0001 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 BINGO ADVISORY COMMITTEE 4 (TEXAS LOTTERY COMMISSION) 5 AUSTIN, TEXAS 6 QUARTERLY MEETING OF THE ? BINGO ADVISORY COMMITTEE ? 7 WEDNESDAY, FEBRUARY 10, 2010 ? 8 9 COMMITTEE MEETING 10 WEDNESDAY, FEBRUARY 10, 2010 11 12 BE IT REMEMBERED THAT on Wednesday, the 13 10th day of February 2010, the Bingo Advisory 14 Committee meeting was held from 10:00 a.m. to 12:32 15 p.m., at the Offices of the Texas Lottery Commission, 16 611 East 6th Street, Austin, Texas 78701, before 17 KIMBERLY ROGERS, Chair. The following proceedings 18 were reported via machine shorthand by Aloma J. 19 Kennedy, a Certified Shorthand Reporter of the State 20 of Texas, and the following proceedings were had: 21 22 23 24 25 0002 1 APPEARANCES 2 BINGO ADVISORY COMMITTEE: 3 Ms. Kimberly Rogers, Chair 4 Mr. Earl Silver, Vice Chair Mr. Emile S. Bourgoyne 5 Mr. Francis M. Ciancarelli Ms. Pat Gifford 6 Ms. Markey Weaver Mr. Thomas "Tom" Weekley 7 Mr. Joe Williams Ms. Melissa Young 8 CHARITABLE BINGO OPERATIONS DIVISION DIRECTOR: 9 Mr. Philip Sanderson 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0003 1 TABLE OF CONTENTS 2 PAGE 3 AGENDA ITEM NO. 1 - The Bingo Advisory Committee will call the meeting to order.......... 6 4 AGENDA ITEM NO. 2 - Consideration of 5 and possible discussion and/or action on the minutes of the August 5, 2009 Bingo 6 Advisory Committee meeting........................ 6 7 AGENDA ITEM NO. 3 - Recognition of new Bingo Advisory Committee members and 8 outgoing Bingo Advisory Committee members......... 7 9 AGENDA ITEM NO. 4 - Report, possible discussion and/or action on the 10 appointment of presiding officers................. 11 11 AGENDA ITEM NO. 5 - Report, possible discussion and/or action on ethics, 12 administrative procedure, and open government laws pertaining to the 13 Bingo Advisory Committee.......................... 12 14 AGENDA ITEM NO. 6 - Report, possible discussion and/or action on calendar 15 year 3rd quarter conductor information............ 15 16 AGENDA ITEM NO. 7 - Report, possible discussion and/or action on nominations 17 for Bingo Advisory Committee positions, including the formation of a Nominations 18 Committee........................................ 19 19 AGENDA ITEM NO. 8 - Report and possible discussion on new products that may help 20 licensed authorized organizations................. 31 21 AGENDA ITEM NO. 9 - Report and possible discussion and/or action on the status 22 of various workgroups including: Bingo Quarterly Reports, Market Conduct, Prize 23 Board Management, Licensing Group #1, Licensing Group #2, and Books and 24 Records Requirements.............................. 31 25 0004 1 TABLE OF CONTENTS (continued) 2 PAGE 3 AGENDA ITEM NO. 10 - Report, possible discussion and/or action on the 2009 Bingo 4 Advisory Committee Annual Report, including the formation of a subcommittee......... 42 5 AGENDA ITEM NO. 11 - Report, possible 6 discussion and/or action on draft amendments to 16 TAC ?402.100 Definitions........ 45 7 AGENDA ITEM NO. 12 - Report, possible 8 discussion and/or action on draft amendments to 16 TAC ?402.501 Charitable 9 Use of Net Proceeds.............................. 49 10 AGENDA ITEM NO. 13 - Report, possible discussion and/or action on draft 11 amendments to 16 TAC ?402.502 Charitable Use of Net Proceeds Recordkeeping................ 51 12 AGENDA ITEM NO. 14 - Report, possible 13 discussion and/or action on draft amendments to 16 TAC ?402.503 Bingo 14 Gift Certificate................................. 62 15 AGENDA ITEM NO. 15 - Report, possible discussion and/or action on draft 16 amendments to 16 TAC ?402.506 Disbursement Records Requirement................. 75 17 AGENDA ITEM NO. 16 - Report, possible 18 discussion and/or action on draft amendments to 16 TAC ?402.600 Bingo Reports...... 79 19 AGENDA ITEM NO. 17 - Report, possible 20 discussion and/or action on draft amendments to 16 TAC ?402.514 Electronic 21 Funds Transfer Recordkeeping...................... 83 22 AGENDA ITEM NO. 18 - Report, possible discussion and/or action on draft 23 amendments to 16 TAC ?402.450 Requests for Waiver........................................ 90 24 25 0005 1 TABLE OF CONTENTS (continued) 2 PAGE 3 AGENDA ITEM NO. 19 - Report, possible discussion and/or action on draft 4 amendments to 16 TAC ?402.451 Operating Capital........................................... 104 5 AGENDA ITEM NO. 20 - Report, possible 6 discussion and/or action on draft amendments to 16 TAC ?402.452 Net Proceeds........ 105 7 AGENDA ITEM NO. 21 - Report, possible 8 discussion and/or action on draft amendments to 16 TAC ?402.453 Request 9 for Operating Capital Increase.................... 110 10 AGENDA ITEM NO. 22 - Public comment............... 112 11 AGENDA ITEM NO. 23 - Consideration of and possible action on future Bingo Advisory 12 Committee meeting dates and/or items to be considered for future meetings................. 112 13 AGENDA ITEM NO. 24 - Adjournment.................. 121 14 REPORTER'S CERTIFICATE............................ 122 15 16 17 18 19 20 21 22 23 24 25 0006 1 P R O C E E D I N G S 2 WEDNESDAY, FEBRUARY 10, 2010 3 (10:00 a.m.) 4 AGENDA ITEM NO. 1 5 MS. ROGERS: Good morning, ladies and 6 gentlemen. It is now 10 o'clock. We will call this 7 meeting to order. We have a quorum. 8 AGENDA ITEM NO. 2 9 MS. ROGERS: I would like to read Item 10 No. 2, consideration of and possible discussion and/or 11 action on the minutes of the August 5, 2009 Bingo 12 Advisory Committee meeting. 13 The minutes are posted on-line. You 14 were given a brief summary in your book. When the 15 motion is made, you will be making it to approve 16 minutes that are on-line, not the summary that's in 17 your book. 18 So do I have a motion to approve those 19 minutes? 20 MS. WEAVER: I make that motion. 21 MR. WEEKLEY: I'll second. 22 MS. ROGERS: Motion made by Markey 23 Weaver and seconded by Tom Weekly. Thank you. 24 Third, recognition of new -- oh, I'm 25 sorry. A vote. All those in favor? 0007 1 FROM THE COMMITTEE: Aye. 2 MS. ROGERS: Unanimously passed. Okay. 3 AGENDA ITEM NO. 3 4 MS. ROGERS: Third, recognition of new 5 Bingo Advisory Committee members and outgoing Bingo 6 Advisory Committee members. 7 We are missing three faces up here, and 8 that would be Ms. Suzanne Taylor, Larry Whittington 9 and Knowles Cornwell. I would just personally like to 10 take a moment to stay these three individuals did an 11 awesome job on the time that they served on this 12 board. 13 Ms. Taylor, we thank her so much for 14 event tabs and everything else, the countless hours 15 she put into it. 16 Mr. Whittington -- Larry, as everyone 17 knows him -- for always giving his opinion. No matter 18 who wanted to hear it, he was always there with it; 19 and Knowles for all the figures and time that you 20 gave. Thank y'all very much. 21 Would anyone else like to say something 22 about the three members that are no longer on the 23 board? 24 MR. SANDERSON: I would like to add one 25 thing, or actually a couple about each one. 0008 1 Suzanne Taylor has served on the Bingo 2 Advisory Committee since 1995. She was on the second 3 committee that was ever formed, in March of '95, and I 4 believe she was the chair since 2002. So for the last 5 seven to eight years, she was the chair of the BAC. 6 She had a lot of input and interest, and I don't think 7 she very seldom ever missed a meeting and/or a 8 Commission meeting, at least not in the time that she 9 was chair of the BAC. 10 Larry Whittington has served on the BAC 11 since 2002. And as Kimberly said, he always had his 12 input 13 And then Knowles Cornwell was on the BAC 14 for three years, starting in 2006. 15 So I, too, would like to thank those 16 individuals. All three of them were part of the 17 board, the committee when it turned around and became 18 a more productive committee, and I attribute that to 19 Suzanne's leadership as well as Knowles and Larry. So 20 that's all I have to say. 21 MS. ROGERS: Thank you. That's very 22 true. 23 Anyone else? 24 MS. WEAVER: I would like to say 25 something. Suzanne Taylor was the BAC to me. She was 0009 1 the reason that I really wanted to serve on the BAC. 2 I don't think anybody gave any more heart and soul to 3 bingo than she did, and she's going to be missed. I 4 don't know anybody that's going to give that kind of 5 time. We all have our own halls to run or our own 6 charities to operate or businesses and families, and 7 she gave all the time. 8 Larry was a character, and he will be 9 missed. 10 And I'm sitting in Knowles' seat, and 11 I'm very much going to miss Knowles. Knowles and 12 Darin both had great input and were very important. 13 And he also kicked me when I wasn't supposed to talk 14 or I would talk too much. So I'm going to miss 15 Knowles a lot. 16 MS. ROGERS: I agree with you, Markey, 17 very much. 18 MR. WEEKLEY: I concur with what's been 19 said of all three. They were excellent members. 20 MS. ROGERS: Anyone else? 21 MR. SILVER: I would like to thank all 22 three of them for serving on the BAC because, I mean, 23 they inspired me to join the BAC and try to make my 24 halls better. And all three of them helped bingo in 25 Texas and helped to resurrect with the event tabs in 0010 1 Texas. 2 MS. ROGERS: I agree; I agree. 3 And with that said, those were three 4 people that we will miss very much. We now have new 5 members. We have Mr. Joe Williams from Abilene. 6 Would you like to say a little something 7 and tell us a little bit about yourself? 8 MR. WILLIAMS: Well, just honored to be 9 here and to serve the State of Texas. 10 MS. ROGERS: Thank you. 11 Melissa Young from Houston. 12 MS. YOUNG: I'm glad to be here. I am 13 the charity representative for Texas New Community out 14 of the Conroe area, and I also serve as the Executive 15 Director of Texas Charity Advocates. So I'm glad to 16 be here. Thank you. 17 MS. ROGERS: Wonderful. 18 And Mr. Emile Bourgoyne from Melville, 19 Louisiana. 20 MR. BOURGOYNE: Thank you. And I would 21 like to say it sounds like we've got some pretty big 22 shoes to fill. But if nothing else, I think I can 23 fill the character spot, so we'll just see how that 24 goes. But I'm very glad to be here. I represent the 25 manufactures and distributors on the BAC, and again 0011 1 happy to be here to serve. 2 MS. ROGERS: Wonderful. Thank you all. 3 Welcome. And it will be interesting to see, since 4 Larry was a character. 5 AGENDA ITEM NO. 4 6 MS. ROGERS: No. 4 is report, possible 7 discussion and/or action on the appointment of 8 presiding officers. 9 At this time, is there a nomination for 10 or a vote for a chair? 11 MS. WEAVER: I would like to make a 12 nomination that our vice chair, Kimberly Rogers, serve 13 as our chair. 14 MS. ROGERS: Second? 15 MR. SILVER: Second. 16 MS. ROGERS: Take a vote? 17 MR. SANDERSON: Take a vote. 18 MS. ROGERS: Take a vote, please. All 19 those in favor? 20 FROM THE COMMITTEE: Aye. 21 MS. ROGERS: Pass it. I, Kimberly 22 Rogers, shall become chair and hopefully get smoother 23 at running this. 24 MR. SANDERSON: Now you can appoint a 25 vice chair. 0012 1 MS. ROGERS: Okay. At this time I will 2 appoint Earl Silver as vice chair. 3 MR. SANDERSON: You caught him like a 4 deer with his headlights in the -- like a deer with 5 headlights in his eyes or whatever. 6 MR. SILVER: I wasn't paying attention. 7 (Laughter) 8 MR. SILVER: I was reading. 9 AGENDA ITEM NO. 5 10 MS. ROGERS: Okay. No. 5, report, 11 possible discussion and/or action on ethics, 12 administrative procedure and open government laws 13 pertaining to the Bingo Advisory Committee. 14 And we have Sandy Joseph to present that 15 to us. 16 MS. JOSEPH: Good morning. For the 17 record, my name is Sandra Joseph. I'm Special Counsel 18 for the Lottery Commission. 19 I want to take a few minutes to draw 20 your attention to in particular the Open Meetings Act, 21 particularly for our new members and to review for the 22 older ones. 23 The Bingo Advisory Committee is subject 24 to the Open Meetings Act. It is made subject to that 25 act by Commission rule. The Bingo Advisory Committee 0013 1 rule does say that you will operate pursuant to the 2 Open Meetings Act. 3 In your notebooks under Tab 5, there is 4 a copy of the Open Meetings Act. Much of it does not 5 apply; however, some of it does. And I would just 6 like to point a few things out to you. 7 If you look on numbered Page 2 of 41, a 8 meeting is defined there under No. (K)(4). And a 9 meeting is a deliberation of a quorum of the members. 10 A quorum is defined on down at the bottom of the page 11 as being a majority of a governmental body. 12 So if a majority of you meet together at 13 any time, you're technically having an open meeting, 14 and there are requirements that go with having an open 15 meeting. First of all, "open" means the public is 16 entitled to be there. And the statute requires that 17 we provide notice to the public of when a meeting is 18 going to occur. 19 The Secretary of State's office 20 publishes notice of meetings on their website. All 21 agencies do this and other entities. So if you're 22 ever wanting to check on what's being scheduled as far 23 as state government, you can look at the Secretary of 24 State website. And in particular, your meetings will 25 always be posted there, and those are required to be 0014 1 posted at least seven days before the meeting. 2 Notice of the meeting as well as the 3 agenda is posted. And your meetings are limited to 4 what has been posted for discussion, so you'll need to 5 follow your agenda. The only exception to that is if 6 a topic comes up that is not on the agenda, it may be 7 discussed to the extent of deciding to include it on a 8 future agenda. So we are bound by the agenda 9 somewhat. 10 Also I want to point out that your 11 meetings must be recorded, either by minutes or by 12 tape. Those minutes are subject to the Open Records 13 Act. That's another statute that provides information 14 maintained by the government is public. 15 If an entity takes action outside the 16 requirements of the Open Meetings Act, that action may 17 be voided or voidable. It may be voidable. So that 18 gives you a general idea of what you do here is 19 available to the public, and you represent a portion 20 of the public that's particularly concerned with 21 bingo. And others, as you can see, are welcome to be 22 here and are here. So keep that in mind. 23 I've also passed out to each of you this 24 morning, put at your place a Guide to Ethics Laws for 25 State Officers and Employees. This is published by 0015 1 the Texas Ethics Commission. You are not subject to 2 this directly; however, we wanted to give it to you to 3 give you some frame of reference for the standard of 4 ethics that state employees must adhere to and which 5 we think will be terrific guidance for you. 6 If you have any questions about the Open 7 Meetings Act or about ethics, I'll be happy to discuss 8 those with you at any time. 9 Does anybody have any questions right 10 now? 11 All right. Thank you 12 MS. ROGERS: Thank you. 13 One thing also I would like to say -- I 14 think it kind of falls under this -- is for our new 15 members, when we're speaking about something, always 16 try and remember not to talk over each other, because 17 it's very difficult for our court reporter to 18 understand what we're saying. Sometimes we feel a 19 little passionate about items. Thank you. 20 Any public comment on this item? 21 No? 22 AGENDA ITEM NO. 6 23 MS. ROGERS: At this time, then, we will 24 move to Item No. 6, report, possible discussion and/or 25 action on Calendar Year third quarter conductor 0016 1 information. 2 Mr. Bruce Miner. 3 MR. MINER: Good morning, old members 4 and new, Chairman Rogers. For the record, my name is 5 Bruce Miner. I'm the Manager of the Taxpayer Services 6 Department of the Bingo Division. I'm here to present 7 to you the information for the first three quarters of 8 2009, as reported by our licensed charities. Even 9 though the fourth quarter data has been entered, it 10 hasn't been finalized, so we'll cover the first three 11 quarters. 