MINUTES OF THE SENATE COMMITTEE ON FINANCE

Seventy-fifth Session

May 12, 2009 The Senate Committee on Finance was called to order by Cochair Bernice Mathews at 8:06 a.m. on Tuesday, May 12, 2009, in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file in the Research Library of the Legislative Counsel Bureau. COMMITTEE MEMBERS PRESENT: Senator Bernice Mathews, Cochair Senator Steven A. Horsford, Cochair Senator Bob Coffin Senator Joyce Woodhouse Senator William J. Raggio Senator Dean A. Rhoads Senator Warren B. Hardy II STAFF MEMBERS PRESENT: Steven J. Abba, Principal Deputy Fiscal Analyst Brian M. Burke, Principal Deputy Fiscal Analyst Michael J. Chapman, Senior Program Analyst Rick Combs, Senior Program Analyst Joi Davis, Program Analyst Jeffrey A. Ferguson, Program Analyst Gary L. Ghiggeri, Senate Fiscal Analyst Eric King, Program Analyst Mark Krmpotic, Senior Program Analyst Barbara Richards, Committee Secretary OTHERS PRESENT: Carole Vilardo, President, Nevada Taxpayers Association Scott Watts, President, Nevada Alliance for Retired Americans Bob Johnston, Retired Public Employees of Nevada Stephanie Day, Deputy Director, Budget and Planning Division, Department of

Administration John Wagner, State Vice Chairman, Independent American Party Dana K. Bilyeu, Executive Officer, Public Employees Retirement System COCHAIR MATHEWS: The Senate Committee on Finance meeting is called to order. SENATOR JOYCE L. WOODHOUSE (Clark County Senatorial District No. 5): For the record, I am here representing Clark County Senate District No. 5. Thank you for the opportunity to present Senate Bill (S.B.) 122. SENATE BILL 122 (1st Reprint): Revises the provisions governing refunds of

property taxes for certain senior citizens. (BDR 38-104)

Senate Committee on Finance May 12, 2009 Page 2 I have prepared my testimony in written form which I am distributing to the Committee (Exhibit C). I will read it aloud and hope you will agree with me that senior citizens deserve our positive consideration on S.B. 122. I am supportive of an amendment to this bill (Exhibit D) that has been incorporated into the version of S.B. 122 that is before you today. In the audience this morning we have a number of individuals who would like to present their thoughts on this bill. The Nevada Taxpayers’ Association is willing to discuss the amendment we added in the Senate Committee on Taxation. I thank you for your time this morning and hope that you can see a way for us to process this bill. COCHAIR MATHEWS: Is anyone else in favor of this bill? CAROLE VILARDO (President, Nevada Taxpayers Association): I am speaking in favor of S.B. 122, as amended. It acknowledges and puts on parity relative to the income levels that we have done with other exemptions. We now have consistency we did not have before. The clarification on how it is calculated is better because it provides consistency. We are in severe economic times, and although it would be the perfect time to make some adjustments for those seniors who need it, it is not practical to do so. With the amendments on the bill, we are supportive of it. SCOTT WATTS (President, Nevada Alliance for Retired Americans): We have approximately 16,000 members in the State. I am here in support of S.B. 122. I want to thank Senator Woodhouse for her work on this bill in these trying times. As senior citizens we need all the help we can get. When these trying times happen in our country, it affects seniors, the poor and the working men and women of the State of Nevada. I ask for your support and vote on this bill. BOB JOHNSTON (Retired Public Employees of Nevada): I am here to support S.B. 122. I will be reading my testimony and have provided you a copy of it (Exhibit E). COCHAIR MATHEWS: Is there anyone else in support of this bill? Is anyone here in opposition? If not, we will close the hearing on S.B. 122. We will open the hearing on S.B. 420. SENATE BILL 420: Prospectively reduces the annual salaries of the

constitutional officers. (BDR 18-1195) STEPHANIE DAY (Deputy Director, Budget and Planning Division, Department of

Administration): The original bill, S.B. 420, recommended a 6-percent reduction to constitutional officer salaries consistent with all other salary reductions for employee groups recommended in the Governor’s Executive Budget. The bill is actually two-fold. The first part of the bill defers the salary increase that was to become effective in January 2011 which was approved under Assembly Bill (A.B.) No. 462 of the 73rd Legislative Session. We are requesting that salary increase be deferred.

Senate Committee on Finance May 12, 2009 Page 3 The second portion of the original bill decreased the salaries of constitutional officers by the 6 percent cited in the Governor’s Executive Budget. I have presented a spreadsheet (Exhibit F) that shows a 4.6-percent salary reduction which is consistent with 12 furlough days for all other employee groups. With the 4.6-percent salary reduction, the recommended salary for the Governor would be $134,799; the salary for the Lieutenant Governor would be $57,361; the salary for the Secretary of State, Treasurer and Controller would be $92,734; and the salary for the Attorney General would be $127,151. COCHAIR MATHEWS: Is anyone else in support of this bill? JOHN WAGNER (State Vice Chairman, Independent American Party): I represent the Independent American Party. We support S.B. 420. Since the State employees are taking a hit on their salaries, it is only right that the administrative officers take a hit on their salaries as well. COCHAIR MATHEWS: If there is no further testimony, we will close the hearing on S.B. 420. We will move on to budget closings. ERIC KING (Program Analyst, Fiscal Analysis Division, Legislative Counsel

Bureau): The Joint Subcommittee on Human Services and Capital Improvement Program (CIP)s of the Senate Committee on Finance and Assembly Committee on Ways and Means has completed its review of the budgets for the State Public Works Board (SPWB) and has made the following recommendations for the Agency’s 2009-2011 biennium budget. The Subcommittee’s recommendations for the SPWB result in a General Fund savings of $95,303 in fiscal year (FY) 2009-2010 and $95,525 in FY 2010-2011. The first budget account (B/A) is for the Public Works Administration, B/A 101-1560. FINANCE AND ADMINISTRATION PUBLIC WORKS BOARD Public Works Administration – Budget Page PWB-1 (Volume I) Budget Account 101-1560 The Subcommittee approved the transfer of six senior management positions from this account to the SPWB Inspection account, as recommended by the Governor, to be funded from project management and inspection fees. However, because the recommended transfer would not have been considered under ordinary economic circumstances, the Subcommittee also approved the issuance of a letter of intent instructing the Agency to include the transferred positions in the Public Works Administration account in the Base Budget of the Agency’s 2011-2013 biennium budget request to be funded with General Funds. The next budget account is the Public Works Inspection, B/A 401-1562.

Senate Committee on Finance May 12, 2009 Page 4 Public Works Inspection – Budget Page PWB-8 (Volume I) Budget Account 401-1562 The Subcommittee approved the elimination of 11 vacant positions based on the amount of work estimated to be included in the Governor’s recommended 2009 CIP. The eliminated positions include six project manager and five building construction inspector positions. The Governor originally recommended the elimination of seven project manager and five building construction inspector positions. In order to improve the SPWB’s management reporting structure, the Subcommittee recommends approval of a budget amendment to reinstate one project manager position. The Subcommittee also approved a budget amendment that reduces the need for General Funds by $190,828. The General Funds had inadvertently been included in the request to transfer the six senior management positions from the SPWB Administration account to this account. The Subcommittee approved the remainder of the SPWB Inspection account as recommended by the Governor with adjustments that reduced building code publication purchases and eliminated funding recommended to replace computers on less than a five-year cycle. SENATOR COFFIN MOVED TO CLOSE B/A 101-1560 AND

B/A 401-1562 AS RECOMMENDED BY THE JOINT SUBCOMMITTEE. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGETS CLOSED.

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MR. KING: The next budget account is Building and Grounds, B/A 710-1349. ADMINISTRATION Buildings & Grounds – Budget Page ADMIN-64 (Volume I) Budget Account 710-1349 The Joint Subcommittee on Human Services and CIPs has completed its review of the budgets for the Department of Administration, Buildings and Grounds Division, and has made the following recommendations for the 2009-2011 biennium budgets. In addition, the Division indicates that due to renegotiation of nonState-owned building leases from July 2008 to April 2009, State Agency monthly lease costs have been reduced by $50,336. The Subcommittee approved the Governor’s recommendation to decrease monthly State Agency office rent from $1.09 to $1.02 per gross square foot in each year of the 2009-2011 biennium. The rental rate reduction was approved based on decreases in expenditures and an evaluation that indicated sufficient reserves would be maintained for Agency operations. An adjustment requested by the Governor to reduce reserves by $427,546 in FY 2010-2011 for an

Senate Committee on Finance May 12, 2009 Page 5 overstatement of rental income for the Las Vegas Belrose Building was approved by the Subcommittee. The Subcommittee approved $146,278 in FY 2009-2010 for building maintenance and renovation projects as recommended by the Governor. Although the Subcommittee determined there is an approximate $2.5 million backlog of deferred maintenance items in State-owned buildings, only projects that involve life safety issues are among the projects recommended by the Governor for the 2009-2011 biennium. The Subcommittee also approved the elimination of an electrician position as recommended by the Governor as a budget reduction measure. With the exception of an adjustment to reduce inflationary increases for building maintenance contracts by $1,409 in both years of the 2009-2011 biennium, the Subcommittee closed the remainder of the Buildings and Grounds budget as recommended by the Governor, with technical adjustments noted by Fiscal Staff. The next budget account is the Clear Creek Youth Center, B/A 101-1353. B&G - Clear Creek Youth Center – Budget Page ADMIN-82 (Volume I) Budget Account 101-1353 The Subcommittee approved the transfer of $7,155 in FY 2009-2010 and $7,158 in FY 2010-2011 in General Funds to the Buildings and Grounds budget in order to consolidate funding for the site’s utilities and operating expenses in that account. A decision unit approved by the Subcommittee in the Buildings and Grounds budget account changed the funding source for the site’s utilities and operating expenses from General Funds to reserve funds and reduced funding for the site’s operating costs by $2,351 in each year of the 2009-2011 biennium. The next budget account is for Marlette Lake, B/A 712-1366. B&G - Marlette Lake – Budget Page ADMIN-85 (Volume I) Budget Account 712-1366 The Subcommittee approved $37,808 in the Base Budget for personnel overtime compensation to provide constant monitoring and adjustment of the water system due to the unpredictability of the system’s collection of water and the variability of demand for water. With the exception of an adjustment to reduce the amount of the General Fund payback in FY 2010-2011 by $1,479 for the final payment of improvements to the water system approved by the Interim Finance Committee (IFC) in 1978, the Subcommittee approved the remainder of the Marlette Lake budget as recommended by the Governor. The Subcommittee also reviewed the budgets for Mail Services, B/A 713-1346 and Mail Services Equipment Purchase, B/A 713-1347. The Subcommittee recommends that these budget accounts be closed as recommended by the Governor, with technical adjustments as recommended by Fiscal Staff. B&G - Mail Services – Budget Page ADMIN-74 (Volume I) Budget Account 713-1346

Senate Committee on Finance May 12, 2009 Page 6 B&G - Mail Services - Equipment Purchase – Budget Page ADMIN-80 (Volume I) Budget Account 713-1347 SENATOR COFFIN: The Administration has been negotiating aggressively on nonState-owned building rent. They are bargaining to get the rents paid down to market levels. I was concerned about the elimination of the electrician position. That incumbent will continue to be employed. I heard from the incumbent who was concerned because he is a highly trained electrician and the only other work offered was of a general nature and not up to his qualifications. MR. KING: He was to be transferred to another position that would include general maintenance work and electrical work. SENATOR COFFIN MOVED TO CLOSE B/A 710-1349, B/A 101-1353,

B/A 712-1366, BA 713-1346 AND B/A 713-1347 AS RECOMMENDED BY THE JOINT SUBCOMMITTEE.

