REFORM PROPOSAL

You have requested reform in 5 areas: education, PERS, collective bargaining, prevailing wage, andconstruction defect. Because we have yet to receive a plan for discussion, in the interest of progress,we are setting forth the following reform proposal addressing these topics. Part 1 addresses reformssuggested by the Chambers of Commerce, which we are using as proxy on specifics for the generalideas you have provided. Part 2 addresses additional reforms that are currently in progress duringthis legislative session. We believe this presents a comprehensive overview of the areas of reformwhich we can support, and look forward to continuing this discussion without delay.

PART 1: CHAMBER-RELATED REFORMS:

The following outlines reforms relating to Chamber suggestions that we believe we can support.

I. Education.

a. Eliminate tenure for teachers and administrators. AB 225.

1. AB 225 requires teachers and administrators who receive negative evaluations fortwo consecutive years to return to probationary status, where they can be non-renewed with no arbitration. It expedites mid-year dismissal of teachers andadministrators who are post-probationary or who have returned to probationarystatus.

b. Probationary employees are at-will and can be non-renewed at the end of the year ordismissed mid-year with no arbitration. AB 229.

1. Among other reforms, AB 229 (i) removes the right of probationary employees toNRS 391's dismissal, suspension, admonition and non-renewal provisions, (ii)removes the right of a teacher or administrator in his or her initial probationaryperiod to have a hearing before a neutral 3rd party arbitrator in cases of mid-yeardismissal, (ill) expedites the mid-year dismissal of post-probationary employees,and (iv) replaces the "Hey Jack" letter with a written statement on each negativeevaluation for probationary employees, eliminating another barrier for districts tonon-renew ineffective teachers. Probationary teachers and administrators in theirfirst three years of employment are at-will and have no due process rights uponnon-renewal or mid-year dismissal. Educators returned to probation under AB225 would only have expedited due process rights in cases of mid-year dismissals.

c. Institute pay-for-performance. AB 229.

1. B 229 establishes pay-for-performance to reward educators who improvestudent achievement.

d. Implement a new 4-tier educator evaluation system. AB 222, AB 229.

1. AB 222 requires the creation of a new 4-tier evaluation process for teachers andadministrators that will replace our current satisfactory/unsatisfactory evaluationsystem. It creates a new Teachers and Leaders Council comprised of parents,teachers, administrators, an SHE representative, school board representative,and public policy experts. The Council will establish criteria for the newevaluation system, which will focus on student achievement using the growthmodel, non-standardized testing and evaluations.

11. AB 229 provides for the new 4-tiered evaluation system to be used for evaluatingteachers and administrators; it must include at least 50% student achievement.

e. Provide for alternative routes to teacher licensure. AB 230, SB 315.

1. AB 230 provides alternative routes to licensure for teachers to broaden the scopeof professionals who can be hired to teach. This will result in a faster, moreefficient, and less burdensome process for graduates of non-education fields andteachers licensed in other states, especially the growing number of educatorslicensed under alternative routes, to become licensed teachers.

f. Require individual school grading system. AB 554, Section 2.

g. Restructure educational governance. SB 219.

h. Re-pass AB 183 to lower the capital reserve requirement for school districts and allowmoney to be used for refurbishment. AB 183.

II. PERS (Please see Addendum for additional history and detail).

The PERS system underwent significant reform during the 2009 legislative session.According to PERS Director Dana Bilyeu, before additional changes are made, it is generallywise to allow a period of time to pass after major reform to assess the extent of the effectsthat those changes have made on the system and its funding. In a fund that is funded atover 70%, the 75th Legislature changed the multiplier rate and contribution rate foremployees. Ms. Bilyeu has stressed that pension finance is an extremely long-term processand the ability to judge how benefit changes have affected costs and employee behavior ismore accurate the longer the period of time for assessment. As a result, she proposedcertain revisions, including pledging to refrain from making additional changes for 10 years,that would allow us to better assess achievement of the fiscal integrity of the PERS system.Further, she suggested that after the 10-year moratorium, benefits should not be increasedunless the system is at least 85% funded and the improvement cost is recognized in thecontribution rate. These recommendations are incorporated in AB 405 and would assist usin instituting a policy of fiscal restraint that would benefit our state and participating retireesfor the long term. Under AB 405, for new members:

a. Callback pay will no longer be included in pay for calculation of retirement benefits;

b. Reportable compensation may not increase more than 10% per year unless an employeeis promoted;

c. The Legislature pledges that there will be no changes to the system for 10 years unless topreselve the financial integrity of the system; and

d. After the 10 year moratorium on changes, benefits may not increase unless the system is85% funded, and the increase in benefits is included in the contribution rate.