12 The first slide, I would like to point 13 out that the receipts for the third quarter only are 14 slightly down from the same quarter last year. 15 However, the gross receipts tax for the three quarters 16 of 2009 are approximately 2.2 percent greater than for 17 the same period of 2008 and 5.8 percent greater than 18 for the first three quarters of 2006. And so bingo 19 sales increased from $192.5 million in the first three 20 quarters of 2006, to $245.2 million for the first 21 three quarters of 2009. 22 Regular card sales continue to decline, 23 from $190.6 million for the three quarters of '06, to 24 $161.6 million for the same period in 2009. 25 Electronic sales increased slightly, from 0017 1 $115.5 million for the three quarter of '06, as 2 compared to $120.9 million for the same period of 3 2009. 4 This slide shows the prize payout 5 percentage for regular bingo and instant bingo for the 6 past four years. The prize payout percentages for 7 regular bingo have leveled off, as compared to last 8 year; however, it's still higher than prior years. 9 Instant bingo prize payouts have shown a gradual 10 decline over the past four years. 11 This slide captures the trend of net 12 receipts, which are gross receipts minus prizes. 13 Total net receipts for the first three quarters of 14 2009 increased 3.1 percent over the same period of 15 2008 and increased 6.1 percent over the first three 16 quarters of 2006. 17 This bar chart compares each of the 18 major categories of expenses, along with the 19 charitable distributions, which are the columns to the 20 far right of this slide, and shows the amount of the 21 disbursements for the first three quarters of each 22 year since 2006. The highest disbursement categories 23 continue to be salaries and rent payments. 24 This slide shows the average attendance 25 per occasion as well as the average spend per player 0018 1 shown over the past four years. And it shows that the 2 average attendance has gradually increased since 2007, 3 still down from 2006. However, there has been a 4 16.3 percent increase in the average spend rate per 5 player since 2006. 6 And this chart reflects the net revenue, 7 reported distributions and the required distributions 8 for the first three quarters of each of the past four 9 years. And the slide indicates the net revenue for 10 the period used to determine the actual and required 11 distributions. Net revenue for the fourth quarter of 12 2008 and first and second quarters of 2009 is slightly 13 down from the past reporting periods last year and 14 slightly greater than the same reporting periods for 15 2006. 16 Reported charitable distributions have 17 increased 11.2 percent since 2006. And the reported 18 charitable distributions for the first three quarters 19 of 2009 are the highest since the first three quarters 20 of 2000. The actual reported charitable distributions 21 shown by the blue line continue to run around three 22 times the amount of the required distribution shown 23 here by the red line. 24 In your notebook is additional 25 information from an analysis performed by Arlette 0019 1 Taylor, our Operational Planning and Performance 2 Coordinator. And that concludes my report for this 3 agenda item. And I'll be glad to try to answer any 4 questions you might have. 5 MS. ROGERS: I don't have any questions, 6 but I would like to say I am happy to see the 7 distributions are up for our charities. 8 MR. MINER: The trend has been such. 9 And, you know, the actual distributions run higher, 10 which was based on the 35 percent distributions -- 11 MS. ROGERS: Right. 12 MR. MINER: -- which, of course, change 13 with the change in the House bill. This probably 14 won't be shown again in the future. 15 MS. ROGERS: Okay. Thank you. 16 Any questions from the members? 17 Any public comment? 18 Okay. Thank you. 19 AGENDA ITEM NO. 7 20 MS. ROGERS: We will move to Item No. 7, 21 report, possible discussion and/or action on Bingo 22 Advisory Committee positions, including the formation 23 of a nomination committee. This has chair, which 24 would be me. If you turn -- we do have three 25 positions that will be coming up in August. So I am 0020 1 just taking a guess at this time that we would maybe 2 want to form a committee to go through the nomination 3 forms. 4 MR. SANDERSON: The three individuals 5 whose term expires at the end of August of this year 6 are Pat Gifford, general public; Kimberly Rogers, 7 charity lessor; and Earl Silver, commercial lessor. 8 Nominations period begins on March the 9 1st and goes through April the 30th. Once we receive 10 the nominations, we will forward those to a 11 subcommittee, if you decide to appoint a subcommittee 12 to review the nominations, as well as we'll review the 13 nominations and then we'll hopefully get back together 14 at the May or early June meeting with the BAC and 15 discuss the subcommittee's report. And we'll have a 16 recommendation to the make to the Commission sometime 17 in July for appointment to those three positions. 18 MS. ROGERS: Okay. 19 MR. SILVER: Could I make a comment on 20 that, Phil? 21 MR. SANDERSON: Yes. 22 MR. SILVER: I know with all the turmoil 23 that we've had since August, we haven't had a meeting 24 since then. But I just wanted to make an observation 25 on that. I have been on the nomination committee for 0021 1 the past three years, and I think I was chair for two, 2 maybe the last one and the one before that and maybe 3 the one before that. I'm not sure. Kim could have 4 been. 5 MS. ROGERS: Yes, I was. 6 MR. SILVER: Good. Well, I just did a 7 little research. And on the Texas Administrative 8 Code, Title 16, Part 9, Chapter 402.102, which is the 9 rule of the Bingo Advisory Committee -- if you could 10 just bear with me for a minute, I'll get to a point. 11 The purpose of the Bingo Advisory 12 Committee, BAC, the purpose of the BAC (a) is to 13 advise the commission on the needs and problems of the 14 state's bingo industry, (b) report the activities of 15 the BAC to the Commission, and (c) perform other 16 duties as directed by the Commission. 17 No. 2, the BAC's sole duty is to advise 18 the Commission. 19 Three, the BAC has no executive or 20 administrative powers or duties with respect to this 21 operation. 22 I did some research on some meetings 23 we've had. From the transcripts of Wednesday, May 2, 24 2007, I would just like to read just a little bit of 25 it, just a quick snippet of it. 0022 1 "MR. SANDERSON: The nomination process 2 is going to change a little bit to where once we 3 receive the nominations, we'll review the applicant, 4 make sure they're eligible and they qualify for that 5 position. We'll also send a copy of the nominations 6 to each individual Commissioner for their review. 7 We'll go through this and we'll rank the nominations, 8 with the advice and consultation of the Executive 9 Director of the lottery, if appropriate. We'll submit 10 to the Bingo Advisory Committee our staff 11 recommendations. You will also have -- your 12 nomination committee will have the copies of the 13 nomination forms which they can conduct their own 14 interviews and contacts. 15 "Like I said, we'll present our 16 recommendations. Y'all can discuss your 17 recommendations. And then at the following Commission 18 meeting after that point, when the Commissioners 19 appoint an individual, we'll have both the discussion 20 from staff and from the Bingo Advisory Committee. And 21 the Bingo Advisory Committee will be used more as a 22 resource than the nominee process." 23 And there was some other conversation, 24 but it goes back down to: 25 "MS. ROGERS: I would just like to say 0023 1 one thing in reference, because I was the Chair on the 2 nomination committee. And after reading this, Phil, I 3 mean, I like this. I think this would be a 4 great process in here as far as my opinion goes. 5 "As long as -- and I've always said as 6 long as we don't lose interviewing the individuals. 7 And individuals like ourselves who are in the everyday 8 working bingo world, interview these {people} to make 9 sure that we get the best possible people out there 10 because, like I said, I think we've gone a pretty good 11 job. I think we have a great BAC." 12 And then Mr. Sanderson goes: 13 "And I can't speak for the 14 Commissioners, but I believe that's what -- one of 15 their, you know, goals is that the BAC be used as a 16 resource..." 17 And I just thought that was interesting, 18 because my concern is with the nomination committee, 19 that what you said was what's in here and you are very 20 consistent at what you say. I'm just concerned that 21 it's not as consistent somewhere else down the line, 22 because the last process, when I was the chair, this 23 process was eliminated, because when the BAC took 24 their time and their effort to interview the three 25 nominations at the time, then 20 more rolled in -- or, 0024 1 actually, 17 more rolled in and then three more rolled 2 into that, that Kim, Pat and myself took the time and 3 effort to call them, interview them, rank them, 4 discuss it amongst ourselves, prepare a report. I 5 mean, that's a lot of time that we put into it. 6 Now, granted, the people on here were in 7 our report. However, the nomination committee did not 8 have any input in the process. We are bingo. We're 9 not doctors, we're not lawyers, we're not attorneys, 10 we're not lobbyists. We are charities, we are 11 lessors, we are manufacturers and distributers. Our 12 livelihood comes from bingo. We know bingo and we 13 know how these rules and these conglomeration of rules 14 can affect us. 15 So I would just like -- I don't know 16 what's different between the first two nomination 17 committees I was on and this last one. I mean, there 18 could be some differences. However, I just want to 19 make sure that the nomination committee, if one is 20 formed, have an input on who is eligible and who can 21 be on the BAC, as well as the staff, because the staff 22 and the BAC are normally right on target. 23 And I just wanted to express my concern 24 with that process and the fault of that process, that 25 it just fell through the cracks this time with the 0025 1 BAC. And the BAC should be a resource because, like I 2 said, we are bingo. 3 MS. ROGERS: And I agree completely with 4 what Mr. Silver said. We are out there every day. 5 And I said it before, as Earl read, we are out there 6 every day, and we speak to these people. We know this 7 process. And my personal opinion is, this process is 8 to keep people on this board that are in it for the 9 State of Texas, are not in it for their hall, they're 10 not in it for personal gains. 11 And when you have someone picking these 12 individuals who does not eat, live and breathe bingo, 13 sometimes we're just maybe a little bit nervous that 14 that's what will happen. And so I think that's what 15 we're trying to express, that if we do form a 16 committee, which that's fine, because I firmly believe 17 you need to call each and every person, you need to 18 talk to them. You knew to ask those questions, and 19 that process needs to be followed. But we also would 20 like to have the voice heard when we take out of our 21 busy time to do it. 22 MS. WEAVER: I would like to say 23 something. Out of all three nominations or 24 recommendations that that committee made, not one of 25 them was appointed to the BAC. I'm not saying that 0026 1 the three that were appointed will not do a good job. 2 It's just that it's very unusual, and I don't think 3 it's ever happened that none of the recommendations 4 were taken, not from the notes that we went back and 5 looked. 6 MR. SANDERSON: Well, I guess one of the 7 things I would like to add, I believe the process last 8 year was different and there were some extenuating 9 circumstances, I believe, that drove those 10 differences. 11 I don't plan to deviate from the past 12 processes that we've had. I mean, there is no plan 13 for that. Like I said, I think last year was just a 14 very unique situation that occurred that, you know, 15 the Commissioners expressed more interest in the 16 nomination process than in the past, not to say that 17 they won't this year. 18 But, you know, I do think that, you 19 know, what we've done in the past, excluding last 20 year, is the route that has seemed to work well. So 21 there's no plans that I have to deviate from that 22 process. 23 MS. ROGERS: And I agree with Phil. I 24 think the process has worked very well. I hope that 25 you will be our voice to let the Commissioners know 0027 1 how we feel about we need to make sure these people 2 are interviewed. And once again, not that our three 3 new members will not do a great job on this board, and 4 we welcome you all with ardor. But just to make sure 5 our process stays, you know, to protect the board so 6 we don't go back to a board who does not help with 7 bingo. 8 MR. CIANCARELLI: Madam Chair? 9 MS. ROGERS: Yes? 10 MR. CIANCARELLI: My recollection is -- 11 And sometime it's limited -- but it seems at that last 12 meeting, there were no other nominations other than 13 the people whose term was expiring. 14 MS. ROGERS: You are correct. As Earl 15 said, there were three nominations, but then we had a 16 flood of 20 and then I believe a couple more. 17 MR. SILVER: It was 17, then three. 18 MS. ROGERS: And then three more. 19 MR. SILVER: For a total of 23, which is 20 excellent, because people want to get involved, but it 21 takes time to talk to every individual. 22 MS. ROGERS: As Phil said, there were 23 some extenuating circumstances. I don't know if the 24 time was opened up for an extended length, but you are 25 correct. At our last meeting, there were only three 0028 1 nominations. 2 So because we do believe in the process, 3 I would like to form a nomination committee. And how 4 many members? Would it be three? 5 MR. SANDERSON: You can have up to four. 6 MS. ROGERS: Up to four. I would like 7 the chair to be Earl. 8 MR. SILVER: No, I can't. 9 MS. ROGERS: Okay. Markey -- 10 MS. WEAVER: I would like to chair it. 11 MS. ROGERS: -- would you like to be 12 chair? 13 MS. WEAVER: Yes, very much so. 14 MS. ROGERS: Okay. You may at this 15 time -- would you want to pick your members? 16 MS. WEAVER: Yes. Melissa Young, Joe -- 17 MR. WILLIAMS: Williams. 18 MS. WEAVER: -- Williams. Okay. And 19 Pat is going out. 20 Tom, would you like to? 21 MR. WEEKLEY: Yes, that would be fine. 22 MS. ROGERS: Okay. 23 MS. WEAVER: And may I pick someone from 24 the public? 25 MS. ROGERS: Yes, sir? 0029 1 MS. WEAVER: Would that be okay? 2 MS. ROGERS: Yes. 3 MS. WEAVER: Mr. Bresnen or 4 Mr. Fenoglio, would either one of y'all like to help? 5 MR. BRESNEN: What time frame are we 6 talking about? 7 MS. WEAVER: We have -- the April 1st -- 8 I'm sorry -- March 1st through April 30th are when our 9 nominations will come in, so we'll probably do May 10 1st. 11 MR. BRESNEN: I would be happy to help 12 during that time frame. 13 MS. WEAVER: Okay. 14 MS. ROGERS: Okay. So we have a 15 nominations committee made up to be chaired by Markey 16 Weaver. Melissa Young will be on there, Joe Williams, 17 Steve Bresnen. 18 Is that correct? Is that everyone? 19 MS. WEAVER: Tom. 20 MS. ROGERS: And Tom -- I'm sorry -- and 21 Tom Weekley. 22 MR. WEEKLEY: Joe Bresnen? 23 MS. ROGERS: And Steve Bresnen as the 24 general public. And your time will go from March 1st 25 to April 30th, is when the nomination forms will be 0030 1 submitted to the Lottery Commission. They will be 2 forwarded on to you. Markey, I will forward to you 3 the questions that have been the questions that we 4 have gone over with the applicants. 5 MS. WEAVER: Okay. Thank you very much. 6 MS. ROGERS: Yes, ma'am. 7 MR. SILVER: Do you have that 8 electronically? 9 MS. ROGERS: I have it on disk. 10 MR. SILVER: Okay. 11 MS. ROGERS: Next -- 12 MR. HEINLEIN: Kim? 13 MS. ROGERS: I'm sorry. Is there any 14 further comment? 15 MR. HEINLEIN: Yes. David Heinlein, 16 represent charities. 17 I have a question probably for Phil. Is 18 there any reason why the three that their terms expire 19 in August could not be rechosen for the committee? 20 MR. SANDERSON: Not that I'm aware of, 21 no. 22 MR. HEINLEIN: So would they then still 23 be able to be considered? 24 MR. SANDERSON: Yes. 25 MR. HEINLEIN: Okay. So we could 0031 1 nominate them as well? 2 MR. SANDERSON: Yes. 3 MR. WEEKLEY: That's a good thought. 4 MS. ROGERS: Any other public comment? 5 At this time we would like to welcome 6 Commissioner Schenck for joining our meeting. Thank 7 you, sir, for taking out of your time. 8 COMMISSIONER SCHENCK: Well, of course. 