SENATOR WOODHOUSE SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED.

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JOI DAVIS (Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau):

The Attorney General budgets closed on April 27, 2009; however, some items were held and that is what we will discuss today. You have been given the Senate Committee on Finance Closing List #6 of May 12, 2009 (Exhibit G). The first budget account is the Attorney General Tort Claim Fund, B/A 715-1348. ELECTED OFFICIALS AG - Attorney General Tort Claim Fund – Budget Page ELECTED-95 (Volume I) Budget Account 715-1348 This budget was held due to the fact that there was a $2 million payout in FY 2008-2009 based on the settlement of a large claim. The Department of Administration indicated that a Highway Fund supplemental would be coming forward to restore this account. The Committee expressed concern as to whether or not there was actually Highway Funds available for that purpose. The bill draft request has become S.B. 424. SENATE BILL 424: Makes an appropriation to the Fund for Insurance Premiums,

commonly known as the Attorney General’s Tort Claim Fund. (BDR S-1313)

In discussing the Highway Fund, I reviewed a balance sheet which indicates the funding is included in that balance sheet. The ending fund balance is

Senate Committee on Finance May 12, 2009 Page 7 appropriate. It would appear that with the restoration of the funds by the Highway Fund supplemental appropriation, should S.B. 424 pass, this budget could be closed at this time. GARY L. GHIGGERI (Senate Fiscal Analyst, Fiscal Analysis Division, Legislative

Counsel Bureau): This budget was originally brought before the Committee during the full closing of the Attorney General’s budgets. This budget and the Special Fund budget were not closed at that time. The Tort Claim Fund was held open pending introduction of the bill to replenish the Tort Claim Fund, and that bill has since been introduced. The Special Fund budget was being held based on a determination of nuclear waste and the amount of funding required over the biennium for that issue. Both of these are being brought to the Committee for closure today. The Department-wide issue of the conversion of the investigators in the Attorney General’s office from unclassified service to classified service, which was discussed and not finalized, also is included. Those are the three issues the Committee will consider in these budgets today. SENATOR RAGGIO: Do we have to approve S.B. 424 in order to do this? MR. GHIGGERI: If S.B. 424 is approved, the funding will be deposited into this budget in FY 2008-2009 and will be shown as a balance forward from FY 2008-2009 to FY 2009-2010. There would be no need to hold this budget for that legislation. If it is not approved, the balance forward could be reduced by the IFC at its June or September meeting. SENATOR COFFIN MOVED TO CLOSE B/A 715-1348 AS

RECOMMENDED BY STAFF. SENATOR WOODHOUSE SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED.

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MS. DAVIS: The next budget account is the Special Fund, B/A 101-1031. AG - Special Fund – Budget Page ELECTED-66 (Volume I) Budget Account 101-1031 This budget came before you previously and was held based on the Agency’s indication that they were awaiting an order from the Nuclear Regulatory Commission which was received yesterday. That order indicated that of the 229 contentions that Nevada filed for the licensing proceedings regarding the Yucca Mountain High Level Nuclear Waste Repository, 222 were approved. The Agency’s projection for the General Fund support in this budget would be about the same which was approximately $2.4 million. However, the Agency worked with its outside counsel based on the State’s economic situation. That outside law firm indicated it would reduce its projection by 29 percent. This will be

Senate Committee on Finance May 12, 2009 Page 8 done by eliminating costs related to contract attorneys, by not having an office in Las Vegas and by an overall streamlining of the costs incurred. The Agency is still indicating that a request for $1.4 million or more is needed to continue the State’s efforts regarding its Yucca Mountain defense. The items regarding the new information are included in boxes on page 6 of Exhibit G. In order to close this budget, the Committee would need to determine if it wishes to approve funding of $1.4 million in each year of the upcoming biennium and also allow the Agency to approach IFC should additional funds be needed. The second thing the Agency learned yesterday from the federal government was that the President’s budget is being reduced dramatically in regard to Yucca Mountain. That is to continue the efforts regarding an alternative and to also continue the Nuclear Regulatory Commission’s (NRC) licensing proceedings. Based on that information, the $5 million that was anticipated in this budget for each year of the upcoming biennium has been reduced to approximately $3.2 million. Staff would also seek authority to adjust that federal revenue authority in this budget. SENATOR RAGGIO: I read a report about the NRC order. All but seven of the contentions were required to be considered. The order also said that many of those were similar and could be combined. The NRC’s perception was that there were so many that were similar, they could be consolidated. It appears there will not be that many hearings. They will be consolidated to a great degree. I am assuming that is one justification for reducing the amount. MS. DAVIS: I believe that is accurate, Senator. There was also some indication that, based on the contentions that were approved to be heard, it would still require all the experts they have lined up for these issues. That is why this has been reduced from approximately $2.4 million to $1.4 million in each year of the biennium. MR. GHIGGERI: Staff had been carrying the number of $1.1 million in additional General Fund appropriations in each year of the biennium. Based on the information provided yesterday, it appears that number is now been increased to $1.4 million. That is $600,000 more over the biennium than what Staff has been carrying as a potential need to add to this budget. In addition, included in that box on page 6 of Exhibit G, is a reduction from the anticipated federal funds from $5 million each year to approximately $3.2 million each year of the upcoming biennium. There are a few technical adjustments Staff has in this account. SENATOR COFFIN MOVED TO APPROVE STAFF’S RECOMMENDATION

TO APPROVE FUNDING OF $1.4 MILLION IN EACH YEAR OF THE UPCOMING BIENNIUM; TO ALLOW THE AGENCY TO APPROACH IFC SHOULD ADDITIONAL FUNDS BE NEEDED; TO AUTHORIZE STAFF TO ADJUST THE FEDERAL REVENUE AUTHORITY AND MAKE ANY NECESSARY TECHNICAL ADJUSTMENTS; AND TO CLOSE B/A 101-1031.

SENATOR HORSFORD SECONDED THE MOTION.

Senate Committee on Finance May 12, 2009 Page 9 SENATOR COFFIN: There was a story in the New York Times regarding Yucca Mountain and the continual problem we have. It will not go away until we have a national solution. We must continue to fight this. I hope there are sufficient funds in our contingency fund when we close all these budgets so we have enough to fight the battle. COCHAIR MATHEWS: Is there any other discussion? If not, we will vote on the motion. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED.

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MS. DAVIS: The last issue is the Agency’s request to transfer 38 investigator positions in the unclassified State service to the classified State service. This request was not included in the Governor’s recommendation. At the last budget closing hearing, Staff was directed to work with the Agency to determine a more accurate fiscal impact of what this proposal would be. In so doing, the Agency has provided an analysis which is included on pages 9 and 10 of Exhibit G. It shows the 38 investigator positions, the budget accounts where they are located and where they would go in the classified State service. Based on that analysis, the Agency’s vacancy savings would increase by approximately $6,800 in each year and reduce some of its nonGeneral Fund budgets by approximately $47,000. Although that fiscal impact does not appear significant, when merit increases are included, the impact could be significant in future biennia. That is based on a proposal to have these unclassified positions moved to the classification series criminal investigator I, II and III. The chart on page 7 of Exhibit G shows those unclassified positions, what they would be receiving in the upcoming biennium and how they would be budgeted with the 4.6-percent reduction just approved. The chart also shows what the classified positions would be with the 4.6-percent reduction with the applicable grade and step. In discussing this with the Department of Personnel, Staff was advised that if the incumbent has been in the position for more than two years, they would not be classified in the entry level training type position to be a criminal investigator I or II. They would be placed as criminal investigator III, a grade 40 that graduates up to grade 43. Based on that information, these investigator positions would be receiving an annual salary increase of approximately $1,100 to $2,700 in the upcoming biennium with future increases based on merit. Staff has provided options for the Committee’s consideration which are outlined on page 8: The first option would be to approve this request and allow Staff to make

technical adjustments to the vacancy savings for the General Fund budgets and to adjust the nonGeneral Fund budgets accordingly. This would also possibly require adjustments based on the Department of

Senate Committee on Finance May 12, 2009 Page 10

Personnel determination whether each of the positions fit within that classification system, which would be the criminal investigator series;

The second option would be not to approve this request at this time; The third option is to request the Department of Personnel to do a study

of these investigator positions to determine if they would be placed in an existing classification system within the Personnel system which would be either the criminal investigator series or the compliance investigator series. The Agency could then request a reclassification based on the results of that study during the 76th Legislative Session.

SENATOR RAGGIO: In looking at the chart on page 7, it appears that a current investigator salary, with the 4.6-percent reduction, is approximately $63,000. If we approve this, will it go up $10,000 to $73,000? MS. DAVIS: The classified position, grade 40, step 1, would be $49,106. The salary top would be $73,699. That would be a grade 41, step 10. That is the range of the salary. The Agency has an internal tier system. They are not always budgeted at the top amount. This was not heard in the Subcommittee. The Attorney General presented it when the budgets were introduced. SENATOR RAGGIO: The primary reason was to get people to fill and retain these positions. How will these salaries, if approved, compare? What will the Department of Personnel have to determine? MS. DAVIS: The Department of Personnel will determine which classification series they would be best placed in after discussing with the Agency the duties of those positions. They would look at the duties of the positions and determine if there is a classification that currently exists, such as the criminal investigator series or the compliance investigator series. If the positions’ duties do not fall under those classification areas, they would develop another classification series specifically for the positions. SENATOR RAGGIO: You are saying an analysis indicates that there would be an increase in compensation ranging from say, $1,100 to $2,700 annually. Is that correct? MS. DAVIS: That is correct. It is based on the length of time these incumbents have been in their positions and where they would fall within the classification grade and step scale. MR. GHIGGERI: If the Committee takes no action on this, those positions would remain in the unclassified pay bill that will be considered by the Legislature this Session. SENATOR RAGGIO: What computation would we have to add to the budget to accommodate 38 positions?

Senate Committee on Finance May 12, 2009 Page 11 MS. DAVIS: That would be Option No. 1. That would be an increase of the vacancy savings of $6,845 in each year and an adjustment down for nonGeneral Fund budgets, such as the Medicaid Workers’ Compensation fraud units. Those are funded without General Funds in the amount of $47,520. That is based on the current analysis. The Department of Personnel still has to do its study of these positions and the duties. There might be further adjustments based on the final review. They indicated they could accomplish this in less than 30 days if these positions fit within an existing classification series. SENATOR RAGGIO: Was Option No. 3, requesting the study of the investigator positions to determine which ones should be unclassified and which ones should not, ever discussed? MS. DAVIS: That is being brought to you for the first time because, based on the last budget closing, Staff was directed to work with the Agency regarding the fiscal impact. We reviewed all options that might be available to the Committee for consideration. SENATOR RAGGIO MOVED TO RECOMMEND THAT THE DEPARTMENT

OF PERSONNEL STUDY THE 38 UNCLASSIFIED INVESTIGATOR POSITIONS AT THE ATTORNEY GENERAL’S OFFICE TO DETERMINE IF THE INVESTIGATOR POSITIONS SHOULD BE PLACED IN AN EXISTING CLASSIFICATION SERIES WITH THE PERSONNEL SYSTEM DEPENDING ON WHICH CLASSIFICATION SERIES IS MOST APPLICABLE; OR IF A NEW CLASSIFICATION SERIES WOULD BE NEEDED, THEN THE AGENCY MAY REQUEST THE RECLASSIFICIATION OF THE POSITIONS BASED ON THE RESULTS OF THE DEPARTMENT OF PERSONNEL’S STUDY PROVIDED TO THE 76TH LEGISLATIVE SESSION.

SENATOR HARDY SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY.

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MR. GHIGGERI: The next budget closing is the Public Employees’ Retirement System (PERS), B/A 101-4821. SPECIAL PURPOSE AGENCIES PUBLIC EMPLOYEES' RETIREMENT SYSTEM Public Employees' Retirement System – Budget Page PERS-1 (Volume III) Budget Account 101-4821 There are three major issues requiring consideration by the Committee which are:

Senate Committee on Finance May 12, 2009 Page 12

1. A temporary 6-percent salary reduction for the 2009-2011 biennium. 2. Suspension of merit salary increases for the 2009-2011 biennium. 3. Suspension of longevity payments for the 2009-2011 biennium.

No reduction was included in the Governor’s recommended budget for those issues. Information provided by the PERS indicates that reductions of $160,121 for FY 2009-2010 and $187,706 for FY 2010-2011 could be implemented if those issues were in this budget. That would consist of approximately $107,000 for the salary furlough, $20,650 for the longevity elimination and approximately $32,000 for the classified merit increases in FY 2009-2010. Approximately $107,000 of the $187,706 in FY 2010-2011 would be for the 4-percent salary reduction, $23,000 for the reduction in longevity and $52,000 for the elimination of the classified merit increases for this biennium. The decision the Committee needs to make is whether to implement the three issues in the PERS budget, consistent with other State agencies. If that is implemented, then Staff would recommend decision unit E-849, which is on page 2, Item No. 3, of the Budget Closing Action Report (Exhibit H), not be approved by the Committee because there would be no need for the merit salary increases for the 2009-2011 biennium if those increases are suspended. E-849 Non-Classified Salary Adjustments – Page PERS-3 SENATOR RAGGIO MOVED TO IMPLEMENT A TEMPORARY SALARY

REDUCTION OF 6 PERCENT FOR THE 2009-2011 BIENNIUM; TO SUSPEND MERIT INCREASES FOR THE 2009-2011 BIENNIUM; TO SUSPEND LONGEVITY PAYMENTS FOR THE 2009-2011 BIENNIUM; AND NOT TO APPROVE DECISION UNIT E-849 IN B/A 101-4821.

SENATOR HORSFORD SECONDED THE MOTION. SENATOR COFFIN: What is the status on A.B. 488? ASSEMBLY BILL 488: Revises provisions governing the employment of retired

public employees. (BDR 23-782) MR. GHIGGERI: I understand that is on the Assembly floor today and will be coming over. SENATOR COFFIN: How much has the eligibility for continuing critical labor shortage been narrowed? MR. GHIGGERI: I have not read the bill and have not seen anything on it, but I understand the fiscal note is basically eliminated on the continuation based on the way the legislation is currently drafted. Until this Committee or another committee has a hearing on it, I cannot say for sure. The program would be continued with just the fiscal note being eliminated.

Senate Committee on Finance May 12, 2009 Page 13 COCHAIR MATHEWS: Since there is no more discussion, we will take a vote on the motion. THE MOTION CARRIED UNANIMOUSLY.

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MR. GHIGGERI: If the Committee will turn to the last page of Exhibit H, the PERS has indicated they are projecting a surge in retirements in June and July of 2009. They are requesting overtime funding of approximately $83,000 to accommodate the additional workload related to the anticipated retirements. Staff has reviewed this, has no objection and recommends approval. SENATOR RAGGIO MOVED TO APPROVE THE PERS’ REQUEST OF

APPROXIMATELY $83,000 IN OVERTIME FUNDING TO ACCOMMODATE THE ADDITIONAL WORKLOAD RELATED TO ANTICIPATED RETIREMENTS AS RECOMMENDED BY STAFF; AND TO CLOSE B/A 101-4821.

SENATOR WOODHOUSE SECONDED THE MOTION. COCHAIR HORSFORD: Do we have an idea of how many people may be retiring based on the surge? MR. GHIGGERI: I am sure PERS has an idea. DANA K. BILYEU (Executive Officer, Public Employees’ Retirement System): We calculated, based on assumptions, that 80 percent of State employees who are eligible, about 1,662 people will retire; 40 percent of those will be able to purchase eligibility, or approximately 180 of 450 will retire. That increases our retirement amounts in June and July by about 1,700. It is typically around 500 for that same period. Obviously, if the surge does not happen, we would not need the funds, but we are concerned we would not have the staffing available to process those retirements. SENATOR COFFIN: I have been looking forward to this all Session. This is one consequence of thoughtless treatment of these employees by the Administration. You cannot cut pay and benefits for people without making them disillusioned about their service to the State. We may have modified some of these things and have taken into account the fact that some reduction in pay has taken place. We have not really helped in terms of trying to show that we are leading the way to the future for them. Maybe some of those employees are waiting to see how we express our interest in their continued employment. The Administration did not demonstrate they appreciated the valued service of these people. It is still in our hands as to what we can do. COCHAIR MATHEWS: We have a motion and a second to vote on. THE MOTION CARRIED UNANIMOUSLY.

Senate Committee on Finance May 12, 2009 Page 14 BUDGET CLOSED.

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JEFFREY A. FERGUSON (Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau):

I will be presenting the Joint Subcommittee on Public Safety, Natural Resources and Transportation of the Senate Committee on Finance and Assembly Committee on Ways and Means Closing Report for the Office of Veterans’ Services. The actions by the Subcommittee provide General Fund savings of $464,690 in FY 2009-2010 and $116,557 in savings in FY 2010-2011. The first budget account is the Commissioner for Veterans’ Affairs, B/A 101-2560. VETERANS' AFFAIRS Commissioner for Veterans' Affairs – Budget Page VETERANS-1 (Volume III) Budget Account 101-2560 In closing the budget for the Commissioner for Veterans’ Affairs, the Joint Subcommittee approved the Governor’s recommendation to transfer the administrative services officer II position from the Veterans’ Home account to the Commissioner for Veterans’ Affairs. The position is better suited in the Commissioner for Veterans’ Affairs budget because it is located in northern Nevada and provides support to all areas of the Nevada Office of Veterans’ Services. The Subcommittee also approved Budget Amendment No. 125, which provides General Funds of $23,762 in each year of the 2009-2011 biennium, to account for increases in copier lease and water costs based on updated projections. In order to provide additional General Fund savings, the Subcommittee approved the Agency’s proposal to eliminate five laptop computers in the second year of the 2009-2011 biennium, providing a General Fund savings of $7,945 in FY 2010-2011. Although not included in the Executive Budget, the Subcommittee approved the Agency’s proposal to utilize this $7,945 in General Fund equipment replacement savings to increase travel costs for the Agency’s Commission members, thereby allowing Commission members to attend all anticipated Commission meetings. The next budget account is the Veterans’ Home Account, B/A 101-2561. Veterans' Home Account – Budget Page VETERANS-7 (Volume III) Budget Account 101-2561 The Subcommittee approved the Governor’s recommendation to provide one new registered nurse IV and one new registered dietician II for the Veterans’ Home. The registered nurse will provide nursing coverage for planned and unplanned leave that has historically been provided through contract nurses and overtime for existing staff. The new registered nurse is funded through reductions in overtime and contract costs. The registered dietician will replace the current dietician provided by the food service contractor, and will provide

Senate Committee on Finance May 12, 2009 Page 15 nutritional care and diet therapy for geriatric residents of the Home. Funding for the new dietician is through reductions to the food service contract. As a State employee, the registered dietician will provide a higher level of service than a contract employee. In order to provide additional General Fund savings, the Subcommittee approved the Agency’s proposal to eliminate some of the replacement and new equipment recommended by the Governor, providing General Fund savings of $60,071 over the 2009-2011 biennium. The eliminated equipment includes computer hardware, physical therapy equipment, and replacement wood paneling. The Subcommittee also approved Budget Amendment No. 173 which reduces General Fund appropriations in this account by $167,741 in FY 2009-2010 and $100,779 in FY 2010-2011, based on a calculation error and updated reimbursement rates from the U.S. Department of Veterans’ Affairs. SENATOR RAGGIO: I note that the eliminated equipment in the Veterans’ Home includes some physical therapy equipment. I would think that was essential in view of the age and condition of the veterans. Do they still have adequate physical therapy equipment? MR. FERGUSON: There were two new pieces of physical therapy equipment. The existing equipment is still there. The Agency indicated they could defer the purchase of this new equipment. SENATOR WOODHOUSE MOVED TO CLOSE B/A 101-2561 AS

RECOMMENDED BY THE SUBCOMMITTEE. SENATOR HORSFORD SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED.

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RICK COMBS (Senior Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau):

The Joint Subcommittee on General Government and Accountability of the Senate Committee on Finance and Assembly Committee on Ways and Means has developed the following recommendations for the Commission on Tourism (COT). The recommendations decrease General Fund appropriations for the Commission by approximately $8.1 million in FY 2009-2010 and $8.6 million in FY 2010-2011. The recommendations also reduce the transfer of room tax revenues to the General Fund by approximately $36.4 million over the biennium. The first budget account is the Tourism Development Fund, B/A 225-1522.

Senate Committee on Finance May 12, 2009 Page 16 COMMERCE AND INDUSTRY ECONOMIC DEVELOPMENT AND TOURISM Tourism - Tourism Development Fund – Budget Page ECON DEV &

TOURISM-27 (Volume II) Budget Account 225-1522 The Subcommittee voted not to approve the Governor’s recommendation to transfer all of the room tax revenues that currently fund the Commission’s operating budget to the State General Fund. The Governor had recommended depositing room tax revenues totaling approximately $17.7 million in FY 2009-2010 and $18.7 million in FY 2010-2011 to the General Fund and funding the Commission’s operations through a direct General Fund appropriation totaling approximately $8.1 million in FY 2009-2010 and $8.6 million in FY 2010-2011. Instead, the Subcommittee voted to continue to fund the Commission’s operations with room taxes, but voted to transfer the projected room tax revenues, exceeding the Commission’s approved operating expenditures, to the State General Fund during the 2009-2011 biennium to offset the General Fund revenue shortfall created by not depositing the room tax revenues directly to the General Fund. The funds transferred from the Tourism Development Fund account to the General Fund will total approximately $2.4 million in FY 2009-2010 and $3.3 million in FY 2010-2011. Although the Governor’s budget projected room tax revenues totaling approximately $17.7 million in FY 2009-2010 and $18.7 million in FY 2010-2011, the Commission indicated in late April that its projections of room taxes for the 2009-2011 biennium totaled only approximately $14.4 million in FY 2009-2010 and $14.8 million in FY 2010-2011. The Subcommittee voted to authorize the Fiscal Analysis Division to ensure that the room tax revenues budgeted for this account are consistent with the Economic Forum’s May 1, 2009, forecast of the revenues that will result from Initiative Petition No. 1. For the first time the Economic Forum was required to review that revenue because the 3-percent increase was being deposited to the General Fund as a General Fund revenue. Based on the Economic Forum projections, that resulted in increasing the room tax revenues by about $272,000 in FY 2009-2010 and about $1.2 million in FY 2010-2011 from the projections that had been provided by the Commission. Based on its decision to continue to fund the Commission’s operations with room tax revenues, the Subcommittee voted to approve the creation of a reserve balance of $300,000 in FY 2009-2010 and $450,000 in FY 2010-2011 to provide for the Commission’s cash flow needs at the beginning of each fiscal year and to provide the Commission with an opportunity to rebuild the reserve level over time. The Commission’s reserve has been depleted during the current fiscal year as a result of declining room tax revenues and the requirement imposed by the Legislature during the 25th Special Session to transfer about $2.8 million to the General Fund to offset revenue shortfalls during the current biennium. The Subcommittee also authorized the Commission to receive a General Fund advance in each year of the biennium to provide additional help with those cash flow needs. After hearing testimony regarding the impacts that would result from the Governor’s proposed budget reductions for the Commission, the Subcommittee

Senate Committee on Finance May 12, 2009 Page 17 voted to increase expenditures for the Commission by about $2.3 million in each year of the biennium. The additional funding includes approximately $336,000 over the biennium to restore two of the nine positions recommended for elimination by the Governor and approximately $3 million over the biennium to restore funding for advertising buys and funding to fulfill requests for information about the state resulting from the restored advertising buys. The additional funds also include approximately $2 million over the biennium to restore funding for the Commission’s Rural Grants program and approximately $536,000 over the biennium to restore funding to support the costs of printing the Visitors’ Guide and Events and Shows publications that are published by the Nevada Magazine. The Subcommittee also voted to decrease funding for the Commission’s China office by approximately $126,000 in FY 2009-2010 and about $144,000 in FY 2010-2011 and to use that funding to further increase the marketing and advertising efforts of the Commission. The Subcommittee also directed that if room tax collections exceed the amounts included in the Legislatively approved budget, the additional room tax revenues should also be directed to marketing and advertising efforts. The Commission indicated during the closing that it would still be able to maintain a presence in China with the reduced funding for the China office after these actions. As a result of not approving the merger of the COT with the Commission on Economic Development, the Subcommittee restored the executive director position that was eliminated in the Governor’s recommended budget. That resulted in increased expenditures in this account totaling approximately $115,000 in FY 2009-2010 and $186,000 in FY 2010-2011. You will be closing the Commission on Economic Development accounts in a few minutes. When you do that, there will be more discussion of that decision not to merge the two agencies. Based on the decision to restore room tax revenues for this account and the current practice of using those revenues to offset tourism-related activities of other agencies, the Subcommittee voted to restore the transfer of room tax revenues through this account to fund tourism-related activities conducted by the Nevada Film Office, the Department of Cultural Affairs Railroads and Museums and the Division of State Parks. The transfer of funds from the Commission to other State agencies will reduce General Fund appropriations in those accounts by approximately $1.4 million in each year of the 2009-2011 biennium. The next account is the Nevada Magazine, B/A 225-1530. Tourism - Nevada Magazine – Budget Page ECON DEV & TOURISM-37

(Volume II) Budget Account 530-1530 The Subcommittee expressed its concerns that the Governor’s recommendation to reduce the staffing for the Nevada Magazine from 11.43 full-time equivalent (FTE) positions to 6.65 FTE positions would place a significant amount of additional workload on the remaining positions in the account and might impact the quality of the magazine. The Commission indicates that the staffing reductions were primarily the result of decreased transfers of funds from the Tourism Development Fund account to the Nevada Magazine account,

Senate Committee on Finance May 12, 2009 Page 18 based on the budget reductions recommended by the Governor. Based on the Governor’s recommended budget, the Commission indicated that it would eliminate purchases of the Nevada Magazine and reduce its transfers to the Nevada Magazine account to offset the costs for the Events and Shows. As indicated previously, the restored funding for the Commission approved by the Subcommittee included approximately $536,000 over the biennium for the costs of distributing the Events and Shows and to offset the costs of printing the Visitors’ Guide. With the additional funding transferred from the Tourism Development Fund account, the Subcommittee voted to restore an advertising and sales representative position to full-time. That was important to the Subcommittee because the position is responsible for generating advertising sales and if the position is not at full time it limits that position to do that. The Subcommittee also voted to restore an eliminated part-time production assistant position and then voted to increase the position to full-time during the 2009-2011 biennium. The position will continue to assist with the design and layout of the magazine, the Events and Shows and the Nevada Travel Planner publications and will provide the Commission with a position that can maintain the Events and Shows Website listing. Finally, the Subcommittee voted to restore $20,000 in each year of the biennium for expenditures associated with using freelance photographers and writers and $72,100 in each year of the biennium for increased printing and postage expenditures for the Visitors’ Guide, as well as increased advertising expenditures associated with the Visitors’ Guide. The Commission had indicated that without the increased funding for freelance writers and photographers, the magazine would be forced to rely on volunteers to submit articles and photographs for publication in the magazine. That was the reason for the addback for the freelance writers and photographers. The final account is for Tourism Development, B/A 225-1523. Tourism - Tourism Development – Budget Page ECON DEV & TOURISM-44 (Volume II) Budget Account 225-1523 Based on the limited funds available for the Commission’s operations during the 2009-2011 biennium, the Subcommittee approved the Governor’s recommendation not to transfer funds from the Commission’s operating account for the Tourism Development matching grants program during the 2009-2011 biennium. The program, which provides grants for the development of publicly-owned property and infrastructure within the State, is typically funded through a $200,000 transfer from the Commission’s operating account each biennium. SENATOR RHOADS MOVED TO CLOSE B/A 225-1522, B/A 225-1530

AND B/A 225-1523 AS RECOMMENDED BY THE SUBCOMMITTEE. SENATOR HORSFORD SECONDED THE MOTION.

Senate Committee on Finance May 12, 2009 Page 19 SENATOR RAGGIO: I know that the China office will still have a presence. What will remain in that office? MR. COMBS: The Acting Executive Director of the Commission indicated that they would probably have to relocate offices and reduce staffing somewhat, but they would be able to maintain an office in China with some staffing to keep a presence there. THE MOTION CARRIED UNANIMOUSLY. BUDGETS CLOSED.

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STEVEN J. ABBA (Principal Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau):

I will be discussing four budget accounts: the Commission on Economic Development, B/A 101-1526, the Nevada Film Office, B/A 101-1527, the Rural Community Development, B/A 101-1528 and the Procurement Outreach Program, B/A 101-4867. Economic Development - Commission on Economic Dev – Budget Page ECON DEV & TOURISM-1 (Volume II) Budget Account 101-1526 Economic Development - Nevada Film Office – Budget Page ECON DEV & TOURISM-10 (Volume II) Budget Account 101-1527 Economic Development - Rural Community Development – Budget Page ECON DEV & TOURISM-16 (Volume II) Budget Account 101-1528 Economic Development - Procurement Outreach Program – Budget Page ECON DEV & TOURISM-22 (Volume II) Budget Account 101-4867 The Subcommittee did not approve the Governor’s recommendation to merge the Nevada Commission on Economic Development (NCED) and the COT. The Subcommittee determined there were few synergies and efficiencies that would occur as a result of the merger, even if more thought and planning had occurred prior to the recommendation. The only savings identified as a result of the merger was the elimination of the executive director position within the COT and savings achieved by allocating a portion of the COT’s rent to the NCED. These savings were offset by one-time costs for furnishings, equipment, Web design and redesign, and the reprinting of marketing materials. Although the COT and the NCED are both responsible for marketing Nevada to people outside the state, the target audiences of the two Divisions are vastly different. The NCED’s mission targets key business decision makers, such as chief executive officers, chief financial officers and risk managers, in an effort to attract and influence businesses to relocate and/or establish new operations in

Senate Committee on Finance May 12, 2009 Page 20 Nevada. The NCED’s business attraction efforts are targeted toward creating long-term tax revenue streams and jobs. The NCED also serves existing Nevada businesses that are seeking opportunities to export products internationally or sell products and services to federal, State and local governments.

The COT’s mission is more tailored to promoting Nevada through marketing and

advertising in order to attract visitors to the State. Its efforts target promotions for tourist attractions and destinations throughout Nevada. Because the target audiences are different for the two agencies, the skill sets of the employees are different as well. As a result, the Subcommittee determined that combining the two agencies does not create significant efficiencies that would result in staff members from one Agency being able to perform work assigned by the other Agency.

In the NCED’s budget, the Governor recommends eliminating four existing and filled positions as a budget reduction measure unrelated to the proposed merger. The Subcommittee determined two of the four positions, the deputy director and the chief of protocol/global trade representative, if eliminated, would have a significant impact on the NCED’s ability to achieve its mission and performance goals, especially in southern Nevada. The deputy director manages the Las Vegas office and is responsible for domestic and international business development, as well as providing support to the development authorities and rural communities in Nye and Lincoln Counties. The chief of protocol/global trade representative is the point position assigned to work with and assist foreign government representatives, international trade groups and delegations and consular corps. The Subcommittee believes the NCED cannot absorb the loss of these two positions by spreading responsibilities to the remaining staff and therefore recommends the positions be restored. The Subcommittee was able to identify savings in the Train Employees Now (TEN) program that offset the costs for restoring the two positions. The Subcommittee recommends approving the Governor’s recommendation to eliminate the remaining two positions, since the NCED has a reasonable contingency plan to redistribute the responsibilities assigned to these positions to other staff in the Agency. The Subcommittee recommends approving $2,842,000 in each fiscal year for the Urban, Rural and Inner-city Development authorities. Although the allocations are a reduction from the amounts approved by the 74th Legislative Session, the funding levels are greater than the amounts available during the current fiscal year, due to budget reductions. The Subcommittee recommends reallocating $100,000 of the total amount of funding to the Rural Development authorities. The Governor’s recommendation reduced the allocation to the Rural Development authorities in an amount proportionally larger than reductions to the Urban and Inner-city Development authorities. The reallocation of funding will provide the rural development authorities its base amount for operating capital and $200,000 in each fiscal year in supplemental grant funding that will be competitively allocated for such activities as research and planning, small business training and development and industrial park development. The Governor’s budget recommends the NCED’s marketing budget be reduced by over 50 percent compared to the levels approved by the 74th Legislative Session. The reductions significantly limit the NCED’s ability to fund outreach, trade shows and marketing campaigns. In order for Nevada to remain competitive and visible during this period of economic stress, the

Senate Committee on Finance May 12, 2009 Page 21 Subcommittee recommends the marketing budget be increased by $100,000 in each fiscal year, partially offset with savings from the TEN program. The additional funding will allow the NCED to develop a public relations campaign for renewable energy, support a six month campaign targeting specific companies that would benefit by relocating to Nevada, and allow attendance and participation in at least five trade shows. These marketing and promotional efforts are in addition to ongoing activities that rely on direct mail, print, the Internet and related collateral materials and mediums. The Subcommittee reviewed the budgets for the Nevada Film Office, the Rural Community Development and the Procurement Outreach programs and recommends these budgets be closed basically as recommended by the Governor, with technical adjustments. The Nevada Film Office will continue to be funded with room tax revenues based on the Subcommittee’s recommendation on funding the COT. In total, the recommendations proposed by the Subcommittee increase General Fund appropriations for the Commission by $97,602 in FY 2009-2010 and $171,118 in FY 2010-2011. SENATOR RHOADS MOVED TO CLOSE B/A 101-1526, B/A 101-1527,

B/A 101-1528 AND B/A 101-4867 AS RECOMMENDED BY THE SUBCOMMITTEE.

SENATOR COFFIN SECONDED THE MOTION. SENATOR COFFIN: I want to thank the Subcommittee for breathing life back into these agencies. I was stunned when I saw that they were virtually stripped of their efforts. For 25 years they have been working hard in generating tourism and business for Nevada. It has really paid off. I am pleased they restored the protocol office. It is important for us to maintain good relations with other countries. COCHAIR HORSFORD: I want to make sure the record is accurate. The amount allocated for the Rural Development authorities is coming from the Nevada Development Authority and the Economic Development Authority of Western Nevada, is that correct? MR. ABBA: Yes, that is correct. COCHAIR HORSFORD: Some intent should be placed on the record to indicate that the Commission needs to coordinate its campaign for renewable energy with the restructuring of the Governor’s Energy Office and the establishment of the Energy Authority. Those campaigns should be aligned based on the strategic plan developed by the two entities. COCHAIR MATHEWS: Senator Rhoads, do you want to make that part of your motion? Senator Coffin, will you still second it? SENATOR RHOADS: Yes, we will make it part of the motion.

Senate Committee on Finance May 12, 2009 Page 22 SENATOR COFFIN: Yes, I will second it. SENATOR RHOADS MOVED TO CLOSE B/A 101-1526, B/A 101-1527,

B/A 101-1528 AND B/A 101-4867 AS RECOMMENDED BY THE SUBCOMMITTEE; AND TO ISSUE A LETTER OF INTENT FOR THE COMMISSION TO ALIGN ITS CAMPAIGN FOR RENEWABLE ENERGY WITH THE GOVERNOR’S ENERGY OFFICE AND THE ENERGY AUTHORITY.

SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGETS CLOSED.

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MARK KRMPOTIC (Senior Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau):

The Joint Subcommittee on Public Safety, Natural Resources and Transportation completed its review of the budgets for the Department of Transportation (NDOT) and developed the following closing recommendations. The first budget account is the NDOT, Bond Construction, B/A 201-4663. INFRASTRUCTURE TRANSPORTATION NDOT, Bond Construction – Budget Page NDOT-1 (Volume III) Budget Account 201-4463 The Executive Budget includes the projected expenditure of $20 million, representing the balance of bond proceeds in FY 2007-2008 that is projected to be carried forward into FY 2009-2010. The Governor does not recommend the issuance of bonds for highway construction projects in the 2009-2011 biennium. The Subcommittee approved the bond construction account as recommended by the Governor. The next budget account is the Transportation Administration, B/A 201-4660. Transportation Administration – Budget Page NDOT-3 (Volume III) Budget Account 201-4660 The Department targets a Highway Fund balance of $100 million to provide sufficient cash to cover operating and capital expenses. Based on Staff’s estimate, the Highway Fund balance is calculated to be between $75 million and $80 million based on revenues and expenditures recommended by the Governor. The Department of Motor Vehicles updated its Highway Fund revenue projections through April 15, 2009. For the three-year period beginning in FY 2008-2009, Highway Fund revenue is cumulatively projected at approximately $73.5 million below the Governor’s recommended level. Based on

Senate Committee on Finance May 12, 2009 Page 23 revised revenue projections, Highway Fund resources would not provide for a targeted ending fund balance of $100 million at the end of the biennium. In response to decreases in projected Highway Fund revenue, the Subcommittee supported a scenario provided by the Agency that reduced capital construction expenditures by $32.1 million in FY 2009-2010 and $49 million in FY 2010-2011 to assist in maintaining a Highway Fund balance of $100 million. In addressing the Subcommittee’s concern with respect to the State’s maintenance-of-effort requirement to receive American Recovery and Reinvestment Act of 2009 (ARRA) funds, the Agency provided the State’s certification to the U. S. Department of Transportation indicating the State would maintain its effort with respect to State expenditures at approximately $71.3 million. The amount certified by the Department is based on total capital outlay levels after reductions in capital construction expenditures of approximately $32.1 million in FY 2009-2010 and $49 million in FY 2010-2011. A key assumption in the NDOT’s ability to reduce the capital construction expenses is the availability of General Obligation Bond Authority of $15 million. The Governor has not recommended additional General Obligation Bond Authority be directed to the Department’s construction program. The Subcommittee provided Staff the authority, if legislation is approved, to add General Obligation Bond Authority to the Bond Construction account and reduce Highway Fund appropriations by the same amount to reflect the use of General Obligation Authority in lieu of highway funds for capital construction. The ARRA provides Nevada with $201.4 million in funding to address highway construction and maintenance projects throughout the State. The Subcommittee supported a budget amendment to add $125 million in FY 2009-2010 and $66.4 million in FY 2010-2011 in ARRA funds to provide funding for highway projects identified for ARRA funding. The IFC, at its April 20, 2009 meeting, approved the addition of $10 million in ARRA funding in FY 2008-2009. The Subcommittee concurred with the Governor’s recommendation to add approximately $2.2 million over the biennium to provide for the implementation of an electronic bidding system. Senate Bill 409 has been submitted to revise the statute to allow for bids to be accepted electronically by the Department. The passage of this bill is necessary to implement the budget. SENATE BILL 409: Authorizes on-line bidding on contracts for the construction,

improvement and maintenance of highways. (BDR 35-1179) The Subcommittee supported the Governor’s recommendation to add 23 positions, with corresponding decreases in funding for seasonal salaries, and contract services to convert 59 of the Department’s seasonal and contract positions to permanent positions. The Subcommittee also concurred with the Governor’s recommendation to reclassify a professional engineer to an unclassified administrative coordinator to establish a civil rights officer who would manage the Department’s internal, external and contract compliance civil rights programs. COCHAIR MATHEWS: We are ready for a motion.

Senate Committee on Finance May 12, 2009 Page 24 SENATOR WOODHOUSE MOVED TO CLOSE B/A 201-4663 AND

B/A 201-4660 AS RECOMMENDED BY THE SUBCOMMITTEE. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR HARDY WAS ABSENT FOR THE

VOTE.) BUDGETS CLOSED.

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MR. KRMPOTIC: The Joint Subcommittee on Human Services/CIPs has completed its review of the budgets for the Division of Welfare and Supportive Services (DWSS) and developed the following closing recommendations. The Subcommittee’s closing actions resulted in decreases in General Funds of approximately $4.3 million in FY 2009-2010 and $9.1 million in FY 2010-2011. The first account is Welfare Administration, B/A 101-3228. HUMAN SERVICES WELFARE Welfare - Administration – Budget Page WELFARE-1 (Volume II) Budget Account 101-3228 To improve efficiency in the Division’s field offices and expand the application for public assistance online, the Joint Subcommittee on General Government and Accountability considered and supported funding recommended by the Governor for a Technology Investment Request (TIR) in the Information Technology (IT) Projects account. To provide corresponding federal funding for the project, the Subcommittee on Human Services/CIPS approved transfer of the federal Supplemental Nutritional Assistance Program (SNAP), formerly known as food stamps, and Title XIX funding of approximately $1.6 million over the biennium which reflects closing adjustments approved by the Subcommittee on General Government and Accountability. To provide product management support and development for the TIR, the Governor recommended nine new IT positions. The Subcommittee supported the addition of eight new positions, with the reduction of one supervisory position that was not critical for support of the project. In approving the positions, the Subcommittee approved accelerated start dates to allow these positions to participate in training as soon as they are hired and to better coordinate the time frames the positions will work with the implementation vendor. The Subcommittee supported the Governor’s recommendations to add two new quality control specialists to address caseload increases associated with the SNAP case review requirements and one hearing officer to address the impact of caseload increases on federally mandated hearings. The Subcommittee supported revised projections in the cost of electronic benefit transfers each year. In supporting the revisions, the Subcommittee also recommended the addition of federal SNAP ARRA funds of $651,992 in

Senate Committee on Finance May 12, 2009 Page 25 FY 2009-2010 and $217,331 in FY 2010-2011, with offsetting reductions to General Funds. The Governor recommended the elimination of 12 positions from the Administration account, including 4 IT positions. Upon closer review by the Subcommittee, it was determined that elimination of the IT positions would affect the ability of the Division to meet federal mandates relative to the Nevada Operations of Multi-Automated Data Systems (NOMADS). Therefore, the Subcommittee supported the elimination of eight positions and the restoration of four IT positions. To address the increase in the cost of restoring these positions, the Subcommittee approved the elimination of an auditor and a telecommunications coordinator at higher salary levels, in lieu of two administrative assistant positions. The Subcommittee concurred with the Governor’s recommendation to add 13 IT positions, with offsetting reductions in Master Services Agreement (MSA) contract expenses, to convert MSA contractors to State positions. In considering this recommendation, the Subcommittee supported a revision in the time frame under which the MSA contractors would overlap with State positions from 6 months to 4 months, resulting in savings of approximately $400,000 over the biennium. The Subcommittee supported the restoration of funding for the Department of Information Technology utilization expenses, based on the addition of positions recommended in the Field Services Account. The Subcommittee restored the General Funded portions of the expense with remaining SNAP high performance bonus funds. SENATOR COFFIN: May we close these budgets individually rather than all together? SENATOR COFFIN MOVED TO CLOSE B/A 101-3228 AS

RECOMMENDED BY THE SUBCOMMITTEE. SENATOR WOODHOUSE SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED.

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MR. KRMPOTIC: The next account is Welfare –TANF, B/A 101-3230. Welfare - TANF – Budget Page WELFARE-17 (Volume II) Budget Account 101-3230 The Division ended the 2005-2007 biennium with a balance of unspent Temporary Assistance for Needy Families (TANF) funding totaling approximately $25.8 million. The Governor’s recommended budget assumes an unspent balance of TANF funding of approximately $15.1 million at the end of the 2007-2009 biennium. The decrease in the balance of unspent TANF funding is primarily due to caseload increases. The balance of unspent TANF funding is

Senate Committee on Finance May 12, 2009 Page 26 projected by the Governor to be depleted at the end of the 2009-2011 biennium due to TANF-related expenditures exceeding available resources in each year of the biennium. Based on the projected depletion of the TANF reserve, the Governor recommends General Funds, in lieu of TANF, of approximately $4.4 million in FY 2009-2010 and $7.5 million in FY 2010-2011 to provide for cash assistance payments. Under the ARRA, Nevada qualifies for emergency contingency TANF funding of approximately $18 million over the 2009-2011 biennium, based on actual and projected caseload increases in each quarter over the two-year period beginning October 1, 2008. Based on the anticipated receipt of ARRA funds, the Subcommittee supported the removal of General Funds, in lieu of TANF, with emergency contingency TANF funding by the same amounts. Based on the receipt of ARRA funds, the Governor submitted a budget amendment to reduce General Funds by approximately $1.9 million over the biennium to reflect the application of federal TANF funds to the TANF-eligible portion of the TIR and to new positions recommended to support the TIR. Based on the lack of available TANF funds, the Subcommittee did not concur with the amendment. The Subcommittee supports revised TANF caseload projections prepared by the Department of Health and Human Services, with review by Staff. A total average of 25,873 cases are recommended in FY 2009-2010, a decrease from 28,424 cases recommended by the Governor, and 29,376 cases are recommended in FY 2010-2011, an increase compared with 29,287 cases recommended by the Governor. The dollar impact of the caseload projections results in savings of approximately $2.3 million in FY 2009-2010 and an increase of $774,831 in FY 2010-2011. Based on the lack of available TANF funds, the Subcommittee concurred with the Governor’s recommendation to reduce the transfer of TANF funds to Clark and Washoe Counties by approximately $3.6 million each year. In concurring with this recommendation, the Subcommittee was concerned with the impact on Child Welfare staff in Clark County, who are funded with TANF funds, and the resulting impact on investigation caseloads and emergency response units established with County Child Welfare staff if those positions were eliminated. To address the reduction of TANF funds to Clark County, the Subcommittee supported the inclusion of language in the Appropriations Act to provide flexibility to Clark County in its use of State General Funds for child welfare services. I believe these General Funds are included in the Clark County Integration Account within the Division of Child and Family Services. Based on the recommendations made by the Subcommittee in the TANF account, a reserve of approximately $1.2 million is projected at the end of the 2009-2011 biennium. In estimating the TANF reserve, the Subcommittee excluded the TANF Supplemental Grant in FY 2010-2011 totaling approximately $2.8 million, since the Grant is not approved for continuation beyond September 30, 2010. SENATOR COFFIN: Although I was chair of the Subcommittee, I disagreed with the original Subcommittee vote eliminating the funds for Clark and Washoe Counties. We had extensive discussions because Clark County would lose 31 trained investigators who perform TANF work. That is one-third of the work force. They had six fatalities within the last year and this is not the time to be reducing the workforce. The dispute arose over the possibility that the County had been

Senate Committee on Finance May 12, 2009 Page 27 notified that they should not continue to rely upon TANF funds forever. They were caught off guard. After a recess in our meeting, this new language was introduced. This new language gives the counties flexibility. I abstained from that vote until I had a chance to see it in writing. What would the granting of flexibility do? Is it an empty gesture or is it something that these two counties can live with? MR. KRMPOTIC: I believe the State funds are called back-end services for child welfare. This flexibility would provide the County the ability to use the funding for front-end services which is what the TANF funds are directed to currently. The only concern would be in future biennia if the County directs General Funds for front-end services that are currently directed for back-end services and that the State examine the Integration budget closely in the future to make sure we are not funding both of them in that account. The Subcommittee heard discussion indicating that Clark County might have the ability to use recovered Title IV-E funds to assist them in the first year of the biennium. SENATOR COFFIN MOVED TO CLOSE B/A 101-3230 AS RECOMMENDED

BY THE SUBCOMMITTEE. SENATOR RAGGIO SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED.

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MR. KRMPOTIC: The next account is Assistance to Aged and Blind, B/A 101-3232. Welfare - Assistance to Aged and Blind – Budget Page WELFARE-21 (Volume II) Budget Account 101-3232 The Subcommittee supports the Governor’s recommendation for increases in projected caseloads, with additional increases based on revised caseload projections from the Division. The Subcommittee approved a letter of intent for the DWSS to continue to report to the IFC over the upcoming biennium prior to implementing the annual Supplemental Security Income cost-of-living increase. SENATOR COFFIN MOVED TO CLOSE B/A 101-3232 AS

RECOMMENDED BY THE SUBCOMMITTEE. SENATOR HORSFORD SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY.

Senate Committee on Finance May 12, 2009 Page 28 BUDGET CLOSED.

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MR. KRMPOTIC: The next account is Welfare Field Services, B/A 101-3233. Welfare - Field Services – Budget Page WELFARE-23 (Volume II) Budget Account 101-3233 In addition to 478 new positions to address projected increases in public assistance cases, the Governor recommended the elimination of 114.5 FTE positions, which includes the elimination of 105.5 existing FTE positions and 9 positions associated with the closure of the Yerington, Winnemucca and Hawthorne field offices. The Subcommittee recommends the restoration of 105.5 existing FTE positions recommended for elimination and the restoration of the Yerington, Winnemucca and Hawthorne offices, representing the restoration of 9 positions. In recommending the restoration of positions, the Subcommittee recommends the reduction of 118 of the 478 new positions that were recommended to address eligibility caseloads. The Subcommittee also approved the modification of start dates for the remaining new positions to better meet increasing caseloads during the early part of the biennium. Based on efficiencies anticipated in field offices and the availability of online public assistance applications by January 2011 resulting from implementation of the TIR, the Subcommittee did not support the addition of 87 of the 478 new positions recommended to start in FY 2010-2011. The Subcommittee also did not support the addition of 15 new lead and supervisory positions, based on the number of positions included in the existing budget. With the changes in positions recommended by the Subcommittee, a total of 258 new positions would be included in the Field Services budget to address projected caseloads over the biennium. The Subcommittee approved the addition of 245 of the new positions as intermittent positions, which will provide the opportunity for the Division to reduce its workforce toward the end of the 2009-2011 biennium once benefits resulting from the TIR are realized. Although not previously used by the DWSS, intermittent positions are currently used by the Employment Security Division (ESD) to address fluctuations in workload associated with processing unemployment applications. A total of 13 new permanent supervisory positions are recommended by the Subcommittee to be retained in the budget. The Subcommittee supported the Governor’s recommendation to add ten new administrative assistant positions to the customer service unit to address increased telephone call volume and longer wait times for citizens contacting the Division by telephone. The Subcommittee concurred with the Governor’s recommendation to add three administrative assistant positions to assist in meeting federally mandated quality control requirements on projected increases in public assistance cases. In supporting this recommendation, the Subcommittee recommended the establishment of these positions as intermittent positions to provide flexibility to the Division in reducing its workforce once benefits resulting from implementation of the TIR are realized.

Senate Committee on Finance May 12, 2009 Page 29 The Subcommittee did not support the closure of the West Owens Street field office in Las Vegas as recommended by the Governor. The Subcommittee restored funding for the Owens office and also the Professional Development Center, where staff training is presently conducted. To offset cost increases associated with the restoration of the Owens office and Professional Development Center, funding for new building space was recommended for elimination by the Subcommittee. SENATOR COFFIN MOVED TO CLOSE B/A 101-3233 AS

RECOMMENDED BY THE SUBCOMMITTEE. SENATOR RAGGIO SECONDED THE MOTION. COCHAIR HORSFORD: Do we use a temporary employment Agency for the intermittent positions? MR. KRMPOTIC: Those positions would be hired by the State. The Division would not go through a temporary employment Agency for hiring purposes. The make-up of intermittent positions is similar to seasonal positions used by the State in the Division of State Parks or the NDOT where positions are filled for a period of time when they are needed to address workload increases. Those positions can be eliminated once the workload diminishes so they are temporary State employees. COCHAIR HORSFORD: I was advised that some of the State agencies are contracting with employment agencies to fill some of these temporary positions. MR. KRMPOTIC: The funding for these intermittent positions is included in the Personnel Services category. Agencies that use contracted temporary employment agencies are funded in the Operating category for those expenditures. The DWSS is funded for these positions in the Personnel Service category and they would have to approach IFC if they wanted to change direction and hire personnel from temporary employment agencies. COCHAIR HORSFORD: Do we need a letter of intent to ensure that will not be the case? I want assurance because of practices I have heard about, particularly because these temporary employment agencies are fee-based. MR. KRMPOTIC: That would be up to the Committee to recommend. The idea for the interim positions originated from the Division and was an idea adopted from the ESD. The ESD hires these positions as State positions. The letter of intent would probably provide emphasis to the Committee’s intent to use State positions in lieu of temporary employment agencies. MS. DAY: Yes, we are planning on the positions being intermittent State positions, not contract positions through a temporary agency.

Senate Committee on Finance May 12, 2009 Page 30 COCHAIR HORSFORD: I suggested, in the pre-budget hearings, that the Division explore ways to streamline methods of working with their clients, recognizing that because of the increased funding from the ARRA and the existing needs, there are additional funds which will produce additional positions. I hoped there would be more community-based collaborations beyond the establishment of new positions. I understand there were regulatory requirements on eligibility. There are other parts of the case management that could be done in partnership. This is an example of where we should have more public/private collaborations rather than building, on a temporary basis, a larger State bureaucracy. I will support the motion but I would have liked to have seen more collaboration. I asked the Welfare Division at the pre-budget hearings to consider some of those options. COCHAIR MATHEWS: With no further discussion, we will now take a vote on the motion. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED.

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MR. KRMPOTIC: The next budget account is for Child Support Enforcement, B/A 101-3238. Welfare - Child Support Enforcement Program – Budget Page WELFARE-36 (Volume II) Budget Account 101-3238 The Subcommittee supported the Governor’s recommendation to provide funding of approximately $1 million over the biennium to fund a TIR to conduct a study to identify alternative solutions and estimate costs for modernizing the Child Support Enforcement Software Application residing on NOMADS. In approving this request, the Subcommittee was concerned with the size and cost of the recommendation that might result from the study. Estimates of between $40 million and $120 million were indicated by the Division. Based on this, the Subcommittee approved a letter of intent to the Division to tailor the study in such a way as to identify solutions that could be funded from resources within the program with the potential use of ARRA funds. The ARRA temporarily repeals the prohibition on using incentive funds as a match to draw down additional child support funds for child support programs. The repeal is effective through September 30, 2010. Approximately $1 million of additional federal funding would be received in Nevada as a result of applying State Incentive Funding to the nonfederal portion. As a result of additional funding anticipated under the ARRA, the Subcommittee concurred with an amendment to the budget to add federal ARRA funds of $1 million and federal incentive funds of $258,097 and recommended a letter of intent to have the Division report on the proposed use of federal funds received under the ARRA prior to the expenditure and submit a plan for expenditure of the ARRA funds, subject to IFC approval. SENATOR HORSFORD MOVED TO CLOSE B/A 101-3238 AS

RECOMMENDED BY THE SUBCOMMITTEE.

Senate Committee on Finance May 12, 2009 Page 31 SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED.

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MR. KRMPOTIC: The next account is for Child Support Federal Reimbursement, B/A 101-3239. Welfare - Child Support Federal Reimbursement – Budget Page WELFARE-44 (Volume II) Budget Account 101-3239 The Subcommittee concurred with the Governor’s recommended budget and supported an amendment to the budget to add federal ARRA funds of approximately $9.3 million and county-federal incentive funds of $2.1 million, based on the repeal of the prohibition on using incentive funds as a match to draw down additional child support funds. The Division approved a letter of intent to have the Division report on the proposed use of federal funds received under the ARRA prior to the expenditure and submit a plan for expenditure of the ARRA funds, subject to IFC approval. SENATOR COFFIN MOVED TO CLOSE B/A 101-3239 AS

RECOMMENDED BY THE SUBCOMMITTEE. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED.

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MR. KRMPOTIC: The next account is Child Assistance and Development, B/A 101-3267. Welfare - Child Assistance and Development – Budget Page WELFARE-46 (Volume II) Budget Account 101-3267 The Subcommittee did not support the conversion of child-care services from the University of Nevada Las Vegas (UNLV) to the Division, as recommended by the Governor. The Subcommittee recommends continuation of the UNLV contract, with additional federal funding of $110,992 each year for additional quality assurance services provided by the UNLV and additional federal funding of $256,832 in FY 2009-2010 and $259,101 in FY 2010-2011 to provide for security services and rent at the West Washington facility to house education staff employed by the UNLV. The Subcommittee expressed its intent to continue with the UNLV until a community-based provider is identified to provide comprehensive child-care services similar to the range of services provided in northern Nevada by the Children’s Cabinet. The Subcommittee

Senate Committee on Finance May 12, 2009 Page 32 recommends a letter of intent for the Division to report back to the IFC on its efforts in identifying and contracting with a community partner to provide comprehensive child-care services in southern Nevada over the biennium. The Subcommittee supports revised child-care caseload projections, resulting in increased subsidy payments for New Employees of Nevada (NEON) and at-risk cases over the biennium. To address the increased child-care caseloads, the Subcommittee concurred with an amendment to the budget to add approximately $14.3 million in ARRA child-care funds over the biennium. To fully fund subsidy payments for NEON and at-risk cases, the Subcommittee recommends that approximately $1.2 million in reserves be redirected to subsidy payments for at-risk cases, $1.9 million to be redirected from quality assurance to subsidy payments to NEON and at-risk cases, and that discretionary child-care cases be capped at 2,500. As a result of the cap on discretionary cases, approximately 2,000 child-care cases would go unserved; however, approximately $1.9 million in discretionary child-care funding would be redirected to NEON and at-risk cases. In approving these changes, the Subcommittee directed the Division to adjust or remove the cap on discretionary cases if additional child-care funding becomes available or if caseloads are not realized at the projected levels. SENATOR COFFIN MOVED TO CLOSE B/A 101-3267 AS

RECOMMENDED BY THE SUBCOMMITTEE. SENATOR HORSFORD SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED.

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MR. KRMPOTIC: The last account is the Energy Assistance Program, B/A 101-4862. Welfare - Energy Assistance Program – Budget Page WELFARE-52 (Volume II) Budget Account 101-4862 To remain within existing funding levels for Universal Energy Charges (UEC) and federal Low Income Home Energy Assistance Program (LIHEAP) block grant funds, the Governor recommended reductions of approximately $2.7 million in FY 2009-2010 and $4.4 million in FY 2010-2011, resulting in reductions in the payment of benefits from the program. The Governor’s recommended budget also recommended a decrease in the average payment per case from $903 in FY 2007-2008 to $559 in each year of the biennium. Based on revised projections of available UEC funds and LIHEAP funds, the Subcommittee supported modifications to the budget which eliminate the reduction recommended by the Governor in FY 2009-2010 and change the decrease recommended in FY 2010-2011 from approximately $4.4 million to $697,006. The modifications recommended by the Subcommittee result in all projected households served under the program in FY 2009-2010 and approximately 4,000 households not served in FY 2010-2011.

Senate Committee on Finance May 12, 2009 Page 33 COCHAIR HORSFORD: It is my understanding the UEC is charged on utility bills. My utility bill has not decreased. Why is this amount decreasing to this fund? MR. KRMPOTIC: I do not believe the actual revenues are decreasing. The need is increasing which is resulting in expenditures outstripping revenues in the program. COCHAIR HORSFORD: What was the rationale for not keeping the decrease proportionate in each fiscal year? MR. KRMPOTIC: I believe the rationale was to serve as many households for energy assistance in the first year of the biennium. It is possible the projections developed by the Division may change, depending on what the need is in the second year of the biennium. The budget approved by the Subcommittee would provide full funding in the first year. It is also possible that additional LIHEAP funds may come forward. In October 2008, the program was fully funded by Congress which provided a large increase in LIHEAP funds to provide energy assistance. The thought was that if additional funding came forward, it would be applied in FY 2010-2011 and the desire of the Subcommittee was to fully fund the first year. SENATOR HORSFORD MOVED TO CLOSE B/A 101-4862 AS

RECOMMENDED BY THE SUBCOMMITTEE. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BUDGET CLOSED.

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MICHAEL J. CHAPMAN (Senior Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau):

The Subcommittee’s closing recommendations for Mental Health and Development Services result in General Fund increases before adjustments in the Federal Match Assistance Percentage (FMAP) of approximately $1.38 million in FY 2009-2010 and $2.11 million in FY 2010-2011. However, the Subcommittee’s closing actions also approved an increase in Title XIX Medicaid reimbursements due to the increase in the FMAP resulting from both the passage of the ARRA and the projected increase in federal FY 2010-2011. These adjustments in the FMAP provide General Fund savings exceeding the amounts recommended by the Governor of approximately $8.32 million in FY 2009-2010 and $7.1 million in FY 2010-2011. The combined actions of the Subcommittee result in overall General Fund decreases of approximately $6.94 million in FY 2009-2010 and $4.99 million in FY 2010-2011. For the Division as a whole, the Governor recommended to eliminate a total of 225.34 FTE positions from the Division. The Subcommittee’s closing actions

Senate Committee on Finance May 12, 2009 Page 34 restored a total of 31.48 FTE positions which will be further discussed in the appropriate sections of this closing speech. The Subcommittee approved the Governor’s recommendation to implement various initiatives in the Mental Health Agency budgets to enhance Medicaid and Medicare reimbursements, third-party insurance and client co-pays in order to reduce General Fund support. These initiatives include: · The transfer of eight accounting positions into the Administration account

to establish a centralized billing office to effectuate more efficient and consistent billing procedures for revenue collections.

· General Fund support of $19,056 in FY 2009-2010 and $19,532 to

contract for billing clearing house services, which will ensure compliance with Medicaid and Medicare regulations, more accurate provider and client identification numbers and that diagnosis codes are valid and correct. These actions should reduce billing claim errors and rejections and improve reimbursement turnaround time.

· Increased medical service charge revenue of $63,000 in the

2009-2011 biennium to support comprehensive training for Division staff tasked with preparing billing claims to become certified code specialists in order to improve the accuracy of coding for rendered services.

· Improve the “front end” client intake and eligibility processes in order to

better ensure all services provided are coded and billed correctly by direct-care staff.

As some of these initiatives have already been implemented, the Subcommittee concurred with Fiscal Staff’s recommendation to extend the Governor’s recommended increase in revenues from approximately $2.51 to $2.97 million in FY 2009-2010 and from approximately $2.61 to $3.32 million in FY 2010-2011, based upon realized increases in FY 2008-2009 revenues. The Subcommittee concurred with the Governor’s recommendation, except for a minor technical adjustment, to increase General Fund appropriations by approximately $1.15 million in FY 2009-2010 and $2.36 million in FY 2010-2011 for projected inflationary increases in medication costs. The first budget account is the MHDS Administration, B/A 101-3168. MENTAL HEALTH AND DEVELOPMENTAL SERVICES HHS - MHDS Administration – Budget Page MHDS-52 (Volume II) Budget Account 101-3168 The Subcommittee approved the Governor’s recommendation to eliminate the northern Nevada medical director position, whose duties will be absorbed by the Statewide medical director. A quality assurance specialist funded with federal funds is eliminated, with the position savings used to support a management analyst position currently supported with General Funds. The Subcommittee concurred with the Governor’s recommendation to eliminate three health program specialist positions and an administrative assistant responsible for disaster response and hospital evacuation planning and training. The federal

Senate Committee on Finance May 12, 2009 Page 35 health resources and service administration grant funds supporting these positions is expected to be reduced by approximately $256,000 in each year of the biennium. Lastly, the Subcommittee also approved the Governor’s recommendation to transfer General Fund appropriations of $100,000 each year from the Administration account to the Health and Human Services Director’s Office of Suicide Prevention to better reflect the costs of the program in one cost center. The next account is the Southern Nevada Adult Mental Health Services, B/A 101-3161. HHS -Southern Nevada Adult Mental Health Services – Budget Page MHDS-7 (Volume II) Budget Account 101-3161 While the Governor recommends a number of budget reductions that include elimination of a total of 136.41 FTE positions, the Subcommittee took several closing actions which restored 24.51 FTE of those positions, as follows: · Approved the Governor’s recommendation to eliminate a total of 4.51 FTE

positions approved by the 74th Legislative Session: two psychiatric caseworkers, a psychiatric nurse and a clinical social worker intended to support expansion of the Program for Assertive Community Treatment; and a half-time mental health counselor to support an additional 85 supported living arrangements.

· Approved the Governor’s recommendation to eliminate a maintenance repair

specialist, a personnel technician, an IT technician and a half-time accounting assistant approved by the 74th Legislative Session to meet administrative and facility support needs.

· Approved the Governor’s recommendation to eliminate 4.04 FTE senior

psychiatrist positions and utilize the savings to purchase contract psychiatrist services.

· In lieu of approving the Governor’s recommendation to modify inpatient

beds-to-staff ratios, which resulted in eliminating a total of 96.81 FTE positions, the Subcommittee voted to restore 17.51 of these FTE positions, including 14 mental health technicians, 1.51 FTE mental health counselors, a psychiatric nurse IV, and a licensed practical nurse in order to further strengthen the Agency’s ability to insure adequate client care. The Subcommittee recommends issuing a letter of intent to the Agency to submit semiannual reports to the IFC identifying the impacts experienced by the Southern Nevada Adult Mental Health Services (SNAMHS) associated with the inpatient staffing reductions, including a comparative history of client and/or staff altercations.

· In lieu of approving the Governor’s recommendation to eliminate a total of

17.54 FTE positions associated with the continued closure of the North Las Vegas Outpatient Clinic, the Subcommittee recommends restoring seven of these positions, including two senior psychiatrists, four psychiatric nurses and the outpatient director of nursing. The restoration of these positions will aid the Agency in better staffing its remaining outpatient

Senate Committee on Finance May 12, 2009 Page 36

facilities at the downtown Las Vegas, East Sahara, Henderson and West Charleston locations.

The Subcommittee also voted to accept Fiscal Staff’s recommendation to replace General Funds of $125,000 with United Health Settlement (UHS) funds that are available in FY 2009-2010 for supporting the community triage center. The next budget account is the Northern Nevada Adult Mental Health Services, B/A 101-3162. HHS - Northern Nevada Adult Mental Health Svcs – Budget Page MHDS-21 (Volume II) Budget Account 101-3162 The Subcommittee concurred the with Governor’s recommendation to eliminate a total of 36.15 FTE positions, as follows: · A 0.49 FTE senior psychiatrist, 1.51 FTE psychiatric nurses and an

administrative assistant approved by the 74th Legislative Session for FY 2008-2009 caseload increases in the medication clinics are eliminated. An additional 0.51 FTE administrative assistant approved during the 74th Legislative Session to support two mental health counselors in the Reno Mobile Outreach Program is also eliminated.

· A total of 12.53 FTE positions approved by the 74th Legislative Session for

FY 2008-2009 caseload increases for psychiatric ambulatory services are also eliminated: 2 senior psychiatrists, 2 licensed psychologists, 2.51 FTE psychiatric nurses, 2 substance abuse counselors, 2.51 FTE mental health counselors and 1.51 FTE administrative assistants.

· A total of 13.11 FTE positions are eliminated to modify the inpatient

beds-to-staff ratios in the Dini-Townsend Hospital. · Four heat plant specialists and a heating, ventilating and air-conditioning

specialist are eliminated as a result of the closure of the old steam-heat plant on the Northern Nevada Adult Mental Health Services (NNAMHS) campus.

· Two psychiatric caseworker positions, one assigned to service coordination

and the other designated to assist clients with employment opportunities and on-campus canteen operations, are eliminated due to difficulties in recruitment and retention. The responsibilities assigned to these two positions have been redistributed to other staff.

The Subcommittee approved the Governor’s recommendation to eliminate funding for 7 supported living arrangements that were approved by the 74th Legislative Session as part of the FY 2008-2009 caseload increases. The Subcommittee also approved Fiscal Staff’s recommendation to replace General Funds of $246,805 with UHS funds that are available in FY 2009-2010 to support the Community Triage Center and the Reno Mobile Outreach program. Lastly, the Subcommittee voted to issue a letter of intent to NNAMHS directing the Agency to approach IFC, should approved medication funding be insufficient to meet client demands in order to avoid rationing of medications or denial of medications to individuals needing these services.

Senate Committee on Finance May 12, 2009 Page 37 The next budget account is the Rural Clinics, B/A 101-3648. HHS - Rural Clinics – Budget Page MHDS-106 (Volume II) Budget Account 101-3648 The Subcommittee did not approve the Governor’s recommendation to close 11 of the Agency’s 21 clinics, which included elimination of a total of 23.28 FTE positions throughout the State. Instead, the Subcommittee voted to approve an alternative plan that restores 9 of the 11 clinics recommended for closure in Battle Mountain, Caliente, Fernley, Hawthorne, Lake Tahoe, Lovelock, Moapa, Silver Springs and Tonopah. However, the clinic in Dayton, closed in September 2008, would remain closed, and funding for the Wendover clinic will cease effective July 1, 2009. The alternative plan involves a net addback to the budget of 7.47 FTE positions, achieved by eliminating 9.55 FTE positions not previously recommended for elimination; the restoration of 11.02 FTE positions recommended for elimination by the Governor, which includes the reclassification of 8 of these positions; and the creation of 6 new positions. Additionally, the alternative plan includes funding support for contract psychiatrists, nurses and counselors to supplement the State staff in order to maintain access to Mental Health Care Services in these communities. In order to implement the alternative plan, the Subcommittee recommends General Fund appropriations of $250,000 in FY 2009-2010 and $758,055 in FY 2010-2011, and the use of supplemental Title XX funds of $773,362 in FY 2009-2010 and $168,882 in FY 2010-2011, which are provided through the Fernley Flood Relief Act. The Subcommittee concurred with the Governor’s recommendation to eliminate two mental health counselor positions approved by the 73rd Legislative Session to support outpatient counseling caseload growth at the time, but have remained vacant due to difficulties in recruiting for the positions. The savings resulting from the elimination of the two positions will be utilized to purchase contract counseling services, primarily in the Elko area. The next budget account is the Facility for the Mental Offender, B/A 101-3645. HHS - Facility for the Mental Offender – Budget Page MHDS-98 (Volume II) Budget Account 101-3645 The Subcommittee voted to approve the Governor’s recommendation to eliminate 6 positions, including 4 forensic specialists, a licensed psychologist and an IT Technician approved by the 74th Legislative Session, as well as a 6-bed reduction in the Dini-Townsend annex due to facility space and design issues. However, the elimination of 4 forensic positions, as well as the 6-bed reduction, will leave the Agency with a combination of 80 nursing and forensic positions, which is consistent with the historic staffing ratio used for this Agency. The Subcommittee did not approve the Governor’s recommendation to provide General Fund appropriations of $16,000 in FY 2009-2010 and $8,000 in FY 2010-2011 to fund activities associated with obtaining joint commission accreditation, due to the Division’s uncertainty with moving forward with accreditation activities. Lastly, the Subcommittee also approved funding included in the Base Budget for 1.51 FTE psychiatric caseworker positions to support the conditional release program approved in S.B. No. 380 of the 74th Legislative Session.

Senate Committee on Finance May 12, 2009 Page 38 The next budget account is the Substance Abuse Prevention and Treatment Agency, B/A 101-3170. HHS – Substance Abuse Prevention & Treatment Agency – Budget Page

MHDS-64 (Volume II) Budget Account 101-3170 The Governor recommended General Fund reductions for substance abuse treatment services of $401,556 in FY 2009-2010 and $374,068 in FY 2010-2011, as well as reductions in General Funds of $100,000 each year for methamphetamine education. The Subcommittee considered treatment services more critical, and therefore did not support this recommendation and restored funding for treatment services. However, instead of adding back General Fund appropriations, the Subcommittee chose to further reduce funding for methamphetamine education programs. As a result, available funding for methamphetamine education programs is reduced from $1 million each year to $498,444 in FY 2009-2010 and $528,932 in FY 2010-2011. The Subcommittee concurred with the Governor’s recommendation to eliminate a half-time administrative assistant position from the Carson City office, as well as a health program specialist position funded with Federal Substance Abuse Prevention Grant Funds, and to redirect the salary savings to the Statewide Prevention Coalitions. While the Subcommittee approved the majority of the Governor’s recommendations to reduce funding for various programs in the three regional center budgets, funding for two programs was restored as follows: · The Subcommittee recommends General Fund appropriations of $180,600

each year to provide monthly allotments of $1,075 to 14 families participating in the self-directed autism program. Eight of those families are at the Rural Regional Center (RRC) and six families are at the Sierra Regional Center (SRC).

· The Subcommittee recommends General Fund appropriations of $216,150 in

FY 2009-2010 and $266,150 in FY 2010-2011 in order to maintain funding to families participating in the purchase of services and respite programs at previous legislatively approved funding levels.

The Subcommittee approved the Governor’s recommendation to reduce funding for the following programs: · Eliminate 1.51 FTE custodian positions, as well as an administrative

assistant, at the SRC, as clients are no longer living permanently on the campus and there is a decrease in Agency staff from previous biennia. In addition, a total of nine positions: three at the Desert Regional Center and six at SRC are eliminated that were approved by the 74th Legislative Session in order to establish crisis prevention intervention teams at the respective agencies.

· Eliminate a contract with the UNR Center for Excellence in Developmental

Disabilities, which provided for the collection of quality improvement data, including personal outcome interviews, and reduce contract funding with the Council on Quality Leadership used for training and consulting with Agency staff on accreditation issues.

Senate Committee on Finance May 12, 2009 Page 39 · Reduce participation in the self-directed Fiscal Intermediary Program by

49 families as a result of changing eligibility from 500 percent to 300 percent of federal poverty level. In addition, the monthly allocations to level 1 families participating in the program that were reduced by $198 during the 2007-2009 biennium will continue at the reduced amount during the 2009-11 biennium.

In addition to these program reductions, the Subcommittee approved the Governor’s recommendations for reductions in Supported Living Arrangements and Jobs and Day Training programs. However, these reductions were offset with recommended increases in caseload for these programs when additional funding became available during the last stages of preparing the Executive Budget. The Subcommittee approved the Governor’s recommendation for a net increase of 254 Supported Living Arrangements statewide, and a net increase of 61 Jobs and Day Training placements statewide. Lastly, the Subcommittee authorized Fiscal Staff to make necessary adjustments to reduce General Fund appropriations by $136,658 in FY 2009-2010 and $459,803 in FY 2010-2011 in the Regional Center budgets, with corresponding increases in the Medicaid budget, in order to address a shortfall of State support for medical costs for new placements in the Home and Community Based Waiver Program. The next budget is the Desert Regional Center, B/A 101-3279. HHS - Desert Regional Center – Budget Page MHDS-75 (Volume II) Budget Account 101-3279 The Subcommittee approved the Governor’s recommendation to eliminate funding for the transition of 12 individuals currently residing in private institutional facilities funded in the Medicaid budget to community placements funded in the Desert Regional Center (DRC) budget. The 74th Legislative Session approved the transitioning of 18 individuals from institutional settings to community placements during the 2007-2009 biennium, but delayed the transition of 12 individuals during the interim period in order to achieve budget savings in the DRC budget. The Subcommittee also voted to approve Fiscal Staff’s recommendation to reduce General Fund support by $17,195 for replacement furnishings for the campus cottages by purchasing the furniture from Prison Industries, and to reduce appropriations by $61,450 in FY 2009-2010 and $60,101 in FY 2010-2011 due to the overstatement of prepared meals and raw food costs in the Executive Budget. The next budget accounts are the Rural Regional Center, B/A 101-3167 and the Sierra Regional Center, B/A 101-3280. HHS - Rural Regional Center – Budget Page MHDS-41 (Volume II) Budget Account 101-3167 HHS - Sierra Regional Center – Budget Page MHDS-87 (Volume II) Budget Account 101-3280 The Subcommittee closed the remainder of the RRC and the SRC budgets as recommended by the Governor with minor or technical adjustments. The next budget account is the Family Preservation Program, B/A 101-3166.

Senate Committee on Finance May 12, 2009 Page 40 HHS - Family Preservation Program – Budget Page MHDS-39 (Volume II) Budget Account 101-3166 The Subcommittee agreed with the Governor’s recommendation to serve an additional 33 families in the Family Preservation Program which increases the total number of families served to 528 by the end of the 2009-2011 biennium. The Subcommittee concurred with the Governor’s recommendation to maintain the monthly assistance payment of $374 to each family during the upcoming biennium. The next budget account is the Southern Nevada Food Service, B/A 101-3159. HHS - Southern Food Service – Budget Page MHDS-1 (Volume II) Budget Account 101-3159 The Subcommittee approved the Governor’s recommendation to eliminate this budget and transfer the respective cost of prepared meals, snacks and raw food for independent cooking programs to SNAMHS, DRC and the Desert Willow Treatment Center (DWTC). Eliminating this account includes transferring two of the three dietician positions to SNAMHS, with one of those positions sharing dietary and meal planning for both SNAMHS and DRC. The third position is transferred to DWTC. For DRC, additional dietician support is achieved by reclassifying a physical therapist position to a dietician position. The reclassification, in combination with eliminating a half-time speech pathologist position, provides payroll savings to purchase contract speech and physical therapy services for DRC’s clients. The Subcommittee closed the budgets for the Mental Health Information Systems, B/A 101-3164, and the Alcohol Tax Program, B/A 101-3255, as recommended by the Governor with minor or technical adjustments. HHS - Mental Health Information System – Budget Page MHDS-33 (Volume II) Budget Account 101-3164 HHS - Alcohol Tax Program – Budget Page MHDS-73 (Volume II) Budget Account 101-3255 SENATOR HARDY MOVED TO CLOSE B/A 101-3168, B/A 101-3161,

B/A 101-3162, B/A 101-3648, B/A 101-3645, B/A 101-3170, B/A 101-3279, B/A 101-3167, B/A 101-3166, B/A 101-3159, B/A 101-3164, B/A 101-3255 AND B/A 101-3280 AS RECOMMENDED BY THE SUBCOMMITTEE.

SENATOR HORSFORD SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS RAGGIO AND COFFIN WERE

ABSENT FOR THE VOTE.)

Senate Committee on Finance May 12, 2009 Page 41 BUDGETS CLOSED.

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COCHAIR MATHEWS: There being no further business before this Committee, we are adjourned at 1:57 p.m.

RESPECTFULLY SUBMITTED:

Barbara Richards, Committee Secretary

APPROVED BY: Senator Bernice Mathews, Cochair DATE: