories of schools. This section is revised to remove the use of the NRT score for school designation purposes.

 

Section 16 refers to technical assistance. This section combines the old Section 15 with the old Section 16, and provides for the provision of technical assistance for the different types of schools, Title I, non-Title I, and charter schools, classified as needing improvement. The amendments also provide for the establishment of technical assistance partnerships (TAPs) for schools, and specifies school choice option for Title I schools that are in need of improvement.

 

Section 17 refers to TAP membership. This section is amended to simplify the membership of the TAPs and it replaces the old school support teams at the district level. Charter school TAPs are formed by the governing body of the charter school.

 

Section 18 refers to the duties of the TAPs. This section sets forth the duties of the TAPs and provides for a simplified review and report, and prescribes a form for that purpose.

 

Section 20 is amended to clarify the requirement that all public schools designated in need of improvement for 2 consecutive years receive technical assistance.

 

Section 24.3 sets forth reporting requirements for the school improvement teams by revising required reporting dates to align with the spring testing and school designation dates. This amended section is essentially the same as the old Section 19.

 

Section 24.7 provides for additional requirements and corrective action for Title I schools in the third consecutive year of designation as a school in need of improvement. This amended section was originally covered in the old Section 22.4. The amendment also specifies a 1-year delay in consequences should the school qualify for the delay under the NCLBA.

 

Section 25 is amended to authorize a support team for a non-Title I school in its

third year of designation to consider, if it determines it is appropriate, corrective action. This section is similar to the old Section 22.5.

 

Section 26 is amended to specify the role of the DOE in providing support teams for all schools. Districts must provide technical assistance for their schools and for district-sponsored charter schools to ensure they receive technical assistance.

 

Section 26.3 and Section 26.7 cover the requirements for schools with a fourth year designation as in need of improvement

 

Section 27 concerns restructuring options. The section is amended to delete the old subsection 1(a), and other portions of the bill as needed, to eliminate the option that a Title I school not making AYP be converted to a charter school as one of the mandated restructuring options.

 

Section 30 is amended to change the determination date for district level AYP status from January 1 of each year to July 1. Additional changes include charter school students shall not be included in the district’s AYP status. It also clarifies, when calculating the AYP, the DOE shall not include district data for students who have been enrolled in the district for less than a full academic year.

 

Section 32 refers to the categories of districts. Under the NCLBA, districts will now have to be designated as in need of improvement. The section is amended to remove the NRT scores for making the district achievement level determinations. It does require the use of the AYP status and the use of the requirements set by the State Board of Education for exemplary and high achieving schools as noted in Section 4.5 of the amendment. Additionally, this amendment clarifies that in making a “needs improvement” designation, when calculating the AYP, the DOE should not include data for students who have attended school in the district for less than a full academic year.

 

Section 41 refers to the district accountability timeline. The section revises various reporting dates for accountability in accordance with the spring testing plan. It specifies reporting “highly qualified” teachers as aggregated and disaggregated by high- versus low-poverty schools. It clarifies that information about the teacher qualifications is also provided at the district level. It requires a report of the paraprofessionals who are not qualified in accordance with the NCLBA at all schools, and deletes the requirement that reports be done in a concise manner.

 

Section 44 refers to the remedial study programs. This section is amended to provide that schools which fail to make AYP, or with 40 percent of tested students scoring in the bottom quarter on all subjects tested of the NRTs, must adopt remedial study programs.

 

Senator Raggio:

The NRTs are still useable here, but not for school designations.

 

Mr. Sturm:

Yes, that is correct. Section 46 deletes the requirement that all instructional paraprofessionals in charter schools must have a certificate. The section is revised to provide that paraprofessionals hired by the date specified in the NCLBA, for Title I schools, be qualified as specified under the NCLBA, and that all paraprofessionals in Title I schools meet these same qualifications by the date specified in the NCLBA.

 

Section 53 is amended to clarify that persons hired after the NCLBA effective date, which was January 8, 2002, must meet federal qualification requirements if the school receives Title I money. This section also specifies that regardless of the hire date, charter school teachers teaching federally-defined “core” subjects must be “highly qualified” under the federal definition by July 1, 2006.

 

Section 55 refers to the statewide accountability system. This section is amended to specify that, to the extent practicable, the unique student identification number should be applicable for use in both public schools and the University and Community College System of Nevada (UCCSN). Further, the statewide management of automated record transfers (SMART) system provisions are amended to include the capacity to link individual teachers and paraprofessionals to individual students. It provides that the SMART system include non-student linked information, required by the accountability reports and the NCLBA, and the designation status for each school. It requires the use of statewide financial accountability systems for reports at the school, district, and State levels. The amendment also requires the State Superintendent of Public Instruction to standardize software, data codes, and exchange protocols for the system.

 

Section 63 refers to testing procedures for limited English proficient students. It is amended to provide, as required by the NCLBA, Section 1111, that the school district may, on a “case-by-case basis,” make a determination to assess such student in the appropriate language other than English for a period that does not exceed 2 additional consecutive years. This section is also revised to delete the exclusion of test scores of disabled pupils taking alternate exams from determinations of school and district AYP status. Further, comprehension skills must also be measured in the test prescribed for the English language learners (ELL) students by the State Board of Education.  The amendment clarifies that the modifications and accommodations adopted by the State Board of Education for ELL and disabled students must be used, versus the old language that said “may” be used.

 

Section 66 refers to exemptions to statewide exams. This section will become effective on July 1, 2003. The amendment deletes the writing exam from the NRT section, moving it to the CRT section. It deletes the provisions indicating the DOE may score the exams. It clarifies that a pupil who fails to demonstrate adequate achievement is required to take a remedial program if the student is enrolled in a school that has failed to make AYP, or in which less than 60 percent of the pupils enrolled in grades 4, 7, or 10 received an average score that is at least equal to the twenty-sixth percentile. It clarifies that the high school proficiency exam (HSPE) includes the subject of reading and mathematics and, except for the writing portion, is developed, printed, and scored by a national recognized testing company.

 

Section 67 refers to new testing requirements. It is amended to delete the requirement for augmented NRTs. The regular NRTs are still administered in grades 4, 7, and 10 and will now be administered in the spring. The section will become effective on July 1, 2004. The spring NRTs will first be administered in the spring semester of 2005. It also requires that CRTs in grades 3 though 8 to be administered in the spring.

 

Section 68 refers to science testing, which will become effective on July 1, 2007. Further, the amendment adds science to the HSPE, with Section 134 retained as it reads. Science will first be administered during the 2007‑2008 school year, as required by the NCLBA. It will be required for graduation in the class of 2008-2009. The DOE can decide whether or not to administer the science exam to tenth graders as part of its budget process.

 

Section 71.7 is a new section and becomes effective July 1, 2005. It specifies that the CRT examinations must be written, developed, printed, and scored by a nationally recognized testing company. It requires the CRTs in grades 3 through 8 for the subjects of English and mathematics. Science testing remains in grades 5 and 8.

 

Section 84 refers to paraprofessionals. This section is amended to specify that a paraprofessional, referenced in the section, is a person who is employed by the school district or governing body and assigned by a school district or charter school.

 

Section 84.5 is a new section that requires the State Board of Education to prescribe at least one examination for paraprofessionals that is consistent with the U.S. Education Code.