III. Cons truction Defect.

a. Eliminate automatic awards of plaintiff attorney's costs, fees and interest. AB 401.

1. Among other things, AB 401 amends Chapter 40 by revising the attorney's feesprovision to clearly state that plaintiffs are not automatically entitled to attorney'sfees - only the prevailing party may receive attorney's fees, and the court is in

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charge of determining who the prevailing party is and the amount of attorney'sfees they are entitled to receive.

IV. Collective Bargaining.

The following reforms to collective bargaining are contained in SB 98:

a. Either party may request potential mediators if the parties have not reached anagreement after four negotiation meetings. Current law requires both parties to agree.

b. Collective bargaining agreements must be approved by the governing body of the localgovernment employer at a public hearing. The CEO of the local government mustreport to the local government the fiscal impact of the agreement, including (i) theestimated total cost of employees' PERS contributions, and (ii) the difference betweenthe estimated total cost of the agreement and the total cost of the immediately precedingagreement between the parties. The CEO of the local government must report to thelocal government the fiscal impact of the findings and recommendations.

c. School district superintendents must report to the board of trustees the fiscal impact ofbargaining decisions.

PART 2: ADDITIONAL REFORMS IN PROGRESS:

Democratic legislators have put forth an aggressive agenda to increase transparency andaccountability in many areas, including campaign contribution and expenditures, governmentcontracts, review of commissions, review of abatements and STAR bonds, funding and governanceof nonprofits, intergovernmental and state agencies, mortgage ownership and foreclosure filings,medical facility safety protocols, economic development funding and programs, budgetingprocesse , health care provider expenditures, health insurance rates, sentinel events at medicalfacilities, the ELlS system on the legislative web ite, and chool system administrative costs. Thefollowing outlines additional reforms that we believe we can support.

I. Education.

a. Lengthen the probationary period for teachers and administrators from one year to threeyears, and prohibit districts from waiving any probationary period. AB 229.

b. Require that student achievement will represent 50% of educator evaluation criteria. AB229.

c. Require school administrators to be subject to the evaluation process. AB 229.

d. Expand the gr und for immediate dismissal of an educator to include grossmisconduct. AB 229.

e. Increase transparency regarding the number and percentage of teachers, administratorsand support staff in each school and district by requiring them to post those numbersonline. AB 229.

f. Create the State Public Charter School Authority, which functions as an 18th schoolboard for g vernance of charter schools. The authority can become the sponsor of newcharters, and will encourage diverse approaches to public education and the use ofinnovative teaching methods that have proven effective. SB 212.

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g. Encourage NSHE institutions to audit existing programs and evaluate the types ofdegree programs and courses offered at each institution, de-duplicate redundancies,increase cost effectiveness, match degree programs with industries where jobs will likelybe available and state economic development goals. This re-emphasizes that thereshould be a clearly focused three-tiered Higher Education System, reflecting the coremissions of each of the NSHE institutions. It also encourages de-duplication of coursesand degree programs being offered at more than one institution in the same geographicarea. AB 220.

h. Establish a Reading Skills Development Center at UNR and UNLV, focusing on helpingschool districts to address reading, literacy problems and language acquisition barriers ingrades 1-3 and provide interventions to correct detected problems by completion ofgrade 3. This not only increases quality of instruction immediately throughinterventions, but will be a source of best-practice knowledge for education studentscurrently enrolled. SB 216.

1. Allow charter schools to use LSST money to (i) partner with community-basedorganizations to offer after school supplemental educational support for at-risk students,(ii) provide summer programs for elementary and middle school students, (iii) provideearly childhood education programs, and (iv) provide GED prep classes. SB 372.