9 Thank you. It's a pleasure to be here with you. 10 MS. ROGERS: Thank you. 11 AGENDA ITEM NO. 8 12 MS. ROGERS: Moving on, Item No. 8, 13 report and possible discussion on new products that 14 may help charities. 15 Mr. Earl Silver. 16 MR. SILVER: Could we table that item 17 until the next meeting, please? 18 MS. ROGERS: Yes, sir. 19 MR. SILVER: Thank you. 20 MS. ROGERS: That item will be tabled 21 and brought up at the next meeting. 22 MR. SILVER: Yes. 23 AGENDA ITEM NO. 9 24 MS. ROGERS: Moving on to Item No. 9, 25 report and possible discussion and/or action on the 0032 1 status of various workgroups. We have the bingo 2 quarterly reports, market conduct, prize board 3 management, Licensing Group No. 1, Licensing Group No. 4 2 and Books and Records Requirement Group. 5 And that looks to be myself. 6 MR. SANDERSON: Let me go ahead and give 7 you some information on this. 8 MS. ROGERS: Thank you. 9 MR. SANDERSON: These are the current 10 work groups that we have set up from the BAC. With 11 the new members on board and the previous members not 12 on the board, I just wanted to have this as an agenda 13 item for you to look at and to discuss to, (1) see if 14 the workgroup needs to continue as is and, (2) if you 15 want to reappoint or include additional individuals in 16 the workgroup. 17 And I'll start off with the Bingo 18 Quarterly Report workgroup. That was the one that 19 was -- Mr. Heinlein has a question? 20 MR. HEINLEIN: When you finish, I'll 21 comment. 22 MR. SANDERSON: The Bingo Quarterly 23 Report Workgroup helped evaluate the new bingo 24 conductor return that will be used for the first 25 quarter of 2010. I don't know if there is, in my 0033 1 mind, a need to continue with that, but that's, you 2 know, certainly up to you, Madam Chair. 3 The other workgroups, Market Conduct 4 Workgroup was a workgroup that was chaired by Earl 5 Silver. They presented some items that they would 6 like to see in a market conduct rule, I believe, back 7 at the July or -- May or July meeting of last year. 8 We have worked on a draft rule that we would like to 9 present to the workgroup for them to look at and 10 consider. 11 Our next workgroup is the Prize Board 12 Management, which the only member currently on there, 13 on that workgroup is Earl Silver at this point in 14 time. That was formed at the May meeting of last 15 year. I am not aware of exactly what their purpose 16 completely was. They just were formed at, you know, 17 the last minute at that meeting. I believe they were 18 trying to come up with something to control the prize 19 payouts to help organizations increase their net 20 receipts, which in turn would help increase their net 21 proceeds. 22 The next two workgroups are the 23 Licensing Workgroups 1 and 2. Those two workgroups 24 were formed in 2007 to look at some of the licensing 25 rules that were being developed at that point in time. 0034 1 The majority of those rules have already gone through 2 the process and been adopted. There are some of the 3 rules that were changed as a result of House Bill 4 1474. We're in the process of going through those 5 current rules. There's several on the Commission 6 meeting agenda for tomorrow. There's several on the 7 agenda for the BAC today to look at. And there again, 8 it's up to your pleasure if you want to continue those 9 two or to create an additional workgroup. 10 The last workgroup is the Books and 11 Records Requirements Workgroup. We've had a couple of 12 meetings. We've got a draft rule. If you want that 13 workgroup to continue, there is a rule pending to go 14 through that workgroup. 15 And then on top of that, we've got a 16 couple other rules that we would like to encompass 17 into the workgroups themselves, and they may go into 18 the market conduct for the most part. One of them 19 deals with the other games of chance, Section 20 2001.416. 21 And another rule is the one I had sent 22 out earlier. The proposed rule number is 402.515, 23 lease and rent payments. And I think that rule would 24 go with the market conduct rule as well as the other 25 games-of-chance rule. 0035 1 MS. ROGERS: Okay. And at this time, I 2 guess we can look over Bingo Quarterly Report. 3 Mr. Heinlein, would you like to comment on that? 4 MR. HEINLEIN: David Heinlein. I was 5 the chairman of that workgroup. And I do think, Phil, 6 that our work is done on that, since we have produced 7 the report that is now available. 8 And I think some good things that came 9 out of this was that we will get a better picture of 10 some of our revenue source. We'll see the event 11 tickets, of course, separate and apart so that we'll 12 know what that particular product is producing, and I 13 like the way that we've done that. 14 As I told Phil, if I had had my way, we 15 would have to go to three pages, because I would want 16 to separate a lot more of these costs. In a previous 17 quarterly report, we had received a pretty good 18 separation of costs which, Phil, wasn't as complete as 19 I would like it. But now we've had to consolidate in 20 order just to produce a product that would not be so 21 lengthy. 22 We do have a lot of consolidation of 23 things. I would point out to you Line Item 13 on that 24 report and Line Item 21 might seem like an overlap. 25 MS. ROGERS: I'm sorry. What are you 0036 1 looking at, Mr. Heinlein? 2 MR. HEINLEIN: Line 13 and Line 21. 3 Line 13 says "Specifically excluded taxes, utility 4 expenses and insurance premiums paid to lessor." 5 MS. ROGERS: That's a quarterly report 6 that you're looking at? 7 MR. HEINLEIN: That's the new quarterly 8 report. 9 MS. ROGERS: Okay. Just so everyone 10 knows what you're looking at. 11 MR. HEINLEIN: And then Line 21 now says 12 "Premise Expenses" and in parentheses, "Mortgage, 13 Insurance, Repairs, Utilities and Janitorial." And 14 just for clarification, that would be those items 15 which were paid directly to a vendor as opposed to 16 being paid to the lessor. 17 We have new rules today to look at where 18 those can be paid to the lessor, but there are rules 19 that have to be abided by in order to do that. But 20 aside from that, you also may pay from the bingo 21 account directly to these vendors that are utilities 22 and janitorial and things like that. 23 And I would be glad to answer any 24 questions that anyone might have on that. 25 MS. ROGERS: Okay. Any questions? 0037 1 So is your opinion that this workgroup 2 is basically finished? 3 MR. HEINLEIN: Yes, I believe we're 4 finished. 5 MS. ROGERS: Okay. So we will no longer 6 continue the Bingo Quarterly Report Workgroup. 7 MR. HEINLEIN: Correct. 8 MS. ROGERS: Market Conduct, I will look 9 to the chair, Mr. Silver. 10 MR. SILVER: Yes, ma'am. We have 11 accomplished a couple of things. We've gone over and 12 accomplished the issue that the Market Conduct Group 13 was formed on, which is setting the minimum price of 14 computers. That just kind of died by attrition -- in 15 the San Antonio area. I'm sorry. 16 The staff was excellent in providing us 17 a rule that we discussed last meeting about some -- a 18 commercial lessor rule, and they did provide it and 19 we're starting to go over that now, with some comments 20 from individuals, until we have a formal meeting. 21 MS. ROGERS: You have work in progress 22 at this time? 23 MR. SILVER: Yes, ma'am. We do have 24 work in progress with that lessor rule. And there 25 could be a couple of other rules that Phil has 0038 1 mentioned that may wind up in the Market Conduct, and 2 we look forward to it. 3 MS. ROGERS: Okay. At this time do you 4 need any new members? Do you have enough members? It 5 seems like you do. 6 MR. SILVER: I think we have enough. 7 MS. ROGERS: Okay. 8 MR. SILVER: Let me -- 9 MS. ROGERS: That's fine. We will 10 continue the Market Conduct. 11 MR. SILVER: Yes. Continue that, 12 please. 13 MS. ROGERS: Okay. I would also look 14 back, and you're still on the next one, Prize Board 15 Management. Do you know -- 16 MR. SILVER: I'm on there by default. 17 There hasn't been a meeting on that one. I have the 18 minutes on why it was formed and how it was formed. 19 And you got it pretty much right, Phil. 20 So I'm the only one, and I don't know what's going on 21 with it. 22 (Laughter) 23 I would like one public member on there, 24 if anybody else would help. The public member, I 25 would like to invite Knowles Cornwell on. 0039 1 MS. ROGERS: So you would like to 2 continue this workgroup? 3 MR. SILVER: Yes, ma'am, I would like to 4 continue it, at least figure out its purpose first, 5 and then we'll discuss that at a later meeting. 6 MS. ROGERS: Okay. Mr. Knowles 7 Cornwell, would you be willing to help? 8 MR. CORNWELL: Yes, ma'am. Madam Chair, 9 yes. 10 MS. ROGERS: Thank you. Knowles 11 Cornwell is a public member. 12 MR. SILVER: And I would like to invite 13 Mr. Bourgoyne if he would like to join us on that 14 committee also. 15 MS. ROGERS: Mr. Bourgoyne? 16 MR. BOURGOYNE: Be happy to. 17 MS. ROGERS: Very good. All right. 18 Prize Board Management will continue. 19 The next workgroup -- once again, 20 Mr. Silver. It looks like you got yourself into a lot 21 of these -- Licensing Group No. 1. 22 MR. SILVER: Yes. 23 MS. ROGERS: Before I go with this one, 24 Phil, is there a reason why -- both the topics are the 25 exact same. Is there a reason why there is Licensing 0040 1 1 and Licensing 2? 2 MR. SANDERSON: I believe initially one 3 of the groups reviewed conductor-related rules, and 4 the other group reviewed lessor-related rules. And as 5 I mentioned before, we're pretty much through with 6 those rulemakings, and it's up to you if you want to 7 continue having those. Or, of course, you can always 8 name a workgroup at a later date if there's any rules 9 that need to be processed. 10 MR. SILVER: There's still some work in 11 progress in Licensing Group 1. The reason why they 12 were split up, because at the time when they came out, 13 when Mr. Miner presented all these rules, there were 14 16 of them. 15 And the minutes, kind of paraphrasing, 16 said 16 is kind of overwhelming for one group, so it 17 was split up. And then there was some logic to the 18 split. But Licensing Group 1, we had myself as the 19 chair, Pat Gifford, Markey Weaver. Public members 20 were Stephen Fenoglio, Steve Bresnen and Richard 21 Bunkley. 22 The list of rules that were given to us 23 was 402.400, which is licensing fees; 402.409, which 24 amendment for change of premises or occasions due to 25 lease termination or abandonment; 402.442, which is 0041 1 amendment to a commercial lessor license; 402.443, 2 transfer of a license to lease bingo premise; 402.444, 3 which is common roof/common foundation; 402.500, which 4 is general record requirements; 402.506, disbursement 5 record requirements; 402.511, required inventory 6 records. And then we had two other rules on there, 7 which were source of funds and collection of rent. 8 The rules that were passed, eight of 9 them were passed out of the 10, which is 402.400, 10 402.409, 402.442, 402.500, 402.506, and 402.511. 11 We do have two pending rules which we're 12 working on, is 402.443 and 444, which are transfer of 13 a license to lease bingo premises and common roof/ 14 common foundations. And we still need to -- we have a 15 semi-proposed rule on sources of funds and also 16 collection of rent. We're still working on that. 17 The staff provided us one, as well as 18 another member of the workgroup provided. But two of 19 those rules -- or three of those rules -- which are 20 500, 506 and 511 -- were also part of the Books and 21 Records that were merged into ours, so those rules are 22 passed and are out of that committee. 23 MS. ROGERS: Okay. But you still do 24 have work that you're working on? 25 MR. SILVER: Yes, ma'am, we do. And, 0042 1 actually, these may wind up -- the sources of funds 2 and collection of rent may wind up in the Market 3 Conduct, but we can leave it at the Licensing group. 4 And if you want to disband the second and whatever 5 rule hasn't gone in there, we can still take work into 6 this one since there's only three things we need to 7 discuss. 8 MS. ROGERS: Okay. That's what we'll 9 do. Very good. In Licensing Group No. 2, all we have 10 is Stephen Fenoglio. He is also listed in Licensing 11 Group No. 1. We will no longer Continue No. 2. We 12 will keep going with Licensing No. 1. 13 The last one is Books and Records 14 Requirements. Ms. Weaver, we still do have work that 15 is going on with this workgroup. So. 16 MS. WEAVER: Yes, ma'am. 17 MS. ROGERS: We will continue this 18 workgroup. 19 Any public comment? 20 AGENDA ITEM NO. 10 21 MS. ROGERS: At this time we'll move to 22 Item No. 10, record and possible discussion and/or 23 action on the 2009 BAC annual report, including the 24 formation of a subcommittee. 25 Every year what happens is, Suzanne, the 0043 1 chair of prior year, would go back and we would 2 form -- I would assist her in making a report for the 3 Commissioners over what has happened -- what we've 4 accomplished, what we've done, tried to do everything 5 shortened down for the Commissioners. And this is a 6 very important thing that needs to be done. It has 7 not been done yet. So I would need to put a 8 subcommittee together to get all that information. 9 MR. SANDERSON: Madam Chair? 10 MS. ROGERS: Yes. 11 MR. SANDERSON: This workgroup is also 12 the one that prepares the annual report of the bingo 13 activities as it relates to gross receipts. The 14 requirements is they report to the Commission gross 15 receipts, prizes and other information as it relates 16 to the conduct of bingo in Texas. And that's the 17 annual report with the pretty charts and graphs. 18 MS. ROGERS: Right. All the nice 19 colorful pie charts and everything. 20 Melissa, would you be willing to chair 21 this subcommittee and put it together? 22 MS. YOUNG: Sure. 23 MS. ROGERS: It's a lot to throw on you 24 all of a sudden in the beginning, but I know that 25 you're very good at numbers and figures and you have a 0044 1 lot of knowledge in that area. Would you like to pick 2 some individuals to help you with this? 3 MS. YOUNG: Earl Silver, Markey 4 Weaver -- I can have four. Is that right? 5 MR. SANDERSON: Yes, ma'am. 6 MS. YOUNG: Anybody else want to 7 volunteer? 8 Kim, would you like to be on that 9 committee? 10 MS. ROGERS: Yes, I would. I'm more 11 than willing to help you. 12 MS. YOUNG: Thank you. 13 MR. SANDERSON: And, Melissa, most of 14 the information that you will use for this report for 15 the sales report comes off the information 16 organizations report on their quarterly reports. We 17 hope to have 2009 information reviewed and ready for 18 distribution around March the 1st. And so once we 19 have that information, we'll provide it to you so that 20 the agency and the BAC are consistent in the sales 21 information and distribution information that are 22 released out. 23 MS. YOUNG: Okay. 24 MS. ROGERS: And I will look back 25 between now and then and find one that we've used in 0045 1 prior years, like for 2008, so you can have a look at 2 some of the format, to go over what we've used before. 3 MS. YOUNG: Okay. 4 MS. WEAVER: Melissa, could we ask David 5 Heinlein from the public to help us? 6 MS. YOUNG: Yes, I would love to ask 7 David. 8 MR. HEINLEIN: (Nods head) 9 MS. YOUNG: Okay. 10 MS. ROGERS: So the workgroup will be 11 Melissa Young as chair, Earl Silver, Markey Weaver, 12 Kim Rogers, and public member will be David Heinlein. 13 Any public comment on that? 14 AGENDA ITEM NO. 11 15 MS. ROGERS: Moving on to No. 11, report 16 and possible discussion and/or action on draft 17 amendment to 16 TAC 402.100, definitions. 18 Mr. Phil Sanderson. 19 MR. SANDERSON: Good morning, Madam 20 Chair. To begin with, Agenda Item Nos. 11 through 21 21 all address draft rules for consideration and 22 discussion. They have all been circulated to members 23 of the BAC as well as members of the public, for 24 informal comment, with the exception of Item No. 11, 25 the definitions. We just recently finalized 0046 1 amendments to that rule. 2 My plan, as each one of these are called 3 up, is to lay out the comments that we have received, 4 potential or possible changes that are being made 5 based on those comments, hopefully to eliminate a lot 6 of discussion that, you know, may entail after each 7 one of these rules comes up. 8 As it relates to No. 11, the definition 9 rule, 402.100, this rule for the most part takes out 10 definitions that are either contained in the Act or no 11 longer require definitions. It adds additional 12 definitions to define the term "agent," as well as -- 13 and my notebook does not have the back page. 14 MR. SILVER: Phil, it's mixed in there. 15 I found it buried further down in the notebook. 16 MR. SANDERSON: Oh, did you? Well, I've 17 got another copy here. It has a definition of the 18 rules, "credit interest," "equity interest" and 19 "proprietary interest" as well as "real party in 20 interest." 21 So at this time, you know, you can 22 discuss this rule. I will be glad to add it to one of 23 the workgroups if you wish. We would like to move 24 forward with this rule, you know, as soon as we can. 25 So if you want to provide a workgroup with the power 0047 1 to make those comments, and we'll make adjustments to 2 it, of course. 3 As with all rulemakings, it will still 4 go through the formal comment period after 5 publication, prior to adoption. And anybody is 6 welcome to provide comments at that time as well. 7 MS. ROGERS: Does anyone have any 8 questions for Phil on this at this time? 9 You could put this under, I would say 10 under Books and Records Requirements, the definitions. 11 Okay. So we'll add this, Markey, to -- so you're 12 aware, we will add this to Books and Records 13 Requirements. 14 Any public comment on this rule? 15 Mr. Steve Fenoglio. 16 MR. FENOGLIO: Yes, Madam Chair, 17 members. I filed an appearance slip. And on this, I 18 would like to be a part of -- I didn't follow who all 19 the members are, but I would like to be a part of the 20 subcommittee. 21 The definitions of "credit interest," 22 "equitable interest" and "proprietary interest" deal 23 primarily with distributors' and manufacturers' 24 licenses, and it's been the subject of at least one AG 25 Opinion request as to what constitutes that. And I 0048 1 don't believe we've got the precision that I think the 2 licensing community needs in that regard, which is one 3 of the reasons I would like to serve on the committee. 4 Then to touch briefly on real party in 5 interest, I think that needs more precision as well, 6 because it says "a person involved in a license 7 applicant's business who made benefit financially." 8 And depending upon how you read those words, you could 9 include a janitor who cleans a bingo hall might meet 10 that standard. So it seems to me that it needs some 11 work. 12 I'll be happy to answer any questions. 13 I'll look forward to serving on the committee. Thank 14 you. 15 MS. ROGERS: We welcome your assistance 16 with that. 17 So Stephen Fenoglio will be added as a 18 public member to the Books and Records Requirements. 19 Yes, sir. 20 MR. BUNKLEY: Hello. My name is Richard 21 Bunkley, with Littlefield Corporation, and I would 22 also like to volunteer to serve on that workgroup as 23 well as the Market Conduct Workgroup, Earl, if you 24 have no objection. Thank you very much. 25 MS. ROGERS: Thank you. Do you have a 0049 1 witness affirmation form? 2 MR. BUNKLEY: I'll turn one right in. 3 MS. ROGERS: Thank you, sir. 4 MR. BUNKLEY: Yes, ma'am. 5 MS. ROGERS: Mr. Richard Bunkley added 6 as a public member. 7 MR. SANDERSON: To Market Conduct as 8 well. 9 MS. ROGERS: And also to Market Conduct. 10 Any other public comment? 11 AGENDA ITEM NO. 12 12 MS. ROGERS: Okay. We will move on to 13 Item No. 12, report, possible discussion and/or action 14 on draft amendments to 16 TAC 402.501, charitable use 15 of net products. 16 Mr. Sanderson. 17 MR. SANDERSON: Good morning, members. 18 This draft rule, charitable use of proceeds, 402.501, 19 was initially drafted to clarify how proceeds could be 20 used by organizations that are tax-exempt from the 21 IRS. 22 A couple of comments that we received. 23 One is the fact that we are listing a link in a rule 24 to the IRS website, not that it's bad to list a link. 25 But if for some reason they redesign their website and 0050 1 the link changes, then we have to republish the rule 2 and change the link. 3 So one option we were looking at is 4 going to the IRS and getting information from them and 5 providing guidelines that would not necessarily be 6 incorporated in the rule but would be guidelines that 7 organizations could look at to make determination of 8 whether or not the use of those bingo proceeds is 9 authorized. 10 The other comment we received was what 11 does "inure" mean. We received several comments on 12 that. And we're looking at possibly trying to find a 13 definition. Even the Internal Revenue Service does 14 not have a good definition of what "inurement" means. 15 The other comment we received is, "What 16 is fundamental public policy?" And I think at this 17 point, that Item No. (3) is one that we'll probably 18 remove from this rule. 19 Additionally, the majority of the rule 20 is also contained in statute. There are, you know, 21 very few differences between what's in the statute and 22 what's in this rule. So in the end, we may have just 23 the guidelines as it relates to the IRS 24 recommendations of the use of proceeds as a guide, you 25 know, to follow. And if that's the case, we'll bring 0051 1 those back for the BAC to look at and for the general 2 public to offer comment on. 3 MS. ROGERS: I would say anything that 4 staff can do to help us get information with the IRS 5 would be greatly appreciated. 6 Any other comment? 7 MR. SILVER: And maybe put it in plain 8 language. 9 MR. SANDERSON: We will try our best. 10 MS. ROGERS: Any public comment on this 11 rule at this time? 12 AGENDA ITEM NO. 13 13 MS. ROGERS: Okay. We will move to Item 14 13, report, possible discussion and/or action on draft 15 amendments to 16 TAC 402.502, charitable use of net 16 proceeds recordkeeping. 17 Mr. Sanderson. 18 MR. SANDERSON: Some of the comments 19 that were received on this rule -- and if we go to 20 Page 2 under (d), recordkeeping, we're going to remove 21 the language "and section ?402.501" and just indicate 22 that, "In accordance with the Bingo Enabling Act, the 23 licensed authorized organization must have 24 documentation for all proceeds used for charitable 25 purposes to substitute the use of the funds for 0052 1 purposes consistent with the exempt purposes of the 2 licensed authorized organization." 3 Additionally, we are planning on 4 removing Paragraph (4) completely. 5 On the next page, we're going to remove 6 Paragraph (6)(C) and, once again, get additional 7 information from the Internal Revenue Service as 8 requirements for scholarship documentation. 9 And I believe that's the only changes as 10 a result from comments that we received. So that's 11 all I have. 12 MS. ROGERS: Okay. Members, any 13 comments on that one? 14 Any public comment? 15 MR. SMITH: Trace Smith. We just -- we 16 support those changes. 17 MS. ROGERS: Thank you, sir. 18 MR. FENOGLIO: For the record, my name 19 is Stephen Fenoglio. 20 And, Phil, did you say -- the pages 21 aren't paginated, but the first deletion is 22 Subparagraph (d)(4) that the staff is making? 23 MR. SANDERSON: Well, that's the first 24 substantive. (d)(1), the second part of the first 25 line on (d)(1), "and section ?402.501" is being 0053 1 deleted. 2 MR. FENOGLIO: Okay. 3 MR. SANDERSON: And then also, yes, 4 (d)(4) in its entirety. 5 MR. FENOGLIO: Okay. 6 MR. WEEKLEY: Then (C), scholarship 7 donations. 8 MR. FENOGLIO: Okay. 9 MS. WEAVER: Phil, did you also say (C), 10 (6)(C)? 11 MR. SANDERSON: (6)(C), yes, ma'am. 12 MR. FENOGLIO: Yes, I got that one, 13 Madam Chair. 14 The one comment I have deals with -- and 15 I believe it's now -- 16 MR. SANDERSON: You don't need to change 17 the paragraph numbers. 18 MR. FENOGLIO: And I'm sorry; I'm not. 19 I'm trying to figure out which one. And under 20 existing Paragraph (7), "A licensed authorized 21 organizations must maintain documentation for all 22 charitable distributions," I'm assuming again this 23 only relates to the charitable bingo funds, not 24 distributions in general from non-bingo sources? 25 MR. SANDERSON: This would include -- 0054 1 correct -- from non-bingo sources -- would not include 2 non-bingo sources. 3 MR. FENOGLIO: And then in Subparagraph 4 (8), the "...organization must maintain documentation 5 of all charitable distributions as to how the use of 6 the funds relates to..." And, Madam Chair, I guess I 7 would prefer to be on the subcommittee, if there is 8 going to be a subcommittee, specifically as to how the 9 use of the funds relates to the cause, et cetera. 10 In past audits, some auditors have had 11 what I considered to be different standards as to the 12 amount of specificity they require. Some have been 13 fairly flexible. Some have been extremely specific, 14 whereby a charity in one area of the state would not 15 have a problem justifying that and a charity in 16 another state using a different standard would have a 17 very difficult time making that justification. 18 And in Subparagraph (9), the 19 "...licensed authorized organization must maintain 20 minutes and attendance records of regularly scheduled 21 meetings. The meeting minutes must include discussion 22 of all funds to be disbursed for charitable purposes, 23 if applicable." 24 With larger charitable organizations -- 25 and I represent several -- they may have a general 0055 1 discussion that they received $8,000 for the month in 2 a charitable distribution, but there will be no 3 general -- specific discussion about how those funds 4 are used, because at the beginning of the year they 5 adopted a budget, and the budget was anticipating -- 6 I'm going to make it up -- $100,000 in one particular 7 calendar year or fiscal year, receipt from bingo 8 monies. 9 So there is no discussion in those 10 particular meeting minutes for the use of those funds. 11 They have instead adopted a budget. The budget said, 12 "We're going to support people with mental 13 disabilities," and there's specific programs that they 14 operate. 15 And again going back to different 16 auditors have different standards, some auditors would 17 look at that and say, "That's not a problem." Other 18 auditors would say, "No, I need those specific minutes 19 where you actually discussed that." Well, they don't 20 exist. This is a year and a half or three years down 21 the road from when the audit occurred, and you can't 22 go back and re-create those minutes. Some auditors 23 would be tempted under those circumstances to say, 24 "Well, then, I'm going to disallow" or "You're going 25 to have to re-deposit" or some other punitive matter. 0056 1 And that relates to another issue. On a 2 larger charitable organization, an organization that 3 may have a general budget of a million to four -- and 4 there are a couple of organizations that come to 5 mind -- they put their bingo distributions into the 6 general fund and they can't track specifically how 7 those general -- those bingo funds were used. 8 And in the past in a previous meeting 9 with Commissioner Cox, Commissioner -- when there was 10 similar language that was being discussed by staff, 11 "Well, you're forcing" -- I'm going to paraphrase 12 Commissioner Cox's discussion with staff about three 13 years ago, I believe -- "Well, then, you're forcing 14 these organizations to lie, because once it goes into 15 the general fund, they can't tell you where those 16 dollars were spent. And no auditor" -- and as you may 17 know, Commissioner Cox was a darn good CPA and an 18 auditor for many, many years. 19 And so the rule is designed I know to 20 ensure that the auditors have adequate recordkeeping 21 to ensure that bingo proceeds are being spent for 22 bingo purposes. But not one size will fit all and not 23 one language will fit all. What might work for an 24 organization that has 80 percent or 100 percent of its 25 regular budget is from bingo wouldn't necessarily 0057 1 apply to an organization where 10 percent or less of 2 its annual budget is from charitable bingo. 3 And again, if there is going to be a 4 committee, I would like to serve on it. I will be 5 happy to answer any questions. 6 MS. ROGERS: Thank you, Mr. Fenoglio. I 7 agree that it's sometimes very difficult for charities 8 to -- it's not -- all of their distributions, the 9 general distribution, it's rather hard to track it 10 when it goes into and they make lump sums for 11 charitable distributions. 12 MR. FENOGLIO: Churches would fall in 13 that same category, most churches. 14 MS. ROGERS: Certainly. So could we add 15 this to the work of the Books and Records Requirements 16 Workgroup? Mr. Fenoglio is on there, so then he would 17 be able to assist with getting that language correct. 18 MR. SANDERSON: That's fine. 19 MS. ROGERS: Thank you. 20 Markey? 21 MS. WEAVER: Thank you. 22 MS. ROGERS: Mr. Bresnen? 23 MR. BRESNEN: Steve Bresnen on behalf of 24 the Bingo Interest Group. 25 I support the deletions of the staff and 0058 1 the modifications that Mr. Sanderson mentioned a 2 moment ago. I appreciate those changes. I also 3 support what Mr. Fenoglio just said. And I think 4 there's a couple of reasons this rule needs a little 5 more work. 6 In the statute, in House Bill 1474 -- 7 just let me, just by way of making sure everybody is 8 on the same page, the law used to say that once you 9 had taken the money out of your bingo account, you 10 could not put money back in, except from the conduct 11 of bingo. But once it was in your general fund or 12 distributed out of that account, you couldn't put it 13 back in except on the basis of a loan approved by the 14 Commission. 15 That was rather cumbersome. House Bill 16 1474 is mostly about streamlining and allowing the 17 charities to operate like any business would or like 18 you would if you have a savings account and a checking 19 account. And so what we put in the statute was that a 20 licensed authorized organization may transfer money 21 from its general fund or other account to the 22 organization's bingo account or to the account of a 23 unit, and that's if you've gotten below your operating 24 capital and you notify the Commission, you just notify 25 the Commission. 0059 1 So first of all, the statute does not 2 limit the money that can be transferred back to -- or 3 be transferred into the bingo account to bingo 4 proceeds. It can be from any source. Now, that 5 presents a problem for the agency that I think we need 6 to be cognizant of while we work this rule out. The 7 law also requires that you have net proceeds from 8 bingo and that you distribute all of your net proceeds 9 above your operating capital. 10 So if someone can take the money out of 11 the bingo account, put it in the general fund and meet 12 the requirement that they distribute all their net 13 proceeds and that they've got net proceeds and then 14 turn around and put the money back in the bingo 15 account, they could just be in a cycle like this and 16 it would be impossible for the agency to ever know 17 what the real deal was. 18 If the organization has 100 percent -- 19 if all of their money comes from bingo, that's pretty 20 easy, but it gets complicated, as you've all 21 recognized, if the organization has more than one 22 source of funds, which I would expect the vast 23 majority of them do, even if it's only bake sale 24 money. 25 So that part of this rule needs a lot of 0060 1 work to stay within the statute but also to give the 2 agency the tools that they need to make sure that 3 people are earning money and that they're actually 4 distributing that money, which the statute both 5 requires by its letter and intent. 6 I'm on Page 4 of this rule at the 7 Subdivision (9). This is a minor example of a number 8 of places in the proposed rules where I think the 9 agencies may be injecting a little more formality than 10 is required and is common. 11 It is very common for an executive 12 director of an organization to be given the authority 13 to spend the funds of the organization, period. And 14 they may not -- there may not be a discussion 15 specifically about bingo funds separate from any other 16 funds. Most organizations are glad to have any dollar 17 they can, and they're happy to spend it. 18 If you're a small organization, maybe 19 you've got $50,000 a year in -- that's your total 20 program costs, having board meetings and writing up 21 minutes and complying with the rule and being specific 22 enough about the discussion is probably just a trap 23 for you when you're, frankly, operating pretty 24 informally but probably enough to satisfy the Internal 25 Revenue Service and maintain your non-profit status. 0061 1 So I would concur with what Mr. Fenoglio said. One 2 size is probably not going to fit all here. 3 Besides that, just looking at the 4 language of the rule, you're only required to have 5 minutes and attendance records of regularly scheduled 6 meetings. So I guess one way to comply with this 7 would be to just, you know, call a special meeting and 8 you wouldn't have to have any minutes and you wouldn't 9 have to have any record of it. So just on the 10 language of it, it needs some work. 11 But I have to say I really appreciate 12 the amount of time, Phil, that you spent sitting down 13 with us and visiting about these things and going 14 through all these things. And I hope that we have 15 been adequately cognizant of your duties and 16 responsibilities so we can do our fair share to help 17 you do your job. 18 Thanks. Any questions, I will be happy 19 to answer. 20 MS. ROGERS: Any questions? 21 MR. BRESNEN: Thanks. 22 MS. ROGERS: Thank you, Mr. Bresnen. 23 And you also, sir, are on the Books and Records Group. 24 So if this goes through there, you'll be able to 25 assist with that. 0062 1 Any other public comment? 2 AGENDA ITEM NO. 14 3 MS. ROGERS: Moving on to Item No. 14, 4 report, possible discussion and/or action on draft 5 amendments to 16 TAC 402.503, bingo gift certificates. 6 Mr. Sanderson. 7 MR. SANDERSON: Once again, we received 8 just a few comments on this rule and a couple of 9 questions. We changed the wording in Paragraph (a), 10 and it will now read, "...the issuing authorized 11 organization must have received payment in full for 12 the gift certificate's redeemable value prior to 13 issuing the gift certificate." And the rest of that 14 language has been removed. 15 We've also removed the next paragraph, 16 (b), "A bingo gift certificate may be sold, issued 17 awarded, or redeemed" for paper, pull-tabs and 18 card-minding devices. That was removed. 19 In Paragraph (e), we added at the end of 20 the sentence that the gift certificate can be redeemed 21 for the vault of the bingo product. 22 On the next page, under Paragraph 23 (h)(1), we removed the language "for bingo paper, 24 pull-tabs and card-minding devices." We just 25 indicated that they have to have the name and address 0063 1 of the location. 2 We removed Paragraph (6); (h)(6) has 3 been removed. 4 On the very last page -- or it may be at 5 the top of your -- bottom of Page 3 -- we removed 6 Paragraph (n) as well as paragraph (p). 7 Once we get through with the meeting 8 today and the changes are made to some of these rules, 9 we'll send the drafts back out and circulate amongst 10 the Bingo Advisory Committee members as well as the 11 workgroup members. 12 If there's any member of the general 13 public that would like to have a copy of these rules, 14 if they would like to leave their email address on the 15 table out front. I'll get Mr. Miner to put a piece of 16 paper out there so you can put your name and email 17 address on there and we'll be glad to email those to 18 you as well. 19 MS. ROGERS: Thank you so much. 20 Any comment? 21 MS. WEAVER: I have a question, please. 22 On (h), under (3), it says "imprinted with the name of 23 the licensed authorized organization(s) authorized to 24 accept the bingo gift certificate at the licensed 25 location." Does that mean each one of our charities 0064 1 needs to be printed on there or just the hall name 2 itself? 3 MR. SANDERSON: Each individual 4 organization. And that's already in the current rule; 5 that's not even a change. 6 MS. WEAVER: Okay. 7 MR. SANDERSON: That's already in the 8 current rule. 9 MS. WEAVER: And the last thing I had is 10 the gift certificate log. Is this a log that is going 11 to be statewide or individual per hall? 12 MR. SANDERSON: I believe it's 13 individual per hall. That's some sort of record. 14 MS. ROGERS: Members, any other 15 questions? 16 MR. SILVER: Yes. On (b) where it says 17 a bingo certificate may be sold, issued, awarded or 18 redeemed only for bingo paper, pull-tab bingo or 19 card-minding, does the pull-tab bingo include the 20 event tickets? 21 MS. ROGERS: That was taken out. 22 MR. SANDERSON: That paragraph was taken 23 out. 24 MR. SILVER: And on (e), is (e) still in 25 there, before I make a comment. 0065 1 MR. SANDERSON: (e) is, yes. 2 MR. SILVER: Okay. A licensed 3 organization, authorized organization awarding bingo 4 paper, pull-tab bingo, card-minding device as a bingo 5 prize must do it by awarding a bingo certificate that 6 can be redeemed for a bingo product. 7 So if there's some type of drawing or -- 8 I don't know how it would be put -- but if somebody 9 won something in the hall that happened to be an event 10 ticket or won something, would they have to be issued 11 a gift certificate and then they would have to go to 12 the pull-tab counter and get something or get the 13 product? 14 MR. SANDERSON: Yes. If the prize for 15 either -- if the prize for a pull-tab game is more 16 pull-tab tickets -- 17 MR. SILVER: Yes. 18 MR. SANDERSON: -- or a card-minding 19 device, then you have to issue the gift certificate at 20 the value that you're determining that they can use to 21 purchase either the card-minding device or the pull- 22 tabs. 23 MR. SILVER: What about playbacks, would 24 that be considered winning an event ticket or instant 25 bingo ticket? 0066 1 MR. SANDERSON: Playbacks, no. 2 Playbacks? 3 MR. SILVER: Like if you win a pull-tab 4 and you won a dollar or -- 5 MR. SANDERSON: Turn it in for another 6 ticket? 7 MR. SILVER: Yes. 8 MR. SANDERSON: No. 9 MR. SILVER: Okay. 10 MS. ROGERS: And, Earl, on that one, on 11 the second one, "can be redeemed for," they inserted 12 "value of the bingo product," so that kind of helps 13 there. 14 Any other comments? 15 Any public comments at this time? 16 MR. KELLER: I would like to say 17 something. 18 MS. ROGERS: Mr. Keller. 19 MR. KELLER: Yes. My name is Kris 20 Keller. And would this gift certificate rule apply to 21 game machines that spit out a ticket and then is 22 redeemed for bingo product in the hall? Would those 23 tickets have to adhere to the gift certificate rule? 24 MR. SANDERSON: The gift certificate 25 rule pertains to the purchase of bingo products. And 0067 1 the only way to purchase bingo products is cash, 2 check, debit card, in some instances possibly a credit 3 card or a bingo gift certificate. 4 Whatever comes out of a gaming machine 5 is a different source and there's another rule that 6 will be going through the Market Conduct Committee to 7 discuss the game-of-chance rule as it relates to 8 Section 2001.416. 9 MR. KELLER: Can you say that last part 10 again. 11 MR. SANDERSON: There is a Market 12 Conduct Subcommittee that will be reviewing the other 13 games-of-chance rule that relates to Section 2001.416 14 that talks about amusement machines and raffles. 15 MR. KELLER: So right now, though today, 16 a ticket dispensed from a machine cannot be redeemed 17 for bingo product, then, unless it adheres to the gift 18 certificate rule? 19 MR. SANDERSON: That's my understanding, 20 yes. 21 MR. KELLER: Okay. There's several 22 games that have those. And I'm just wondering if the 23 Lottery Commission wouldn't mind, in their quarterly 24 letter that they send out to everybody, maybe 25 addressing this issue where -- kind of a blanket 0068 1 warning, so to speak, so that all organizations know 2 that these tickets should follow the gift certificate 3 rule? 4 MR. SANDERSON: Be glad to. Thank you, 5 Mr. Keller. 6 MR. KELLER: Thank you. 7 MS. ROGERS: Thank you. Mr. Keller, do 8 I have a witness affirmation form from you? 9 MR. KELLER: No, but I'll fill one out. 10 MS. ROGERS: Thank you. 11 MR. KELLER: I'll fill one out. 12 MS. ROGERS: Thank you. 13 Any other public comments? 14 MR. CORNWELL: And, Phil -- my name is 15 Knowles Cornwell. And, Phil, I just heard you say 16 that the only way that a prize for a card-minder, 17 per se, can be awarded is after you award them a gift 18 certificate. So today halls play a game called Speed 19 Ball. And a lot of the folks will -- it matches up to 20 their computer or card-minding device, and they'll run 21 a little 180 ticket count, Speed Ball, and give away 22 six computers. Charities make more money; they're 23 keeping the tab money. They're selling more 24 computers. 25 You're telling me now they've got to 0069 1 stop on that Speed Ball game, give them a certificate 2 and then they've got to go up and get the computer 3 from the front desk to get a card-minder. Is that 4 what this rule is intending -- you're intending to do 5 and operate the rule? 6 MR. SANDERSON: The rule is intending to 7 account for that prize as being a cash prize that was 8 used to purchase a gift certificate, which in turn was 9 used by the player to purchase a card-minding device. 10 MR. CORNWELL: Okay. So the -- 11 MR. SANDERSON: How the transaction 12 transpires, I'll leave it up to the organization. 13 MR. CORNWELL: Today they're reporting 14 that as a merchandise prize on the quarterly reports; 15 today they're reporting that as a merchandise prize. 16 MR. SANDERSON: Okay. And I think that 17 has been taken off of the quarterly reports, the 18 merchandise prize category, if I'm not -- no, it 19 hasn't. I'm sorry. It has not been taken off; it's 20 still on there. 21 They would report it as a cash prize now 22 as it relates to the gift certificate. 23 MR. CORNWELL: Okay. I still don't 24 under- -- can we work on this rule a little bit? I 25 think you're creating a nightmare when we're awarding 0070 1 these things as a prize, these tabs as prizes for 2 card-minders. The tab rule does say anything -- it 3 can award them tickets, merchandise or cash. The tab 4 rules do say that. 5 MR. SANDERSON: Okay. 6 MS. ROGERS: Maybe I'm a little bit 7 lost, too. Why would it be any different? I mean, if 8 you win a pull-tab or an event tab, you win cash in 9 order to -- 10 MR. SANDERSON: I don't see the 11 difference. 12 MS. ROGERS: Okay. 13 MR. SILVER: It could just be an 14 additional step, which is going to add additional 15 paperwork, which is going to add additional confusion 16 and then additional opportunity for a violation. It 17 just seems like we're going backwards. 18 MS. WEAVER: I think a gift certificate 19 should be that; it's a gift certificate. I don't 20 think we should go out and try to create work for our 21 charities or our hall managers or floor workers or 22 whatever by -- I mean, we do the same thing with our 23 Speed Ball. So now we're going to have to -- as I 24 understand, we're going to have to create more 25 paperwork, and we can't do that with our Speed Balls 0071 1 any more. 2 MS. ROGERS: Maybe that's what I'm 3 asking. Why are the gift certificates now coming into 4 play into this? How are they getting tangled into 5 here? 6 MR. SANDERSON: It could be partially 7 because we have found some organizations are not 8 reporting those card-minding devices as a prize. And 9 so -- 10 MS. WEAVER: So we all have to be 11 punished? 12 MR. SANDERSON: -- it's for 13 accountability more than anything else. It protects 14 both the organizations and the players. 15 MS. ROGERS: But if these organizations 16 are not reporting they gave away the computers, the 17 card-minding devices, then what's to say they're going 18 to go and take the time to make a gift certificate? 19 MR. SANDERSON: Yes. 20 MS. ROGERS: I mean, I'm just trying to 21 be the devil's advocate here. 22 MR. SANDERSON: I don't want to get into 23 our details of investigation. 24 MS. ROGERS: Okay. 25 MR. SILVER: So you found some that were 0072 1 doing that, Phil? If you happen to, hypothetically, 2 if you did, then maybe go after them and not 3 everybody. 4 MR. BOURGOYNE: I have a question. What 5 purpose is the gift certificate to serve as the 6 actual -- 7 MS. ROGERS: I'm sorry, Mr. Bourgoyne. 8 If you can try and turn that on a little bit more. 9 She cannot hear you. 10 MR. BOURGOYNE: Maybe if I turn it on, 11 it will help. 12 MS. ROGERS: There you are. 13 MR. BOURGOYNE: I'm just trying to 14 understand what purpose the gift certificate is going 15 to serve that the actual winning pull-tab itself 16 couldn't serve. That's what they use now. Right? 17 The pull-tab itself is what they redeem for the 18 card-minding devices, the winning pull-tab? I mean, 19 what's the difference between it? 20 MR. SANDERSON: I mean, we would be glad 21 to look at that, yes. 22 MS. ROGERS: Mr. Fenoglio? 23 MR. FENOGLIO: And for the record, that 24 was going to be my suggestion, is that you've got to 25 look at -- I don't know the specifics about the harm 0073 1 or the perceived harm, but you've got to look at 2 what's going on in each hall. And if they are, as 3 Mr. Bourgoyne so eloquently stated, the item that was 4 purchased was a pull-tab. They properly accounted for 5 that, and the purchase of it initially from the 6 distributor and then the sale, and then now they have 7 awarded the prize. And instead of $100 or $20 cash 8 prize, the charity has announced, "We're going to 9 award the use of two card-minders," then that should 10 be sufficient. 11 If an organization is going to cheat 12 from start to finish, there's not enough paper to 13 write enough rules for that. And I'm not suggesting 14 that organizations do that. But I think Mr. Bourgoyne 15 hit it right on top of the head. You've got to look 16 at what's going on in a specific hall to know whether, 17 in fact, they should be issuing gift certificates and 18 tracking them and with all the paperwork involved or 19 if there is something else going on, as Mr. Bourgoyne 20 suggested. 21 And I'll be happy to serve on the 22 committee. Thank you. 23 MS. ROGERS: Thank you. 24 Phil, would you like this rule to go 25 underneath one of the workgroups? Do you think that's 0074 1 necessary? 2 MR. SANDERSON: If you want to put it 3 with the Books and Records, that will be fine. 4 MS. ROGERS: Yes, sir, we'll do that. 5 MS. WEAVER: May I ask that Knowles 6 Cornwell also serve on this committee? 7 MS. ROGERS: Yes, ma'am, you are chair. 8 Knowles Cornwell will be added to the Books and 9 Records Requirements Group. 10 Yes, sir. 11 MR. HEINLEIN: Madam Chair, David 12 Heinlein. 13 Phil, I need to ask you a question. You 14 said merchandise prizes were still on the quarterly 15 report, and I do not find them there. 16 MR. SANDERSON: I think the line item 17 for merchandise prize was removed in the new 2010 18 report. We still have it listed on the sales journal 19 for organizations to track. 20 MR. HEINLEIN: We do that, but we don't 21 report it on the quarterly report. 22 MR. SANDERSON: I think it's just listed 23 as prizes. 24 MR. HEINLEIN: Correct. 25 MS. ROGERS: Thank you. 0075 1 Any other public comment? 2 At this time we will move to Item No. 3 15. 4 MR. SANDERSON: Can we take a break? 5 MS. ROGERS: At this time we will take a 6 10-minute break. We will come back at 11:30. 7 Thank you. 8 (Recess: 11:20 a.m. to 11:32 a.m.) 9 MS. ROGERS: We would like to call this 10 meeting back to order. It is now 11:32. 11 Board members, if you will take your 12 seat. 13 AGENDA ITEM NO. 15 14 MS. ROGERS: All right. We'll move on 15 to Item No. 15, report, possible discussion and/or 16 action on draft amendments to 16 TAC 402.506, 17 disbursement records requirement. 18 Mr. Sanderson. 19 MR. SANDERSON: Good morning. Rule 20 402.506, based on some comments that were received, 21 there have been some changes to the language, 22 additions and deletions. 23 On the bottom of Page 2 in Subparagraph 24 (10), I removed everything but the first sentence. So 25 now (10) will only read, "A licensed authorized 0076 1 organization or unit shall maintain records to 2 document any expenses for promotions or door prizes." 3 The remainder of that paragraph has been deleted, as 4 well as Paragraph No. (11) was deleted. And I believe 5 that was all of the changes. 6 MS. ROGERS: I will say that No. (10) is 7 where I have the problem. So if that's been deleted, 8 no problem. 9 Members, do you have any comments on 10 that? 11 Any public comment? 12 MR. FENOGLIO: Steve Fenoglio. And we 13 support the staff recommended changes. Thank you, 14 Phil, and your staff for that. 15 I don't know that it's a big issue, but 16 Subparagraph (f), "Bank fees incurred because the 17 organization fails to maintain sufficient funds . . . 18 will not be considered a reasonable or necessary 19 expense." When we drafted -- and I helped draft the 20 change in law back with House Bill 2519 -- what we 21 were trying to do was move to an IRS standard of 22 reasonable or necessary expenses. And in an IRS 23 standard, they would allow bank fees to be deducted 24 from your income tax returns. 25 Again, I don't know that this is a big 0077 1 issue. Certainly for larger organizations, it would 2 not be. But I would hate to have a hard and fast rule 3 that if a charitable organization had an occasional 4 use where they incurred bank fees, that they could not 5 deduct those as reasonable bingo-related expenses. 6 I can perceive where if an organization 7 had a lot of bank fees, it might suggest to the agency 8 that there is an inherent problem with the 9 organization. And I can anticipate where you could -- 10 an auditor could determine or Phil Sanderson could 11 determine that in general those type of fees might be 12 reasonable and necessary but if they reach a certain 13 level, they are no longer reasonable or necessary. 14 And I think that ought to be the way it should read. 15 I will be happy to answer any 16 questions -- giving the staff more flexibility. 17 MS. ROGERS: I appreciate that, 18 Mr. Fenoglio. And I see that some banks do charge you 19 if your bank account goes down below a certain amount 20 and that's what they're talking about. That would not 21 be considered a reasonable expense. 22 MR. SANDERSON: You know, we can 23 definitely look at that language and maybe possibly 24 rewording it. You know, the way I read it, it's 25 limited to more the NSF checks, because it talks about 0078 1 sufficient to cover all checks written, and transfers, 2 so it's not necessarily -- it would not pertain to a 3 maintenance fee as it relates to a bank account. 4 MS. ROGERS: Right. And hopefully the 5 charities realize that. And hopefully the charity 6 would change their type of bank account if that was 7 the problem. 8 Board members, do you have any other 9 questions? 10 Any other public comment? 11 MS. IVES: Excuse me. I have a public 12 comment on 402.506, if you don't mind. My name is 13 Sharon Ives, and I'm with Fort Worth Bookkeeping. 14 On this rule, (b)(1) where it states 15 "similar documents," would contracts be covered under 16 that? 17 Paragraph (2) regarding the written 18 lease agreement, I don't understand why, if you have a 19 lease agreement between the lessor and the conductor, 20 why you would need an invoice. It should be one or 21 the other. 22 And also toward the back, No. (2), cash 23 disbursement journal required information, 24 Subparagraph (A), organization, I would like to see 25 added "or unit." Same on down in Paragraph (f), first 0079 1 sentence, "A licensed authorized organization 'or 2 unit.'" 3 And I believe those are my comments on 4 this rule. Thank you 5 MS. ROGERS: Thank you, Ms. Ives. 6 Any other comments? 7 AGENDA ITEM NO. 16 8 MS. ROGERS: Moving on to No. 16, 9 report, possible discussion and/or action on draft 10 amendments to 16 TAC 402.600, bingo reports. 11 Mr. Sanderson. 12 MS. ROGERS: Hold on. I had 514. 13 Electronic funds transfers was next. Did I skip one? 14 I did. 600. Okay. 15 MS. ROGERS: Made me think I was wrong. 16 MR. SANDERSON: Yes. Once again, based 17 on comments that were received, there are some changes 18 to this particular rule. Paragraph (a), definitions, 19 is completely eliminated. 20 Down around Line 18 in Paragraph (c), 21 "For quarterly reports," change the word "received" to 22 "submitted electronically." 23 And Line 17, we added some language that 24 says -- this is for the commercial lessor, (f)(1) -- 25 says, "The report shall also include information 0080 1 regarding property taxes on the facility, water, 2 electric, and gas utility expenses, property and 3 casualty insurance premiums for the facility that are 4 paid by the lessor and reimbursement by the 5 organization or unit to the lessor," to help clarify 6 that the commercial lessor only reports on that line 7 item the income for what he received as it relates to 8 a pass-through on the property taxes, insurance and 9 utilities. 10 MS. ROGERS: Is that the only changes to 11 that one? 12 MR. SANDERSON: Line 8 on Page 3, there 13 is an extraneous word "to," that was removed, "lease 14 of bingo equipment and the total sales of cards, 15 sheets, pads and instant bingo..." 16 At the top of Page 5 -- let's see. That 17 change is already in your notebook, that "may result." 18 As a matter of fact, I think Bresnen's eyes were -- 19 what I indicated was changed in (f) was already 20 changed in the notebook; so, yes. That was already in 21 the notebook, (f)(1) the change that I just read out 22 about the property taxes. 23 MS. ROGERS: Mine says "reimbursed," and 24 it "reimbursement." 25 MR. SANDERSON: Yes. 0081 1 MS. ROGERS: Yes. That change was not 2 made. 3 MR. SANDERSON: And that is all of the 4 changes to that rule. 5 MS. ROGERS: Members, any comment? 6 Any public comment at this time? 7 Mr. Bresnen. 8 MR. BRESNEN: Yes. I'm not sure if I 9 have a complaint, because I'm not sure what we have 10 done. Phil, could you just read that photograph 11 (f)(1) the way you've got it changed. 12 MR. SANDERSON: (f)(1) will say, "A 13 commercial lessor holding a license to lease bingo 14 premises must file on a form prescribed by the 15 Commission or in an electronic format prescribed by 16 the Commission a quarterly report stating the rental 17 income received. The report shall also include 18 information regarding property taxes on the facility, 19 water, electric, and gas utility expenses, property 20 and casualty insurance premiums for the facility that 21 are paid by the lessor, and reimbursed by an 22 authorized organization or unit to the lessor. The 23 report must be filed with the Commission on or before 24 the 25th day of the month following the end of the 25 calendar quarter, regardless of whether [any] income 0082 1 was received." 2 MR. BRESNEN: And I assume that the 3 quarterly report form, then, would be revised to 4 reflect this new -- 5 MR. SANDERSON: Yes. The new quarterly 6 report for commercial lessors has separate line items 7 for the pass-through expenses. 8 MR. BRESNEN: One line would be rental 9 income and another line would be the separately stated 10 utilities, insurance and taxes. Is that correct? 11 MR. SANDERSON: Correct. 12 MR. BRESNEN: Okay. I think that's an 13 improvement and one that we talked about, because 14 right now you've got income and expenses kind of in 15 the same line. 16 And I hope I didn't miss it while I was 17 trying to get my mind wrapped around that. But on the 18 last page, the second line on my version, it's -- hold 19 on. It's -- I may have the wrong -- well, the part 20 that says that failure to file a required report by 21 the due date will result in administrative penalty. 22 MR. SANDERSON: That is changed to 23 "may." 24 MR. BRESNEN: Changed to "may." Okay. 25 Good. 0083 1 Those are my comments. Thank you very 2 much. 3 MS. ROGERS: Thank you, sir. 4 Any other public comment? 5 Ms. Ives. 6 MS. IVES: Thank you. Sharon Ives 7 again, Fort Worth Bookkeeping. 8 On the 402.600, bingo report rule 9 regarding the commercial lessor, I don't understand. 10 If the commercial lessor is paying the property taxes, 11 water, electric, gas, and so on as stated in here, why 12 would they need to put that on the quarterly report? 13 MR. SANDERSON: Only if they're 14 receiving reimbursement. 15 MS. IVES: Okay. All right. Thank you. 16 MS. ROGERS: Any other comment, 17 questions? 18 AGENDA ITEM NO. 17 19 MS. ROGERS: Okay. We'll move to Item 20 No. 17, report, possible discussion and/or action on 21 draft amendments to 16 TAC 402.514, electronic funds 22 transferred recordkeeping. 23 Mr. Sanderson. 24 MR. SANDERSON: Thank you. 25 Based on comments that we received to 0084 1 this draft rule, in Paragraph (a), we've added the 2 language -- after "electronic terminal, telephone," we 3 added "mobile phone," because there are some people 4 now that bank on their iPhones. 5 (Phone rings) 6 There are some people who leave the bell 7 on while they're in a meeting. 8 (Laughter) 9 In Paragraph (b)(2)(B), 10 "Authorization(s) shall be reviewed on a regular 11 basis," that language was removed. Paragraph (b) was 12 modified to say, "The licensed authorized organization 13 or unit shall maintain documentation of the board 14 approval of changes and the persons authorized to 15 execute electronic funds transfers." 16 And the other language was removed, and 17 Paragraph (D) was also removed. So it's just 18 documentation of who is authorized to make electronic 19 fund transfers and any changes to that authorization. 20 Paragraph (3), "An officer or director 21 independent of the bingo operations" was removed, and 22 "the bingo chairperson and bookkeeper" were added. 23 And those are the changes based on 24 comments. 25 MS. ROGERS: I would just have one 0085 1 comment. If you took it out or changed it, please do 2 tell me. If you are authorized to sign the checks, if 3 the charities have authorized the bookkeeper to sign 4 their checks, is this stating that you need additional 5 documentation that you are authorized to pay on-line, 6 like let's say your electricity bill on-line or 7 whatever the bill may be? Or is that a -- 8 MR. SANDERSON: Well, the signature 9 cards or the authorization to sign the checks would be 10 sufficient. But when you start banking on-line, 11 sometimes you tend to give out your information so 12 someone else can partake of the activity, they can log 13 in as you and make that payment. 14 So what we're saying is, you need to 15 make sure you're careful with that information and 16 that whoever is -- you know, the organization and the 17 entity needs to know who is authorized to make those 18 transfers. 19 MS. ROGERS: But a signature card at the 20 bank would be enough -- 21 MR. SANDERSON: Yes. 22 MS. ROGERS: -- documentation that this 23 person is authorized to pay the bills, whether this 24 bookkeeper is authorized? 25 MR. SANDERSON: That is correct. 0086 1 MS. ROGERS: Okay. That was my 2 questions. 3 Board members, any other questions? 4 Any public comment? 5 Mr. Bresnen. 6 MR. BRESNEN: A couple of quick things. 7 Thanks for the changes that you've already outlined. 8 On the first page -- I don't have one 9 with the line numbers. But in the definition of 10 "force majeure" -- 11 MR. SANDERSON: That's a different rule. 12 MR. BRESNEN: Oh, I'm sorry. I thought 13 we were on 453. 14 MR. SANDERSON: 514. 15 MR. BRESNEN: My bad. 16 (Laughter) 17 MS. ROGERS: Any other public comment? 18 Ms. Ives. 19 MS. IVES: Thank you. Sharon Ives 20 again. I'm still from Fort Worth Bookkeeping. 21 On Paragraph (2)(A), "Only authorized 22 person(s)," you said that would be itemized or stated 23 who those persons are. Correct? 24 MS. ROGERS: I was verifying that if you 25 were on a signature card to sign the checks for the 0087 1 unit account or the bingo bank account, that that was 2 sufficient documentation that you were able to do EFT 3 transactions. 4 MS. IVES: Okay. And then on down to 5 Paragraph (C) where it states that, "The licensed 6 authorized organization or unit shall maintain 7 documentation of board approval" -- 8 MS. ROGERS: That was taken out. 9 MS. IVES: "Board approval" was taken 10 out. Correct? 11 MS. ROGERS: The entire paragraph. 12 Correct? 13 MR. SANDERSON: No. All of Paragraph 14 (D) was taken out. Paragraph (C) was changed to 15 incorporate -- you know, that's the documentation that 16 would be the signature card that indicates that they 17 have been approved to handle electronic fund 18 transfers. 19 MS. IVES: Okay. Good, because I don't 20 know -- I mean, I'm sure the licensed authorized 21 organization would have a board, but I don't think a 22 unit would have a board. They would most likely have 23 the trustee organization. 24 Paragraph (3), I don't know how other 25 bookkeepers do it, you know, within the State of 0088 1 Texas, but I know in my office, the only electronic 2 funds transfers that we do and have been doing for the 3 last two to three years would be the IRS EFT PS 4 payments, and those are mandatory. You really don't 5 have a choice of doing the old coupon with the check 6 and taking it to your local financial institution, so 7 you're mandated on doing that. 8 So, I mean, there's -- I mean, when I 9 read the rule, I didn't see anything that pertained to 10 that, just the EFTPS for the IRS, the 941, 940 and, of 11 course, the TWC on your quarterly payroll taxes. All 12 of that has to do with payroll taxes. 13 MS. ROGERS: I think it's everything. 14 When they just say "EFT," that means everything. I'm 15 sure some pay their electricity bill and water bill. 16 MS. IVES: I understand; I understand 17 that. 18 Okay. On the second page, Paragraph 19 (2), at the end of the first sentence where it states 20 "invoice or billing statement," if you strictly do 21 just the EFTPS's with the IRS, you will not have an 22 invoice or a billing statement. 23 MR. SANDERSON: What document do you 24 have that tells you how much to pay? 25 MS. IVES: Well, based on, you know, 0089 1 your payroll program, your payroll worksheets or 2 whatever. But, you know, when you do the EFTPS, you 3 have a choice of either doing that over the telephone, 4 which you would have your worksheet, or over the 5 Internet, which you would receive, you know, your 6 confirmation. You receive a confirmation regardless, 7 either way. That would be the only documentation, but 8 it's not an invoice or a billing statement. 9 On down, same subparagraph, (2)(f), at 10 the end of that, "behalf of the organization," I would 11 like to see added "or unit." 12 And on Paragraph (E) where it states 13 that, "The bingo chairperson or other person 14 authorized to sign on the bingo bank account shall 15 notify the organization's financial institution 16 immediately to report problems or if it is suspected 17 that someone has access to the bingo bank account 18 without permission." 19 I don't know about you guys, but if I do 20 my on-line banking and I notice that something is 21 weird, I would be calling not only the financial 22 institution, I would be calling the local authorities. 23 The last I looked, that would be theft. 24 MS. ROGERS: I agree with you. 25 MS. IVES: Thank you. I appreciate it. 0090 1 MS. ROGERS: And, Ms. Ives, if you will 2 look at No. (2)(G), I think that says the confirmation 3 receipt, if it's provided, would be sufficient, I 4 believe. Am I correct on that? 5 MS. IVES: Yes. 6 MS. ROGERS: So it is saying if you get 7 a confirmation receipt from the -- 8 MS. IVES: Okay. 9 MR. SANDERSON: Yes. 10 MS. ROGERS: Thank you. 11 MS. IVES: Thank you. 12 MS. ROGERS: Any other comments? 13 AGENDA ITEM NO. 18 14 MS. ROGERS: At this time we'll move to 15 No. 18, report, possible discussion and/or action on 16 draft amendments to 16 TAC 402.450, request for 17 waiver. 18 Mr. Sanderson. 19 MR. SANDERSON: Once again, there have 20 been some changes, based on the receipt of informal 21 comment, as it relates to the definition of "force 22 majeure" -- there he is. The language after "the 23 Bingo Enabling Act or Charitable Bingo Administrative 24 Rules" has been deleted, removing on Line 10 and 11, 25 "provided that failure to comply could not be avoided 0091 1 by the exercise of due care by the organization or 2 unit." 3 On Page 2, Paragraph (E) has been 4 removed, "a copy of the meeting minutes where the 5 organization voted as a whole to apply for the Waiver" 6 has been removed. 7 And then under Paragraph (3) as it 8 relates to the credible business plan, Paragraphs (E), 9 (F), (G) and (H) are open for discussion to an extent. 10 And I know this rule as well as 453 that talks about 11 the operating capital, I believe, the same basic 12 changes were made to the definition of "force majeure" 13 as well as the credible business plan. 14 And what we did with these two rules is, 15 we actually went out and looked to see what a credible 16 business plan is, and we put all that down. Now, what 17 we have also been working on are forms and templates 18 that organizations can use to fill in the blanks to 19 help create cash flow analysis, market trends and so 20 forth. 21 These are rules that we need to move 22 forward with. If you want to assign them to a 23 workgroup, then the workgroup probably needs to meet 24 within the next week, primarily because these do 25 pertain strictly to House Bill 1474, and we do have a 0092 1 mandatory requirement that rules be adopted by 2 April 1st. And we're hoping to at least have them 3 published by April 1st. 4 And we have already started to receive 5 some inquiries to request waivers for both the 6 operating capital and the net proceeds. So we're 7 reviewing the business plan language. If someone has 8 suitable substitute language, I would be glad to 9 review that and take a look at it. But, like I said, 10 the last four rules -- 450, 451, 452 and 453 -- we 11 need to move forward with. And I don't think -- in 12 all, I did not receive very many comments to these 13 rules to begin with when I sent them out. 14 So with that, I'll open up to your 15 comments. 16 MS. ROGERS: I just had one question. 17 On Line 15, (A) "to be exempt from bingo operations 18 resulting in net proceeds over the license period," 19 could you just, for my education, give me a for 20 instance why or what -- why they would ask for a 21 waiver of that. What situation is that trying to 22 handle? Is that possible? 23 MR. SANDERSON: Well, I can try to give 24 you some examples and try to give you some 25 understanding. And as it relates to several of 0093 1 these -- actually, all four of these particular rules, 2 House Bill 1474 had significant changes to the bingo 3 account as well as distributions. It now requires all 4 net proceeds to be disbursed. It requires or 5 authorizes you to keep a certain amount in your bingo 6 account and anything over that amount has to be 7 disbursed. 8 Then there is another requirement that 9 bingo operations must have net proceeds over the 10 course of their license period. Or if it's a two-year 11 license, then each year of that license period. 12 So if an organization operates four 13 quarters and they have zero or negative net proceeds, 14 then their license is subject to denial or revocation. 15 If they can prove, because of some force majeure, that 16 something totally beyond their control caused them to 17 not make money and we review that and say, "Okay. 18 We'll give you a chance to operate another year," then 19 this is what the documentation is that's required to 20 ensure us that they're going to make money. 21 We have some organizations out there 22 that have net receipts -- now, the term "net receipts" 23 is defined as gross minus prizes. So taking the prize 24 payouts completely out of the category, what their net 25 receipts were $500,000 last year, their expenses were 0094 1 $550,000. So for the year, they lost $50,000. It 2 would take something pretty significant for me to say, 3 "Well, you need to go ahead and keep playing another 4 year." 5 So if there is, like I said, an instance 6 that caused that and they can document it and provide 7 sufficient documentation to review and convince the 8 division that there is this need or it would be in the 9 best interest of the organization to continue 10 operating and they've got a plan to try to make a 11 profit, then they could request the waiver and 12 exemption and continue to operate. If they have 13 operated at a negative net proceeds for more than a 14 year, then I think it would probably take a lot of 15 documentation. 16 And so that's one of the areas that 17 these rules address. And, you know, Mr. Bresnen made, 18 you know, reference to it earlier when he talked about 19 the net proceeds that, you know, this is where, you 20 know, the rubber hits the road, so to speak, that the 21 organizations have to make money and they just can't 22 be in bingo for someone else to make money. 23 MS. ROGERS: Okay. Thank you very much. 24 MR. SANDERSON: Does that help? 25 MS. ROGERS: That makes it very clear, 0095 1 very clear. 2 My suggestion at this time would be to 3 form a workgroup separate from Books and Records 4 Requirements, because I think that is a little bit 5 loaded and these need prompt attention. 6 Is there someone on the board that would 7 like to chair. Francis, would you be willing to chair 8 a workgroup? 9 MR. CIANCARELLI: I'm already obligated 10 for the next two weeks to (inaudible). 11 MS. ROGERS: Okay. Joe, would you be -- 12 MR. WILLIAMS: I'm sorry. 13 MS. ROGERS: No? 14 MR. WILLIAMS: I'm sorry. 15 MS. ROGERS: Okay. 16 MR. SILVER: I'll do it. 17 MS. ROGERS: Earl. Thank you, sir. 18 MR. SILVER: What am I doing? 19 (Laughter) 20 MS. ROGERS: You're going to chair a 21 workgroup that's going to help Phil look over these 22 last four rules. It would be 450, 451, 452 and 453, 23 because they need prompt attention. They need to have 24 something by April 1st. 25 Correct, Phil? 0096 1 MR. SANDERSON: Yes. Actually, we have 2 to have them ready a little bit quicker, because they 3 have to be presented to the Commission at their next 4 meeting. There is a Commission meeting tomorrow, so 5 the next Commission meeting would probably be sometime 6 in early to mid-March. I don't have an exact date. 7 So we need to have a draft ready to present to them 8 probably by -- I would say probably by no later than 9 the end of next week to the middle of the following 10 week. So that's -- 11 MS. ROGERS: This is going to be a tough 12 task, needs a lot of attention. 13 Is there any comment, board members, 14 that y'all have on this rule specifically? 15 No. 16 Mr. Silver, would you like to pick or 17 ask individuals to assist you in this workgroup? 18 MR. SILVER: If somebody wants to 19 volunteer, because I know it's going to be quick, and 20 I don't know what everybody's schedule is, so they 21 would just have to tell me. 22 MS. ROGERS: Are there any volunteers 23 from the board? 24 MR. BOURGOYNE: I would be happy to 25 volunteer. I've just got a couple of days next week 0097 1 I'm tied up. 2 MS. ROGERS: Okay. Thank you. 3 MR. SANDERSON: If I might ask -- you 4 know, as I mentioned, you know, the item that received 5 the most comment was the business plan and what should 6 constitute the business plan. I will provide you a 7 draft of what we have as far as the frequently asked 8 questions and some of the templates that we're working 9 on at this point in time. I would probably like to 10 schedule a meeting probably around Wednesday or 11 Thursday of next week, if that's possible for either 12 of y'all. 13 MR. BOURGOYNE: I've got two or three 14 days next week I'm not going to be able available 15 except by phone or email. 16 MR. SANDERSON: Okay. 17 MR. BOURGOYNE: I will be in New 18 Hampshire. 19 MR. SANDERSON: That you will not be 20 available? 21 MR. BOURGOYNE: Correct. 22 MR. SANDERSON: What days will you be 23 available? 24 MR. BOURGOYNE: Tuesday through Thursday 25 I won't be available. 0098 1 MR. SANDERSON: Okay. Maybe we can meet 2 next Friday. Will that be all right? 3 MR. BOURGOYNE: I can do that. 4 MR. SANDERSON: Okay. So we'll look at 5 scheduling something Friday. 6 Earl? 7 MR. SILVER: Thank you. Friday morning 8 will be good. 9 MR. SANDERSON: Okay. 10 MS. ROGERS: Any other board members? 11 Public members? Mr. Steve Bresnen, 12 Mr. Stephen Fenoglio. 13 Anyone else? 14 Okay. So we have a workgroup. Would 15 you like to call it House Bill rules or -- 16 MR. SANDERSON: Just call it Operating 17 Capital and Net Proceeds. 18 MS. ROGERS: Okay. It will be chaired 19 by Mr. Earl Silver. Mr. Emile Bourgoyne, Steve 20 Fenoglio and Steve Bresnen. 21 MR. BRESNEN: May I make a quick 22 comment? 23 MS. ROGERS: Yes. I was just fixing to 24 comment. 25 MR. BRESNEN: Sorry. 0099 1 MS. ROGERS: That's okay. 2 MR. BRESNEN: I didn't mean to steal 3 your thunder. 4 MS. ROGERS: No, sir. That's fine. 5 MR. BRESNEN: Let me just tell you what, 6 for people in the room here, this was one of the most 7 difficult areas to work in, because in the past, we've 8 had situations where the -- y'all remember when Bruce 9 was showing us the chart that had the required 10 distributions on the bottom and then the actual 11 distributions. And then I think net -- was it net 12 proceeds on the top? 13 MR. SANDERSON: Net proceeds, yes. 14 MR. BRESNEN: Well, you notice that red 15 line on the bottom was completely removed from the two 16 lines at the top. And what we were getting was a 17 whole lot of people, in the Legislature in particular, 18 that were under the impression that the 35 percent 19 rule meant that the charity got 35 percent off the 20 top, which would be great and I would be in that 21 business if you could make a 35 percent guaranteed 22 profit every year after all your expenses. Better 23 than Wal-Mart, better that Berkshire Hathaway. 24 So we got tired of fighting that fight 25 and trying to explain that. So we said, "Let's take 0100 1 everything that you make and require it to be 2 distributed," because there was one organization in 3 the state had $450,000 in its bingo account. 4 We're like, "Well, why aren't you 5 distributing that?" 6 They said, "Well, we're saving for a 7 building." 8 We are like, "Well, my god, take it out 9 and put it somewhere else so it gets credited towards 10 distributions." 11 So what we did was, we said, "You have 12 to be able to keep some money to operate on," and we 13 struggled with how to set that limit, and we took 14 things out like the prizes -- david Heinlein was 15 instrumental in helping realize these things -- and 16 any monies that you were holding for your taxes and 17 those kinds of things out of the equation. 18 On the other hand, you've got 1,400 19 charities operating, and some of these operations are 20 very substantial. So there was a concern whether that 21 $50,000 limit was going to be enough. There was also 22 concern of people that were in bingo just to be 23 operating a bingo game and not to do anything for 24 charitable purposes. So the concept was, you got to 25 make money. Now, that's not a very tough concept to 0101 1 meet in here, you know. You've got to make a dollar. 2 Now, in the example that Phil described, 3 if somebody has got $500,000 after prizes are paid and 4 they've got $550,000 in expenses, then one of two 5 things is happening. They either need to go under, 6 because they can't sustain that business at that 7 level, or they have got to get ahold of their 8 operation in a way to knock out $51,000 worth of 9 expenses. It's as simple as that. 10 The thing that I don't like the rule -- 11 that I don't like about the rule the way it is right 12 now is, it's way too formalistic. It's one of these 13 rules -- and I hope I'm talking about the right one 14 this time -- has in it that if you do a market 15 analysis of the geographical area that you're in or 16 something -- and, you know, we're not going to be able 17 to do that. Most of the charities are not going to be 18 able to do that without going and spending money on 19 it, and that's going in the opposite direction of 20 where they need to go. 21 All that has to happen here is the 22 plan -- either the business plan has to be credible or 23 your evidence of the force majeure -- by the way, this 24 statute says "credible evidence of circumstances 25 beyond the control of the organization, including 0102 1 force majeure." It's not limited to force majeure. 2 Force majeure is a hurricane, it's a lightning- 3 strikes-your-building-and-fries-everything type of 4 deal. That's really the easy one to me. 5 But in the circumstance that you were 6 talking about, Phil, I think if somebody came in with 7 a credible business plan and part of it was, "We're 8 going to cut our expenses by $51,000 and here is how 9 we're going to do it, if the agency, if the board can 10 look -- I can't remember. Did we allow you to do this 11 or does it have to go to the whole Commission? It may 12 be the Commission, but they may be able to delegate 13 that to you. 14 But the bottom line is, if somebody can 15 come in with their records and say, "Look, we spent 16 too much on expenses and we're cutting everybody back 17 10 percent. That's going to save us $60,000, and we 18 will make a profit," then to me, that's simple. But 19 it's completely within the discretion of the agency to 20 decide what is credible. 21 So I think what we come up with, at 22 least in this first year in this unplowed territory 23 here, is something that gives the broadest discretion 24 to the agency, the least impact in terms of expense on 25 the charity to put the thing together, and makes it 0103 1 absolutely clear in the rule that it's in the 2 discretion of the Commission to determine what 3 constitutes credible. Then we can always change this 4 rule if it's getting out of hand and people are 5 finding ways around it and not doing what the 6 Legislature intended. 7 That's the background. I think that's 8 where we need to go. I think we need to make it 9 simple, streamlined, and go from there. And I really 10 wish David Heinlein would volunteer to be on this 11 thing, for reasons he knows. 12 Thank you. 13 MS. ROGERS: Thank you, sir. 14 MR. KELLER: Can I volunteer for that 15 committee? 16 MS. ROGERS: Yes, sir. 17 MR. KELLER: I volunteer to be on that 18 committee. 19 MS. ROGERS: Okay. That was Kris 20 Keller. 21 Mr. Heinlein? 22 MR. HEINLEIN: I don't think Earl is 23 going to let me stay off. 24 MR. SILVER: No, I'll just call you. 25 MS. ROGERS: David Heinlein. Thank you. 0104 1 Any other public comment? 2 AGENDA ITEM NO. 19 3 MS. ROGERS: We will move to Item 19, 4 report, possible discussion and/or action on draft 5 amendments to 16 TAC 402.451, operating capital. 6 MR. SANDERSON: Actually, if I'm not 7 mistaken, there were no comments received. There were 8 not any comments received to this particular rule at 9 all, so there's no changes from what's in your 10 notebook or from what was sent out earlier. 11 MS. ROGERS: Members, do you have any 12 comment? 13 Ms. Weaver? 14 MS. WEAVER: Well, maybe a few. On the 15 date, I guess on the third page under (h), it says the 16 funds -- are these just annual dates that we've pulled 17 out to try to make sure that -- 18 MR. SANDERSON: This is actually in the 19 legislation. 20 MS. WEAVER: Okay. 21 MS. ROGERS: Any further comment, 22 Markey? 23 MS. WEAVER: No, ma'am. 24 MS. ROGERS: No? 25 Any public comment? 0105 1 Stephen Fenoglio. 2 MR. FENOGLIO: Yes, just briefly. I 3 assume this rule would likewise be a part of the 4 subcommittee. And the reason I raise that is in 5 Subparagraph (j), a licensed authorization may apply 6 for an increase in the retained operating capital 7 limit. I'm assuming that refers to the other rule 8 that we're looking at on operating capital limits? 9 MR. SANDERSON: It does, yes. 10 MR. FENOGLIO: And in that regard, I 11 think we fix it. In the other one we fix this, but I 12 think we ought to look at both. 13 MS. ROGERS: Yes, sir, you are correct. 14 All four of these next rules will be in there. 15 Any other public comment? 16 AGENDA ITEM NO. 20 17 MS. ROGERS: Then we will move to Item 18 20, report, possible discussion and/or action on draft 19 amendments to 16 TAC 402.452, net proceeds. 20 Mr. Sanderson. 21 MR. SANDERSON: Once again, we received 22 very little comment. Paragraph (a) has been reworded 23 a little bit, took out the word "the" at the beginning 24 and just say, "Net proceeds from conduct of bingo must 25 result in a positive amount over . . . the 0106 1 organization's license period." Then we added that, 2 "If the organization has a two-year license, the net 3 proceeds from the conduct of bingo must result in a 4 positive amount over each year of the organization's 5 license period." 6 The other change was on Line 19 -- I'm 7 sorry -- Line 18. We added the word "positive." It 8 will say "fail to result in positive net proceeds." 9 And then on the last page, there was a 10 hard return missing, so there was a Paragraph (d) that 11 was in the middle of Paragraph (d), which has now 12 become (e). 13 That's it. 14 MS. ROGERS: Any comments? 15 Any public comments? 16 MR. SMITH: Trace Smith. I've just got 17 a quick question. I'm sure this is going to go to a 18 workgroup or whatever. 19 So I'm to understand at the very first 20 Line, (a), it says, "Net proceeds from the conduct of 21 bingo must result in a positive amount over each year 22 of the organization's license period." Is that 23 correct? 24 MR. SANDERSON: That is correct. 25 MR. SMITH: Okay. Then on (b)(1) it 0107 1 says, "The more recent quarterly report information of 2 the organization or unit will be used to determine if 3 the bingo operations of the organization resulted in 4 net proceeds." 5 MR. SANDERSON: We did add a word in 6 there, "the most recently filed quarterly report," so 7 in case if there were any amendments to a particular 8 quarter, that it would be encompassed in that. 9 MR. SMITH: Okay. So which one -- I'm 10 unclear as to which one you go by. Do you go by the 11 most recently filed quarterly report or the year's -- 12 MR. SANDERSON: Well, Paragraph (2) 13 tells you how -- the calculation for a one-year 14 license is based on the reports for the four calendar 15 quarters immediately preceding the license end date. 16 MR. SMITH: Okay. Here is my main 17 question: I know a lot of times some charities have 18 good times in the wintertime and they have bad times 19 in the summertime. If overall for the whole year, I 20 guess what I'm trying to understand, even if you have 21 one quarter that, say, you had a negative on one 22 quarter, if you had a positive for the whole year, 23 then that would be all right, not just for the 24 quarter? 25 MR. SANDERSON: The law is net proceeds 0108 1 for the year, for the license period, yes. 2 MR. SMITH: Okay. All right. Thank 3 you. 4 MS. ROGERS: Thank you. 5 Any other public comment? 6 Ms. Ives. 7 MS. IVES: Sharon Ives again. 8 On that (b)(1), I don't understand why 9 you just don't delete No. (1). It's too confusing, 10 stating that you are going to use the most recently 11 filed quarterly report, but everything is based on an 12 annual period, a look-back period or whatever you want 13 to call it. I just don't understand why you don't 14 delete. 15 MR. SANDERSON: Well, if it needs to be 16 made clearer, we can. What we're talking about is an 17 organization, we'll say they filed their first quarter 18 of 2009 return, and that would be one of the four 19 quarters that we look at in determining the net 20 proceeds. 21 Somewhere in July or August, they 22 realize that they made a mistake on that first 23 quarterly report and they file an amended return. So 24 we're saying that we're going to use the most recently 25 filed return for the quarter, not necessarily all the 0109 1 returns that are filed during the four quarters. That 2 probably -- looks like it confuses you even more so. 3 MS. IVES: Do I have that puzzled look 4 about me? 5 MR. SANDERSON: What we're wanting is 6 the four quarters and the four returns that are the 7 most recent returns for that particular quarter. If 8 there have been audits, if there has been an internal 9 audit by the organization for whatever reason -- you 10 know, they forgot to report a whole month and they 11 realized it and sent another return in, you know, 12 making that amendment -- that we're looking at the 13 most recent return for a particular quarter. 14 MS. IVES: Okay. The way that I read 15 this was that each organization that sends in a 16 quarterly report, you're going to look at it. If it's 17 in the negative, then everybody will be in trouble. 18 But then, you know, when you read 19 different paragraphs, it's when the organization comes 20 up for renewal, then the renewal time period, you're 21 going to look back at the first complete quarter, of 22 course. And if that's in the negative, then you're 23 going to go back three more quarters to do the year 24 average or -- 25 MR. SANDERSON: No. The calculation is 0110 1 based on the four quarters, all four quarters prior to 2 the license end date. 3 MS. IVES: Okay. That's it. That's all 4 I have. Thank you. 5 MS. ROGERS: Thank you. 6 So No. (1) is just saying that if 7 they've amended, you're going to use that one first -- 8 MR. SANDERSON: Yes. 9 MS. ROGERS: -- and what they filed 10 prior? 11 MR. SANDERSON: Yes, that is correct. 12 MS. ROGERS: Okay. Any other public 13 comment? 14 AGENDA ITEM NO. 21 15 MS. ROGERS: We'll move to Item No. 21, 16 report, possible discussion and/or action on draft 17 amendments to 16 TAC 402.453, request for operating 18 capital increase. 19 MR. SANDERSON: This rule has basically 20 the same changes that were made to 402.450 in the 21 definition of "force majeure," remove the last part of 22 that definition, provided that failure to comply could 23 not be avoided by the exercise of due care by the 24 organization or unit, so that's been removed. 25 In Paragraph (2), we added the term, to 0111 1 be clear, that it's necessary to facilitate the bingo 2 operations of the organization or unit. 3 Paragraph (C), which is the top of Page 4 2, changed the wording of (C) to say, "the license 5 period" instead of "the requested license period" and 6 just indicated that it should encompass the license 7 period that's being utilized for the request to exceed 8 your capital. 9 The next paragraph, (D), has been 10 removed. 11 Paragraph (4), the business plan, we 12 added "for the organization's bingo operation," just 13 once again to be clear. And again, it has Paragraphs 14 (E), (F), (G) and (H) which received significant 15 comment that will be discussed in the workgroup. 16 And the last page on Paragraph (f), 17 No. (2), we changed it from the Charitable Bingo 18 Administrative Rule on use of proceeds to "Charitable 19 Purpose as it's defined in Section 2001.454 of the 20 Act." 21 And those are all the changes to 453. 22 MS. ROGERS: Members, any comments? 23 Any public comment? 24 MR. SANDERSON: Thank you very much, 25 Madam Chair. I hope in receiving some of these 0112 1 comments before the BAC meeting, it helps to make the 2 changes that we can make and recommend so that it goes 3 smoothly. We just went through 12 rules in probably 4 about just an hour and 20 minutes, which is very good, 5 although some have been assigned to workgroups, but I 6 think it went very well. 7 MS. ROGERS: I think it does help. I 8 think it helps to work on it a little bit before. 9 Thank you. 10 AGENDA ITEM NO. 22 11 MS. ROGERS: Item No. 22, public 12 comment. Do we have anyone who would like to speak? 13 AGENDA ITEM NO. 23 14 MS. ROGERS: Item No. 23, consideration 15 of and possible action on future Bingo Advisory 16 Committee meeting dates and/or items to be considered 17 for future meetings. 18 I went through and wrote down the 19 next -- I guess the next one would be May? 20 MR. SANDERSON: I will leave that 21 totally up to the Chair. We did miss a meeting, you 22 know, in the fall, because of the late appointments. 23 But if you want to, you know, have three more meetings 24 between now and the end of the year, there may be -- 25 you know, some of these rules we may need to look at 0113 1 again as it relates to what was assigned to the Books 2 and Records Committee and the Market Conduct 3 Committee. So, you know, if you want to have one in 4 late April and then maybe one in early June, then 5 maybe one in late July or August, it's entirely up to 6 you. 7 MS. ROGERS: I actually liked when we 8 did it last year. We went ahead and set out our 9 meetings, because then you have time for those of you 10 that are out of town, which is all of us almost, you 11 have time to prepare your schedule. 12 So late April -- I don't have my 13 calendar in front of me. 14 In late April -- when is -- April 1st is 15 when we have to have all the things for House Bill 16 1474. Correct? 17 MR. SANDERSON: April 1st is for House 18 Bill 1474, which means that any rules that would be 19 pertaining to that particular requirement are going to 20 be at the March Commission meeting. They will he 21 proposed for public comment at that point in time and 22 then hopefully adopted in the April or the May meeting 23 for the Commission. 24 These other rules are not necessarily 25 driven by House Bill 1474 to the extent that the last 0114 1 four we talked about are. But I would like to, like I 2 said, get those routed quickly. And so if the 3 workgroups that are involved in these can meet and 4 have some input back to me, you know, fairly quickly 5 on those rules, then I think that would help as well. 6 MS. ROGERS: Okay. So if we look at the 7 third Wednesday of April, that would be April 21st. 8 MR. SANDERSON: And that's fine. I just 9 want to be mindful of the Heinleins of the world, that 10 April 25th is the due date for the quarterly reports 11 and April 15th is tax date of the United States. 12 MS. ROGERS: Well, that's why I was not 13 recommending April 14th, because I'm right there, too. 14 MR. SANDERSON: So that would be -- the 15 21st would be fine, that Wednesday, if it's the 16 pleasure of the committee. 17 MS. ROGERS: The 28th? 28th, if 18 everyone will put that down in their calendar, if that 19 is available, if the room is available. 20 MR. SANDERSON: Right now it is, yes. 21 MS. ROGERS: Okay. That will be our 22 next meeting. We will discuss Market Conduct, our new 23 workgroup, Books and Records. We'll -- 24 MS. WEAVER: When is the Commissioners' 25 meeting? 0115 1 MR. SANDERSON: The Commissioners have a 2 meeting tomorrow, which is February the 11th. They do 3 not necessarily have a standing meeting date. They've 4 been meeting around the second Thursday, I believe, is 5 what they try to look at. 6 MS. WEAVER: So if we have our meeting 7 on the 24th, we'll have enough time to get the 8 Commission prepared before then for their next meting? 9 MR. SANDERSON: For the May meeting? 10 MS. WEAVER: Or would it need to be the 11 21st? 12 MR. SANDERSON: It would probably need 13 to be the 21st or earlier that week, other than a 14 Wednesday, if that's -- you know, that's entirely up 15 to you. But if they were to meet on the second 16 Thursday, it would be May 13th, which would indicate 17 we would have to have all that information to the 18 Commissioners by actually Thursday the 29th. 19 MS. WEAVER: I don't think we would have 20 time. 21 MR. SANDERSON: Or if you want to meet 22 late March. I mean, that's -- 23 MS. ROGERS: Would it be more 24 convenience to meet earlier April? Give me some input 25 here, members, please. 0116 1 MR. BOURGOYNE: I can't make the 12th, 2 13th, and 14th. 3 MR. SANDERSON: April 7th, the first 4 Wednesday? 5 MS. ROGERS: Emile? Emile, you cannot 6 make it? 7 MR. BOURGOYNE: I can make that it week, 8 the 7th. 9 MR. HEINLEIN: The bank statements 10 aren't in yet. 11 MR. SANDERSON: So you don't have any 12 work today. Right? 13 MS. ROGERS: Correct; correct. 14 And if we move our meeting to April 7th, 15 then we should have -- 16 MS. WEAVER: Plenty of time. 17 MS. ROGERS: -- plenty of time to have 18 information for the Commissioners. Is that okay with 19 everyone, April 7th? 20 MR. WEEKLEY: That's good. 21 MS. ROGERS: Okay. Our next meeting 22 will be April 7th. 23 Thank you, Mr. Weaver, for bringing that 24 up. 25 And we will put on there the Books and 0117 1 Records. 2 MR. SANDERSON: Books and Records -- 3 MS. ROGERS: Market Conduct. 4 MR. SANDERSON: -- Market Conduct and 5 the tabled item from -- 6 MS. ROGERS: Report and possible 7 discussions on new products that may help charities? 8 MR. SILVER: Yes, ma'am. 9 MS. ROGERS: We will have a report. 10 Other items, members? 11 Mr. Fenoglio? 12 MR. FENOGLIO: On the 19th, Phil, we 13 discussed February 19th for the meeting -- 14 MR. SANDERSON: Yes. 15 MR. FENOGLIO: -- but we didn't get a 16 time. And before everyone scoots, it might be 17 appropriate to coordinate calenders on that -- 18 MS. ROGERS: Okay. 19 MR. FENOGLIO: -- given the time 20 deadlines that Phil is operating under. 21 MR. SANDERSON: Somebody said the 22 morning of the 19th was -- 23 MR. FENOGLIO: That would be good. You 24 just tell me what time to be there. 25 MR. SANDERSON: Nine o'clock will do, 0118 1 from 9:00 to noon. 2 MR. FENOGLIO: That works. And we may 3 want to -- I didn't keep track of everyone, but 4 someone may want to call in, which y'all accommodate, 5 I'll be here for that. 6 MR. SANDERSON: And we'll have a 7 conference call number, yes. 8 MR. FENOGLIO: Okay. Thanks. 9 MS. ROGERS: Board members, would you 10 like to go ahead and try to get the rest of the year 11 scheduled out? 12 MR. BOURGOYNE: Yes. 13 MS. ROGERS: Okay. So that will put us 14 in the beginning of July for our next meeting. 15 July 4th week is that very beginning one. 16 MS. WEAVER: No. 17 MS. ROGERS: July 14th, is that good for 18 everyone so far? Phil? 19 MR. SANDERSON: That's fine, yes. 20 MS. ROGERS: July 14, 2010, will put us 21 into October. 22 MR. SILVER: When does the nomination 23 period end for the new members? 24 MR. SANDERSON: The nomination period 25 will -- well, the nomination period ends April the 0119 1 30th. So if you want to have a late May or early June 2 meeting to discuss the nominations as well as your 3 report to the Commission on the annual report, that 4 might be a good item to look at. 5 MS. ROGERS: Okay. 6 MR. SANDERSON: Like June the 23rd, 7 possibly, or the 16th. 8 MS. ROGERS: So move the July meeting to 9 June? 10 MR. SANDERSON: Yes. 11 MS. ROGERS: Okay. Then instead of 12 July 14th, June 23rd? 13 MR. SANDERSON: June 23rd? 14 MS. ROGERS: Yes. 15 MR. SILVER: Yes, sir. 16 MS. WEAVER: It was moved to June 23rd. 17 MR. WEEKLEY: June 23rd. 18 MS. ROGERS: Okay. And then we'll look 19 at having one in September, tentatively planned? 20 Yes? September 15th? 21 MR. SILVER: That will be good. 22 MR. SANDERSON: Okay. 23 MS. WEAVER: I can't. 24 MS. ROGERS: No? September 22nd? 25 MS. WEAVER: I can't. 0120 1 MS. ROGERS: September 8th? 2 MS. WEAVER: I can. 3 MS. ROGERS: Okay. Yeah! 4 MR. WEEKLEY: September the 8th, then? 5 MS. ROGERS: Yes, sir, September 8th. 6 Do you want to stop with that one? 7 MR. SANDERSON: That will probably be 8 fine. 9 MS. ROGERS: Okay. So these meetings 10 will be: April 7, 2010 will be our next Bingo 11 Advisory Committee meeting. Then we will schedule for 12 June 23, 2010, September 8, 2010. Okay. 13 Any other items that y'all can think of 14 that need to be on there? If not, please email Phil. 15 Commissioners Schenck -- is he still 16 here? 17 Yes, sir. Would you like to comment at 18 this time on anything? 19 COMMISSIONER SCHENCK: I guess so. I 20 want to thank our new members for joining us. I know 21 that I haven't had a chance to say hello. 22 Mr. Bourgoyne, welcome. 23 Mr. Williams and I got a chance to say 24 hello. 25 We really appreciate your service. 0121 1 We're really looking for your ideas and your full 2 participation. And I know that this advisory 3 committee has been very helpful to the Commission. We 4 value your work and we really look forward to your 5 full and frank participation in these rulemakings 6 procedures and then the nominations process that's 7 coming up. 8 And my door is open to you. If you have 9 any questions and any concerns, feel free to talk, 10 obviously, to Phil and to me as well. Thank you very 11 much. 12 MS. ROGERS: Thank you, sir. And we 13 greatly appreciate you attending our meetings. 14 Any other comments? 15 AGENDA ITEM NO. 24 16 MS. ROGERS: At this time the meeting 17 will be adjourned. It is 12:32. Thank you very much. 18 (Meeting adjourned: 12:32 p.m.) 19 20 21 22 23 24 25 0122 1 C E R T I F I C A T E 2 STATE OF TEXAS ) 3 COUNTY OF TRAVIS ) 4 I, Aloma J. Kennedy, a Certified 5 Shorthand Reporter in and for the State of Texas, do 6 hereby certify that the above-mentioned matter 7 occurred as hereinbefore set out. 8 I FURTHER CERTIFY THAT the proceedings 9 of such were reported by me or under my supervision, 10 later reduced to typewritten form under my supervision 11 and control and that the foregoing pages are a full, 12 true and correct transcription of the original notes. 13 IN WITNESS WHEREOF, I have hereunto set 14 my hand and seal this 19th day of February 2010. 15 16 17 ________________________________ 18 Aloma J. Kennedy Certified Shorthand Reporter 19 CSR No. 494 - Expires 12/31/10 20 Firm Registration No. 276 Kennedy Reporting Service, Inc. 21 Cambridge Tower 1801 Lavaca Street, Suite 115 22 Austin, Texas 78701 512.474.2233 23 24 25