 

Section 85 refers to the ratio of experienced teachers in low-performing schools and the section is deleted. Instead Section 136 requires each district to submit a plan to the Legislative Committee on Education explaining how it proposes to ensure compliance with the NCLBA language.

 

Section 97 refers to the employment of teachers with middle school licenses and paraprofessionals. This section is amended to specify that certain teachers and paraprofessionals hired after January 8, 2002, in Title I programs, must be qualified as specified under the NCLBA. The change also shifts the date for qualification as  “highly qualified” to July 1, 2006, which is mandated by the NCLBA.

 

Section 109.5 is a new section added to ensure districts utilize the parent partnership agreements specified in the NCLBA in its parental involvement policies.

 

Section 130 refers to the stipends for low-performing schools. This section is revised to make the stipend program for personnel in low-performing schools parallel to the Governor’s budget proposal, which is a $2000 stipend for principals, vice principals, and teachers.

 

Section 132 is revised completely to require the DOE to provide notice and information to all teachers on how to become “highly qualified.”

 

Section 136 refers to paraprofessionals. This section is revised extensively to require each district to submit a plan explaining how it proposes to ensure compliance with the NCLBA mandates concerning the use of the terms “highly qualified” and “experienced” teachers. Further, the amendment specifies that the provisions of this section do not supersede, negate, or limit collective bargaining or other employee rights specified in the NRS.

 

Section 140 is a new section. The section is revised extensively to delete the old language. The new section will require the DOE to create and distribute a pamphlet for educators, parents, and the community, providing guidance and definitions with regard to technical assistance and supplemental services provisions as required by the NCLBA.

 

Section 141 revises repealed sections accordingly. This section includes the repeal of the existing incentive whereby one-fifth of retirement is offset for teachers who stay in “needs improvement” schools.

 

Senator Cegavske:

In the section referring to consulting with the State Board of Education about the new tests, staff indicated the tests have to come from a nationally recognized testing company. How many national testing companies are there?

 

Mr. Sturm:

Currently, there are three major test vendors: CTB/McGraw-Hill, Riverside, and Harcourt.

 

Senator Cegavske:

Which ones has the State used?

 

Mr. Sturm:

Nevada currently uses Harcourt and Riverside. CTB/McGraw-Hill has been used as a test vendor in the past.

 

Senator Cegavske:

Has a cost comparison been completed for all three companies?

 

Mr. Sturm:

The federal law provides funds for the additional testing costs, so staff has not done a comparison of costs for the three companies. The State already has in place maintenance of effort (MOE) standards for statewide testing. There is no fiscal impact when both sources are combined.

 

Senator Cegavske:

Why does the amended part in Section 84 concerning paraprofessionals state the person “is employed?”  Has there been a problem?

 

Mr. Sturm:

This language change was recommended by the Washoe County School District to clarify that the term “paraprofessional” refers to actual school district employees to distinguish them from volunteers or people simply assigned to work in the school district.

 

Senator Cegavske: 

Does the federal government impose consequences, other than the withholding of funds, for not following the requirements of the NCLBA and for not presenting the plan detailed in Section 85 to the Legislative Committee on Education?  What is the due date for the plan? 

 

Mr. Sturm:

On page 68 of the draft amendment document (Exhibit H), it states “ the board of trustees of each school district and the governing body of each charter school shall, on or before September 1, 2004, submit a copy of the plan to the Legislative Committee on Education.”  According to the procedures for federal enforcement of the NCLBA, the DOE must withhold funds if the AYP provisions of the NCLBA are not followed. The “highly qualified” teacher provisions do not have federal consequences for failure to perform.

 

Senator Cegavske:

The school districts have to have the plan ready for submission to the Legislative Committee on Education by July 1, 2003. Is that correct?

 

Mr. Sturm:

The school districts must begin working on the plan by July 1, 2003, but the submission date is on or before September 1, 2004.

 

Senator Rawson:

In Section 55, staff mentioned the old SMART system, which has been replaced with the System for Accountability Information for Nevada (SAIN), there will be some additional costs for implementation of and transition to the SAIN. Is there any change required in S.B. 191 to provide the necessary funds, or will the funding be handled through a budget office authorization?

 

Mr. Sturm:

The word and acronym changes will have to be made in this bill, if the committee wishes to place the new name into the NRS.

Senator Rawson:

Could the name change be handled through a budget office authorization?

 

Mr. Sturm:

Yes, it could.

 

Senator Coffin:

Since the test scores come back to the school in June, on what date will parents be notified of their child’s test performance scores for the previous year?

 

Mr. Sturm:

Some of the dates are given on the timeline schedule the committee has. I believe the tests are administered in April and the parents, teacher, school, and the school district will receive the test scores by late May. The parents will be notified how their child performed in that grade at the end of the school year.

 

Senator Raggio:

At the April 3 hearing on S.B. 191, we had a series of questions and answers about changing the test administering from the fall to the spring. Each concerned party was directed to prepare a joint written assurance document restating their verbal assurances. However, the committee did not receive all the assurances in a single document. In changing the testing from fall to spring, the committee requests assurance that all parties will still be able to meet date deadlines and requirements in the NCLBA and in S.B. 191. The committee also wants assurance that there is adequate notice given to parents of their child’s progress on a diagnostic basis. Additionally, the teachers who are involved in this process need to be given adequate opportunity to change lesson plans and have adequate information from the test scores to make whatever accommodations are necessary to meet the needs of the child. The committee also requested assurance that compliance will be met in issuing the report cards mandated under the NCLBA and S.B. 191, for Title I and non-Title I schools.

 

I am going to ask the parties involved to come up and give their assurances again. I will ask for verification of each item detailed on the assurance list. The first item is the change specifying the NRTs in grades 4, 7, and 10, and the separate CRTs in grades 3 through 8. The assurance asked for was:  “Will the restructuring of the tests result in the over testing of students?”  In the first written document received from the school superintendents and distributed to the committee as a letter entitled, “Nevada Association of School Superintendents” (Exhibit J), the statement is made “we believe it will not” result in over-testing of Nevada students. Why does the statement say:  “we believe?”

 

Dr. James Hager, Superintendent, Washoe County School District; Chairman, Nevada Association of School Superintendents:

It is difficult to speculate on the situation. It is the judgment of all the school superintendents that the restructuring of the test schedule will not result in over-testing of students.

 

Senator Raggio:

Also, will the school districts use the State CRTs for the purposes they have outlined, and will those tests effectively replace the individual school district’s CRTs?

Dr. Hager:

Once the Legislators have enacted S.B. 191, the school superintendents believe it is incumbent upon them to administer the State CRTs. There may be some circumstances in which the individual school districts may wish to do some additional testing.

 

Senator Raggio:

Your statement may indicate an over-testing situation, and that is one of the committee’s chief concerns.

 

Dr. Hager:

The school superintendents understand the committee’s concern. Without going into a lot of teaching and instruction issues, there is a lot of diagnostic testing that needs to go on to see where students’ performance levels are all the way through a school year. The testing may be in a formal testing sequence, a teacher-made test, or a variety of other diagnostic tools. The school superintendents believe this additional testing will improve and enhance teaching and student learning. We do not believe it is over-testing for the sake of testing, but the testing is for the sake of student achievement.

 

Senator Raggio:

Will all school districts, both rural and urban, be able to meet the revised time lines?