J. Authorize the Board of Regents to implement differential tuition and tie tuition and feesto the cost of an academic program or major. If the Board of Regents increases the costof tuition or fees for any program, the institution must set up scholarships and reducedfees for economically disadvantaged students. Require a report of the graduation rate ineach degree program, steps NSHE is taking to increase the graduation rate, employmentrates and starting salaries of students by degree program, and initiatives taken by theBoard of Regents to align degree programs with economic development goals. SB 449.

k. Permit increases in tuition or fees assessed at levels higher than those assessed January 1,2011, to be retained by the institution at which the student is enrolled. SB 451.

1. Revise the Nevada Plan for School Finance for funding school districts, charter schoolsand university schools for profoundly gifted pupils. Amend NRS 387.122 to use aweighted value for pupils with disabilities, gifted pupils, transient pupils, ELL, homelessor foster care pupils, smaller school districts and schools etc., in order to provide thesestudents with additional basic support guarantees for students and schools with specialneeds. Require the Dept. of Education to establish an advisory group to develop aformula for establishing the weighted values for each category for implementation inschool year 2013-2014. SB 11.

m. Revise implementation of longitudinal assessment and evaluation for charter schools.SB 35.

n. Require the State Board of Education to develop a five-year strategic plan and requirethe Department of Education to perform a comprehensive review of all testing. Thisincreases accountability for strategic goals and provides for more long-term planning toaddress recurring issues in improving student academic achievement. AB 113.

o. Require the Department of Education to work with NSHE to set clearly defined goalsand benchmarks that ensure students are prepared for success in the workplace. Thisencourages development of a K-16 system, reduces remedial class demand at our

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universities, and helps align K-12 curriculum with economic development goals. AB138.

P: Encourage companies to strengthen their relationship with our universities by partiallyabating taxes for Nevada companies that invest in Nevada's universities and employstudents in the area in which they operate. AB 191.

q. Reduce the drop-out rate by providing a means for students to pass a test thatdemonstrates subject and course proficiency for course credit. AB 233.

r. Create a Rainy Day fund for K-12 Public Education and the Nevada System of HigherEducation that encourages fiscal responsibility and long-term planning, as well asprovides increased stability and predictability of funding. Funds left over from year toyear will be reverted to these accounts instead of reverting to the General Fund.Currently, there is an incentive to spend all funds by year's end, regardless of fiscalprudence of the programs funded. AB 241.

s. Require school districts to assess the feasibility of consolidation of services, functions,facilities and personnel, including, but not limited to: purchasing, accounting, recruiting,transportation, chief financial officer, human resource director, and schoolsuperintendents. AB 551.

t. Create a K-12 Public Education Stabilization Account into which the Controller woulddeposit any unexpended funds from the Distributive School Account. SB 122.

u. Create a separate category of licensure for teaching special education. AB 395.

v. Add provisions in NRS that require criminal background checks of educationalpersonnel upon renewal of a license. AB 393.

w. Create the Advisory Council on Parental Involvement and Family Engagement. Createthe Office of Parental Involvement and Family Engagement within the Department ofEducation and require the Superintendent of Public Instruction to appoint an employeeof the Department to serve as the Director of the Office. Prescribe the duties of theOffice, which include adopting policies and developing a list of practices designed toincrease the involvement of parents and the engagement of families in the support of theeducation of their children. Include parental involvement in accountability reports,planning and regional training. AB 224.

x. Require the State Board of Education to adopt policies that encourage parental andfamily involvement. These policies would create a welcoming atmosphere andencourage collaboration between parents, families, communities and schools. SB 229.

II. Construction Defect.

a. Establish that, for workmanship that meets or exceeds applicable codes and ordinances,there is a rebuttable presumption that that workmanship is not a constructional defect.AB 401.

b. Reduce the statute of limitations for willfully or fraudulently concealed residentialconstruction defect claims to three years after discovery and reduce the statute of reposefor residential construction defect to six years after substantial completion. AB 401.

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III. SAGE Commission Recommendations and Government Efficiency Reforms.

This session, Democratic legislators are also addressing government efficiency and long-term savingsin a meaningful way. Of the SAGE Commission Recommendations which have not yet beenadopted, Assembly Democrats have bills to address 15 (including items 9, 10, 11, 13, 15, 17, 19, 29,41, 42, and 43), out of 26 total remaining recommendations for which legislative action is needed.The following provides details of provisions in bills currently alive in the legislative process:

a. Employee incentives for saving the state money. SB 286.

1. SB 286 gives state employees an incentive to come up with ways to save the statemoney and a formal vehicle for proposing these suggestions. The bill requiresreporting on the program so the Legislature may properly evaluate the savings.

b. Limit heart/lung, cancer and hepatitis liability for local governments for Medicare-eligible persons. SB 135.

1. SB 135 limits the benefits available for certain occupational diseases, includingheart and lung diseases, cancer and hepatitis for former police officers, firefightersand arson investigators who are Medicare-eligible.

c. STAR bonds. AB376.

1. AB 376 strengthens reporting requirements to ensure bonds are not misused,clarifies that existing businesses are not eligible to move into a TID just to get thetax break, prevents loss of revenue, and brings greater transparency to the processby allowing the Legislature to fully evaluate costs and benefits of the program.

d. Create a evada Sunset Commission. AB 474, SB 251.

1. AB 474 requires each board and commission to be reviewed at least once every 10years in order to streamline and consolidate functions and eliminate unneces aryor outdated boards and commis ion s. 1his bill requires the review of anyabatements and exemptions for the board or commission. It requiresboards/ commissions to submit a report, prior to review, of its functions,structure, oversight, etc., to make it easier for the Commission to pickboards/ commissions which need reviewing first, and requires public hearings.The review is conducted by a subcommittee of the Legislative Commission.

e. Create a Nevada Grants Manager Office. SB 233, AB 243.

1. SB 233 creates a grants manager position to oversee, coordinate, and streamlinegrants at the state and local level. All grants applications and receipts would flowthrough the office, preventing duplication of efforts and ensuring all availablegrants are applied for. The office also encourages and helps businesses apply forfederal grant funding for projects in evada.

f. Performance-based budgeting and funding priorities based on revenue. AB 248.

1. B 248 establishes performance-based budgeting for the state, which willpromote transparency, accountability, and save the state money. This forcesgovernment to set priorities, then determine funding, and promotes budgetingtoward outcomes. Budgets must layout long-term term goals and explain howthe short-term budget and goals match long-term strategic goals, explain each steplaid out in the budget and how that step moves toward short- and long-term goals,

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and explain how goals will be measured. Performance indicators must be postedonline and detailed for Legislature to properly measure progress and costs andbenefits. If changes are made, they must be accompanied by an explanation ofwhy the goal or measurement indicator wasn't valid, and how the new measurewill be more accurate or effective.

g. Require non-profits that receive state funds to report prospectively and retrospectivelyon how, and for what, the state funding will be used. AB 242.

1. AB 242 requires non-profits to report to the Legislative Council Bureau on howthey used state funds and to post this information on their website. on-profitsmust also post information regarding their board, other sources of income, andannual report, increasing transparency and accountability and helping the stateanalyze costs and benefits.

h. Inventory state buildings and centralize leasing. AB 404.

1. AB 404 centralizes leasing and purchase of buildings and lands under the authorityof the Division of Buildings and Grounds, requires the posting of this informationon the internet, prevents duplication of efforts, cuts down on administrative costs,allows for more efficient use of current buildings and lands, and allows for easieroversight by the Legislature of current inventory.

1. Implement a 4-day work week. AB 479.

J. Reform PEBP. AB 80, AB 560, SB 104.

k. Study the public works process. AB 144, AB 240, SB 192, AB 152.

1. Reform bidder's preference. AB 144. AB 144 gives preference to firms bidding onpublic works projects that employ Nevada workers and buy materials from evadafirms.

m. Reform design-build contracts, encouraging private industry. SB 83, SB 193. These billsstrengthen the design-build process, clearly stating that private companies will be usedwhenever possible.

n. Change IFC work-program thresholds. AB 243.

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ADDENDUM: PERS HISTORY.

The following list summarizes the changes made to PERS in the 2009 session.

• Reduced the monthly retirement allowance for each member whose effective date ofmembership is on or after January 1, 2010, reducing the multiplier of the member's averagecompensation by 2.5 percent for every year of service.

• Monthly retirement allowance was calculated by multiplying a member's averagecompensation, over the member's 36 consecutive months of highest compensation, by 2.5percent for every year of service earned before July 1,2001, and 2.67 percent for every year ofservice earned thereafter.

• Increased the amount of reductions for members who have an effective date of membershipon or after January 1, 2010, to 6 percent of the unmodified benefit for each full year, and anadditional 0.5 percent for each additional month that the member is under the appropriateretirement age.

• The retirement benefit was required to be reduced by 4 percent of the unmodified benefitfor each full year, and an additional 0.33 percent for each additional month in which the memberwas under the appropriate retirement age.

• Reduced the postretirement increases for retirees who become members of the System on orafter January 1, 2010.

• Reduced the benefits caps to 4 percent at the 12th anniversary and each year thereafter.Previously, it would increase again to 5 percent at the 14th anniversary.

• Increased from 60 to 62 the age at which a member whose effective date of membership ison or after January 1, 2010, is eligible to retire with at least 10 years of service.

• Increased the age at which a member is eligible to retire. States that an employee whobecomes a member on or after January 1, 2010, is eligible to retire at 65 if he has at least 5 yearsof service, at 60 if he has at least 10 years of service and at 50 if he has 20 years of service,eliminating the ability of future police officers and firefighters to retire after 25 years of serviceregardless of age.

• Changed law to allow PERS to retain the contribution rate when it exceeds the actuariallydetermined rate by less than 2 percent to reduce the unfunded liability of the system.

• Mandated that any new, extended or modified collective bargaining agreement must beapproved by the governing body of the local government employer at a public hearing.

• Also required the chief executive officer of the local government to provide a reporton the fiscal impact of the agreement that included the cost of benefits.

• Limited a member whose effective date of membership is on or after January 1,2010, to 10percent per year the amount of an increase in compensation that can be considered whendetermining a retirement allowance (to prevent spiking of rates)

• As calculated over a 5 year period that commences 2 years immediately preceding the3 years of highest compensation.

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• Entitled an employee whose retirement allowances are limited by this provision to arefund for a portion of his or her contributions to the system.

• Limited the type of callback pay that may be considered compensation (for purposes ofdetermining future benefits) for employees who become members of the system on or afterJanuary 1,2010.

• Required the PERS Board to post on its website any document that a public employer isrequired to submit to the system that relates to the contribution mechanism used by thepublic employer.

• Mandated that the term of the members of the Police and Firefighters' Retirement FundAdvisory Committee must be limited to 4 years and authorizes removal of the members onlyfor cause.

• Mandated that a public employer that reports ineligible wages must be responsible to theemployee for any resulting impact to the employee's benefit.

• Added a requirement that before a PERS dispute can be submitted to a fact finder, theparties must have failed to reach an agreement after at least six meetings.

• Made changes that require a fact finder or arbitrator to consider funding for the current yearbeing negotiated, the ability to pay over the life of the contract, as well as the compensationof similar employees in other states when determining the financial ability of a localgovernment employer to grant monetary benefits and to include PERS benefits andcontributions in that consideration.

• Made changes that require local government employers subject to collective bargaining tohold an open public meeting within 45 days after a receiving decision from a fact finder orarbitrator to discuss the agreement.

• The meeting must include a discussion of the issues, the statement of the fact finderor arbitrator and the overall fiscal impact of the decision, including the cost ofbenefits.

• Changed PERS retirement for judges and benefits for judges who are reemployed afterretirement.

• Allowed a retired judge to qualify to receive allowances under the Judicial Retirement Planfor the duration of his or her active service if he or she is at least 60 and is re-hired at least 6months after retirement.

• Provided that a retired judge who is reemployed and commissioned as a senior judge isentitled to receive a retirement allowance in addition to compensation for his or her serviceand is entitled to receive additional service credit for actual time served if he or she isreenrolled in a retirement plan.

• Extended the exception for retirees receiving benefits while working in areas of critical laborshortages - a retired public employee who accepts employment or an independent contractwith a public employer under the Public Employees' Retirement System is disqualified fromreceiving allowances under the system for the duration of that employment or contract.

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• Required public employers that participate in the PERS to select a liaison officer to certifyrecords and coordinate certain matters between the System and members or publicemployers (was previously optional).

• Clarified that the penalty against a public employer for failing to file payroll reports or remitpublic employer contributions in a timely manner be based on the most recent payrollreport.

• If a justice of the peace or municipal judge is a member of PERS and wants to switch to theJudicial Retirement Plan, he must submit written notice by March 31st on the year after hiselection, or within 90 days of his appointment.

• Exempted volunteers of a fire department so that a retired public employee may volunteerwith a fire department while continuing to receive retirement benefits from the System.

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