 

Dr. Hager:

Yes, every school district, rural and urban, has looked at the letter of assurance and signed their acceptance. My signature and the signatures of 14 of the school superintendents are on the signatory page. The three other school superintendents were unavailable, but we will have their signatures as well. However, all 17 school district superintendents support and concur with the letter of assurance.

 

Senator Raggio:

Moving the testing from the fall to the spring would mean preparation work for the upcoming school year would have to be completed during the summer months. Could the preparation work be done without additional costs?  I detect a little bit of “waffling” in your assurance letter where it states, “none of us can predict with total certainty what the exact costs will be. We believe the spring testing schedule will be fiscally neutral when compared to fall testing.”  Can you assure us of the fiscal neutrality?

 

Dr. Hager:

Yes, we believe the change in the testing schedule will be fiscally neutral.

 

Senator Coffin:

Postage can sometimes be a large expense. Who communicates with the parent?

 

Dorothy L. Merrill, Senior Director, Public Policy, Accountability and Assessment, Washoe County School District:

There will be a number of mailings going out. Those mailings would go out regardless of when the test is administered. Whether the tests are administered in the fall or spring, parents would still receive those reports. On the issue of parent notification for school choice, those letters will be sent by the school districts to parents having students in the affected schools.

 

Senator Coffin:

According to the timeline, it looks like parents will be notified in the second week of June. Schools on a traditional schedule will already be out.

 

Dr. Merrill:

The language of the statute now reads, that when results come to the school districts, the school districts have a set number of working days to get those reports to the schools in all the school districts. Schools then send those reports home to parents. At the very latest, the scores will go to parents in the second week of June. We believe, if the test scores are returned in a timely manner, parents will receive those report cards before the end of May.

 

Senator Coffin:

Does your statement mean a teacher must have a student’s grade ready before the school year is over?

 

Dr. Merrill:

A student’s grade is not going to be determined by his or her performance on the CRTs. The classroom grade is separate from the CRT scores. What is important here is that the teacher, parent, and student know how the student did on the CRTs with regard to mastery of the tested standards.

 

Senator Coffin:

Since the State has a high transient population, I am concerned that bulk mail notification will not get to the parents, since it is not forwarded without additional cost.

 

Dr. Merrill:

The schools cannot send test results through bulk rate mail because the scores are personalized individual results. The U.S. Postmaster requires those results to go in the first class mail.

 

Senator Coffin:

If the student changes his or her address during the school year, what assurance does the committee have that the parent notification letter will be forwarded?

 

Dr. Merrill:

The Washoe County School District anticipates this problem by running mailing labels as close as possible to the time the report cards will be mailed home, so address changes are already made in the existing computer system. Address changes are immediately processed in our computer system.

 

Senator Raggio:

In your letter of assurance, the school superintendents’ state:

 

The NCLBA requires that parents having children enrolled in Title I schools that fail to make AYP for 2 consecutive years be notified of their ability to choose a different school on the first day of the school year. We all apparently agree that is not an acceptable time frame. What has been twice confirmed is that the only information parents must receive is test information that will enable them to make informed decisions about school choice. In other words, the entire accountability report card is not required before the beginning of the school year.

 

It is the chair’s understanding that the NCLBA does require the school and the school district report cards to reach the parents prior to the beginning of the school year.

 

Dr. Merrill:

In the paragraph above, the one you just quoted, the school superintendents have given the name and phone number of the U.S. Department of Education spokesperson with whom we have several communications on this issue. She has confirmed our statement.

 

Senator Raggio:

Staff will have to reconfirm that.

 

Dr. Hager:

The school superintendents have made the direct contacts, just as the Legislative Counsel Bureau staff has, and we can show you the correspondence generated. We will do whatever is necessary to be in compliance.

 

Senator Raggio:

The committee does not want to have deadline dates missed because the testing is being moved to the spring. The committee also asked whether the school superintendents were comfortable moving from a diagnostic process to an evaluative one. The letter of assurance response provided seems to imply the school superintendents are moving away from the diagnostic process. Is that correct?

 

Dr. Hager:

Could you ask the question again?

 

Senator Raggio:

Is it the position of the school superintendents that knowing whether a fourth grade student met third grade requirements seems to be a priority as opposed to finding out how a student can meet the third grade requirements? 

 

Dr. Hager:

The school superintendents’ position is that both purposes will be met. The fourth grade student will have test data that shows the teacher what the individual child knows and does not know about the third grade standards.

 

Senator Raggio:

What I asked is if this test is going to be administered in the spring to a child in the third grade, will the third grade teacher receive the information in time to help the child improve in areas of third grade deficiency. It is understood the fourth grade teacher will find out what the child learned in the third grade. If the test was administered in the fall, the third grade teacher would have the information to assist him or her in redefining lesson plans and in redefining the subject matter focus to help the students achieve success in the third grade.

Dr. Hager:

The school superintendents believe the fourth grade teacher, receiving the test data in the early part of the child’s fourth grade year, will find the information more valuable and useful than having the third grade teacher receive the information on the student while the student is still in the third grade. In fact, the student would be halfway through the third grade by the time the testing scores reach the teacher.

 

Senator Raggio:

The school superintendents’ letter states, “Parents at the overwhelming majority of Nevada schools would receive formal notice of school choice 6 to 7 weeks, not 2 or 3 weeks, prior to the beginning of the school year.”  Does this mean not all the parents will receive notification prior to the start of the school year?

 

Dr. Merrill:

For the multi-track schools, which begin in early July, parents will have approximately 2 weeks to make a school choice decision. This is the shortest period of time a parent will have. Other parents would have 6 to 7 weeks to make a school choice decision.

 

Senator Raggio:

The limited time frame afforded to the parents of students at the multi-track schools is one reason why we raised this issue. The parents will not have the same length of time in order to make their school choice decision.

 

Dr. Merrill:

Under the NCLBA, the parent can receive the formal notification for school choice as late as the first day of the next school year. The school superintendents believe the time frame they have presented far exceeds that requirement.

 

Senator Raggio:

In the letter, the school superintendents’ state, “We are committed to meeting the revised timeline.”  Is that the same as saying we will meet the timeline?

 

Dr. Hager:

Yes, that is correct.

 

Senator Raggio:

The DOE’s letter was submitted separately. The committee would like to clarify some of the details and have a reiteration of assurances.

 

Jack McLaughlin, Superintendent of Public Instruction, Department of Education:

The DOE’s letter has been distributed to the committee and is entitled, “Assurance Made to the Senate Committee on Finance by the Nevada Department of Education” (Exhibit K). The DOE concurs with the amendments.

 

Senator Cegavske:

I have a question and a recommendation for the DOE. I would like the DOE to contact all three of the national testing companies to find out the dates the companies have for completion of all the test scoring, and find out what dates the schools can expect to receive this information from the companies. I still believe the entire summer period will be wasted if the parents have not received their students’ testing report cards for the prior school year. I want staff to have each of the concerned parties put in writing what information and what distribution process will be used for getting out the parent notifications. If that language is not in the amended document, I want to have it put it.

 

Mr. Sturm:

There is another provision in S.B. 191 that requires the DOE to review any regulations adopted pursuant to this bill by the Legislative Committee on Education. The Legislative Committee on Education’s main task is to oversee most of the major school reform issues. It would be up to the chairman of that committee to put the review on its work program.

 

Senator Cegavske:

Are you saying the language is not currently in writing in the bill?  Is it something we could ask to have written into the amendment?

 

Mr. Sturm:

If it were part of the regulatory process that the Legislative Committee on Education adopts, then the Legislative Committee on Education would complete the review during the interim.

 

Senator Cegavske:

Can we put the language in the legislation now?

 

Senator Raggio:

Yes, we could put it in.

 

Senator Cegavske:

I would like to make a recommendation the language be inserted in the amended bill.

 

Senator Raggio:

What section do you want the language placed in?  What is the specific language you want in S.B. 191?

 

Mr. Sturm:

I believe the section is 136.

 

Senator Cegavske:

The school improvement plan should contain language that states the dates for parent notification and the method of distribution of the notices.

 

Senator Raggio:

I am a little unclear if you are referring to the testing companies or the schools. One of the concerns we had with the spring testing was it would compress the timeline and would require the test scoring to be completed by the testing company within 20 days. Is that correct?

 

Keith Rheault, Deputy Superintendent for Instructional, Research, and Evaluative Services, Department of Education:

It is 28 days.

Senator Raggio:

In the assurances the committee received, everyone agreed that the time was adequate for the testing companies to complete the test scoring.

 

Dr. Rheault:

All three major test companies agreed they would provide the test scores within 28 days. The only exception was for open-response test questions; then the minimum turn-around time was 35 days. Those types of questions are not included in the tests. All three companies bid both the NRTs and CRTs and guaranteed they would meet the 28-day time limit.

 

Senator Raggio:

Some of the committee members have a long memory. The time limitation has been a requirement in previous contracts, and the companies did not meet the guaranteed deadlines.

 

Senator Cegavske:

I want to see a plan included in S.B. 191 to specify how the school districts will disseminate the test scores to the schools, teachers, students, and parents. I also want a timeline included showing dates for distribution of the test scores. The parents should have the results before the summer is over.

 

Senator Raggio:

What section in S. B. 191 would be most appropriate for placement of the suggested language?

 

Mr. Sturm:

The language could be placed in a new transitory subsection similar to Section 136. The exact placement depends on the recommendations and preferences of the Legal Division.

 

Senator Raggio:

We can accommodate the insertion of the desired language. I want to go back to item 6 referenced in the letter of assurance (Exhibit K) from the DOE, which discusses the timelines, and item 9, which refers to parent notification of school choice. In item 9, the DOE states,  “Districts and schools will have information necessary to inform parents about the school choice option consistent with the NCLBA and the above timeline.”  I want to emphasize that the superintendent of public instruction has the authority to regulate and monitor the process to ensure the date deadlines are met. This requirement is mandated by the NCLBA. Parents need to have the information in a timely manner in order to make their decisions about school choice.

 

Senator Coffin:

Does the legislation allow time for staff changes to be made and to ensure schools have time to gear up or gear down based on the total student population? 

 

Dr. Rheault:

The law states the schools shall provide choice of more than one school. A list of schools meeting AYP would be provided. School districts do shift teaching staffs around at the beginning of the school year to balance the different schools’ enrollment counts and provide adequate classroom coverage. The NCLBA states a school district cannot use lack of capacity as an excuse for not offering school choice to parents. Some provisions would have to be made if the schools where choice is being offered are already at full enrollment.

 

Senator Coffin:

I want to be assured that schools at full capacity will not be “squeezing in” additional students.

 

Dr. McLaughlin:

The school choice option “kicks in” after the end of the second year. At the end of the first year, school districts will have to start considering contingency plans if the school is again designated “low-performing.”  Currently, 12 schools are on the school choice model. Very few of the students at those schools chose to go to another school. School districts can predict fairly accurately where its schools are in terms of the performance standards.

 

Senator Raggio:

We would like Mr. Bellister of the Nevada State Education Association (NSEA) to provide the committee with similar assurances.

 

Al Bellister, Lobbyist, Nevada State Education Association:

I have distributed to the committee the NSEA’s letter of assurance (Exhibit L).

 

Senator Raggio:

The committee will make all the letters of assurance part of the record. I understand your concern that you cannot give assurances about matters that are outside of your control. The committee did ask that changing the test dates from the fall to the spring might create possible implications that could reflect negatively on a teacher’s performance. The NSEA’s response states,  “I do not recall, and the record of the hearing does not include, that you defined your meaning of ‘implications’”.

 

Mr. Bellister:

That answer represents my best attempt to dodge a bullet. The NSEA supports moving the testing schedule to the spring. It was my assumption that your meaning of “implications” referred to the fact that, in putting the tests in the spring, the teacher would still have time to teach the material and have the student master the material during the academic year in which the material was taught. The test scores would serve as a diagnostic tool for the teacher receiving the student in the fall.

 

Senator Raggio:

At that point, it may be too late to change the lesson plans. If the teacher does not receive the test scores until 2 weeks before the student enters the class, how will the teacher have the necessary time to make the required modifications?

 

Mr. Bellister:

I believe teachers use their own diagnostic tools during the course of an academic year to measure a student’s progress and, at the same time, teachers make appropriate adjustments to their lesson plans.

Senator Raggio:

I want to direct the committee’s attention to the revised fiscal note for S.B. 191, which has been distributed to the committee as Exhibit M.  (Original is on file in the Research Library.).

 

Mindy Braun, Education Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:

During the hearing of April 3, 2003, on S.B. 191, the committee requested school districts to again review submitted fiscal notes for accuracy, and base any revisions to the fiscal notes on the proposed amendments to this bill. In response to the committee’s request, the school districts met with staff to review the proposed amendments to the bill and subsequently provided this revised fiscal note.

 

In the middle of page 1 of the revised fiscal note (Exhibit M), there is a table which shows the school districts’ estimates for implementing S.B. 191. This current third revised fiscal note shows a fiscal impact to school districts in the amount of $924,000 for FY 2003-2004 and $1,617,000 for FY 2004-2005. The revised figures are based upon two categories of anticipated expenses, which are costs for the TAPs, and the expected costs connected to implementation of the plan for improvement developed by support teams and partnerships.

 

Page 2 shows the school districts’ estimate of the costs to implement the TAPs at $1000 per school. The cost was determined by estimating that each designated school would require 10 days of substitute pay for teachers to participate in the improvement process for the school. The school districts estimate 28 non‑Title I schools will be identified in FY 2003-2004 and 49 non‑Title I schools will be identified in FY 2004-2005. The costs for the substitute teacher pay amounts to a fiscal impact to school districts of $28,000 in FY 2003-2004 and $49,000 in FY 2004‑2005.

 

The school districts are also estimating an additional $2000 per school for anticipated expenses involved in hiring experts outside the school and school district. The experts would be necessary to analyze the data and review the curriculum and instruction process.  S.B. 191 only requires a TAP to consist of an employee of the school and an employee of the school district. However, the school districts do indicate that, based upon the large number of schools expected to be identified as in need of improvement, the number of school district personnel available may not be sufficient to support the schools in the review and analysis of data process at each school. The costs amount to a fiscal impact to school districts of $56,000 in FY 2003-2004 and $98,000 in FY 2004‑2005. The statewide total for implementing the school improvement plans amounts to a fiscal impact to school districts of $84,000 in FY 2003‑2004 and $147,000 in FY 2004-2005.

 

The second part of the fiscal note involves the school improvement planning and implementation of the plans. The school districts are estimating a cost of $30,000 for each of the non-Title I designated schools. The school districts are looking at implementing a plan for before- and after-school instruction, summer school classes, and individual tutoring for the students in the non‑Title I designated schools. The cost is estimated to be $182 per pupil. The total cost amounts to a fiscal impact to school districts of $840,000 in FY 2003‑2004 and $1.5 million in FY 2004-2005. Staff could take the costs of the remediation program needs back to the K12 subcommittee for its consideration in applying Governor-recommended remediation funds to cover the expenses, which would offset this fiscal impact.

 

Senator Raggio:

Attached to the fiscal note is Dr. Merrill’s report from the Washoe County School District. What other documents are attached?

 

Ms. Braun:

The report of the costs from each of the 17 school districts is attached as well as a statewide summary of all costs.

 

Senator Raggio:

Is this fiscal note based on the proposed draft amendment (Exhibit G)?

 

Ms. Braun:

Yes, that is correct.

 

Senator Raggio:

The committee is not going to process the whole bill at this time, but I will accept a motion to amend the bill with the proposed amendment draft and the inclusion of the new language specifying parent notification.

 

SENATOR RAWSON MOVED TO AMEND S.B. 191 WITH THE PROPOSED DRAFT AMENDMENT AND THE INCLUSION OF LANGUAGE SPECIFYING PARENT NOTIFICATION AND RE-REFER THE BILL TO THE COMMITTEE WITH THE AMENDED LANGUAGE.

 

SENATOR COFFIN SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Senator Raggio:

I have asked for information for the committee to explain the retirement incentive credit stipend. The committee will consider using the retirement credit stipend as an alternative to the stipend of $2000. The hearing on S.B. 191 is closed, and we are opening the hearing on S.B. 235.

 

SENATE BILL 235 (1st Reprint): Revises provisions governing payment of hospitals for treating disproportionate share of Medicaid patients, indigent patients or other low-income patients. (BDR 38-746)

 

Senator Raggio:

For the record, I need to make a disclosure. I have a conflict of interest on this measure because one of our firm’s consultants has been lobbying for this bill. I am turning the hearing over to the Vice Chairman, Senator Rawson.

 

Senator Rawson:

This bill comes out of the interim committee on health care. It deals with intergovernmental transfers of funds (IGT), changes to the administration of the Medicaid disproportionate share hospital (DSH) program, and revises the method of distributing DSH funds to qualified hospitals. DSH is a $70 million per year Medicaid program, which provides critical funding to hospitals for care of indigent and uninsured patients. The interim study committee tried to develop a formula for the distribution of funds. Some concerns were expressed about some of the decisions made in the implementation formula for the distribution of funds and amendments that were proposed. The committee realized it was running out of time, so the human resources subcommittee amended the bill to make it exempt and re-refer it to the finance committees. The intent of the Legislature is to develop a standardized formula for fund distribution that can be used on an annual basis without re-visiting the distribution issue at every session of the Legislature. Yearly reviews may be necessary, but the formula will be set. Some bill has to be processed this session because the IGT of the Medicaid DSH program sunsets this year. It is a significant amount of funding for the State and the University Medical Center (UMC). An additional amendment is going to be proposed today by Senator Washington.

 

Charles Duarte, Administrator, Division of Health Care Financing and Policy, Department of Human Resources:

The position of the State is to preserve the State’s net benefit from the program as contained in the Executive Budget, and to protect the net benefits to rural hospitals. Otherwise, the State does not have a position on how the DSH funds should be distributed among the hospitals, as long as the distribution does not reward inefficiency or conflict with the federal law. The Division of Health Care Financing and Policy (DHCFP) is opposed to S.B. 235 in its current form. The bill does appear to retain the benefits for the rural hospitals, but our primary concern is the changes it makes to the IGT. In this context, IGTs are transfers from county governments to the State.  The purpose of these transfers is to provide matching funds for the federal DSH dollars. Any IGT funds in excess of the matching funds are retained by the division and used as matching funds for other medical payments in the Medicaid program. The bill is based on an estimated total of $76 million of DSH payments available per year. However, the DHCFP is currently estimating available DSH funds at approximately $70 million in FY 2003-2004 and $68.8 million in FY 2004‑2005. The reduction in available DSH funds for Nevada is due to changes in federal regulations calculating DSH allotments nationwide and increases in Nevada’s federal medical assistance payment. The bill addresses the decreased federal funding for the DSH program by requiring the DHCFP to reduce the pools and guarantees proportionally. I have distributed my testimony, entitled “TESTIMONY, Senate Bill 235 – First Reprint,” to the committee as Exhibit N.

 

Senator Rawson:

At this point, it is the intention of the subcommittee to close this budget as recommended by the Governor, which would adjust the payments down and protect the amount of funds that would be going to the State.

 

Mr. Duarte:

With your statement, you have taken care of the DHCFP’s concerns about the bill. The only other concern the DHCFP has is the need to provide protection to rural hospitals. The DHCFP believes that whatever methodology is developed here will be fair and will recognize the efficient operation of facilities throughout the State.

 

Senator Maurice E. Washington, Washoe County Senatorial District No. 2:

A packet of information on the proposed amendment to S.B. 235 has been distributed to the committee as Exhibit O. The proposed amendment was drafted to accomplish several important policy decisions. It would fairly distribute funds to those hospitals that provide care to a disproportionate number of low-income patients without rewarding inefficiency. The amendment would also protect the State’s net benefit, which supports the Medicaid program, and would protect the rural hospitals, and simplify the DSH formula. It would provide flexibility in the DSH formula, so it does not have to be changed each biennium.

 

Lynn Fulstone, Lobbyist, MountainView Hospital, Sunrise Children’s Hospital, Sunrise Hospital and Medical Center:

I will take you through the proposed changes to S.B. 235 by summarizing the changes section by section. Section 1 is the same as the existing law. Section 2 provides for an audit of major hospitals within a county. If a hospital has a cost-to-charge ratio that is 10 percent higher than the average for all major hospitals in that county, then an audit will be requested. This data is currently reported by all hospitals to the Department of Human Resources. Section 2, subsection 2 states the Legislative auditor or a qualified accounting firm will conduct the audit and present a report to the audit subcommittee of the Legislative Commission and to the Interim Finance Committee (IFC). Section 2, subsection 3 and subsection 4 provide for the mechanics of the audit. Section 2, subsection 5 and subsection 6 require the hospital being audited to pay for the audit.

 

Senator Rawson:

Is the audit considered to be a performance audit?

 

Ms. Fulstone:

It would be a financial audit. Section 2, subsection 7 provides that a hospital not complying with the audit would forego its DSH program funds until its cost‑to-charge ratio returns to within 10 percent of the average. Section 2, subsection 8 contains the definitions of the terms used in Section 2.

 

The next part of the proposed amendment deals with NRS 422.382 and would give the DHCFP the flexibility to determine the amount of the IGT to be paid in order to maximize the amount of federal funds. Only hospitals in Clark County and Washoe County pay IGT.

 

The next part of the proposed amendment deals with NRS 422.387 and would state DSH funds are to be distributed by regional pools to guarantee current funding to rural areas and Washoe County. The percentages are based on the funds distribution contained in the current law. By using percentages rather than dollar amounts, the law will not have to be changed each biennium. It also provides for the DSH funds to be distributed in all pools outside Clark County. Also, this section would distribute funds in Clark County based on the total number of Medicaid days provided by each qualifying hospital. A hospital qualifies if its Medicaid utilization percentage is greater than the statewide average, which is the same requirement as stated in the current law. These numbers are fixed, verifiable, and regularly reported to the DHCFP. This section provides flexibility to proportionally adjust percentages if needed due to an audit of a new or closed hospital, as required by law. The proposed amendment provides that the IFC may adjust the DSH funds distribution, based on audit results, if a hospital’s cost-to-charge ratio is not justified. Finally, the proposed amendment provides flexibility to include new hospitals and remove hospitals ceasing to exist. The definitions of the terms used are also included. A DSH/IGT analysis showing the DSH allocation to pools and the allocation within the pools is included in the packet.

 

Senator Rawson:

Is Washoe County under a “hold-harmless” provision?

 

Senator Washington:

Yes, that is correct.

 

Senator Rawson:

Are there any concerns about the funding for the rural hospitals?

 

Ms. Fulstone:

Washoe County should receive the same amount of funding it has received under the existing law. The rural hospitals are handled similarly. Churchill County asked for an increase in its DSH funds because it has changed its status from a public to a private facility. That adjustment was also accommodated in the figures provided. This information is tabled in Attachment A of Exhibit O.

 

On the second page of Attachment A, the total DSH payments and the net benefit to be distributed among all the qualifying hospitals in Clark County are shown. In FY 2003-2004, the amount of the pool is $14,362,702, and in FY 2004-2005 it is $14,453,756. In the middle of the second page is a table showing the amount of funds each hospital will receive based on its Medicaid days utilization and Medicaid days. The percentage of the DSH funding based on Medicaid days and the equivalent dollar figures are given. The number of Medicaid days for each hospital was provided by the DHCFP.

 

The next two pages in Attachment A provide spreadsheets prepared by the DHCFP, with the exception of Clark County, showing comparisons of funding under S. B. 235 and A.B. 297. The figures for the UMC, Lake Mead Hospital, and Sunrise Hospital and Medical Center are handwritten in.

 

ASSEMBLY BILL 297 (1st Reprint):  Revises provisions governing payment of hospitals for treating disproportionate share of Medicaid patients, indigent patients or other low-income patients. (BDR 38-885)

 

Denell Hahn, Lobbyist, Sunrise Hospital and Medical Center:

I want to explain why Medicaid days were chosen as the method for allocation of the DSH funds in Clark County. Medicaid days, although paid through the Medicaid program, accurately reflect use patterns for indigent, low-income, and uninsured patients. This population group tends to use facilities that are geographically convenient, easily accessible, and frequented by other members of the same group. Sunrise Hospital and Medical Center and Lake Mead Hospital are in areas that have a high density of low-income families. All major hospitals, not just public hospitals, have the same obligation to provide emergency services, as mandated by federal law. Some of the other proposed amendments suggest using uncompensated care figures, which actually do not reflect care only given to low-income people. Sometimes uncompensated care figures reflect poor business practices, high salaries, and high costs.

 

We believe the Medicaid days figures are the most objective method for determining the distribution of DSH funds. Comparing acuity of illness figures among the Clark County hospitals’ shows that Sunrise Hospital and Medical Center is significantly higher than the total market average in acuity. UMC is a little lower than average, and Lake Mead Hospital is a little lower than the figures for UMC. Even when the statistics for new babies are eliminated from the figures, the numbers remain the same in reflecting acuity of illness. The upper-payment limit program did provide an extra $20 million to UMC, and $10 million a year going forward. All of these funds represent new money.

 

Senator Rawson:

What is the cost-to-charge ratio for the three Clark County hospitals?  Do all of the hospitals fit under the 10 percent higher than average figures?

 

Ms. Fulstone: 

I have the numbers, but I have not calculated whether all the hospitals fit under the 10 percent, so perhaps we should look at those figures.

 

Senator Rawson:

Is the method of calculating the 10 percent higher than average figures a standardized procedure?  Or would rules have to be developed to establish a standard formula for calculation of the figures?

 

Ms. Fulstone:

The cost-to-charge ratio determination is defined in the proposed amendment, and the definition is the same as the one used by the American Hospital Association. Some confusion may have been caused over the definition of one term. We have now clarified the definition by using the definition for the term used in the NRS. The cost-to-charge ratio formula is on page 3 in the middle of the page.

 

Senator Rawson:

Over the years, the Legislature has avoided requiring audits of the hospitals because of the additional expense involved.  Is the audit recommended in the proposed amendment adding a significant expense, or is the audit completed by using a standardized method?

 

Ms. Fulstone:

It isbelievedan audit would rarely need to be completed since all of the hospitals would fall within the 10 percent higher than average statistic. If 10 percent is not the right number, or if the number needs to be adjusted, we could reevaluate the percent trigger. Its purpose is to serve as a trigger only.

 

Michael R. Alastuey, Lobbyist, University Medical Center:

The UMC is in support of S.B. 235 and in opposition to the amendment because it contradicts the study findings. The DSH program is federally funded and brings in about $38 million in net benefit to the State. In order to receive the $38 million for distribution to qualified hospitals, there needs to be approximately $32 million put up in non-federal match funds. Instead of charging the minimum amount of $32 million, the State requires hospitals and counties to pay about $48 million to the State IGT fund. What happens to the extra $16 million?  The State either pockets the funds by placing the amount in reserve or, on occasion, accesses the funds to help match and extend the Medicaid program in lieu of State funding.

 

The fact that Clark County taxpayers basically fund this entire program for the State was made clear in the interim study committee’s results. This situation represents a major policy issue in terms of geographical equity. It is also of concern that there are other proposals including this amendment that would further disadvantage southern Nevada taxpayers. Clark County is essentially the financial foundation of the DSH program.

 

Without the IGT payments from the UMC via Clark County’s taxpayer the Nevada DSH program would collapse, meaning no entities would receive the DSH funds. Otherwise the State would have to put up matching funds to bring in the maximum amount of federal funds possible. Since this critical program is paid by UMC and Clark County for the entire State, UMC’s share must be protected. UMC notes the subcommittee’s likely closure of the Medicaid budget would be as recommended by the Governor. It is also noted, having worked on the first reprints of both S.B. 235 and A.B. 297, that a small percentage adjustment in one paragraph is all that is necessary to reconcile the State’s need for the funds and, at the same time, enable the subcommittee to close the budget as the Governor recommends.

 

The DSH allocation of funds is critical to UMC’s operations. Since September 11 and through ensuing economic downturns, UMC has experienced a 28 percent increase in the number of patients who are unable to pay for their hospital care. The continuous percentage increase in patients places economic burdens on UMC that are not placed on other hospitals. UMC also absorbs costs not paid by other institutions in the proportions that UMC has to handle them. Therefore, more than ever before, it is supplemental financing like the DSH funds that remain critical to UMC operations. We are aware there is a fixed sum of federal benefits available, and all the hospitals compete for their share of the funds. In the past, disputes over conflicting statistics have always brought an “untidy” end to the DSH program controversy. As a result of all the confusion and frustration that ended the 71st Session, all parties agreed to commit to an impartial interim study and abide by its findings. Without a consistent method for determining the true needs of hospitals for uninsured patient funding, there will never be a rational basis for distributing the DSH funds. Finally, there is a valid DSH program study and the program is again controversial because not all the parties agree with the study’s findings.

 

The interim study was rigorous. I personally sat in on a couple of the conferences where finance officers and specialists in federal fund reimbursements conferred with each other and differed with each other over methodology and inclusion of costs. In the end, it was the consensus that the consultant had produced a credible product. Did the UMC get all the costs included that it wanted?  No, absolutely not. In fact, several outpatient centers serving predominantly indigent or non-paying patients had costs excluded in the uncompensated cost structure of UMC. Nevertheless, even with those exclusions, UMC is willing to abide by the study findings and outcome. It is not Medicaid patient days, as proposed in the amendment offered today, but net uncompensated costs that should be used to determine which hospitals should receive the DSH program funds.

 

Of all the hospitals in the study, UMC incurs by far the highest percentage of costs on behalf of uninsured patients. These are the patients for whom there is no pay source. These patients are not Medicaid patients or eligible income‑declared county indigents for whom a pay source is available. Typically, the patients served are the working poor or those who have assets just beyond the income threshold that is required for them to receive public assistance. These people do a lot of hard work in the community, but they receive no insurance benefits. The net benefit to hospitals could also be distributed based on the general population of hospitals in Clark, Washoe, and other counties.

 

Those hospitals that now receive the DSH program funds would continue to receive them except for one hospital that should be eliminated due to its extremely low percentage of uncompensated care costs, and two other hospitals that should have their benefits reduced. If future DSH program funding is increased, it should first be distributed to those hospitals having the highest percentage of net uncompensated care costs.

 

It is noticeable, in all the recommendations from the findings of the interim study report, net uncompensated costs predicate the determination of the DSH program funds. Now, at this late hour, an amendment is proposed that contradicts the study findings. All of the other issues raised, like efficiency and business practices, tend to divert our collective attention from the fact that the hospitals primarily proposing such amendments have the lowest net uncompensated costs.

 

The study findings indicate state hospitals with low uncompensated care costs should be disqualified from receiving the DSH program funds. Hospitals facing far greater financial risks should be the decisive factor for determining the DSH fund distribution, not the sheer volume of Medicaid care. If it was the federal government’s design and intent in federal legislation to have funds go directly to hospitals where Medicaid eligible patients are going for care, the federal government would have added the funds to the amounts used to match Medicaid days rates. The DSH funds were provided as a separate sum of money available under State Medicaid plan requirements to give special allocations to hospitals facing special circumstances, not in a proportionate way, but in a disproportionate way.

 

UMC supports S.B. 235 (1st Reprint) because it is faithful to the findings of the interim study. The report clearly indicates that DSH program funding should be allocated to hospitals that have the greatest percentage of net uncompensated care costs. The bill allocates to the State and to UMC approximately the same amounts allowed in the current year recognizing that a single percentage figure can easily be changed to reconcile this account with the Governor’s recommendation for closing.

 

We ask the committee to support these funding levels so UMC’s financial position is not further eroded. UMC’s financial position is still in recovery and the revenue structure is still very precarious. At the close of last year, a transfer of $38 million in funds was necessary to shore up UMC’s cash position and to take care of financial losses incurred by UMC. These financial realities are still a factor. UMC has to have every advantage on the taxpayers’ behalf at its disposable, including replacement of approximately $10 million in annualized cuts, the continued receipt of an undiminished benefit from the upper‑payment limit, and the continued undiminished receipt of the DSH program funds. Even with all those specifications, a transfer of funds up to $15 million may still be required to keep UMC financially solvent this year. We also ask the committee to set the allotment process in statute because the proposed amendment leaves the process open, wandering, forever indeterminate, and forever involved in interim activity. The process needs to be codified.

 

One of the goals of the interim study committee was to put a process in the statutes so this nightmare does not have to be relived every 2 years. We also request that, if necessary, an administrative process be imposed on this bill to ensure accurate accountability is achieved on the part of all participating institutions in a way relevant to the determination of net uncompensated care costs, not to some parameter that has no bearing on the actual distribution of the DSH program funds. We paid for the study; we ought to listen to the outcome. This study was supposed to end this continuous conflict, and it is our responsibility to let the study do its work. We want to keep the State whole, and with fine-tuning and changing one percentage from 67 percent to 68.54 percent, the account can be adjusted to reconcile with the closing of this budget account as the Governor recommends.

 

I would like to respond to some of the remarks made by the Sunrise Hospital representatives. They stated all hospitals share the commonality of Medicaid patient days so it should be used as the determining factor for the DSH fund distribution. In their view, this process would more equitably allocate the DSH program funds. Following September 11, when the displaced worker’s center was set up on a temporary basis for a number of days, thousands of people came to interface with public service organizations, representatives of the gaming industry, representatives of labor, community helpers, and public servants of all kinds. Clark County social services were there with UMC. We did not see a tremendous representation from other area hospitals. This one scenario highlights the difference between a public county hospital, like UMC, and its private counterparts.

 

Senator Rawson:

You indicated in your presentation that some slight changes could make the bill reconcilable with the Governor’s recommendation. Do you have those changes in mind?

 

Mr. Alastuey:

I would start back with your remark, Senator Rawson, that reconciling this account to be in agreement with the Governor’s recommendation would require a change in one percentage. Also, there is language in A.B. 297 that would have the effect of codifying the allocation process.

 

Senator Rawson:

It has been mentioned that the first reprint of S.B. 235 might be detrimental to the rural hospitals. Do you have sense of that situation?

 

Mr. Alastuey:

In the same process of modifying that single percentage, a point-by-point check can be made of each of the rural hospitals to assure their funding is intact. We have kept in touch with the rural hospitals and have clarified our goodwill to them throughout this process. We do not want the findings of the interim study thrown out and we believe S.B. 235 (1st Reprint) is a good and sound piece of legislation.

 

Danny L. Thompson, Secretary-Treasurer, Nevada State AFL-CIO:

The first handout I have distributed to the committee is entitled “Nevada Hospitals Profit, Loss, and Uncompensated Care Washoe County and Rurals,” and on the reverse of the page “Nevada Hospitals Profit, Loss, and Uncompensated Care Clark County” (Exhibit P). The second handout distributed to the committee is entitled “Article Abstract - from Health Services Research, April 2001, Vol. 361 (1 Pt. 1), pp. 25-51” (Exhibit Q). Everyone in this room was present during the agreement that resulted from the completed interim study.

 

The study indicated the DSH program funding distribution should be based on uncompensated care costs and not Medicaid days. From the study itself, on page 24, I quote, “Sunrise Hospital and Medical Center should not receive a DSH distribution. While Sunrise Hospital does have a significant amount of uncompensated care costs at $6.6 million, the percentage of their operating revenues in uncompensated care costs is at 1.7 percent, and is the lowest in the State.”  Of all the hospitals in Clark County, Lake Mead Hospital lost $6.7 million while the percentage of their operating revenue in uncompensated care costs was 12.7 percent. UMC lost over $20 million while the percentage of their uncompensated care costs was at 9.91 percent. Summerlin Hospital made almost $5 million and still provided 4.5 percent of operating revenue from uncompensated care costs. Valley Hospital Medical Center had a $1.6 million loss with 4 percent of operating revenue in uncompensated care costs. Saint Rose-De Lima had a $2.8 million loss with 3.78 percent of operating revenue coming from uncompensated care costs. Desert Springs Hospital lost almost $9 million with 3.44 percent of operating revenue coming from uncompensated care costs. Mountain View Hospital had a $3.5 million profit with 2.21 percent of operating revenue coming from uncompensated care costs. Sunrise Hospital and Medical Center had a $20 million profit with 1.71 percent of operating revenue coming from uncompensated care costs. Saint Rose de Lima had a $10 million profit with unavailable information on the percent of operating revenue coming from uncompensated care costs.

 

This amendment is obscene. In cooperation with the United Way Helping Hands Program, the AFL-CIO set up a center in the culinary union hall and parking lot to provide assistance for people out of work after September 11. Representatives from social services, corporations, utilities, and UMC set up booths and served approximately 1000 people a day. During the 71st Session, the growth in the DSH program funds was given to Sunrise Hospital and Medical Center, and their representatives complained that UMC was making a profit. Today, Sunrise Hospital and Medical Center is complaining that UMC is operating inefficiently. UMC ends up with the people who have no preventive care. We urge you to pass the bill as it stands and dismiss this amendment. We do not believe the good of the community will be served if the proposed amendment to this bill is adopted.

 

Robert A. Ostrovsky, Lobbyist, Lake Mead Hospital (Tenet health Care):

Lake Mead Hospital receives the DSH program funds at the rate recommended by the interim study committee report. I am in an unusual position because the amendment that has been proposed delivers more money to Lake Mead Hospital than the amount in the interim study committee’s report, and more money than the amount indicated in the revised version of S.B. 235. The hospital and corporation administrators oppose this amendment. They believe that “DSH” means exactly what it says. It is a share, a percentage, and a value used to compare total hospital population, costs, uncompensated care costs, and income. Medicaid days, in fact, are compensated days.

 

The hospital receives payment from the State for providing services to the poor. Lake Mead Hospital cares for a very large population of low-income people and uninsured people. The hospital provides the necessary care as law and compassion obligates them to do so. We believe the uncompensated care cost figures should be the determining factor for distribution of the DSH funds. Even though it generates fewer dollars for Lake Mead Hospital, we believe it is the right way to measure which hospital should receive what proportion of the DSH programs funds. If the DSH program fund grows, Lake Mead Hospital would like to receive a larger percentage. The hospital certainly needs it and can use the additional funds.

 

It is no secret that Lake Mead Hospital, along with 14 other hospitals nationwide, is for sale by Tenet health Care because they do not generate enough profit. Every dollar Lake Mead Hospital receives is important because the hospital is struggling to stay in business in North Las Vegas. North Las Vegas is undergoing a surge of growth. There is a lot of money going in and a lot of new homes are being built. The face of the community will be changed by this burgeoning growth. We support the interim study committee’s report and we are willing to accept their findings. We are willing to support S.B. 235 even though it reduces the funding for Lake Mead Hospital. We also support the rural hospitals’ and Washoe County’s needs and their needs should be met. This is a Clark County problem and it needs to be resolved in Clark County.

 

Ben Contine, Representative, Las Vegans for Affordable Healthcare:

Our organization is a diverse coalition of groups and individuals working to preserve UMC and the UMC “quick cares” for the Las Vegas valley. To date, over 4100 individuals and more than 20 groups have signed on to our campaign to preserve UMC. Over the last 2 years, the UMC system has provided a record amount of uncompensated care to people in the community who have no health insurance. UMC has prevented a health care crisis, but they have struggled financially as a result. UMC is critical to the southern Nevada health care safety net and to the estimated 250,000 uninsured residents of Clark County. There is no better example of this than after September 11 when UMC averted a health care crisis by providing $56 million, a record amount, of uncompensated care to people in the community who had no health insurance. UMC’s expenditure was more than all the other Clark County hospitals combined.

 

The number of uninsured people in Clark County continues to grow. As a result, UMC is destined to set another record by providing more than $70 million in uncompensated care costs in 2003. The DSH program funds were created to provide financial assistance to safety net hospitals, like UMC, that provide the greatest share of health care to lower-income and indigent individuals. Providing this care is extremely costly; safety net hospitals, like UMC, rely on these funds to help defray expenses. We urge the committee to keep the Nevada dollars where they are most needed in Nevada’s public hospitals. We urge the committee to follow the recommendations of the interim committee’s study report to ensure that desperately needed funds go to the safety net facilities that truly care for a disproportionate share of the poor and the uninsured.

 

Janice C. Pine, Lobbyist, St. Mary’s Health Network:

For the record, I would like to state that St. Mary’s Health Network stands neutral on either of the bill’s versions. However, should it be the committee’s desire to process the proposed amendment to S.B. 235, I would like to suggest an amendment to the amendment (Exhibit R). The language on page 8, subsection 7 of Senator Washington’s proposed amendment (Exhibit O) deals only with a new hospital being established in the State, which could then become eligible to receive the DSH program funds. I would like to suggest new appropriate wording for that subsection:

 

If a new or existing hospital in this State, which is not included in subsection 3, but which is otherwise eligible to receive a disproportionate share payment, the Administrator may establish a percentage for the new or existing hospital and adjust the percentages for each hospital in the group of hospitals described in a paragraph of subsection 2 of which the new or existing hospital was a member.

 

Robin L. Keith, Lobbyist, Nevada Rural Hospital Partners Foundation:

The position of the Nevada Rural Hospital Partners Foundation regarding the distribution of the DSH program funds in Clark County is a neutral one. We have had some specific concerns about the DSH legislation and we have had those concerns addressed by the interim study committee. I would like to thank UMC, Sunrise Hospital and Medical Center, Clark County, and the interim study committee for understanding the impact of the DSH program funds on rural hospitals and the contribution of rural hospitals to the health care delivery system. That support has been translated into the language in S.B. 235, the proposed amendment, and A.B. 297.

 

Senator Washington:

UMC’s comments are appreciated. I, too, had an opportunity to participate in the “pain and suffering” that has gone on with the DSH program fund distribution. A small portion of this amendment deals with the southern Nevada conflict about the distribution of funds. Sometimes as policy makers and Legislators we represent the whole State. I grew up in Las Vegas and have observed over the years the change in demographics and lifestyles of the low‑income families that live in the area of Sunrise Hospital and Medical Center. Sunrise does serve that community and they serve it well.

 

The question remains, after the IGT has been removed, how will the remaining $14 million be distributed among the three hospitals that qualify for the DSH program funds based on the 10 percent figure?  The percentages and the numbers have not changed. The proposed amendment suggests dividing the funds based on Medicaid days, not on uncompensated care costs figures. Regardless of which hospital patients select for care, the hospital should be compensated based upon those Medicaid days. The proposed amendment represents a fair and equitable division of the DSH program funds. I recognize the interim committee completed a study on proposed recommendations, but the study report is just that, a study. Ultimately, we, the Legislators, have the final say and vote to determine how the funds are distributed.

 

Studies are provided to Legislators for information they require to make sound decisions and good policies. I believe this proposed amendment is fair and equitable because the cost-to-charge and Medicaid dollars should follow the patient as opposed to basing the fund distribution on uncompensated care costs. I ask the committee to consider whether the entire $14 million available should go to UMC, discounting the other Clark County hospitals, or should the funds be distributed fairly across the board. Should the patients who are in need be the primary consideration, or should it be the organizations and the hospitals that are vying for the funds?

Senator Rawson:

The hearing on S.B. 235 is closed. There is a public safety subcommittee meeting at 8:00 a.m. tomorrow. This meeting is adjourned at 7:27 p.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Judy Coolbaugh,

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Senator William J. Raggio, Chairman

 

 

DATE: