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 8   
 9                   BINGO ADVISORY COMMITTEE
10   
11                         MAY 25, 2005
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18             BE IT REMEMBERED that the BINGO ADVISORY
19   COMMITTEE held a hearing on the 25th day of May, 2005,
20   at 10:00 a.m., before Kimberlye A. Furr, RPR, CSR in
21   and for the State of Texas, reported by machine
22   shorthand, at the offices of the Texas Lottery
23   Commission, 611 East 6th Street, Auditorium, Austin,
24   Texas, 78701, whereupon the following proceedings were
25   had:
0002
 1   
 2                         APPEARANCES
 3   
 4   Chairman:
 5              Ms. Suzanne Taylor
 6   Charitable Bingo Operations Director:
 7             Mr. Billy Atkins
 8   Committee Members:
 9              Mr. Daniel Moore
10              Mr. Larry Whittington
11              Mr. Mario Manio
12              Mr. John (Jack) Dougherty
13              Mr. Thomas (Tom) Weekley
14              Ms. Rosalie Lopez
15   Reporter's Certification ...................... 127
16                            INDEX
17   
18   AGENDA ITEMS
19   Item Number 1 .................................   4
20   Item Number 2 .................................   4
21   Item Number 3 .................................   4
22   Item Number 4 .................................   6
23   Item Number 5 .................................   7
24   Item Number 6 .................................  13
25   Item Number 7 .................................  28
0003
 1   Item Number 8 .................................  96
 2   Item Number 9 .................................  97
 3   Item Number 10 ................................  99
 4   Item Number 11 ................................ 116
 5   Item Number 12 ................................ 117
 6   
 7   
 8   
 9   
10   
11   
12   
13   
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16   
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20   
21   
22   
23   
24   
25   
0004
 1                     (AGENDA ITEM NO. 1)
 2                  MS. TAYLOR:  It's 10:02, so we'll call
 3   the meeting to order.
 4                  First of all we'd like to express our
 5   appreciation to Commissioner Clowe for being here.  We
 6   love having him.  Anything you want to say at any time,
 7   you know we love your words of wisdom
 8                     (AGENDA ITEM NO. 2)
 9                  MS. TAYLOR:  Item Number Two:
10   Consideration of and possible action on the minutes of
11   the March 30th, 2005 Bingo Advisory Committee meeting.
12                  These are posted on the web.  Is there a
13   motion to approve?
14                  MR. MOORE:  I make a motion to approve.
15                  MR. MANIO:  Second the motion.
16                  MS. TAYLOR:  All in favor.  It's
17   unanimous.
18                     (AGENDA ITEM NO. 3)
19                  MS. TAYLOR:  Item Number Three:
20   Recognition of new Bingo Advisory Committee member and
21   outgoing Bingo Advisory Committee member.
22                  We'd like to welcome Rosie Lopez, our
23   new member.  Rosie, if you'd like to let us know about
24   you and where you come from and what you do.
25                  MS. LOPEZ:  Thank you for having me here
0005
 1   today.  I'm real excited about being a part of the
 2   Bingo Advisory Committee.  I represent Keep America
 3   Beautiful, which is, of course, a nonprofit
 4   organization in Odessa, Texas.  Most of you have heard
 5   of keep America beautiful and keep Texas beautiful and
 6   keep whatever city beautiful that you're in, that is
 7   the nature of our business.  And we're very fortunate
 8   to have been a part of charitable bingo for about
 9   almost 18 years, and so we're very grateful for Charity
10   bingo in our organization.  Thank you.
11                  MS. TAYLOR:  Thank you.  We're glad to
12   have you.
13                  At this time it's also my sad duty to
14   say good-bye to Pete.  Pete, we've got this award.  We
15   appreciate everything you've gone, and you know we
16   didn't want to let you go, as you can tell.  Rosie,
17   we're glad to have you, we're just crazy about Pete.
18   We've got a certificate here and it says, Pete
19   Pavlovsky is recognized for service on the Bingo
20   Advisory Committee, 2002 to 2005, and it is signed by
21   Commissioner Clowe and Mr. Atkins.  We'd love to give
22   this to you.  We also have Pete's name card and we're
23   going to pass it around, and any on those on the
24   committee who would like to write anything, you can
25   write it on the back and then we'll give it to Pete.
0006
 1                     (AGENDA ITEM NO. 4)
 2                  MS. TAYLOR:  Okay.  That takes us to
 3   Item Number Four:  Consideration of and possible
 4   discussion and/or recommendation to the Texas lottery
 5   Commission on the commercial lessor position on the
 6   Bingo Advisory Committee.
 7                  Kimberly is Chair of this subcommittee;
 8   she's not here at this time.
 9                  MR. MOORE:  I'm on the committee, also.
10   We really haven't had any applications, really, so to
11   speak, to come in.  Have you seen any that's been
12   passed onto her?  Because she hasn't forwarded any to
13   me.
14                  MR. ATKINS:  No, I don't believe we've
15   received any.
16                  MR. MOORE:  I don't know what we can do
17   to facilitate this.  I don't know if we can put a
18   bulletin in.
19                  MR. ATKINS:  We can.  We can continue to
20   advertise it on the web site and in the Bingo Bulletin.
21   There is a form that's maintained on the web site, so
22   if any of you should come across anyone who is
23   interested, they can access that nomination form
24   through the web site.
25                  MR. MOORE:  So that's all we have on
0007
 1   that for now.
 2                     (AGENDA ITEM NO. 5)
 3                  MS. TAYLOR:  Moving on.  Item Number
 4   Five:  Report and possible discussion on Bingo
 5   Enforcement Process Review.
 6                  MS. JOSEPH:  Good morning.  I'm Sandy
 7   Joseph, assistant general counsel, and assisting me is
 8   going to be Phil Sanderson.  He's going to run a
 9   PowerPoint presentation for us.  This item involves
10   making a report to you that we made to the
11   commissioners at their last meeting April 6th, and it
12   concerns an effort by a group of people at the
13   commission to review the Bingo Enforcement Process and
14   to come up with ways to do things better, and I thought
15   it might be beneficial or informational for y'all to
16   see this also so that you'll know some of the things
17   that we're striving to do.
18                  First of all, the purpose of the project
19   was to study the Bingo Enforcement Process and make
20   recommendations for changes to increase both easy
21   effectiveness and efficiency.
22                  MR. ATKINS:  Sandy, can I just point out
23   for everyone's benefit, I don't recall you saying it --
24   you might have -- but this study focussed primarily on
25   internal processes.
0008
 1                  MS. JOSEPH:  I didn't say that.  Thank
 2   you for adding that.  It's true.  And that's why maybe
 3   all of you haven't heard of this because we were
 4   looking at our internal workings.
 5                  All right.  We began thinking about this
 6   last spring and we assembled a cross-divisional team
 7   with people from the Lottery Division, the Bingo
 8   Division, the Legal Division.  We designed a project
 9   plan, and these are the people that worked on it.  You
10   may know some of these people.  Raul Aguirre is from
11   the Lottery Commission and has a lot of experience with
12   enforcement matters there.  He has since moved other to
13   legal enforcement.  The rest of these people, some are
14   in the field and some are here in Austin.  This was a
15   very hardworking team.
16                  What we did, we developed our
17   objectives, first of all -- and I'm not going to go
18   through our entire report, but just kind of give you
19   the flavor of it -- and one of our main objectives was
20   to encourage voluntary compliance and remedial action.
21   We developed a mission, which was to identify tools and
22   practices to increase the efficiency and effectiveness
23   of the charitable bingo enforcement process.  What we
24   did, first of all, was to look at our current process,
25   how do we handle -- how had we been handling
0009
 1   enforcement.  We conducted internal and external
 2   interviews, surveys, and meetings.  We reviewed the
 3   current rules and statutes and then we mapped the
 4   process.  I don't know if y'all are familiar with
 5   process mapping, but it's a like a flowchart, trying to
 6   figure out what's going where and where things are
 7   coming from, where actions are taken.
 8                  Now, after we did that, we got our basic
 9   information gathered and we tried to analyze it, and we
10   looked to identify what each step in the process was
11   and what was the purchase of each step.  Were there any
12   activities that were duplicated or unnecessary or any
13   bottlenecks?  Who's involved and what's their role?
14   How much time do we spend on each step?  What's the
15   legal framework?  Is there any relevant historical
16   information about the process?  Sometimes you run up
17   against those things, why are we doing it like this, so
18   we tried to find out.
19                  We identified some major issues after
20   doing this that we thought we could address.  First of
21   all, efficiency, procedures and guidelines, resources,
22   knowledge and awareness, automated charitable bingo
23   system, the legal framework, and communication.  We
24   evaluated the process asking ourselves some key
25   questions.  First of all, does it make sense?  Does it
0010
 1   improve service?  Does it reduce work?  Does it save or
 2   waste money?  Does it help our staff?  Then we decided
 3   to try to see what we could do to improve things.  We
 4   developed a list of standards or qualities the ideal
 5   process would have and we mapped the flowchart of the
 6   ideal process.  We considered advantages and
 7   disadvantage of ideas through discussion and debate.
 8   We reached consensus on 33 recommendations.  I'm not
 9   going to go through all 33 recommendations, but give
10   you an example under each of the issues.
11                  Under efficiency, we had nine
12   recommendations.  An example, to develop a new process
13   to expedite settlement agreements.  And as many of you
14   know, we've been working on that with our Draft Rule
15   707.  Procedures and guidelines, we had six
16   recommendations, one of which, develop guidelines for
17   coordination between the Charitable Bingo Operations
18   Division and the Legal Division Enforcement Department.
19   Under resource we had two recommendation.  An example,
20   create a compliance specialist position within the
21   Bingo Division.  Knowledge and awareness, we had six
22   recommendations.  One was to provide operator training
23   for the bingo enforcement staff.  We realized that not
24   everyone in our division or other people who worked
25   with bingo had attend the operator training.
0011
 1                  ACBS, this has to do with our computer
 2   system developed to keep track of bingo enforcement
 3   matters, and that system has been implemented, but we
 4   realized that we need to develop procedures for
 5   standardized data entry so that it will be easier to
 6   access information so things will get consistently
 7   itemized.  Legal frame work, an example was to increase
 8   use of show compliance letters to address enforcement
 9   issues in a timely manner  And, finally, under
10   communication, we had one recommendation, which it's a
11   broad recommendation, which would have more specifics
12   under it, but to improve enforcement efforts through
13   communication and information sharing.  If any of y'all
14   worked as part of a large organization, you know that
15   it's often hard to have the right hand know what the
16   left hand is doing, so we wanted to address some of
17   those issues.  Another example was to provide wireless
18   internet access perhaps to our field people so that
19   they can communicate with Austin and with the database.
20                  After we did that, we sought management
21   approval.  We submitted a written report.  We met with
22   Billy Atkins and with Kim Kiplin, the general counsel,
23   to discuss the recommendations and to give them a
24   chance to offer any suggestions, comments, questions,
25   and for us to respond.  They approved 32
0012
 1   recommendations for implementation review.  Currently,
 2   we are know in this phase of implementation:  We have
 3   designated implementation review teams.  We're
 4   developing a review project plan taking into account
 5   agency resources, and we believe and hope that the
 6   impact of this is that we're going to have more
 7   effective and efficient enforcement that enhances the
 8   integrity of charitable bingo, also increased
 9   compliance with the Bingo Enabling Act and the
10   administrative rules, that there will be a resource
11   savings.
12                  That concludes my PowerPoint
13   presentation on that.  Does anyone have any questions?
14   There are copies of the slide presentation in your
15   notebook.  Feel free to call me if you come up a
16   question later and you'd like to know more about what's
17   going on with this.
18                  Any comments, Billy?
19                  MR. ATKINS:  Well, I was just going to
20   say, members, just so you know, I do appreciate all the
21   work that Sandy and her team put into this effort.
22   Sandy brought a lot of experience in this type of
23   process review from her agency.  She worked, I think,
24   specifically with the Rail Road Commission, and I think
25   that she was very effective in what I would refer to as
0013
 1   hurting the cats, because, as you notice, there were a
 2   lot of people from a lot of other divisions in the
 3   agency, so she had to work very hard to schedule those
 4   meetings and make sure everybody could attend and keep
 5   this process moving, so they are now putting a lot of
 6   that same effort that they put into the review into the
 7   implementation of a lot of those recommendation, and I
 8   just appreciate her work as well as the work of the
 9   other staff members that contributed to this.
10                  MS. JOSEPH:  Thank you.
11                  MS. TAYLOR:  Is there anything more on
12   that agenda item?
13                     (AGENDA ITEM NO. 6)
14                  MS. TAYLOR:  Moving on to Item Number
15   Six:  Report and possible discussion on the 79th
16   Legislature.
17                  MS. TREVINO:  Good morning, Madam Chair
18   and members.  For the record, my name is Nelda Trevino;
19   I'm the director of Governmental Affairs.  I appreciate
20   having this opportunity to provide you an update on the
21   legislative session.  The last day of this regular
22   session is next Monday, May 30th, and the last day for
23   the governor to sign the veto bills is June the 19th.
24   And, again, it is our intent to provide you a
25   comprehensive end of session report as soon as the
0014
 1   legislative session ends.
 2                  Included in your notebook are two
 3   legislative tracking reports.  The first report
 4   includes bills that relate to charitable bingo and the
 5   second report includes bills and resolutions related to
 6   the State Lottery Act, the Charity Raffle Act, and
 7   other gaming activities.  And I believe if we haven't
 8   provided you updated copy reports.  We're going to
 9   provide you some updated copies of those two reports as
10   a result of the status of bills changing on a daily
11   basis.  We wanted to be sure that everyone had the most
12   current information.  And I would look to highlight a
13   couple of bills noted on these reports.
14                  First of all, House Bill 1138 by
15   Representative Kino Florez and Representative
16   Armbrister.  This is the bill that relates to the
17   operation and regulation of charitable bingo.  You may
18   recall that this bill includes many of the
19   recommendations that were recommended by the House
20   Licensing and Administrative Procedures Committee
21   during the interim.  And this bill did pass out of the
22   House last month.  It was considered by the Senate
23   State Affairs Committee last week and has been left
24   pending.
25                  The agency's Sunset Bill, House Bill
0015
 1   1434 by Representative Peggy Hamric and Senator Mike
 2   Jackson, this bill passed out of the House and has been
 3   considered and voted favorably by the Senate Government
 4   Organization Committee.  Amendments relating to the
 5   authorization of electronic pull tab machines, the
 6   video lottery machines were laid out during the
 7   committee meeting but were withdrawn.  And this bill is
 8   posted on the Senate intent calendar for today.  And I
 9   do want to point out that, based on legislative
10   deadlines as it relates to the House and the Senate
11   rules, today is the last day for the Senate to consider
12   any bill on second or third reading, so if the Sunset
13   Bill is not considered today by the Senate, then it
14   will not make it through the legislative process this
15   session.
16                  As a result of that -- and this bill is
17   not noted on the reports that we have provided you --
18   and that bill is House Bill 1116, and this is a bill
19   that is referred to as the Sunset Schedule Bill, and a
20   lot of people informally refer to it as the Safety Net
21   Bill.  Yesterday the Senate did make -- adopted an
22   amendment to this bill that would continue the
23   existence of the Lottery Commission until 2011, so it's
24   kind of a repeat of what happened last session when the
25   agency's Sunset Bill did not make it through the
0016
 1   legislative process and the agency was incorporated
 2   into, again, this Safety Net Bill, so, again, the
 3   amendment that was adopted yesterday by the Senate
 4   continues the existence of the Lottery Commission until
 5   2011.
 6                  House Bill 2797 by Representative Norma
 7   Chavez would authorize federally recognized Indian
 8   tribes along the Texas/Mexico border to engage in bingo
 9   without state licensing, and while this bill has not
10   made it through the legislative process, the language
11   of the bill was amended over the weekend by the House
12   into Senate Bill 1863, and that bill also -- I
13   apologize, it's not noted on your reports that you
14   have, and it's kind of an ominous bill related to state
15   fiscal matters, and, again, the House did adopt an
16   amendment that incorporated the language of
17   Representative Chavez' bill into Senate Bill 1863.  And
18   then similar language also has been included in House
19   Bill 3540.  That bill is noted on your report.  And
20   while we're still reviewing the actions of the Senate
21   from last night, the Senate did amend House Bill 3540
22   to include a similar provision.  It appears -- and I
23   really want to qualify this because we're still
24   reviewing the language, but it appears that the
25   difference would be that the tribe would have to comply
0017
 1   with state licensing requirements.  So we'll continue
 2   to review that and update you on the actions of those
 3   bills.
 4                  The last bill I want to mention is House
 5   Bill 3, and this is a property tax relief bill by
 6   Representative Jim Keffer.  And this bill is being
 7   considered and remains pending in the House and Senate
 8   Conference Committee, and the authorization of
 9   electronic pull tab machines or instant bingo card
10   minders is included in the Senate version of House Bill
11   3.  And as many of you might be aware through some of
12   the media attention that has been given, the House did
13   vote to instruct the House conferees of this conference
14   committee to reject the provision of the bill that the
15   Senate included in their version.
16                  This concludes my report, and I'll be
17   happy to answer any questions that you might have
18                  MR. ATKINS:  Nelda, if I can just point
19   out one thing for the members to make sure it's clear,
20   and you mentioned it in your cover memo:  This report
21   is labeled "Bingo Operations," and it's specific to
22   bills dealing with the Bingo Enabling Act, but you may
23   have an interest, as your time permits, looking at the
24   one labeled "Texas Lottery Commission," because that
25   will cover, really, just any kind of legislation that's
0018
 1   been filed dealing with gaming, and I think as you go
 2   through, though, you'll notice there have been several
 3   bills filed this session relating to raffles.
 4                  MS. TAYLOR:  Are there any other
 5   questions?  Anybody have anything to ask Nelda?
 6                  MR DOUGHERTY:  Nelda, I just noted in
 7   the paper today on that critical House Bill 3540, the
 8   way I read it, it sounded like it died, but maybe it
 9   didn't die.  There was hope for it to breathe, so if
10   you can expound on that just a little.  It's a pretty
11   important bill.
12                  MS. TREVINO:  It is, and it's a bill
13   that has many provisions.  What occurred last night
14   when the bill was being considered on second reading,
15   there was a motion that was made to basically stop
16   further consideration of any amendments being
17   considered, and as a result that, there might be some
18   misunderstanding that the bill didn't make it through,
19   but it did pass out of the Senate, and so the
20   likelihood -- or, what will happen now is, is that bill
21   will have to go back to the House and the House will
22   either concur with what the Senate -- the Senate
23   changes or they will move to appoint a conference
24   committee.
25                  MR. DOUGHERTY:  So it is moving along;
0019
 1   it's just a moratorium on more amendments, as I
 2   understand you?
 3                  MS. TREVINO:  Yesterday, there was a
 4   moratorium, if that's a word, I guess, we can use.
 5                  Any other questions?
 6                  MR. MOORE:  The Sunset Bill is which one
 7   that's still pending?
 8                  MS. TREVINO:  It is House Bill 2034.  So
 9   it's the House bill that really has the movement.  The
10   Senate bill has died off.
11                  MR. MOORE:  And when is the deadline on
12   that?  Tonight?
13                  MS. TREVINO:  Today.  The Senate would
14   have to consider it today.
15                  MR. MOORE:  And then if it doesn't pass
16   out of the committee, or whatever, this will come up
17   again in two years, it sounds like?
18                  MS. TREVINO:  No.  What it appears,
19   Danny, right now, the way things stand -- and, again,
20   it passed out of the Senate committee, so it's eligible
21   to be considered on the Senate floor and today is the
22   last day for the Senate to consider any bill on second
23   or third reading, so if it does not get considered
24   today, yesterday on the bill that I mentioned, House
25   Bill 1116, that's the Sunset Schedule Bill, there was
0020
 1   an amendment added by the Senate that extends the
 2   existence of the agency until 2011, so the agency would
 3   not go through Sunset review until 2011, so the agency
 4   basically gets a six-year life.
 5                  MR. MOORE:  Okay.  Thank you.
 6                  MS. TREVINO:  You're welcome.
 7                  MS. TAYLOR:  Any other questions for
 8   Nelda?
 9                  We have one person that has turned in a
10   witness affirmation form.  David Heinlein?
11                  MR. HEINLEIN:  I'm David Heinlein.  I
12   represent about 30 charities in bingo conducting.  I
13   just wanted to call your attention -- I mentioned it to
14   Nelda to see if she knew anything about this particular
15   bill, and this also concerns the 79th Legislature, and
16   that is Senate Bill 1215 and the companion bill is
17   House Bill 3417, and it may have some language in it
18   that would affect charitable bingo very negatively.
19                  It states that requiring a charitable
20   corporation to have a corporation's financial
21   statements required by -- I'm going to skip on down --
22   provides that an audit is required for charitable
23   corporations after they have a total gross revenue of
24   $750,000 or more and then a review is required if they
25   have a gross revenue of $500,000 or more.  It started
0021
 1   out at $250,000 and it's moved up to those numbers.
 2   The accounting profession has noted that this
 3   particular bill is a very dangerous bill for charities,
 4   and they have tried to get that amount raised to
 5   $2 million.  I don't know what effect that might have,
 6   but it will affect us in the bingo industry.  I cannot
 7   imagine a charity being able to afford an audit.  I
 8   don't know what provision might be made and I don't
 9   know if the lottery has any input on that or not.  You
10   might want to look at that.
11                  The reason that the bill is being
12   proposed is because of 911, as many other bills have
13   been proposed, because of nonprofit organizations being
14   used as a funnel for terrorism, and they're looking at
15   that very closely, as is the Internal Revenue Service.
16   Charitable bingo needs to be on the alert that we're
17   coming under scrutiny than ever before, and I think
18   that is going to be increased.
19                  MR. ATKINS:  What is the bill number,
20   again, David?
21                  MR. HEINLEIN:  It is Senate Bill 1215
22   and House Bill 3417.
23                  MS. TAYLOR:  So, David, is that a yearly
24   audit that this bill is requiring?
25                  MR. HEINLEIN:  It would be an annual
0022
 1   audit requirement.  I'm not sure that you have to do it
 2   unless you were being looked at by the attorney
 3   general, and the purpose is so that the attorney
 4   general has the information that they would need to be
 5   able to look at a charity's financial records to see if
 6   there's any money laundering.  And it's stated in the
 7   analysis of the bill that the attorney general does not
 8   have the funds necessary to be able to do the
 9   procedures necessary to determine it, so they're
10   looking for this legislation to give them a tool that
11   they can more easily and less cost to the state so it's
12   a revenue saving for the state and a way of looking at
13   nonprofit organizations under a microscope
14                  MS. TAYLOR:  And what's the cost to the
15   charities?
16                  MR. HEINLEIN:  I can't imagine.  I've
17   talked with a number of CPA firms that do audits, and
18   their first blush is they wouldn't do an audit of a
19   nonprofit organization.  One difficulty would be, to
20   begin with, it would take at least two years before you
21   would even be eligible to get an audit, because under
22   the audit rules, they have to be able to be with you
23   when you do an inventory at the beginning and at the
24   end of a fiscal year, so next year you couldn't even do
25   that.  You would have to hire someone today and have
0023
 1   them review your ending inventory and your beginning
 2   inventory for the next year, and then the following
 3   year, they would have a possibility, but as far as the
 4   cost, it being $20,000, it would not be very likely,
 5   and it could be -- and I think the more difficult thing
 6   would be finding someone who would even do an audit
 7   under the new county guidelines.
 8                  MS. TAYLOR:  This audit, it this the
 9   same as the audit that we have done for different
10   organizations?  I mean, one of the ones that I'm
11   involved with has an annual audit done by a CPA and we
12   always thought we were being ripped because we paid
13   about $4,000 for that.  Is that the same --
14                  MR. HEINLEIN:  After you have gone
15   online, you can get a lesser amount, but to begin
16   with --
17                  MS. TAYLOR:  We thought $4,000 was high.
18   So that's not high?
19                  MR. HEINLEIN:  No, not at all.
20                  MS. TAYLOR:  Okay.  I mean, we kept
21   thinking --
22                  MR. HEINLEIN:  But you take charities,
23   and their activity for fundraising is bingo, and it
24   would be very difficult.
25                  MS. TAYLOR:  So for a new charity out of
0024
 1   the blue to get this, you're saying $15,000 a year to
 2   get this audit?
 3                  MR. HEINLEIN:  To start with, to get the
 4   first one done, I think
 5                  MS. TAYLOR:  Anybody else have questions
 6   for David?
 7                  MS. LOPEZ:  I just have a question, and
 8   help me understand this:  Are you talking about an
 9   audit just strictly for bingo operations?
10                  MR. HEINLEIN:  For their whole
11   organization, and in some cases, that activity would be
12   pretty much just bingo as far as fundraising.
13                  MS. LOPEZ:  If I could just make a
14   statement to that.  For example, our particular
15   organization already has an annual audit conducted by
16   en external auditor that includes all of our
17   fundraising efforts, which, of course, charitable bingo
18   is one of those and many other various sources of
19   revenue, and we're looking at about close to $4,000 a
20   year is what we're currently paying for an audit, and,
21   again, we've been doing this for several years.
22                  MR. HEINLEIN:  And the rules are
23   changing, so I think there are charities that are
24   small, and doing this to bingo operations, I think it
25   would be difficult.  The CPA's that I've talked to that
0025
 1   do audits, they're not interested in even considering
 2   it.
 3                  MS. LOPEZ:  I can under understand that.
 4   We did have to seek a special person that wanted to
 5   conduct ours.
 6                  MR. HEINLEIN:  And if you have
 7   charities -- and I have several that order audited as
 8   well, but the charitable bingo is about ten percent of
 9   what they do, and so it doesn't raise a big flag and
10   it's not a testing that they have to do, but if it's
11   just bingo, they're going to have testing of the bingo
12   and it's going to be difficult.
13                  MR. MOORE:  David, did you say what the
14   status was of the bills?
15                  MR. HEINLEIN:  I looked to see if I
16   printed one out last night and I didn't.  The House
17   bill has been left pending, but that means they're just
18   focussing on the Senate bill, and I didn't print the
19   current status on that.
20                  MR. MOORE:  I think is pulling something
21   up over here.
22                  MR. ATKINS:  I was just looking at the
23   text.  The bill that David is talking about is the
24   Nonprofit Corporation Act, so it's not a statute that
25   the agency has jurisdiction over, so that's why it's
0026
 1   not one that would pop up on our radar screen or we
 2   would be asked to comment on.
 3                  I would just expand a little on what
 4   David was saying:  I do think that the interest in 501C
 5   organizations, nonprofit organizations, the interest by
 6   the Internal Revenue Service as well as a wide variety
 7   of federal law enforcement agencies has been increased
 8   in part because of 911, but I think there is also just
 9   a broader intent to try and bring a sense of
10   accountability to these nonprofit organizations, not
11   unlike what the private sector encountered with, say,
12   Enron.  So, you know, in the private sector, they pull
13   up Sarbanes-Oxley and other measures to increase
14   accountability in the private sector, and that interest
15   is, I think, starting to spread to the nonprofit
16   sector, also.
17                  And like you said, Danny and Suzanne,
18   there are a number of organizations already receiving
19   audits a lot of times because it's a requirement under
20   other grants that they may receive.
21                  MR. WHITTINGTON:  Plus, on that, David,
22   I understand when you say a certain amount of money,
23   it's not hard to get up to a gross of $250,000 when
24   you're doing bingo and you're giving out $5,000 a day,
25   so it's not hard to get there.  And on top of it, when
0027
 1   you get there, the charities, they don't make no money
 2   anyway, but the gross is there.  It really affects the
 3   charities because most off them aren't making no money.
 4                  MR. HEINLEIN:  What they're trying to do
 5   is get -- trying to attack the money received by the
 6   charities, and if they get that, then we will pass
 7   under the radar, but without it, it's going to affect
 8   everybody in bingo.
 9                  MR. WHITTINGTON:  Bingo is $60,000 a
10   month, one charity, and we're not making a dime for the
11   charities but we're grossing that much, so it will
12   really affect the charities for this.
13                  MR. HEINLEIN:  It will be a bill worth
14   looking at.
15                  MR. ATKINS:  Just trying to pull up the
16   bill real quick, it appears that the Senate bill passed
17   the Senate and was referred to the House Business and
18   Industry Committee, but it hasn't been considered, and
19   as Nelda has mentioned -- and I don't think there's a
20   committee meeting scheduled.
21                  MR. HEINLEIN:  Thank you.
22                  MR. MOLINARE:  Billy, what is the senate
23   bill number?
24                  MR. ATKINS:  Senate Bill 1215.
25                  MS. TREVINO:  This is Nelda Trevino, for
0028
 1   the record.  And I just had staff check on the status
 2   of these bills.  Senate Bill 1215 was passed out of the
 3   Senate.  It was referred over to a House committee and
 4   never occurred.  And then the House bill, House Bill
 5   3417, filed in the House, considered in the House
 6   committee, and left pending.  So, again, based on
 7   legislative deadlines -- I'm trying to be very cautious
 8   because you never know what can happen on the last days
 9   of the session, but as these bills are as stand-alone
10   bills and based on the legislative deadlines, these
11   bills would not make it through the legislative process
12   as stand-alone bills.  Now, whether the language or the
13   provision of these bills get amended to some other bill
14   that's still making it through there, that's always a
15   possibility, but as stand-alone bills, they appear that
16   they're not moving any further.
17                  MS. TAYLOR:  Any other discussion on
18   this agenda item?
19                     (AGENDA ITEM NO. 7)
20                  MS. TAYLOR:  Item No. 7:  Report and
21   possible discussion and/or action on new draft rules
22   regarding standard penalty guidelines and expedited
23   administrative penalty guidelines.
24                  MS. JOSEPH:  Again, my name is Sandy
25   Joseph, for the record.  Enclosed in your notebook
0029
 1   under this item are copies of the May 17th, 2005 drafts
 2   of new rules 402.706 pertaining to the standard
 3   administrative penalty guideline and 402.707 pertaining
 4   to expedited administrative penalty guideline.  Before
 5   I discuss that draft, I thought it would be helpful,
 6   especially in light of the fact that there is a new BAC
 7   member, to go over a little bit of background of the
 8   development of these rules, and I'll be showing you a
 9   part of a presentation that I did make to the
10   commissioners on April 6th.
11                  First of all, the idea for the rules
12   came about last year; some thought started going into
13   this.  Staff started thinking perhaps this would be
14   helpful to them and to the industry members.  We looked
15   at other states who have similar types of rules.  The
16   lottery has standard penalty rules, which is, of
17   course, regulated also by the commission, so it seemed
18   to make some sense that bingo would have something
19   similar, and then also in the Sunset recommendations,
20   there was discussion about the need for standard
21   penalty rules.
22                  Now, the objective of these rules are
23   the following:  First of all, promote consistent and
24   fair assessment of administrative sanctions; inform
25   licensees of compliance requirements and potential
0030
 1   sanctions for noncompliance; to courage compliance; to
 2   facilitate timely resolution of cases; and to encourage
 3   settlements.  I want to emphasize that the proposed
 4   administrative rules do not create any new violations.
 5   All the violations talked about that are listed in
 6   these rules already exist in the statutes or elsewhere
 7   in the rules.  They do not create any new authority for
 8   imposing sanctions.  So what we're trying to do is just
 9   organize things to make guidelines that's easier for
10   both our staff and for the public to understand.
11                  The proposed penalty amounts are based
12   on review of other states' penalties and also their
13   perceived deterrence effect.  First of all, proposed
14   rule -- or, draft proposed Rule 706 provides guidance
15   for administering an administrative penalty to persons
16   that violate the act or the rules; however, it does not
17   bind the authority of the commission to impose a
18   penalty pursuant to the act.  In other words, they're
19   guidelines.  The list of violations contained in the
20   standard penalty -- standard administrative penalty
21   rule is not an exclusive list.  Additional remedies
22   also may be imposed, such as an organization could be
23   required to re-deposit funds or a license could be
24   revoked.
25                  Now, as presented to the commissioners
0031
 1   on April 6th, the look-back period for repeat
 2   violations was four years.  Since that time, our work
 3   group has modified that recommendation, and I'll
 4   discuss that in a few minutes.  The rules contain a
 5   number of factors to be considered when administering
 6   or assessing penalties.  Those include the seriousness
 7   of the violation, the history of previous violations, a
 8   deterrence of future violations, any efforts to correct
 9   the violation, the intent, corporation, license
10   class -- that one, we have deleted in the current
11   draft -- any actual damages -- we deleted that one,
12   also from the current draft -- any risk to the public
13   or state -- we had license class twice; again, we've
14   deleted that -- any cost of the investigation or
15   examination, any other matter that justice may require.
16   We have modified these and we'll take a closer look at
17   that in few minutes.
18                  Rule 707, the expedited administrative
19   penalty guideline, provides an alternative,
20   disciplinary procedure for certain more minor
21   violations.  It will also facilitate an expeditious
22   resolution.  It provides for issuance of a notice of
23   administrative violation and settlement agreement upon
24   the agreement that a violation has occurred and allows
25   20 days from the receipt of the notice to accept, sign,
0032
 1   and return.  Penalty amounts are set.  This is like a
 2   traffic ticket more or less; you agree that you
 3   committed a violation, so the fine is "X" amount.  If
 4   the violator, or the alleged violator, does not want to
 5   agree, they can request a hearing and then the process
 6   would proceed in the normal fashion.
 7                  Now, the next few slides just point out
 8   some of the work that has gone into this.  I'm not
 9   going to go into it in detail, but, again, we did begin
10   back on April 29th of last year.  The staff worked
11   until August 11th, at which time it provided the first
12   update to the BAC; although, the BAC had been
13   previously notified and advised that this was going on,
14   that the work had begun at the staff level.  In
15   November, the BAC work group and the TLC staff met to
16   discuss the administrative penalty rules, and drafts of
17   the rules were posted on the web for comments.  In
18   December, Steve Fenoglio met with Phil Sanderson for
19   several hours to discuss the penalty rules, and
20   subsequent revisions were made to the drafts as a
21   result of his comment.  In December, the BAC work group
22   and the commission staff met to discuss the
23   administrative penalty and rules again.  In March, the
24   work group and the staff again met.  March 30th, the
25   staff presented the draft rules to the BAC for the
0033
 1   final time, and by the final time, that meant before
 2   presentation to the commissioners.  And on April 6th,
 3   the draft administrative penalty rules were presented
 4   to the commissioners at their meeting and the staff
 5   recommended publication.  At that time, after much
 6   discussion and consideration, the commissioners decided
 7   not to approve the drafts for publication but asked the
 8   staff to go back and continue work to address some of
 9   the issues that were raised.  These issues were raised
10   in several letters that were sent to the commissioners,
11   and also there were issues that, really, the staff new
12   existed, the work group new existed.  So those issues
13   included how long the rules were.  Some folks felt like
14   the staff hadn't responded to many of the comments and
15   suggestions.  There was a concern about the timing on
16   the penalties, in other words, that one violation might
17   occur which would necessarily lead to additional
18   violations and the penalties would increase at a
19   disproportionate rate to what really might be
20   considered fair and reasonable.  We have addressed
21   that.  I'll talk about how we've addressed these issue
22   in a moment, but I wanted you to see what the issues
23   were that we were looking at.  Other issues included
24   the comment that the four-year look-back period was to
25   too long, as I mentioned before, and then concern was
0034
 1   raised about the source of the payment of penalties,
 2   and this was not addressed in the rules, but there was
 3   a lot of concern about where is the money going to come
 4   from to pay the penalties.  Also, there was an issue
 5   with the 20-day response period for deciding whether or
 6   not to accept an expedited penalty agreement.
 7                  Okay.  And we'll stop right here for a
 8   minute.  If we could have the lights back on.  Thank
 9   you.  All right.  After the commission meeting on April
10   6th, the staff and volunteers from BAC and also members
11   of the industry began having meetings to work on these
12   issues and see what else could be done, to see if any
13   additional consensus could be reached and to just
14   gather more information.  Participants in those
15   meetings included Stephen Fenoglio, Suzanne Taylor,
16   David Heinlein, Sharon Ives, Danny Moore, Melissa
17   Young, Phil Sanderson, Marshal McDade, and myself.
18   Mario had hoped to participate, I believe, but it did
19   not ever work out for his schedule.
20                  MR. MANIO:  No.  Business pressure.
21                  MS. JOSEPH:  Right.  And, also, Steve
22   Bressnan and hoped to participate.  Danny did not get
23   to participate nearly to the extent.  We tried to keep
24   him and everybody in the loop, but everybody did what
25   they could.  Now, the group did meet five or six
0035
 1   times -- I listed them out, but I can't remember
 2   exactly now -- for several hours.  We met on Fridays.
 3   Suzanne was there at every meeting.  David Heinlein
 4   drove in several times, a several-hour drive, to
 5   participate and participated by phone when he couldn't
 6   drive in.  We really had a hardworking group and a
 7   committed group and we appreciate that.  Now, all the
 8   issues that had been identified were addressed by the
 9   group and we reached agreement on some of the things,
10   many of the things, actually.
11                  Based on additional information that we
12   shared at the meetings, changes have been made to the
13   draft rules at this point.  For example, the list of
14   violations is much shorter.  And in your notebook is a
15   copy of the current draft and the draft that was
16   submitted to the commission so that you can compare if
17   you haven't had a chance to.  Phil Sanderson was able
18   to gather some data from the computer database and give
19   us information on how often all of the violations were
20   found to have been committed, so to speak, as far back
21   as our database went, which is several years.  Based on
22   that information, we found that there were many
23   violations that had not occurred during that time
24   period; therefore, we decided to take those off of this
25   draft because they apparently haven't been a problem.
0036
 1   Now, that doesn't mean that one of those violations
 2   won't occur in the future, but what we're trying to do
 3   is create a list of violations that will be useful to
 4   our staff and to the bingo industry, so it makes sense
 5   to make it a little bit shorter, or a lot shorter, so
 6   you can find what you're looking for and what might
 7   really apply to the current situation, so we did take
 8   off a lot of the violations.  In fact, we shortened it
 9   from 126 in the April draft to 38 violations, so that's
10   a lot shorter for those of you that were concerned it
11   was too long.
12                  In addition, in looking at the list very
13   carefully, we went over every item on them, and based
14   on the number of times violations were committed, et
15   cetera, we moved seven of the violations from the
16   standard penalty rule to the expedited penalty,
17   because, in looking at them closely, even more closely,
18   we decided these are things that would put well on the
19   expedited penalty list.  Overall, we believe that we
20   made the list a lot more user friendly.  If something
21   is too long, you don't have time to thumb through the
22   whole thing and find what you're looking for.  In
23   addition, language was added to address the concern
24   about a possible cascading effect of violations.  Y'all
25   understand what I mean by a cascading effect?  No
0037
 1   questions about that?
 2                  All right.  If you look in the
 3   underlying language in your notebook, the first rule,
 4   Rule 706, the second page of that, 706-I, paragraph
 5   "I," No. 5, and then "A," under that.  Paragraph "I" is
 6   talking about the factors that will be considered when
 7   assessing a penalty.  No. 5 says -- after listing a
 8   number of factors that would be considered, No. 5 says,
 9   "any other matter that justice may require including,"
10   and we added there, "whether the violation was the
11   unavoidable result of a related violation."  So what
12   we're saying there is if this violation necessarily
13   occurred because of another violation, we'll take that
14   into consideration and it wouldn't -- it may not -- it
15   probably wouldn't make sense to zing somebody the total
16   amount for violations that were really one core
17   violation.  Okay.  Any questions about that?
18                  Also, while we're right there, notice
19   the language in No. 4 right above, that factor
20   originally said, "efforts to correct the violation,"
21   and at the suggestion of Steve Fenoglio, and everyone
22   agreed, we added the language, "after awareness of the
23   violation through personal knowledge or notification by
24   the commission."  In other words, we wanted to indicate
25   did somebody try to correct it once they knew about it?
0038
 1   I wanted to clarify that.  We also deleted from the
 2   violation some language that was unnecessary; it was
 3   just kind of extra language, to make it shorter, also.
 4                  Now, the issues on which agreement was
 5   not reached are the following:  First of all, the
 6   source of the money to pay the administrative
 7   penalties.  Now, we did not have this in the rule to
 8   begin with, but it seems like there's a demand to know
 9   one way or another where is the money going to come
10   from, so there has been language added to both of the
11   rules to indicate that penalties must be paid from a
12   nonbingo source of funds.  Now, as I said, there was
13   not agreement on this; however, the staff, and in
14   particular the director of the division, feels that
15   it's important to have this guideline in there.  Okay.
16                  Do you want to add anything to that,
17   Billy?  Okay.  All right
18                  MS. TAYLOR:  Could I ask you a question?
19                  MS. JOSEPH:  Yes.
20                  MS. TAYLOR:  So does this mean that if
21   you send in your quarterly report late that that would
22   also be nonbingo funds since that's a violation?
23                  MS. JOSEPH:  No.  This is applied to
24   these penalty rules that we're talking about here.
25                  MS. TAYLOR:  Isn't that part of it?
0039
 1   That's part of it, that you have to send in the
 2   quarterly report and you have to send in your payment.
 3   So if either the report or the payment was late, would
 4   that be from nonbingo funds?
 5                  MS. JOSEPH:  Billy, do you have an
 6   opinion on that, or Phil?
 7                  MR. SANDERSON:  Phil Sanderson,
 8   assistant director of the bingo division.  The penalty
 9   associated with filing or paying late on your quarterly
10   report is a tax code penalty, so it would not be
11   affected by the language in this rule as far as coming
12   from nonbingo revenue.  Now, if there was an
13   administrative penalty associated with that, for
14   whatever reason, if it was several times that they
15   filed late, then that would be a different -- the
16   administrative penalty is the only thing that cannot be
17   paid for with bingo funds.
18                  MS. TAYLOR:  Okay.  And say that one
19   more time.  Because it's a what?
20                  MR. SANDERSON:  The penalty that's
21   associated with filing late, the five percent and the
22   ten percent penalties, are tax code; they're part of
23   the tax code from the comptroller.
24                  MR. ATKINS:  And these are
25   administrative penalties?
0040
 1                  MS. JOSEPH:  Thank you, Phil.  I
 2   couldn't quite remember what our differentiation was.
 3   I knew that we had one.
 4                  Any other questions about that?
 5                  Okay.  The next issue concerned the
 6   length of time allowed to accept an expedited penalty.
 7   The proposed rule allows 20 days for the alleged
 8   violator to decide whether they want to accept that
 9   penalty or whether they don't want to do the expedited
10   penalty process and prefer to just go the normal route.
11   There was a lot of comment at the commission meeting
12   that 20 days was not adequate for some organizations
13   that may meet every 30 days or even less frequently.
14   The staff does not -- at this point does not think it's
15   a good idea to extend the 20-day period because to do
16   so would defeat the purpose of it being an expedited
17   rule.  In other words, if you extend -- you know,
18   you're trying to make this a fast process; if you
19   extend the time out to several months, you've defeated
20   your purpose.  I would like to point out, however, that
21   the requirement in the draft is that a decision be made
22   as to whether or not the expedited penalty will be
23   accepted.  That doesn't mean it has been paid within 20
24   days.  There would be an additional period of time to
25   pay so that would give organizations perhaps an
0041
 1   opportunity to meet and, you know, discuss that payment
 2   of the penalty.  I suppose if the organization met and
 3   they went, what the heck did you do, I mean, the
 4   fall-back thing is always to go back to the regular
 5   process.  So if an expedited penalty is offered, if
 6   that opportunity is offered, someone can either accept
 7   the penalty or they request a hearing and say, no, I
 8   don't want to accept this penalty.  In other words,
 9   just like you have a traffic ticket, you can contest
10   the ticket and ask for a hearing, or in this case, if
11   nothing is done, then we would proceed to set the
12   alleged violation for hearing.
13                  MR. MOORE:  Sandy, so when does the
14   clock start ticking.  A field auditor walks in a bingo
15   hall and there's a violation, do they tell the charity
16   right there -- is that 20 days or is there a notice
17   that comes in the mail?
18                  MS. JOSEPH:  No.  It would be right
19   there from that time.
20                  MR. MOORE:  He's going to open up the
21   penalty matrix and say, okay, this is what you're
22   looking at?
23                  MS. JOSEPH:  Right.
24                  MR. MOORE:  Okay.  I just wasn't clear
25   on that.  I wasn't sure if there would be a notice or
0042
 1   not.
 2                  MR. ATKINS:  I think that was discussed
 3   pretty significantly at the last BAC meeting.
 4                  MR. MOORE:  It was?
 5                  MR. ATKINS:  Yeah.  And it was -- you
 6   know, also at the last meeting, that was apparently the
 7   first time that the -- that was laid out that way at
 8   the last meeting.
 9                  MS. TAYLOR:  I also believe somewhere in
10   here it says from the date the violation was noted.
11                  MS. JOSEPH:  Which would be that time,
12   yeah.  Those expedited are meant to be -- they're
13   violations that are observable like on the spot.  Okay.
14   I can't remember what one is.
15                  MS. TAYLOR:  There aren't very many.
16                  MS. JOSEPH:  Yeah, there aren't very
17   many of them.  Like, you don't have the sign posted; I
18   don't see a sign anywhere.  Okay.  The person agrees,
19   yep, we don't have a sign posted, that's the end of it.
20   Things that just observable on the spot.
21                  MR. MOORE:  That makes sense.
22                  MR. WHITTINGTON:  Sandy, once they
23   accept this 20-day violation, do y'all have a time
24   period for them to pay this penalty after that
25   acceptance?
0043
 1                  MS. JOSEPH:  Yes.  Currently it would be
 2   60 days from the date the order is issued by the
 3   director.  In other words, if someone agrees, they want
 4   to accept the penalty on the spot, then that will be
 5   sent in for Billy's review, he'll sign an order, and
 6   then there will be 60 days from that date to send in
 7   the penalty.
 8                  MR. WHITTINGTON:  But they got up to 20
 9   days to do this, accept?
10                  MS. JOSEPH:  That's right, 20 days to
11   accept, and then 60 days more days from the date of the
12   order.  Any other questions about that?
13                  Another issue was -- and David Heinlein
14   had raised this issue in our meetings, and I can't
15   remember if he did at the Commission meeting, but I
16   think he did, and that is the issue of -- or, the
17   desirability of having a cap on the amount of
18   penalties, and it was offered that it would be helpful
19   to organizations, to charities, to know the limit of
20   what might happen to them at any given time, and David
21   was hopeful we could come up with something like -- we
22   didn't really get down to discussing figures, but, just
23   like, you know, the most you could ever be penalized
24   would be $50,000 at a time or $10,000 or whatever.
25   While the staff understands why that would be, you
0044
 1   know, desirable and comforting for the organizations,
 2   we don't feel that we can do that because the
 3   circumstances are just too varied, and there have been
 4   times in the past and recently where we feel
 5   organizations have committed just numerous, numerous
 6   violations and perhaps with not the best of intent, and
 7   we are attempting -- or, have assessed, you know,
 8   significant violations, so it's just really impossible
 9   for us to predict what we're going to come up against.
10                  Do y'all understand why we don't feel
11   comfortable recommending tying our hands?  Does anybody
12   want to argue against that?
13                  MR. WHITTINGTON:  I don't want to argue
14   with that.  I feel that any charity, in a day's time in
15   bingo, if they have made those kind of mistakes, number
16   one, they don't need to be in bingo.  They shouldn't be
17   in bingo and they should be fined and fined out of
18   bingo, but most of these charities are trying to make
19   an effort; they're just trying really to survive and
20   make it.  Those charities need to have another look and
21   say, hey, they're trying, okay, give them a chance;
22   these guys, they got good intent.  And most the people,
23   I think about 90 percent, are trying to do that, trying
24   to abide by the rules.
25                  MS. JOSEPH:  We totally agree with that,
0045
 1   and that's why we have all those factors that we would
 2   consider and the intent, you know, whether it was
 3   willful or an accident or whatever.
 4                  MS. TAYLOR:  I think that one of the
 5   hiccups that we had with that, Larry, is the time that
 6   we're going back.  What is the amount of time you
 7   can -- we're talking about going back three years?
 8                  MS. JOSEPH:  And that was the next
 9   issue, the draft as presented to the commissioners, we
10   said that we would consider repeat violations back for
11   48 months.
12                  MS. TAYLOR:  All right.  So 48 months.
13   So you have an organization -- if I'm on a board of
14   directors somewhere, then that means I can responsible
15   for something that happened four years ago.
16                  MS. JOSEPH:  Let me add real quickly,
17   though, the consensus of this recent group was to
18   change -- well, not consensus, but we did reduce that
19   to 36 months.  We did reduce that look-back period to
20   36 months.  Now, Steve Fenoglio had offered 24-month
21   look-back period.  He is not sure whether 36 months
22   satisfies his client base or not simply because he
23   hasn't had time to get in touch with them in light of
24   the legislative session.  He said it's possible that,
25   you know, the people he represents will agree to -- you
0046
 1   know, and not have a problem with 36 months, but he had
 2   originally suggested 24.  The reason that the staff
 3   wants to stick with at least 36 is because of the time
 4   delay between audits, and I believe -- you know, it's
 5   typical that we just audit folks maybe once every three
 6   years, you know, so if we say the repeat violation
 7   period is only two years, there are not going to be any
 8   repeat violations because we probably didn't get out to
 9   audit them quick enough to catch any.
10                  Do you see what I mean?  Is that right?
11   Any questions about that?
12                  MR. WHITTINGTON:  So if a charity got
13   somebody in bookkeeping or whoever or a cashier messing
14   up and those people are gone down the road and somebody
15   else come in and make an honest mistake and mess up, is
16   it fair to look back and give the penalty about
17   somebody else from three years ago who messed their
18   organization up?
19                  MS. JOSEPH:  Well, I want to point out
20   that if there have been repeat violations, it's just
21   one of the factors.  Again, another factor is, was it
22   on purpose?  Was it an accident?
23                  MR. WHITTINGTON:  Y'all will look at
24   that?
25                  MS. JOSEPH:  Yeah.  It's not just only
0047
 1   look at one factor and makes a decision based on that,
 2   but the whole circumstance and all the factors
 3   involved.
 4                  MS. LOPEZ:  I might also mention that a
 5   lot of nonprofit organizations do change, according to
 6   their bylaws, board of directors every two years, like,
 7   they'll serve like a two-year term, so, again, I guess
 8   to just reiterate that, I mean, if people have served
 9   on the board for a couple of years and they're no
10   longer there and there is a repeat violation, are those
11   people still held responsible even though they've left
12   the board and are no longer part --
13                  MS. JOSEPH:  Personally?
14                  MS. LOPEZ:  Yes.
15                  MS. JOSEPH:  The organization is
16   responsible.  It depends on the nature of the violation
17   whether there would be any liability on the individual.
18   You know, if there's some criminal -- of course, we
19   don't prosecute criminal.  We can refer criminal
20   violations, but primarily we're looking to the
21   organization, so the organization as a whole is
22   responsible even though there may be changes in
23   personnel.  However, that is a factor, you know, and
24   that may be a mitigating circumstance that there was a
25   lot of turnover outside the control of the
0048
 1   organization; they were doing the best they could, so
 2   all of that would play into it.
 3                  MR. ATKINS:  Another factor could be if
 4   these new members that you're talking about, Rosie, if
 5   they were notified of what had happened.  You know, you
 6   would hope that a strong board of directors would, you
 7   know, get some sort of history of the organization and
 8   so, you know, they would know when they got on the
 9   board, you know, a year ago, a year and a half ago,
10   just so you know, this happened, so that would, you
11   know, again, be their continued drive to make sure that
12   those violations didn't occur in the future.
13                  MS. JOSEPH:  Any other questions or
14   comments about that?
15                  MR. MANIO:  Just some remarks about the
16   cap.  The charities that I have spoken to are concerned
17   about the possibility that they might be assessed a
18   huge amount of money for certain violations.  With the
19   absence of a cap, it's real -- let me put it to you --
20   they are terrified of the possibility of the Lottery
21   Commission might put them out of the bingo business.
22   That's the perception.  I know that's not the intent,
23   but the perception is, yes, they're out to get us
24   again.
25                  MS. JOSEPH:  Well, if you could -- okay.
0049
 1   And I don't know if you've pointed this out to those
 2   folks, Mario, but if you could help spread the word
 3   about this list of factors that's going to be
 4   considered.  All of that's going to be taken into
 5   consideration as well as the amounts that we have
 6   suggested for each violation.  You know, unless --
 7   unless someone is purposefully doing --
 8                  MR. ATKINS:  Can I try and address that,
 9   Mario?  What you might let them know is, if they're
10   worried about some, you know, really big, huge monetary
11   penalty, really what they need to be more worried about
12   is the fact that they're probably close to getting
13   their license revoked or denied anyway, because, you
14   know, what would precipitate a really huge, gigantic
15   penalty is a whole slew of violations.  And, you know,
16   innocent mistakes happen.  I don't believe we've seen
17   situations where innocent mistakes have happened in a
18   lot of different areas consistently over an extended
19   period of time.
20                  MR. MANIO:  The answer to that, they are
21   terrified, which is probably the desired effect of
22   these rules, because we want to encourage compliance.
23   The fact that they are terrified will make them comply,
24   so that's the fact.  The piling on, which you have
25   tried to show by adding some words in the rules, that
0050
 1   will not have the same effect as a limit or a cap on
 2   penalties.
 3                  MS. JOSEPH:  Mario, if we tried to set a
 4   cap, it would be so high that I'm afraid they would
 5   remain terrified, is my personal opinion, because we
 6   would have to make it high enough to cover the very
 7   egregious situations, which is not going to be the norm
 8   at all.  That's my thought on it.  Do you have any
 9   solution to that?
10                  MR. ATKINS:  Well, I'm not sure if that
11   addresses your statement.  I think what you're saying
12   is, the question about piling on, I think that should
13   help address some concerns about, you know, these huge
14   penalty amounts, I think is what you saying, but, I
15   mean, I'm thinking of four specific examples right now
16   of, you know, organizations that we conducted a pretty
17   extensive audit on, and, you know, each organization
18   has between 20 and 25 serious violations.  I mean,
19   these -- I'm not going to mark these up to mistakes.
20   These are, in my opinion, intentional violations of
21   state law.
22                  MR. MANIO:  I cannot argue with that and
23   I'm not disputing that fact, but, by and large, the
24   typical organization tries to comply with the law, and
25   we try to focus more on the exception rather than the
0051
 1   rule.  And the charities that I have spoken to, I mean,
 2   they might have some infractions like the workers
 3   didn't print the paper and the time of day, I mean,
 4   minor infractions.  The existence of a rule like this
 5   puts them in a position where, oh, like, they're out to
 6   get me.
 7                  MR. ATKINS:  Well, I agree with
 8   everything you said except for the use of the word
 9   "terrified."  We are not trying to terrify anyone.  We
10   are trying to encourage voluntary compliance; I admit
11   it.  So, I guess what I'm interested in now, Mario, is,
12   based on the discussion we've had, what are you going
13   to go back and tell those organizations?
14                  MR. MANIO:  Well, I could tell them, and
15   what I've been telling them is, that's not the intent
16   of the Lottery Commission, but it's my word against
17   what they have seen in the past or what they have heard
18   from other people.
19                  MR. ATKINS:  Well, and I don't know that
20   anything can be done about that.  You know, I mean, I
21   think you give your best faith effort and, you know, if
22   folks are not going to believe you, they're just not
23   going to believe you.
24                  MR. MANIO:  That's true, too, but I just
25   feel that, you know, the cap is just an issue that has
0052
 1   been resolved, and I don't know what we intend to do in
 2   here, but it's probably a good thing to revisit that
 3   issue and see if we can do something about that.
 4                  MR. ATKINS:  Well, and I don't want to
 5   cut Sandy off, but, you know, again, this will go
 6   before the commissioners and there will be ample time
 7   for public comment and at the end of the day, it's
 8   going to be their decision, you know, but based on all
 9   of the information that the staff has available to it
10   right now, the staff is not inclined to recommend to
11   the commissioners that there be a cap.
12                  MS. TAYLOR:  And I have to agree with
13   Mario, that I would like to see there be some cap, and
14   whether it's a cap on nonintentional violations, that
15   would please me.  If it's an intentional violation, I
16   don't have very much pitty for the organization, but a
17   cap on nonintentional violations, I'd like to see
18   something like that in here.
19                  MR. WHITTINGTON:  And one other thing,
20   too, I mean, we can look at this any way we want.  We
21   can look at it from San Antonio to Corpus and to the
22   small cities and small towns in Texas, these people are
23   simple minded and anything makes them afraid; that's
24   just the way it is.  We need to tell them to look at
25   the web site and read that, if you are trying your best
0053
 1   to do right, okay, with a good intent, the Lottery
 2   Commission will look at these penalties and we'll try
 3   to work something out with you.  That's what needs to
 4   be said, something simple so they can understand it, on
 5   the web site, and we need to tell these people to look
 6   at the web site, look at something or some type of
 7   flier we put out for these organizations so they'll
 8   know, because they are afraid.  When they read this,
 9   oh, man, we're going to be penalized for everything we
10   do.  No, you're not, not as long as you're trying to do
11   it right.  The Lottery Commission needs to let them
12   know, as long as you're trying to do it right and don't
13   do it over and over and over, but when you don't have a
14   name tag on or somebody does something simple, don't
15   think you're going to get penalized right away, y'all
16   need to do this, you might get penalized and you might
17   not, but you got to get this together because next time
18   you will.
19                  MS. TAYLOR:  I agree with part of you on
20   that, Larry, the nonintentional part.  The name tags, a
21   lot of that, I mean, it has been changed.  They're
22   issued warnings and warnings.  They getting warned
23   several times to wear their name tags before they're
24   going to get fined, and, you know, a lot of the amounts
25   were reduced somewhat.  I'm just worried about the
0054
 1   intentional/nonintentional.  The bad apples, go after
 2   them, take all their money, put them out of bingo,
 3   good, because they make every one of us look bad.  I
 4   mean, that's where bingo gets it's black eye.  But if
 5   it's just a nonintentional violation, something that is
 6   an honest to God mistake, that's what I would like to
 7   see a cap on.  And I can't even think of anything
 8   because I haven't been part of an organization that I
 9   can recall that's ever had a violation, but I just know
10   that things happen, stuff happens.  And the terrified
11   isn't so much -- I don't think organizations are
12   terrified, but one of the organizations I'm a member
13   of, we have $900 in our checking account, that's it,
14   one violation with $1,000 fine would kill the
15   organization.  I mean, everybody on the board would be
16   having to donate money to put in the checkbook, so a
17   little bit of money means a lot.  Because those are the
18   people I like the best.  I always seem to have poor
19   organizations, but, yeah, a cap on nonintentional is
20   all I would like to see on there.
21                  MS. JOSEPH:  All right.  We haven't --
22   the group didn't discuss it in terms of intentional
23   versus nonintentional.  We could give some more thought
24   to that.  Perhaps, a group might get together again to
25   explore that a little bit more.  The commission meeting
0055
 1   is scheduled, I believe, June 26th?
 2                  MR. ATKINS:  24th.
 3                  MS. JOSEPH:  June 24th.  So we still
 4   have two or three weeks before we present anything to
 5   them.  In my opinion, we're still -- you know, we can
 6   still work on this.  If we come up with something and
 7   say, oh, no, this is better, you know, we can do that,
 8   so I'd certainly be willing to convene another meeting
 9   and let us talk about it a little bit, you know, try to
10   work on that again, give it some more thought.  Mainly
11   because we never -- and I don't know that our result
12   will be any different, but we didn't really talk about
13   it from the standpoint of intentional versus
14   unintentional, and I hate to just say no without really
15   giving it some thought.  I think we would all be
16   willing to talk about it and think about it.
17                  MR. MANIO:  One more final word.  This
18   is a very interesting discussion, and despite the
19   differences in opinions in here, let me say that the
20   board group has done a great job.  We started with this
21   committee more than a year ago with over 50 pages in
22   one room alone and they have trimmed it down to 20, 25
23   pages, this is an excellent, excellent job.
24                  MS. JOSEPH:  Thank you.  The BAC work
25   group that was assigned to this originally worked very
0056
 1   hard, and since our April 6th meeting, we've had a
 2   different composition of people working with this, and
 3   those people as well worked for very hard.  Thank your
 4   for recognizing that.
 5                  MR. MOORE:  Sandy, I have a question on
 6   the time, this 36 months.  Is there a policy or an
 7   unwritten rule how often a charity or anybody in bingo
 8   gets audited?
 9                  MS. JOSEPH:  I don't know.
10                  Billy, you or Phil want to address that?
11                  MR. SANDERSON:  Phil Sanderson.  There
12   is not a standard policy or procedure.  It's all based
13   off of risk assessments, and, you know, they may get
14   audited today and not get audited again for three years
15   or they may get audited today and then get audited
16   again next year.
17                  MR. MOORE:  So there are some charities
18   out there that haven't been audited in the last five
19   years?
20                  MR. SANDERSON:  I don't believe there
21   are, no.
22                  MR. MOORE:  As far as the field audits,
23   is there any guidelines that those guys follow that
24   they have to go to this hall and this hall twice a
25   month?  I just -- it's so random sometimes, just from
0057
 1   talking with halls and charities around the state.  I
 2   was just curious, what is the steps they follow to do
 3   these things?  Because, you know, you hear that they
 4   show up at one place a lot more than another, and I
 5   don't know if that's because there's trouble or what,
 6   so I was just curious about that.
 7                  MR. SANDERSON:  There's not any
 8   standard.  We try -- the only -- one goal that we do
 9   have is, we try to visit each location at least once a
10   year so that everybody gets visited once a year as far
11   as an inspection or observation goes, you know, and
12   that's our primary goal in that area.  The other ones,
13   since the audit section has taken over investigating
14   more of the complaints, then that might why they're
15   seeing more frequency of the auditors coming out
16   because of the number of complaints that we get.
17                  MR. ATKINS:  Now, another thing, Danny,
18   what we do try and do is visit every location once a
19   year.
20                  MR. MOORE:  I think he mentioned that.
21                  MR. ATKINS:  Okay.  Yeah.  I'm sorry.
22   So it could be that part of their regular visit to a
23   location could not coincide with another visit that
24   they are going to make for a BRI observation audit or
25   whatever.
0058
 1                  MR. MOORE:  Or a different charity, I
 2   guess?
 3                  MR. ATKINS:  Exactly, yeah.
 4                  MS. JOSEPH:  All right.  Our plan
 5   then -- or my plan, the agency staff plan, is to
 6   present the revised draft rules to the commissioners at
 7   their next meeting.  Now, we will continue to --
 8   there's no reason we have to just like stop thinking
 9   right now, so if we come up with something that we
10   think is, you know, even a little better twist on
11   something, we can certainly incorporate that.  If that
12   happens, this work group that we've been working with,
13   and certainly Suzanne, will be aware of that.  I don't
14   know if we have e-mail addresses for the entire
15   committee, but Suzanne could communicate to everyone if
16   additional changes have been made.  We will have
17   Suzanne, Danny, Mario, Sharon Ives already on the list
18   of the group of people as well as Steve Fenoglio, so,
19   you know, we'll do our best to make everybody aware of
20   what's going on and not have anybody be surprised.
21                  Let me think if there's anything else.
22   I did also want to say, when we do take this to the
23   commissioners, what we'll be doing is asking them to
24   approve it for proposed rule making, so once it's
25   published, if they approve that at some point, it will
0059
 1   be published in the Texas Register and it will be on
 2   our web site and there will be a minimum 30-day comment
 3   period for everybody to make more comments, you know.
 4   In addition, we'll schedule a public hearing for people
 5   to come and tell us in person of their wish, what they
 6   think about the rules.  So the upcoming commissioner
 7   meeting is not at all the end of the process.  We've
 8   been doing all this stuff informally.  That will be the
 9   beginning of the formal process, so there will still be
10   additional opportunity.
11                  Billy?
12                  MR. ATKINS:  The draft rules in the
13   notebook, are they on the web site now?
14                  MS. JOSEPH:  No, they're not.
15                  MR. ATKINS:  Okay.  Can we have those
16   placed out there?
17                  MS. JOSEPH:  Certainly.
18                  MR. ATKINS:  Would you, Sandy, talk a
19   little bit -- well, I guess before that, if you want to
20   ask if there are anymore questions.
21                  MS. TAYLOR:  Are there any other
22   questions from the committee for Sandy?  Anybody in the
23   public for Sandy?
24                  Commissioner Clowe, did you have
25   anything that you wanted to say?
0060
 1                  COMMISSIONER CLOWE:  Tom Clowe, Chair of
 2   the Texas Lottery Commission.  I would like to comment
 3   on this item on your agenda, but before I do that, I'd
 4   like to comment on a prior item on your agenda, which
 5   is Nelda's report about the Sunset Bill.  And I think
 6   it's important as you all serve on this committee for
 7   you to understand or at least have a view about the
 8   legislative process, because my hope is that you're
 9   learning of that and you're getting experience and
10   you're becoming more knowledgeable, and, you know, I'd
11   like to just chat with you a minute informally.  It's
12   on the record, but this is just one person's opinion,
13   and I'm not speaking for the commissioners at all, but
14   the question might be asked:  What's the problem with
15   this Sunset Bill?  Why can't this Sunset Bill get
16   passed?  What's wrong with the Lottery Commission?
17                  My sense, and strictly my opinion, is
18   that, in the last regular session when our Sunset Bill
19   didn't get passed and we ran into the two-year safety
20   net was that there were outside concerns about items
21   that relate to the Lottery Commission that caused that
22   bill not to be passed.  We had a review from the Sunset
23   Committee that I think was very positive, and the items
24   that they recommended be looked at, possibly changed,
25   about the Lottery Commission in that last session were
0061
 1   really not negative; they were really positive.  There
 2   was a lot of talk about bingo in that session, if
 3   you'll remember, and we said, informally, this is all
 4   about bingo, and then it rolled over and it got to be
 5   all about lottery, and the words BLT and that type of
 6   thing came up, and so our bill didn't get passed.  And
 7   now Nelda has briefed you this morning, and I think it
 8   was clear in what she told you, that it may be that the
 9   bill will not be passed and we will go into what she
10   referred to as the safety net bill, which would extend
11   the life of this commission for another six years to
12   2011, and it's my personal opinion, again, that it
13   isn't because there's anything internally wrong with
14   the workings of the commission of the bingo division.
15                  It is that there are really two thoughts
16   out there.  One is, you know, in regard to lottery
17   operations, we don't want anything to be hung on that
18   Sunset Bill in the form of an amendment that might be
19   legislation that would expand gaming.  And the other
20   thought is that we want to hang some things on that
21   Sunset Bill that would get revenue for the state.  And
22   there is an alternative between those two schools of
23   thought, which is the extension of the Lottery
24   Commission and the bingo division just sort of as it is
25   for another six years, and that's not a bad compromise,
0062
 1   if you want to call it that.
 2                  And these are observations from a person
 3   that's not in the legislative process.  I'm an observer
 4   from distance, but you took her report and you seemed
 5   to accept it, and I thought may be the question might
 6   be in your mind:  What's wrong with this Sunset Bill?
 7   Why can't they get it through?  An agency likes to see
 8   their review come up every 12 years, and then the bill
 9   was introduced, have a Sunset Bill, get it passed, and
10   then you're set for another 12 years, and that is not
11   our case.  And, you know, we are running an operation
12   in this state in both bingo and in lottery that's
13   controversial.
14                  I had a reporter interview me last week
15   and he said, you know, why are people always talking
16   about the Lottery Commission?  What is it that you
17   people are doing over there that the media focuses on
18   you so much?  And the answer I gave him was, you got to
19   remember, there are a lot of people in this state, well
20   over a third, that don't like gaming of any kind and
21   there are lots of dollars.  This is a big business in
22   the state and that brings attention.  So if you ever
23   get a feeling that you're getting a lot of attention, I
24   think probably to a certain extent, that's true.  We
25   probably get more attention than the Texas Parks and
0063
 1   Wildlife gets, you know, and the DPS gets.  Those are
 2   petty routine.  Although, they're big operations, it's
 3   pretty routine, but not nearly as controversial as what
 4   we do here.  So that's my personal opinion about what I
 5   would add to Nelda's report about why we are looking at
 6   maybe being extended in life for maybe another six
 7   years instead of getting the Sunset Bill approved and
 8   having 12 years.  In my opinion, there's nothing wrong
 9   with that if that's the way it goes.
10                  Now, on this agenda item, I would like
11   to comment to you about this process.  And Sandy has
12   told you that this will more than likely be on the
13   commissioners' agenda for the June 24th meeting, and
14   I'm asking that it be on the agenda.  I think this
15   process is very, very positive and I think you have
16   come -- when I say you, I mean the industry, the staff,
17   the work done by the legal division, the input of the
18   members of the BAC, and the work group -- a long way in
19   this period, and Sandy described to it you just exactly
20   right.  This all has been a process of trying to get
21   the best effort achieved that is done informally
22   through a series of meetings and discussions and
23   compromises prior to the point that it is officially
24   published and put on the agenda for the commissioners,
25   and then the commissioners determine whether or not
0064
 1   they like the product well enough.  And they said in
 2   the last meeting, if you'll remember, as she pointed
 3   out to you, go back and do some more work, and so now
 4   it sounds like the work is being done and it will come
 5   to the commissioners on the 24th of June unless
 6   something else happens, and the commissioners will
 7   decision make at that time whether or not to have the
 8   item on the agenda for consideration and there will be
 9   a 30-day period where the public can make comments on
10   top of everything that's already been said, and there
11   will be a public meeting.  It wouldn't surprise me a
12   bit, when the rules come up for final consideration, if
13   the commissioners wouldn't hear public comment at that
14   time.  And my understanding -- Sandy, you correct me if
15   I'm wrong -- is that it has to be within the records at
16   that point.
17                  MS. JOSEPH:  In rule making, you can
18   take additional time.
19                  COMMISSIONER CLOWE:  In rule making, you
20   can take the entirety of any scope of comments, so,
21   see, that opens it up even more.  It's in disciplinary
22   that you have to stay within the records of the trial.
23   See, you need to ask your lawyer all the time about the
24   rules.  So it's important that you understand that
25   that's the process and we're not anywhere near towards
0065
 1   the end, but I think -- and you have hammered out these
 2   differences and you have focussed on some of the things
 3   that concern you, like the cap on the violations.  It's
 4   a very good discussion here this morning.  I'm sorry
 5   the other two commissioners couldn't hear that.  The
 6   issue of the look back and whether you're going back 48
 7   or 36 months.  These kinds of communications are very
 8   beneficial, and that will come to the commissioners.
 9   It will come in reports from the staff.  It will come
10   in the record of the public meeting.  It will come from
11   the comments of the public.  It may very well come in
12   comments at the commission meeting.
13                  Now, I've said to you before, the
14   legislation is what the legislature gives the agency,
15   but the rules, the rules are the agency's and the
16   commissioners adopt the rules, so the commissioners
17   are, in a sense, the judges that make the final
18   decisions and they have to determine what the
19   reasonableness is of these issues, and so your comments
20   and your work up to this point is very, very important.
21   And understand, the staff doesn't make that decision
22   and the legal department doesn't make that decision.
23   They work like the devil to get the best product they
24   can with your help and with the public's help, but the
25   commissioners are the ones that decide whether there
0066
 1   will be a cap, whether it will be intentional or
 2   unintentional and whether there will be a look back of
 3   36 or 48 months.  That is the decision the
 4   commissioners will make.
 5                  There's been another comment made that
 6   I'd like to touch on briefly, and that is, well, I
 7   think it was said to us in our last meeting, you know,
 8   we got a friendly commission now and we feel pretty
 9   positive about this commission and we're not sure that
10   there will be a friendly commission in the future and
11   that's why these rules are so important to us right
12   now.  Well, I didn't make a response to that in the
13   meeting to that comment, but here's what I would say to
14   you:  I don't think you've got a particularly friendly
15   commission right now; I think you've got a really well
16   informed commission and I think the commission, in my
17   six and a half years now on this board, has made a real
18   effort to understand the bingo industry and get to know
19   what it's problems are and to be proactive in dealing
20   with those problems.  You know, we had this joint BAC
21   and commission meeting and you've had commissioners
22   here at your meeting, so I'd view it as a more informed
23   and knowledgeable commission.  And my hope is that, in
24   the future, you all will continue to make an effort to
25   reach out to the commissioners and draw them in in the
0067
 1   way you have in the past to what's going on in the
 2   bingo industry; that can only help everyone.
 3                  And the rules, remember the rules are
 4   the commissioners', and so having an informed
 5   commission today doesn't mean that a commission, hence,
 6   might not change the rules.  The commission can do
 7   that.  The commission is looking at these rules right
 8   now with the idea of changing them, and so the rules
 9   can be changed; they are not set in stone; they are
10   subject to review and they are subject to revision.  So
11   that's why it's important for you to do the kind of
12   work that you've done in this instance on the rules and
13   on future rules that might come before you.  You're
14   fulfilling, in my opinion, what is the real role of the
15   Bingo Advisory Commission in the work that you're doing
16   in getting these rules together and you're focussed on
17   something that is the commission's business.  That's
18   what makes it so gratifying.
19                  Madam Chair, those are the two comments
20   that I wanted to make.  While I'm here, if anybody has
21   a question on anything regarding what's on the agenda,
22   I'd be happy to try to answer it for you.  Thank you
23   very much.
24                  MS. TAYLOR:  Thank you.
25                  MS. JOSEPH:  I'll just add, when I
0068
 1   present these proposed rules to the commissioners, I
 2   will outline for them very clearly the issues that are
 3   outstanding that there has not been agreement on or
 4   consensus on and I'll attempt to present both sides of
 5   that so that they can be assisted in making their
 6   decision.
 7                  Any other questions for me?
 8                  MR. ATKINS:  Sandy, I just wanted to --
 9   real quickly, maybe you could discuss for the advisory
10   committee the process we're going to be looking at on a
11   go-forward basis as it relates to the rules and their
12   development.
13                  MS. JOSEPH:  My understanding is, I'm
14   going to be doing a lot of other bingo rule making in
15   the future as the legislature does whatever it does
16   that may cause us to need additional rules as we need
17   to revise rules that we already have because they need
18   to be updated or improved, whatever, and I'm going to
19   continue working a lot on bingo rule making.  The plan
20   is, on a go-forward basis, to use a model essentially
21   like we've been doing since April 6th, where the staff
22   will have some people working on the rule and then
23   we'll ask for any volunteers to work with us on the
24   rule.  I guess the slight change is, it's going to be
25   the same composition of people, but I'm going to be
0069
 1   taking the lead on getting the meetings together and
 2   trying to keep the process moving, et cetera, so the
 3   staff feels that that would be-- it's worked well.  I'm
 4   sorry, Danny, that you didn't get to participate as
 5   much, but I think we made a lot of progress.  So that's
 6   our intent, and I think that's what's Billy is talking
 7   about.  So, you know, in all likelihood, we're going to
 8   need more volunteers.  And we may have to call on some
 9   different people because we're going to wear the ones
10   we've got out.
11                  MR. MOORE:  Is there anything in the
12   pipeline?
13                  MS. JOSEPH:  Not specifically.  You
14   know, we've been looking at a lot of the direct
15   legislation and a lot of the places where they'll say,
16   you know, the commission will adopt rules, but, no, we
17   haven't got a plan yet.  We'll be looking at all that,
18   what needs to be done.
19                  Anything else I should add that I've
20   forgotten?  Any comments about that?  Does that work
21   for y'all?
22                  MS. TAYLOR:  Okay.  Thank you.  If we
23   could have public comment now.  David Heinlein?
24                  MR. HEINLEIN:  Thank you, Madame Chair.
25   David Heinlein with Jetta Services.  I want to start
0070
 1   out by just thanking Sandy for doing such a good job
 2   with the work group.  She has a great personality to
 3   gather people together and get our attention.  At the
 4   first meetings, I told her I really want to be present,
 5   but that's a four-hour drive to get over here, but I
 6   did it because I think it's important that you get to
 7   know people, and now that I know Sandy better, I told
 8   Sandy that I wanted to serve on these committees and do
 9   some of it by phone because that's a lot less time
10   consuming, but I wanted to thank Sandy and Phil
11   Sanderson for their input.  Sandy was very patient with
12   us on every single item on the administrative rules.
13   We went through every single one word by word, and
14   Sandy would make sure, is everybody okay with that and
15   making comments, so we took a slow process; we didn't
16   rush through it.  I was really happy about that and I
17   was just amazed that she had that kind of patience
18   because some of us are a little dumb on some of these
19   things, and she's listed for us several items that we
20   did not have a consensus on.
21                  I continue to be concerned about the
22   money to pay the administrative penalties coming from
23   other than bingo funds.  Although, as Suzanne pointed
24   out, a lot of our charities don't have any funds to
25   begin with, so, really, any amount, $500, is going to
0071
 1   be a lot to have a penalty imposed.  I don't know what
 2   we'll do, whether we have to have some sort of
 3   fundraising activity to pay for those penalties, but a
 4   lot of our concerns have been really taken away, Mario,
 5   as to the large -- these big amounts of money by lots
 6   of things that we did get done.  I'm very pleased with
 7   the ones that she's pointed out.  This 5-A, for
 8   instance, the unavoidable result of a related
 9   violation, I think that relieved my concerns about this
10   cascading effect that we've been so concerned about, so
11   I believe that we're looking at a fair assessment and I
12   think the rules are moving in the direction of
13   accomplishing our purposes of encouraging compliance
14   without putting someone out of business.
15                  I learned that the ability to do so does
16   remain by there not being a cap.  A cap was a concern I
17   had at the very beginning, but as we've moved through
18   the process, I modified my concern to that and I really
19   wrote a statement of what I thought should happen, and
20   then Sandy gave me some other information, which is why
21   we're able to talk about that because I wanted to get
22   some input from Commissioner Clowe.  I asked that we
23   write a statement that the aggregate accumulated fines
24   for any licensed period might not exceed $5,000 unless
25   approved by the commission.  I did not intend to
0072
 1   minimize or put a cap on the total possible penalty of
 2   the fine.  People could, in those cases where there's
 3   an intentional violation, make it $100,000 or $200,000,
 4   whatever it takes to get them out of bingo; let's get
 5   them out of bingo.
 6                  For those who are just trying their best
 7   to process all the paperwork, and it's an enormous
 8   amount of paperwork, as you know, in bingo, and there's
 9   so many opportunities to make an infraction that's not
10   intentional that I thought it will be important to have
11   listed in here a cap that would only be surpassed by
12   the commission's approval.  According to Sandy and
13   Phil, the truth is, no fine is assessed even now that's
14   not approved by the commission.
15                  Well, I didn't know that, so that gave
16   me a new light on that, but then I started thinking,
17   well, you know, the whole purpose of our laying out
18   this matrix is to have some guidelines so that some
19   penalties would be assessed.  I think today there's a
20   lot of penalties that might have been assessed if there
21   hadn't been a matrix rather than having to fine someone
22   $1,000 for a violation, so it's a good thing that we
23   have some guidelines now so that people can have a
24   matrix and they can say the first violation is zero and
25   then it escalates as it goes on.  I think that Phil was
0073
 1   correct in saying that the bottom line effect is that
 2   there will be more penalties assessed, and I think
 3   that's the truth because there's going to be the
 4   ability of the auditors in the field and those who come
 5   in contact with the conductor and the lessor and the
 6   manufacturer to have something that's reasonable to say
 7   that, you know, you've done this and it's a violation
 8   and you're going to be fined $100.  I think there's
 9   going to be an enormous amount of increase in small
10   violation assessments.  I think that Phil made that
11   comment in one of our meetings, so I think there's
12   going to be more of these that are going to go to the
13   commission for approval, and it seems to me that the
14   commission might want to consider some sort of matrix
15   of their own or having the ability to quickly be able
16   to go through those violations that are brought to
17   their attention for approval to pass on the approval,
18   you know, in an organized way as well.  You know, we
19   may send out a whole lot of checks for a charity to
20   sign and it gets to be -- you know, they start signing
21   checks and they don't really look at them.
22                  I've gone through a process recently of
23   encouraging the charities to have one person for at
24   least a quarter to be the only one that sits there and
25   signs the checks and very carefully looks and examines
0074
 1   every one of them, because we make mistakes.  Sometimes
 2   we write a check for $150, put another zero on it and
 3   it's $1,500, and someone signs it and sends -- I swear
 4   this happened to us.  The supplier says, hey, what's
 5   this?  So, you know, you need to carefully look at
 6   that.
 7                  I think that if we have a whole large
 8   increase in these assessments being brought to the
 9   commission for sign-off, it's going to get like the
10   payroll checks and you just sign them off, and it seems
11   to me that there may even be -- that there should be a
12   number that turns on that light, you know, if the
13   assessment is increased to an amount of money that's --
14   I don't know what it might be, because that would have
15   to be something that the commission would look at and
16   see what kind of traffic there is coming into that
17   area, but I believe it would be helpful.  And if that
18   is something that they think would be helpful to do
19   then I think it should be put into these rules, and it
20   would give the public a little more confidence, too,
21   that this is a serious thing; we want you to comply.
22   But there is a higher court.  There is someone else
23   that looks over the shoulder of Charitable Bingo
24   Division, and that is the commission, and they have to
25   sign off on them because I didn't know that until I was
0075
 1   told in the meeting.  I think it could cause some of
 2   these charities that may feel terror to not have such
 3   terror if they knew the commission had to sign off on
 4   that.
 5                  So while you have a staff that's going
 6   through routines, and sometimes you make mistakes, any
 7   of us can get into routines, and your fear of having
 8   that happen can be allayed if you know that it has to
 9   first pass through the commission and signed off on,
10   but it has to be something that's -- when you know that
11   they're signing of on not just as a routine thing but
12   is given some pretty serious consideration.
13                  I look forward to another meeting where
14   we might talk about the intentional or unintentional
15   type of violation having a difference.  I think that
16   would be a good thing to do.  Thank you.
17                  MS. TAYLOR:  Mr. Fenoglio, were you
18   going to speak on this item?
19                  MR. FENOGLIO:  I think so, Madam Chair.
20   Let me give you my witness affirmation form.
21                  Madam Chair, members, for the record, my
22   name is Stephen Fenoglio.  I'm an attorney in Austin.
23   I have participated, I believe, in all but one of the
24   meetings in the working group and we appreciate the
25   staff's involvement in that regard, and I think
0076
 1   Ms. Joseph has done a great job collecting the comments
 2   and getting your comments back to us.  We've narrowed
 3   the field substantially.  I want to raise, though, one
 4   issue.  And I apologize for being late.  As y'all know,
 5   there's a legislative meeting or two going on across
 6   the way and we've been involved in that.
 7                  This whole process was started by a
 8   Sunset Advisory Commission recommendation back in 2003.
 9   Actually, the first time a proposal for the commission
10   to adopt administrative penalty rule was raised in the
11   Sunset Advisory Commission staff report, and I believe
12   it was in the summer of 2002.  That bill died, as you
13   know, in the 2003 session, and I believe the lottery
14   Sunset Bill will die again this session.  I think
15   Chairman Clowe spoke a little bit about that process.
16                  Well, the point on that is, this whole
17   requirement for administrative penalty rules spring
18   from a recommendation of ten different -- or,
19   collectively, ten different members of 2003, eight of
20   whom are members of the legislature, and the same is
21   true in the 2005 process.  It's never been approved by
22   the legislature and it likely won't be approved by the
23   legislature, and the genesis of that is that the
24   legislative recommendation that has yet to see law,
25   then it occurs to me that perhaps the commission
0077
 1   process is being a little premature in establishing an
 2   administrative penalty rule, particularly where you
 3   have continuing concerns of, where are the funds going
 4   to come from to pay the penalties.  And while the last
 5   version that the commissioners saw that issue was
 6   hidden from view.  Certainly, today, the issue is out
 7   front and personal, and I don't know of any other state
 8   agency in Texas that has a similar requirement.
 9                  I believe that some of you were present
10   perhaps when the commissioners considered this matter
11   on April 4 at their commission meeting where they
12   directed that the staff work with the industry and come
13   back.  One of the commissioners observed, I don't know
14   how you can make that recommendation if bingo money
15   comes in a general fund account and is intermingled
16   with other funds, how a charity can say none of those
17   bingo moneys were used to pay an administrative
18   penalty.  That would certainly be the case if
19   100 percent of the general fund originates from bingo.
20   Well, then the charity can certainly say, you know, we
21   don't have any other money to pay, but if it's a
22   charity -- a large charity of, say, $1 million to
23   $3 million in general budget revenues where bingo plays
24   perhaps 60 to $100,000 a year, it goes into the general
25   fund account and it's intermingled with a whole host of
0078
 1   funds, some of which are specifically targeted to
 2   address specific programs.  Those moneys aren't
 3   commingled, but the rest of the moneys are, and I don't
 4   know the answer to that.  I've thought long and hard,
 5   and I believe it was Commissioner cox, Billy, that made
 6   that observation, that I don't know how you can
 7   affirmatively say in the settlement agreements the
 8   charities are required to certify that none of those
 9   funds come from bingo funds.
10                  Y'all heard me talk about the Arc of the
11   Capital Area.  It's one of the charities that I
12   represent.  I've been on their board for 12, 15 years,
13   and they're about a million two budget charity.  Bingo
14   plays 60 to $80,000 a year, roughly, of their total
15   fund.  I mean, you can play budget games and say, well,
16   none of the funds are paid from bingo, but I don't know
17   that the auditor of the charity could say, well, yes,
18   we know exactly where those dollars came from; we had a
19   $50,000 golf marathon tournament and we do that every
20   year and raise roughly $50,000 a year for the charity,
21   so those moneys go in the general fund.  Does the Arc
22   pay the penalty?  Who knows.  Unless someone says -- a
23   board member says, I'll pay the $500 penalty, here's my
24   check to the Arc of the Capital Area.  The Arc goes and
25   cashes it and gets certified money in the form of a
0079
 1   money order, then I think they could say, yeah, those
 2   funds did not come from bingo top or bottom.  That's a
 3   concern.
 4                  The other concern is the overall cap of
 5   the penalty.  We talked a lot about that in our
 6   discussions and meetings, and we did not get to a
 7   resolution.  You know, part of me understands where the
 8   staff is coming from because they don't know today what
 9   bad charity might show up tomorrow in an audit, and if
10   you have a one size fits all, it may not work.  On the
11   other hand, you are talking about charities, many of
12   whom substantial sums of their funds come from bingo,
13   many of whom are not particularly sophisticated, do not
14   have full time professional staff on board, and
15   certainly some of the workers in the bingo hall are
16   volunteers.  I guess in the overall scheme of things,
17   we're asked to trust the process.
18                  MS. TAYLOR:  If I could interject.
19   While you were busy elsewhere at the Capitol looking
20   out for our interests, we did have this discussion, and
21   I suggested, and a couple of members suggested, that we
22   would like to see a cap on nonintentional --
23                  MR. FENOGLIO:  I think that's a great
24   idea.  I'm sorry I missed that observation.  I wish I
25   had thought of it.  It would certainly go against the,
0080
 1   oh my gosh, we did it, but we didn't intend to.  And I
 2   think most of the penalty provisions are aimed at those
 3   type of knowing type of violations as opposed to, this
 4   is purely a pay work requirement and since the charity
 5   conducts three sessions a week, the maximum number of
 6   all the paperwork they're going to accumulate is going
 7   to be, what, Suzanne, a three-inch notebook of papers,
 8   at least, all the papers they're going to have to keep
 9   up with, their invoices, the check cancelled, et
10   cetera, et cetera, et cetera, and you're volunteers are
11   low paid workers.  It's remarkable that you would not
12   find some violations.
13                  I guess the final thing -- I made this
14   comment the last time and I won't repeat it much -- it
15   has to do with the expedited violation.  And, again,
16   this is a comment that Commissioner Cox observed in the
17   meeting.  In the new language in 402.707, subparagraph
18   E, the last sentence, the opportunity for an agreement
19   in accordance with the subchapter will expire, and that
20   is, the charity is given 20 days to make a decision.
21   The problem is, some charities don't meet monthly.
22   Many charities meet every other month or perhaps
23   quarterly.  Coupled with the fact that the way the rule
24   reads today, they can't use bingo funds to pay for it,
25   you may get into a situation where the charity is
0081
 1   confronted with an expedited penalty and cannot get its
 2   executive committee or board of directors organized and
 3   focussed on that before the 20-day period.  They
 4   made -- the manager of the hall and perhaps the primary
 5   operator of the hall all agree, we should settle this,
 6   but the reality is, since it's nonbingo funds, they
 7   don't want to encumber the charity's general fund,
 8   since they don't have authority, neither the bingo hall
 9   manager nor the primary operator typically would, they
10   don't have the authority to fine the charity, so the
11   window misses.
12                  My suggestion and the suggested language
13   I've given staff before is, we understand that the
14   staff wants to use that 20-day notice for another
15   purpose in the Bingo Enabling Act as far as the time
16   period to initiate an enforcement action, and I don't
17   have a problem with that, but if, in fact, on the 40th
18   day before there's ever any hearing, the charity's
19   board or executive committee meets, understands what's
20   in front of it, has an opportunity to hire a bookkeeper
21   or an attorney who's knowledgeable about the issue, and
22   looks at it and says, okay, this makes sense, we did
23   violate the law, and it's a problem for us, we want to
24   fix it, and we want to pay an administrative penalty.
25   The way the rule reads today, it's gone.  Their only
0082
 1   option then is either surrender their license or go to
 2   hearing, and I would submit either of those options are
 3   not part of good government.  That if, in fact, under
 4   those circumstances, the charity ought to be able to
 5   go -- if the staff is convinced, for example, that the
 6   charity has been trying to get to there, trying to get
 7   to yes, but because of other people involved, they
 8   couldn't, the staff ought to be able to say, okay,
 9   well, sure, we'll take that deal.  We offered you the
10   administrative penalty and you can pay $500 or $300 or
11   $1,000.  You can look at the penalty matrix guide and
12   figure out, you know, if there were multiple
13   violations, it could be $500 to $1,000.  We'll still
14   take that.  Because other than singling out one notice
15   of hearing, that staff hasn't been encumbered much by
16   it.  There's been no real cost other than the cost that
17   was already involved in getting to the point where they
18   gave the notice.  And I would suggest that that would
19   be part of good government, an efficient resolution.
20   It may not be within the 20 days.
21                  In many cases with many of the charities
22   I represent, I would be amazed if they could get to an
23   agreement in 20 days.  Because by the time that the
24   hall manager reaches the primary operator or the board
25   person who is responsible for that, that could be a
0083
 1   week.  It would then be another week before they can
 2   reach someone who can actually understand what went on
 3   and give them advice.  If they have to take it to an
 4   executive committee and the executive committee doesn't
 5   meet for another month, then you're way beyond that.
 6   All of those things take time.  And, certainly, the
 7   staff have time constraints, too, but, you know,
 8   sometime when someone wants the staff to turn on a
 9   dime, the staff has not been able to do that, and I
10   don't mean that with any disrespect.  It's just a
11   matter of, everyone has so many hours in a day, and
12   sometimes things get done timely and sometimes they
13   don't.  Again, if everyone agrees that that result
14   ought to occur, the offer should not be taken off the
15   table with the charity then being faced with either we
16   quit, we'll surrender our license, or we now have to
17   hire a lawyer, suit up, and go to a formal case, which,
18   by the way, I'm selfishly not too worried about that,
19   but from the overall scheme of things, that's not, I
20   think, what's in the best interests of both the
21   regulator, the charity, and the public's interest.
22                  And, Chairman, I'm sleep deprived, and
23   those are all the comments that I can make, and I'll
24   try to answer any questions.
25                  MS. TAYLOR:  Any of the committee
0084
 1   members have any questions to ask?  Thank you.  Any
 2   other public comment?  This is just the public comment
 3   on this one agenda item at this time.
 4                  MS. LAUDER:  My name is Carol Lauder and
 5   I have been asked to provide input on your meeting
 6   processes, and that's why I'm going to comment on this
 7   particular agenda item.  I had a question that I could
 8   possibly provide guidance if I can figure out what that
 9   would be.  One of my questions, Steve Fenoglio just
10   shared some concern on this agenda item on expedited
11   rules that maybe the commission shouldn't be adopting
12   them, that it might be premature since it wasn't
13   mandated by the legislature.  Did I understand that
14   correctly?
15                  MR. FENOGLIO:  Yes.
16                  MS. LAUDER:  And my question is:  I know
17   that this committee has been working for over a year on
18   this work, and so from a process standpoint, I'm really
19   not commenting on the content of the item and what gets
20   decided, but in terms of the process, it would seem, as
21   a facilitator, being a facilitator, my question would
22   be:  Is that not an issue that was addressed in the
23   very beginning of the work group, whereby, a decision
24   was made regardless of what the legislature has or has
25   not done, the commission has decided that they want to
0085
 1   engage in this work group and produce these expedited
 2   rules?  Is my question at all clear?  Probably not.
 3                  MR. ATKINS:  Well, I --
 4                  MS. LAUDER:  I guess my concern --
 5                  MR. ATKINS:  Yes, I think that was
 6   addressed early on, and I think that Steve started off
 7   his comment with, you know, something similar to, I
 8   haven't said this before; I haven't raised this before.
 9                  MS. LAUDER:  Correct.  And that's my --
10                  MR. ATKINS:  So, you know, people may
11   not agree, but I think it would be the staff's
12   contention -- and, unfortunately, Ms. Joseph had to
13   leave for personal reasons, but she would be the one to
14   more appropriately comment on this, is that, you know,
15   the staff feels that it is appropriate.
16                  MS. LAUDER:  To engage in the expedited
17   rule process?
18                  MR. ATKINS:  Specifically the expedited
19   rule process is something that developed out of the
20   discussions relating to the administrative penalty
21   guidelines.
22                  MS. LAUDER:  Okay.  And the only reason
23   I raised the issue at all is because, from a good
24   meeting process standpoint, in order to be affective as
25   a committee, questions like whether something should be
0086
 1   engaged in are critical to be handled at the beginning
 2   of the work so that people don't work for a year and a
 3   half on something or a year on something and then
 4   decide that it's not a worthy undertaking.  Now, I'm
 5   not suggesting the industry or the public doesn't have
 6   the right to raise the issue at any point in time.  I'm
 7   not suggesting that at all.  They do have that right.
 8   But I would hope that the BAC would feel comfortable in
 9   answering or responding to something like that at the
10   end of the process.  I would hope that you would
11   look -- and this is for future, today this is what it
12   is -- but that you would look at those overarching
13   issues of whether you should be addressing something
14   before you put so much time and effort into it.
15   Questions or comments?
16                  MS. TAYLOR:  Let me see if I can get my
17   thoughts here.  I agree with you.  The proposed rule,
18   the administrative rules were brought to the BAC.  We
19   could either participate in them or not participate,
20   but it was going ahead with or without our input.
21                  MS. LAUDER:  Okay.  I see.
22                  MR. ATKINS:  Yeah.  And that's one of
23   the joys of government, you know, whether or not we
24   think something is necessary or worthwhile or
25   appropriate, you know, a lot of times we don't have a
0087
 1   choice.
 2                  MS. LAUDER:  Okay.  Well, thank you for
 3   allowing me to comment.  And I just want to see that
 4   your efforts, whether it be the division's efforts or
 5   the Bingo Advisory Committee's efforts or the
 6   industry's efforts, are as efficient and affective as
 7   possible.  Thank you.
 8                  MS. TAYLOR:  Thank you, Carol.  Any
 9   other public comment on this item?
10                  Are we looking for a motion?  What are
11   we looking for, Billy?
12                  MR. ATKINS:  Again, I'm sorry that Sandy
13   had to leave.  It does say and/or action, so do you
14   know, Phil, if Sandy was seeking a specific action from
15   the BAC?
16                  MR. SANDERSON:  Phil Sanderson,
17   assistant director.  I don't know if she was actually
18   seeking a specific action.  I do know that the
19   commissioners had requested at the May 10th meeting, I
20   believe it was, or the April 26th meeting, that the
21   rules be presented back to the BAC before they come to
22   the commission, so I would assume that the
23   commissioners are maybe looking for how the BAC feels
24   about the rule.
25                  MR. ATKINS:  I guess that would make
0088
 1   sense.  That would be consistent with commissioner
 2   Clowe's comments, that it's his understanding that this
 3   will be coming back before then, so whatever
 4   recommendation I think the BAC would want to make to
 5   him I think would be ripe for consideration.
 6                  MS. TAYLOR:  At the last commission
 7   meeting or at the last BAC meeting, I don't remember
 8   the exact wording and I don't have the report here, but
 9   it was something to the effect of the BAC recommended
10   to the commissioners not to go ahead with the specific
11   rule, and at the meeting they wanted to know why we
12   felt so strongly about them not proceeding to post this
13   in the Register and take public comment and do the
14   public hearing and all of that, so I don't know if any
15   one of you wants to say that we agree with this rule or
16   we agree with going ahead, but they are looking for us
17   to say something, since last time we voted to ask them
18   to not go ahead with them.  Mario?
19                  MR. MANIO:  At this time I will go ahead
20   and make my vote in favor of sending this to the
21   commission with the permission that certain items be
22   revisited.  Well, that may not even be necessary
23   because, like Billy said, there's a window for public
24   comment, so some of the things that we are concerned
25   about, if they are really of interest to the public,
0089
 1   that will come out during that comment, specifically
 2   the cap and the look-back period.  We'll see what the
 3   public thinks about that.
 4                  MS. TAYLOR:  Larry?
 5                  MR. WHITTINGTON:  I think we should go
 6   ahead on with the administrative rules except on some
 7   things that should be capitalized, and I mean
 8   capitalized, for instance, definitely making sure that
 9   these things are looked at by the lottery commission
10   with good intent on certain charities.  And like you
11   said, on the bad apples, you know, I don't have nothing
12   against them guys not being in bingo because they
13   shouldn't be, but the good people that try, I think we
14   should go ahead but capitalize on a few things and say,
15   hey, guys, you know, these should be underlined, stand
16   up if you got good intent, if you make a mistake say
17   things.  And the cap, too, see if we can cap those
18   people who understand what's going on with the rule.
19                  MS. TAYLOR:  Tom?
20                  MR. WEEKLEY:  I agree that it should be
21   passed on.  There's been a lot of hard work put into
22   this and whether we agree with any or all of it, I
23   think it should be passed on to the commission.  It's
24   going to be anyway, but you can't ignore all the hard
25   work that's gone into this, and those items that we
0090
 1   think maybe are not correct, as Mario pointed out,
 2   there will be an opportunity there to discuss those,
 3   and I'm sure the commissioners will discuss all of it
 4   to a degree.  I would vote in favor of passing it on to
 5   the commission.
 6                  MS. TAYLOR:  Rosie?
 7                  MS. LOPEZ:  Since I'm a newcomer, I have
 8   been listening to everything that's been discussed this
 9   morning, and, again, you know, I'm a believer in
10   accountability and I believe that there is, you know, a
11   responsible -- you know, responsible part of all of us
12   that we have to be responsible for everything we do,
13   but on the other hand, there has to be -- I think it
14   needs to be looked at on a case-by-case basis with the
15   nonintentional, like we talked about the morning, and
16   the intentional violations, and I really think that,
17   you know, the committee has worked on this for a long
18   time.  It's been over a year and a half, and so I think
19   that, you know, there has to be some things that need
20   to be revisited, as Mario mentioned, and I believe that
21   this would be -- again, I look at the streamlining of
22   some of the violations that have been reduced to 38
23   instead of, you know, 70 or 80, and from a nonprofit
24   standpoint, I look at that as in favor of not having to
25   keep up with as many rules, and we're all again buried
0091
 1   under paperwork continuously, and so the more
 2   efficiently and effectively that we can minimize some
 3   of those things, I think it really helps the industry
 4   more.
 5                  MS. TAYLOR:  I agree with you, but being
 6   aware whether they're in there or not, they're still
 7   something they should have to comply with.
 8                  Jack, what do you think?
 9                  MR. DOUGHERTY:  Well, as a nonoperator,
10   this whole process is very fascinating to me, but I
11   certainly think we should move on with the rules to the
12   commission.  And I really appreciate what Mario has
13   commented on, that some of it needs to be addressed,
14   other than that, I'm open here.
15                  MS. TAYLOR:  Your turn, Danny.
16                  MR. MOORE:  I think I would concur.  I
17   think the opportunity still exists for people to
18   comment.  I think we'll probably have another meeting
19   or two, the way it sounds from Sandy.  Billy, I would
20   just hope that they do publish this stuff on the web
21   site for the public as soon as possible.  And any
22   changes, let's not drag our feet and make sure those
23   new drafts, Phil, are out on the site so everybody
24   knows where we are exactly so comments don't come in
25   that may reflect the change has been made or something,
0092
 1   so if y'all would do that, I think that would be
 2   important for everybody.
 3                  MS. TAYLOR:  Mr. Fenoglio, could I ask
 4   you a question?
 5                  MR. FENOGLIO:  Yes.
 6                  MS. TAYLOR:  I think it's the consensus
 7   of the committee that we would like to pass these rules
 8   on with some exception that we hope is continued to
 9   work out, so how would you suggest that we put this so
10   that the commissioners -- since you were there --
11   understand where we're coming from?
12                  MR. FENOGLIO:  Well, I guess -- and I
13   heard what Mario said, but he didn't identify
14   specifically, but, generally, I heard him say about the
15   look back and the cap, and I think that would -- and I
16   think Billy could probably help, but you would want to
17   flush that out in some manner so that the commissioners
18   know specifically, in a perfect world what the concern
19   is, number one, and also in the perfect world, number
20   two, what's the recommendation that the BAC has on
21   whatever issues they are.
22                  I'm looking -- Ms. Joseph, in her
23   e-mail, did a good job of identifying four remaining
24   issues that had been raised, and to the extent that
25   those are the four, or some of the four, then, Madam
0093
 1   Chair, to reference that.  And, again, in the perfect
 2   world, I think the commissioners, in addition -- for
 3   example, if one of the concerns was the source of money
 4   to pay administrative penalties, a recommendation that,
 5   whatever that would be, that the charities have the
 6   discretion to utilize whatever funds are available to
 7   them to pay an administrative penalty, as an example.
 8   A cap on the amount of penalties, I think that's what
 9   it says, O, slash, F, with a space, and I don't know if
10   that's -- I read that as "of penalties."  Billy?
11                  MR. ATKINS:  And you have an e-mail,
12   Steve, from Sandy?
13                  MR. FENOGLIO:  Yes.
14                  MR. ATKINS:  Okay.  This was going to be
15   my suggestion:  That the BAC move to send them to the
16   commission and that they vote for publication in the
17   Texas Register for public comment the proposed
18   administrative rules noting the still outstanding
19   issues contained in Sandy Joseph's May 19, 2005 memo to
20   the Bingo Advisory Committee, and those include the
21   source of money, the length of time to accept an
22   expedited penalty, the cap on the amount of penalties,
23   and the time period for considering repeat violations.
24                  MR. FENOGLIO:  And yesterday I got
25   delivered the notebook.  Thanks to your staff for
0094
 1   getting that to me.  I read it about 3:00 this morning.
 2   Yes, I think that would be one way to address it.
 3   Although, in a perfect world, you know, Billy, I could
 4   see a commissioner saying, well, if I wanted to go with
 5   their concern, what's the remedy?  What's the language
 6   that I should have?  And I don't know that y'all have
 7   time to parse that, but in the perfect world, I can see
 8   a commissioner saying, well, what is it they want?  I
 9   understand their concern, but what language do they
10   want?  And, again, in the perfect world, you would have
11   that.
12                  MR. ATKINS:  And I think there was a
13   discussion prior to your being able to join us.  You
14   know, I think there was a discussion about holding
15   additional meetings before the commission meeting, so
16   some of those may be addressed then.  And I would
17   think, Steve, that it would be appropriate at the
18   beginning of the public comment period to say, we're
19   not sure what we want.  We know right now we want to
20   continue to look at that.  And, you know, if there
21   hasn't been language proposed prior to the commission
22   meeting through these -- you know, through these
23   ongoing meetings, then it may be something that's
24   proposed during the public comment period.
25                  MR. FENOGLIO:  And you can do it that
0095
 1   way, certainly.  And I wasn't aware until you just said
 2   it that there may be another meeting.  I mean, I think
 3   if you had 20 or 30 minutes, you could work out the
 4   language, assuming that everyone was in agreement on
 5   what the issue was, and get that to a commissioner.
 6                  Did I answer your question?
 7                  MS. TAYLOR:  Yes.  Both of you.
 8                  MR. FENOGLIO:  May I be excused?
 9                  MS. TAYLOR:  Yes.  Thank you so much.
10   Thank you, Billy.
11                  Do I hear a motion for what Billy said?
12                  MR. ATKINS:  You want me to repeat it?
13                  MS. TAYLOR:  Yes.
14                  MR. ATKINS:  The Bingo Advisory
15   Committee moves that the commission vote for
16   publication in the Texas Register the proposed new
17   administrative rules 402.706 pertaining to standard
18   administrative penalty guidelines and 402.707
19   pertaining to expedited administrative penalty
20   guidelines.  Did I say for public comment?  And would
21   note for the commissioners the outstanding issues noted
22   in Sandy Joseph's May 19th, 2005 memo to the BAC.
23                  So that would be the motion.
24                  MS. TAYLOR:  Who makes that motion?
25                  MR. MOORE:  I'll make the motion.
0096
 1                  MS. TAYLOR:  Okay.  Danny makes that
 2   motion.  Is there a second?
 3                  MR. MANIO:  I second the motion.
 4                  MS. TAYLOR:  All in favor?  Opposed?
 5   Then we will forward that to the commissioners.  It was
 6   a unanimous vote.
 7                  MR. ATKINS:  And what we will do is, in
 8   addition to the draft rules, we'll include a copy of
 9   that memo in the commissioners' notebook so they'll
10   have access to it.
11                  MS. TAYLOR:  It's pretty close to the
12   end of the agenda, so I would suggest we take a 15 or
13   20 minute break, whatever you would like, and come back
14   and finish this up.  We'll meet back here at 12:35.
15                  (A short break was taken.)
16                     (AGENDA ITEM NO. 8)
17                  MS. TAYLOR:  We're back from break now.
18   We'll start with Item No. 8:  Report and possible
19   discussion and/or action relating to the work group
20   assigned to develop recommendations relating to the
21   Bingo Advisory Committee annual report.
22                  That would be me, but before I do that,
23   I do want to recognize that Commissioner Cox is now
24   here.  We're glad to have you.  Thank you so much for
25   coming
0097
 1                  COMMISSIONER CLOWE:  Thank you, Suzanne.
 2                  MS. TAYLOR:  The annual report, the work
 3   group did meet like once or twice, and I have to say
 4   that it's probably -- it's not ready for this meeting,
 5   but we will get this together and have it ready for the
 6   next meeting.  Kimberly and I just didn't quite get it
 7   all together to have this report ready, but we will
 8   have it for the next meeting.  Mario did a great job
 9   and Pete and it kind of stopped with us, so we'll take
10   the blame and we'll pick up steam and have it ready.
11   Any other discussion on that item?  We won't talk about
12   it anymore at this time.
13                     AGENDA ITEM NO. 9)
14                  Item No. 9:  Report and possible
15   discussion and/or action related to the 2005 Bingo
16   Advisory Committee work plan.  This is the work plan
17   that we looked at at our last meeting and did approve
18   to send on to the commissioners.  The commissioners did
19   approve that at their -- which meeting?
20                  MR. ATKINS:  Their May 10th.
21                  MS. TAYLOR:  May 10th meeting.
22                  MR. ATKINS:  And it has been posted to
23   the web site.
24                  MS. TAYLOR:  The work plan, in essence,
25   becomes -- or, where we get our agenda items for our
0098
 1   future meetings, so if you're not familiar with it, for
 2   you new members, you'll get a chance to look at it.
 3                  MR. ATKINS:  Members, you may have some
 4   interest in going back and reviewing the discussions
 5   that occurred at that meeting.  There were some
 6   specific questions asked on a couple of the items, and
 7   I did the best I could to answer them, but it will just
 8   help you, I guess, better understand the commissioners'
 9   intent if you take the time to just look over that.  It
10   was a very brief discussion.
11                  MS. LOPEZ:  That's on the BAC web site?
12                  MR. ATKINS:  It's on the bingo division
13   web site, yeah.
14                  MS. TAYLOR:  The minutes you're
15   requesting are the May 10th meeting of the
16   commissioners' meeting?
17                  MR. ATKINS:  That's correct.
18                  MS. TAYLOR:  Any other discussion of the
19   work plan at this time?  Public comment?
20                  David, I would note that one of the
21   items in the work plan that I thought would interest
22   you is something that you had talked to me before
23   about, and that is Item No. 3.  It's comment on the
24   effect of administrative rules and regulations on bingo
25   operations, so that would be an item that you could
0099
 1   bring up the cost to charities for.
 2                  MR. HEINLEIN:  It's on the web site?
 3                  MS. TAYLOR:  It is on the web site.
 4                  MR. ATKINS:  And that was also one of
 5   the items that there were some discussion about, so,
 6   again, I'd encourage you to look at that.
 7                     (AGENDA ITEM NO. 10)
 8                  MS. TAYLOR:  If there's no other
 9   discussion on this item, then we'll go on with 10:
10   Report on the activities of the charitable bingo
11   operations division.
12                  MR. ATKINS:  Thank you, members.  The
13   division has been pretty busy over the past several
14   months, of course, with the legislative session and
15   regular activities, but there's also been a number, I
16   guess, of special projects that we've been working on,
17   particularly enhancements to our web site, and I
18   thought it would be best to actually just show you some
19   of those.  And then, also, I want to give you a
20   demonstration of an online services center that we have
21   been developing for the licensees, so just to start off
22   with, going through the report in your notebook, we are
23   going to be working on press releases relating to the
24   first quarter of 2005 figures.  As a result of the last
25   Bingo Advisory Committee where we included an
0100
 1   activity -- or, a report on the activities of the
 2   charitable bingo division resulting from the joint
 3   meeting we had, one of the comments that we received
 4   that was very positive from the BAC members was the
 5   inclusion of a number of articles that the division
 6   comes across relating to bingo in this state and other
 7   states all across the world.  And even though he
 8   refuses to accept credit for it, Commissioner Cox
 9   suggested that we develop for the website this headline
10   section where we can post those online.
11                  So what we do, we don't necessarily
12   conduct a very sophisticated search, but when we do
13   come across stories, again, relating to bingo, relating
14   to charitable gaming, we will post those on this web
15   site, and we generally leave them up for about a
16   five-day period before we pull them down.  And, also,
17   another thing we do is, if you press on one of these
18   links -- here's one that we just put up today dealing
19   with charitable bingo gaming in Colorado -- it's going
20   to take you to another site and it could be a site that
21   would require you to, you know, subscribe to their
22   service, et cetera, but we're putting that out there.
23   These are updated daily.  We would encourage you to
24   look at them.  We have noted this in the upcoming issue
25   of the Bingo Bulletin.  Just a service that we're
0101
 1   putting out there for our licensees.
 2                  Another thing that we have been working
 3   on is the development of our forms and applications in
 4   an interactive PDF format.  Now, what this will allow
 5   organizations to do -- we still have the regular PDF
 6   format out there.  In this case of the interactive PDF
 7   format, what it will allow an organization to do is go
 8   out and complete the form electronically, they'll then
 9   be able to print it out, sign it, and send it into us.
10   Some of the -- some of the fields, you know, have been
11   hard coded to only allow a certain type of text.  See
12   here, in the social security number, it won't allow me
13   to enter a letter; it requires a digit.  So, we
14   currently have -- and then, of course, it -- say, if
15   you were working on an application for the registration
16   to include workers, you could fill all of the
17   information out, go here, print the form, you know,
18   sign it, send it in, and then if you wanted to do
19   another, you would just click on "reset form," and it
20   would clear all the information in there and you could
21   start out all over again.  We currently have about, I
22   think, 23 forms done.  We've started to work on, you
23   know, the ones that get the most use, as well as, quite
24   frankly, those that were the easiest for us to do, but
25   we will continue working on those and putting those
0102
 1   forms out there in the interactive format.
 2                  And then we have, also -- I'll go here
 3   on the publications published on the web site, the "How
 4   to Talk to the Media" publication that we've worked on
 5   with the BAC.  We sent that through legal for their
 6   review.  We now have it published on the web site.
 7   We'll also be incorporating the fact that we have that
 8   publication available in the operator training program
 9   as well as the Bingo Bulletin, because I think what we
10   have found is that organizations are going to get the
11   best response from their own local media, and so,
12   again, if you'll recall, you know, we talked about in
13   the publication ways that organizations can make the
14   story of interest to a local media.
15                  And then, finally, one of the things
16   that we've done is, we've put this little button right
17   here, and we're hoping that that will, you know, catch
18   some folks' attention, but, you know, we talked after
19   the fourth quarter, after 2004, that organizations have
20   surpassed the three quarters of a billion dollars mark
21   in charitable distributions, so what we are going to
22   start to do is, we are going to start to track what we
23   call "The March Towards a Billion Dollars," and we
24   will, on a quarterly basis, update this figure as
25   charitable distributions are made, and then, of course,
0103
 1   at the end of the year, we'll put the total for the
 2   year out there.  But we would encourage organizations
 3   to -- you know, they can print this out, post this in
 4   the hall.  They can share this with the media.  But we
 5   think the goal of driving towards one billion dollars
 6   in charitable distributions from the conduct of bingo
 7   is a great message to get out to the public.
 8                  Then the last thing that I wanted to
 9   report on before I got into my demonstration is the
10   fact that the operations manual has been referred to
11   legal, and I've talked to Sandy Joseph, and I believe
12   she's very close to finishing her review of the
13   document, and then I understand, I think, from Phil and
14   Marshal that they may have some additions that they
15   want to make to it, but I'm hoping that by the next
16   meeting, we will have completed that project and have
17   it available to the licensees.
18                  Now what I'd like to do is start talking
19   about the bingo services center that we've been working
20   on, and I've talked to some members individually.
21   Suzanne, I think we've talked.  Larry, I might have
22   talked to you; I don't remember.  I discussed it with
23   David Heinlein.  The staff has been working on
24   developing this online resource for licensees and the
25   public that has, really, three main purposes.  One is
0104
 1   to allow licensees to review information specific to
 2   their organization on a timely basis that will help
 3   them in the operation of their organization.  It's also
 4   intended to allow public access to commonly requested
 5   reports that now organizations have to obtain by
 6   submitting open records requests.  Thirdly, this will
 7   come with a very robust -- or, with a bingo hall
 8   locator service that has a very robust search feature
 9   so that the public will be able to go out and find
10   bingo locations to play bingo at.
11                  Now, what I'd like to show you now is
12   just a demo of screens that are under development, and,
13   again, I want to emphasize to everyone that this is a
14   very early preview of what's being developed.  Most
15   likely, the forms on here, you know, will change at
16   some point during the development process, and then
17   I've also been advised by the contractor, that since
18   this is a demo site, it will run somewhat slower than
19   the real site will.  Our scheduled implementation date
20   for this is September of this year.
21                  Now, the first thing that would happen
22   once we're ready to go live with this is, we would
23   submit notification to the primary operator and
24   business contact of every organization and provide them
25   information on how to go to this site and set up their
0105
 1   account.  So, Suzanne, I'm going to use you as an
 2   example.  You're the primary organization, the primary
 3   operator for ABC Charity.  You would get the letter and
 4   it would tell you how to go out and set up your
 5   account.  You would set up your account and you would,
 6   in effect, become the manager of that account and you
 7   would have the authority to grant access to this
 8   information to as many or as few people as you wanted
 9   to.  So, for example, if David Heinlein was your
10   bookkeeper as well as 19 other organizations, those
11   19 -- those 20 organizations may decide to give him
12   access to this information.  That's going to be the
13   organization's decision, and they can give access to as
14   many or as few people as they want.
15                  Now, in terms of, again, managing the
16   accounts, the one thing that's going to hinge on is, if
17   for whatever reason you go away, if you cease to exist
18   on the system, the access that you granted everybody
19   else is also going to go away, so your new primary
20   operator is going to have to go in there and open it
21   up, but I'll talk about having the access to different
22   organizations.
23                  MR. WHITTINGTON:  Any cost?
24                  MR. ATKINS:  Well, to the agency, but
25   not to the organization.
0106
 1                  Now, what you're seeing here -- let me
 2   point you to this column right here.  What you're
 3   seeing here is essentially every report that would be
 4   available, but if I walked in just as a conductor, then
 5   the only thing I would see here would be the
 6   information specific to a conductor:  Quarterly
 7   reports, amendment account, average attendance,
 8   temporary license account, quarterly -- no, that's not
 9   one.  So I would only see what is applicable to me as a
10   conductor.  If I logged on as a lessor, I would only
11   see what's applicable to me as a lessor, et cetera, et
12   cetera.  What I'd like to -- I don't want to go through
13   every report, but I do want to talk about some of the
14   features that they're going to have.
15                  First of all, again, they're going to
16   have a pretty sophisticated search feature.  What it's
17   going to do is, it's going to default to the most
18   current quarter, but you will also be able to search
19   for a maximum of up to four consecutive quarters.  Now,
20   one of the things that we're not going to be able to
21   do, because the quarterly report form has changed this
22   quarter, you won't be able to cross the 2004 or 2005
23   time period, but, otherwise -- you know, let me just do
24   this right now.  You can pull up cumulative data --
25   again, all of this is test data -- for calendar year
0107
 1   2004, and so that's what you would see.  You would see
 2   the cumulative data for each of the line items on the
 3   quarterly report form.
 4                  Now, another feature that you're going
 5   to see that is specific to all of the reports is the
 6   ability here -- and I think the -- yeah, you can get it
 7   in a printable format so that you can just print it out
 8   directly or you can download the information in, say,
 9   an Excel format, so organizations will be able to
10   download this information and build their own
11   databases.
12                  MR. WHITTINGTON:  If they are late on
13   paying taxes, will that be on their report, too,
14   dealing with the taxes?
15                  MR. ATKINS:  I don't think it will
16   identify it specifically as being delinquent.
17                  MS. TAYLOR:  Now, on this particular
18   report, can you go -- you can get this on any charity
19   just like the open records or is this specific to the
20   charity that's logged on?
21                  MR. ATKINS:  What I'm in right now is
22   specific to the charity, but I'm going to show you
23   something else in a minute.
24                  Now, I mentioned earlier that one person
25   can have access more to -- to more than one
0108
 1   organization's records, so, you know, this is what that
 2   would look like.  Now, again this is a demo, so, you
 3   know, we only have one charity set up, you know, and we
 4   have one lessor, one distributor, and one manufacturer,
 5   but you could have a list of five, ten, 50 charities
 6   right here that an individual could have been granted
 7   access to.  So, again, all of the report features are
 8   going to come with these types of search capabilities,
 9   with the printer-friendly format, and the download
10   feature.
11                  MR. WHITTINGTON:  It goes up to 15,
12   right, charities that you can look at a time?
13                  MR. ATKINS:  They can go to as many as
14   they want.  There's no limitation on that.
15   I think -- let me go to the amendment account.  This is
16   something that would be specific to, again, the
17   charitable organizations.  One of the most common
18   questions or calls that we get from charities is, "Do I
19   have any money in my account for an amendment?"  Okay.
20   So we're working to put that information out here, and
21   what the charity would be looking at is this line right
22   here, and then they would know if, you know, they have
23   the money in their account right now for an amendment.
24                  Now, this system is going to be
25   available to licensees, I think, either 22 or 23 hours
0109
 1   a day, seven days a week.  There's going to be a time
 2   period from like 4:00 to 5:00 in the morning or 3:00,
 3   something in the morning, where the information is
 4   updated, so what organizations will need to be mindful
 5   of is the fact that -- let's suppose that at 8:00 in
 6   the morning, someone goes out, they want to do an
 7   amendment, they log on, they see that there's $10
 8   there, they fax in the amendment, and that $10 is used
 9   up.  If someone else, for whatever reason, goes out
10   there at 3:00 or 4:00 in the afternoon and they want to
11   do an amendment, they go and look up and they see
12   there's $10 there, there's not really $10 there, so
13   that's something that organizations are going to have
14   to manage.  Now, one of the things that we've put in
15   there to help clarify that is all of this information
16   that, you know, to the organizations on its surface
17   won't mean a lot, but what it will help is, if there is
18   a question on the balance or whatever, the examiner
19   that the licensee is talking to will have access to the
20   same information, so they'll be able to talk them
21   through the process.
22                  Now, one other features that will be on
23   here -- I don't believe it's on here now -- there will
24   be a link, as I said before, to the interactive
25   amendment form.  So, again, if you're wanting to do an
0110
 1   amendment, you go out here and you look, okay, I should
 2   have money, click, take me to the amendment form, fill
 3   out the amendment, print it off, send it in.  And,
 4   again, there's another account that's set up for
 5   temporaries that, you know, is essentially the same
 6   feature, same functionality.  It will have the same
 7   link to the interactive form.
 8                  Now, let me go over to the license
 9   information, and I don't know if there's -- I don't
10   think there's any information loaded under these.
11   Yeah, see, there's not.  What this screen would tell
12   you is -- make sure I say this right, Phil -- if an
13   organization has an application, a renewal, an
14   amendment, or a temporary that's pending, what the
15   organization will be able to do is, they'll be able to
16   go here and they should be able to know that we do have
17   the application and know when we got it.  Some of these
18   reports here will start to give the organization
19   information specific to their license that's contained
20   on our record now.  I don't think this one was working.
21   Okay, it is.  So, you know, it will show you the
22   mailing location, the main location, the playing
23   location, it will show the schedule that we have for
24   the organization, and it looks like this is including
25   the temporaries.  Okay.  I didn't think it was.  It is.
0111
 1                  Again, another screen will let the
 2   organization know -- and this is a problem I was having
 3   yesterday.  This screen will let the organization know
 4   how many temporary applications they have available to
 5   them, how many they've used and how many they have
 6   left.  Maybe I need to search.  Okay.  Here.  So
 7   they've used one temp.  They have eleven temps.  This
 8   does have it; it has the link straight to the
 9   application form.  I'm pretty sure there wasn't any
10   information on there.  Okay.  So here's one for a
11   manufacturer.  It would tell you the kind of
12   information that's available.  This would also be
13   specific to conductors if they have a bond that we're
14   holding.  And then, finally, this will be individuals
15   associated with an organization or a position.  If
16   they're on the registry, we're also going to include
17   here in this column how long it's been that they have
18   attended the operator training program and if they
19   have.  So that's the type of information that will be
20   available to specific licensees about their
21   organization.
22                  Now, this column here, the statewide
23   financial reports, this will be something that anyone
24   will have access to.  And, again, there's separate
25   state law that requires organizations to make more and
0112
 1   more information that's normally requested through open
 2   records available to the public through their web site,
 3   so, again, there's going to be a lot of information on
 4   here, again, with pretty robust search capability.  Let
 5   me just pull up real quick -- pull up something real
 6   quick.  If we look in Dallas for Elks organizations.
 7   Okay, there's three.  So this is what we get.  Now,
 8   something to keep in mind on this report is that the
 9   report on the screen is only going to show the
10   information that we have listed here, and the help
11   screen will highlight this point, but if you click on
12   download full report, you'll get all of the data from
13   the complete report for those organizations.  Okay
14                  MS. TAYLOR:  Can you search by hall?
15                  MR. ATKINS:  You can.  Let's see if you
16   can here.  Yeah.  And now the problem with -- Suzanne
17   asked the question, can you search by hall?  You can.
18   What you have to be able to do is, you have to know the
19   exact spelling of the name.  Okay?  So let's search for
20   any location with the word "night" in its name in
21   Dallas.  There aren't any.  Too bad; I thought there
22   was; I really wanted to go there.  But if you do that,
23   then there's Nite Owl Too.  You're going to have to
24   know exactly what you're looking for.  I'll do this for
25   Danny's benefit, you know, the delinquent purchasers.
0113
 1   You know, we currently send that out electronically for
 2   organizations, now we're just going to have it here.  A
 3   lot of organizations themselves can look and see if
 4   they're on there and why and address those issues.
 5   This report, the conductor return report, will give you
 6   a cumulative report for the state.  A lot of this
 7   statewide information is stuff that, again, we will use
 8   for the -- you know, we'll be able to refer the media
 9   to it when they call about bingo, the legislators, et
10   cetera.
11                  Now I would like to show you real
12   quickly kind of where they are right now on the bingo
13   hall locator service if I can get that to come up.
14   Again, this will be a feature that will be available to
15   the general public from the bingo home page.  You'll be
16   able to search for locations, again, on a county level,
17   city level, zip code level.  You can search for a
18   specific organization.  Again, you can search for a
19   hall.  You can search for a specific day of the week.
20   Just, for example, if we wanted to know anyone in
21   Austin that was playing bingo on Wednesday, this is
22   what we'd get:  The organization's name, the name of
23   the location where they play at, the phone number for
24   the location, the street address, as well as the day
25   and time of the game.
0114
 1                  MR. WHITTINGTON:  Would this be good on
 2   the web site for the public, for the public just to
 3   view that, have that on the web site?
 4                  MR. ATKINS:  That's where it's going to
 5   go.
 6                  MR. WHITTINGTON:  For the public?
 7                  MR. ATKINS:  Uh-huh.  Now, this, if I
 8   understand correctly, is only going to capture annual
 9   license times, so it's not going to capture any type of
10   temporary games or whatever.  Again, also, same kind of
11   feature here, you know, we can search for any games
12   being conducted on Wednesday at a location with the
13   word "Nite" in it.  And it looks like there are two
14   locations today at Nite Owl Too in Dallas.  We are
15   exploring the possibility of incorporating into this
16   feature a mapping service, so that if the individual
17   says, okay, I want to go there, they would be able to
18   click on Nite Owl Too and it would pull up a map of
19   where that is to ease them in finding that, but that
20   may be a cost issue.
21                  Again, we're scheduled to start, I
22   think, internal testing the latter part of June, our
23   own internal data testing, and, again, our scheduled
24   implementation date is September of this year.  And
25   that's all I had to report.
0115
 1                  MS. TAYLOR:  Well, I like it.  I think
 2   it's pretty awesome, very awesome.
 3                  MR. ATKINS:  This is part of the
 4   agency's ongoing strategy program.  This is phase one.
 5   Our future goals will include to put the operator
 6   training program out on the web site in an interactive
 7   format with our ultimate goal being to allow
 8   organizations to conduct their business electronically,
 9   actually, submit their applications, et cetera,
10   electronically, so this is the first step in that
11   process.
12                  MS. TAYLOR:  Beside it's awesome, does
13   anybody else have any other comment?
14                  MR. HEINLEIN:  I can't wait for it.
15                  MR. WHITTINGTON:  I wanted to say,
16   Billy, on the advertising, if we go to a local media
17   for some advertising for our organization, is there any
18   type of form letter that we could probably make it from
19   the Lottery Commission that will enhance our meeting
20   when we go there like saying, this is a charity
21   operation, you know, under the Texas Lottery
22   Commission, could you help them on some public
23   announcement or something like that, some type of form
24   letter from y'all that would help us when we walk into
25   a station?
0116
 1                  MR. WEEKLEY:  Like a certification?
 2                  MR. WHITTINGTON:  Yeah, something like
 3   that.  You might not think so, but the Texas Lottery
 4   Commission just being on something being part of bingo
 5   would help me if I was to walk into a media like TV or
 6   radio, can you help this charity out on some
 7   advertising.
 8                  MR. ATKINS:  You know, I need to check
 9   with our folks in legal.  I mean, I don't send out the
10   licenses.  I'll look into that, Larry.
11                  MR. WHITTINGTON:  Anything.  Because we
12   can't pay for advertising, so if we can get some
13   announcements free, so some type of form letter from
14   the Texas Lottery Commission, that would help the
15   charity out.
16                  MR. ATKINS:  And I'll check with our
17   media relations folks and see what they think.  They
18   may have some suggestions.
19                  MS. TAYLOR:  Any other comment?  Public
20   comment?
21                     (AGENDA ITEM NO. 11)
22                  Okay.  Then we are down to Item No. 11,
23   which is public comment.
24                  Commissioner, do you have any commentS
25   you would like to make?
0117
 1                  COMMISSIONER CLOWE:  I do not, Suzanne.
 2                  MS. TAYLOR:  Carol, did you have
 3   anything else that you wanted to say?
 4                  MS. LAUDER:  Carol Lauder, for the
 5   record.  I just wanted to make an observation that I
 6   thought the meeting that you had today is one of the
 7   best meetings that I been to.  I know I've only been to
 8   about half a dozen meetings beginning in December with
 9   the joint meeting of the BAC commissioner bingo
10   division and the public industry, but I thought the
11   amount of discussion and exchange among the members was
12   really incredible and that it really shows the
13   commitment that each of you have to getting a good
14   result on the issues that were on the agenda.  It just
15   seemed that there's an increase in discussion, whether
16   it be to agree to disagree or to agree, and more
17   exchange of acknowledging the work by the bingo
18   division that they are doing in support of charitable
19   bingo, and I think that's a really good thing to make
20   the committee more affective and efficient.  That's all
21   I had to say.
22                     (AGENDA ITEM NO. 12)
23                  MS. TAYLOR:  Thank you.  Down to Item No
24   12, then:  Consideration of and possible action on
25   future Bingo Advisory Committee meeting dates and/or
0118
 1   items to be considered for future meetings.
 2                  Danny, I believe that you had something
 3   to say on this item.
 4                  MR. MOORE:  I just think that up to this
 5   point we've had a lot of meetings over the last five
 6   months.  I think with the summer upon us, I don't
 7   foresee any legislative changes here over the next few
 8   days for bingo, so I just think that maybe we should
 9   hold off for a couple of months on any meetings.  I
10   think it's put a lot of pressure on Suzanne in her
11   capacity as chairman.  You know, she's got to attend a
12   meeting here and then she's got to be back two weeks
13   later to attend the commissioners' meeting, and she's
14   got a lot on her plate.  I'm just sharing my opinion of
15   that.  I think we all should try to help her a little
16   more in preparing for those meetings because it's a lot
17   on her plate, I think.  I just want to keep her around
18   a little while.
19                  MS. TAYLOR:  Billy asked how much I paid
20   you to say this.
21                  MR. WHITTINGTON:  When do you think we
22   should meet?
23                  MR. MOORE:  Actually, I think the middle
24   of August, the end of August.  I don't see any reason
25   to be here in July.
0119
 1                  MR. WHITTINGTON:  August is fine.
 2                  MR. MOORE:  24th, Billy, or 17th,
 3   something like that?
 4                  MR. ATKINS:  The 1st is a Wednesday, it
 5   looks like.
 6                  MR. MANIO:  Before we decide on the
 7   date, let's go back to the work plan and then identify
 8   if there's any item that needs to be taken up
 9   immediately.  Is there anything in here like in the
10   handout?  We have nine items in the work plan.  Is
11   there anything that we need to take up in the next
12   month or month and a half?
13                  MR. ATKINS:  Well, the one thing that I
14   mentioned earlier, Mario, is, we are expecting
15   internally some movement on the operations.  You know,
16   I guess it's probably not imperative that that come
17   back to the BAC before we do anything with it.  You
18   know, we can probably go ahead and move forward on
19   that.  It's something that the BAC, you know, could
20   look at when they get back together, but just in -- I
21   mean, there are always going to be the day-to-day
22   business and there are always going to be items that
23   come up, but, you know, as of May 25th at 1:15, no, I
24   can't think of anything imperative that has to be done.
25                  MS. TAYLOR:  Let me ask you a question.
0120
 1   On publishing the proposed rules in the Texas Register,
 2   the meeting is the 24th of next month, the commission
 3   meeting, so if it was published in the Register, what's
 4   the time line of registering and the hearing and all
 5   the rest of that?
 6                  MR. ATKINS:  I'm going to be ask Sarah
 7   Wolf, who has replaced Sandy Joseph, to come up and
 8   just be available if she's aware of me blatantly
 9   misspeaking.  Sara is the new assistant general
10   counselor with the commission.  She comes with
11   extensive experience from the Texas Ethics Commission.
12   When the commission votes to publish in the Texas
13   Register for public comment a proposed rule, I want to
14   say it's within ten days that it's actually published
15   in the Register and the 30-day clock starts from the
16   day the publication --
17                  MS. WOLF:  Well, the 30-day clock starts
18   the date of publication, but I don't think there's a
19   mandatory ten days in there.  My experience is, after
20   it's proposed, you send it over to the Texas Register
21   and it gets in -- the schedule gets published as soon
22   as it can, but ten days later, from a practical
23   standpoint.
24                  MR. ATKINS:  And that's what I meant,
25   from a practical standpoint, it's generally ten days
0121
 1   after that and then the 30 day --
 2                  MS. WOLF:  Runs from publication.  And
 3   so -- but you don't have to act immediately upon the
 4   expiration of the 30 days.  Basically, it stays alive
 5   for 180 days, so it would be a commission decision
 6   after publication how quickly after that 30-day period
 7   they want to take up and consider for final adoption.
 8                  Does that answer the issue on the table?
 9                  MS. TAYLOR:  I think, yes.  What I was
10   trying to figure out is when approximately do you think
11   the public comment -- the public hearing would occur?
12                  MR. ATKINS:  The public hearing, you
13   know, I would just think that it would occur -- I don't
14   know if this is going to help a lot -- within that
15   30-day period, you know, somewhere around the middle of
16   that 30-day period, so I would guess middle to late
17   July.
18                  MS. TAYLOR:  So the hearing takes place
19   during the publication in the Register?
20                  MR. ATKINS:  Yes.
21                  MS. TAYLOR:  Not after?
22                  MR. ATKINS:  No.  The hearing is part of
23   that 30-day comment period.
24                  MS. TAYLOR:  So sometime in July?
25                  MR. ATKINS:  When we publish this rule
0122
 1   for public comment, we're going to go in and schedule a
 2   public comment hearing, you know, and that will occur
 3   during that 30-day period.
 4                  MS. TAYLOR:  I was just to trying to see
 5   if it's going to be something in August if we were
 6   going to have to -- because personally I like to come
 7   to that.  I just wanted to know if I was going to be
 8   back here Tuesday and Wednesday or Monday and Wednesday
 9   or, you know -- okay.  But if that's going to be July
10   and the other is August -- Carol?
11                  MS. LAUDER:  Is there an opportunity for
12   public comment to discuss this agenda item?
13                  MS. TAYLOR:  We're discussing the future
14   meeting dates, which --
15                  MS. LAUDER:  Well, whenever that comes
16   up.
17                  MS. TAYLOR:  Thank you.  Okay.
18                  So I guess if that's going to be in
19   July, then it really doesn't have an effect on a
20   meeting in August, so is it the wish of the committee
21   to have a meeting the 17th of August or the 24th of
22   August?
23                  MR. WHITTINGTON:  The 17th, because the
24   24th is getting close to school.
25                  MS. TAYLOR:  17th everybody?
0123
 1                  MR. MANIO:  Yeah.  And I'm speaking for
 2   my replacement.
 3                  MS. TAYLOR:  Okay.  Carol?
 4                  MS. LAUDER:  For the record, my name is
 5   Carol Lauder.  At the meeting I facilitated with all of
 6   you in December -- well, I have a question first:  For
 7   the annual report that you and Kimberly are working on,
 8   is there -- when will that be made available to the
 9   commission?  Will they have an opportunity to see your
10   accomplishments over the last year prior to their
11   meeting in August, if they're meeting in August, is my
12   question.
13                  MS. TAYLOR:  I don't believe so.  I
14   think the report would have to come back to the
15   committee and then the committee to vote to pass it on
16   to the commission.
17                  MS. LAUDER:  Okay.  So there would be an
18   opportunity in August for the committee to approve the
19   annual report and then it would go to the commission
20   and they would look at it in like September.  Is that
21   correct?  Okay.  Given my understanding of a couple of
22   things, I just want to share my concerns about you
23   waiting until August to meet, and I certainly
24   appreciate your volunteers and you're paying your way
25   here and I admire you so much for all the work that you
0124
 1   do as volunteers.  My understanding when I facilitated
 2   the joint meeting is that the commissioners would be
 3   making a decision about whether to continue the Bingo
 4   Advisory Committee in its form as it is now in August
 5   of this year.  Is that correct, Billy?
 6                  MR. ATKINS:  That is correct.
 7                  MS. LAUDER:  So as your meeting process
 8   facilitates, it would be my suggestion that you capture
 9   your accomplishments and ensure that those get to the
10   commission before they make that decision.
11                  MS. TAYLOR:  Okay.  So the commission
12   meeting is normally towards the end of the month?  No,
13   not necessarily.
14                  MR. ATKINS:  No, I would not say that.
15                  MS. TAYLOR:  Okay.  Well, would you all
16   prefer to move the meeting up to the beginning of
17   August that way, hopefully, we'll get before the
18   commission meeting.
19                  MR. WHITTINGTON:  The 3rd?
20                  MR. ATKINS:  The 3rd.
21                  MS. TAYLOR:  The 3rd would be great.
22                  MS. LAUDER:  And the only thing I would
23   add is that the documented notes from the December 20th
24   meeting of 2004, all of the state groups define their
25   roles and their goals, and the Bingo Advisory Committee
0125
 1   defined their goals for the next nine months, which was
 2   actually done for the purpose of the commission to take
 3   a look back over the last nine months, January through
 4   August, and so that document is an excellent resource
 5   for you to reflect on in your annual report and you
 6   might say the stated goals were, here's goals that
 7   we've accomplished, here's some of the goals that we're
 8   continuing to work on, and so you might use that
 9   document as a resource document that will really help
10   you in framing your annual report.  Although, it sounds
11   like you're fairly far along on it, but you might want
12   to take a look back on that.  And also, Rosie and Tom,
13   that document would be a very good resource for you to
14   look back over the notes for the December 20th meeting
15   with the commissioners.
16                  MS. TAYLOR:  Thank you, Carol.  It's
17   going to be the 3rd.
18                  Okay.  Items for the agenda?
19                  MR. WHITTINGTON:  The legislation.
20                  MS. TAYLOR:  The legislation.  The
21   administrative rules?
22                  MR. WHITTINGTON:  Yeah, let's go back
23   over that.  Can we have some literature about your
24   presentation, Billy, about the new website for the
25   organizations?  Can we have some type of printout at
0126
 1   the next BAC meeting on that?
 2                  MR. ATKINS:  I don't know what you're
 3   talking about.
 4                  MR. WHITTINGTON:  What you showed us on
 5   the slide.
 6                  MR. ATKINS:  You know, I conceivably
 7   could have a little more information about our
 8   preparation and implementation.
 9                  MS. TAYLOR:  Progress on the bingo web
10   site?
11                  MR. WHITTINGTON:  Yes.
12                  MS. TAYLOR:  Anything else that we feel
13   we've left undone today?  The annual report?
14                  MR. ATKINS:  We'll have, by then, I'm
15   sure, several -- we should have several quarterly
16   reports.
17                  MS. TAYLOR:  Anything else, committee
18   members?  If you think of anything, you can let me know
19   or let Rolando or Billy know, and we'll make sure to
20   get it on the agenda.  And I will have my e-mail up and
21   working by next week.  I had a personal problem with my
22   computer; it crashed again, so I've started over again.
23                  Okay.  If there are no other items, then
24   the meeting is adjourned.  It's 1:25.
25   
0127
 1                   REPORTER'S CERTIFICATION
 2   
 3   STATE OF TEXAS         )
 4   COUNTY OF TRAVIS       )
 5   
 6             I, KIMBERLYE A. FURR, Certified Shorthand
 7   Reporter for the State of Texas, do hereby certify that
 8   the above-captioned matter came on for hearing before
 9   the BINGO ADVISORY COMMITTEE as hereinafter set out,
10   that I did, in shorthand, report said proceedings, and
11   that the above and foregoing typewritten pages contain
12   a full, true, and correct computer-aided transcription
13   of my shorthand notes taken on said occasion.
14   
15             Witness my hand on this the 20th day of June,
16   2005.
17   
18   
19                 _______________________________
                   KIMBERLYE A. FURR
20                 Texas CSR No. 6997
                   Expiration Date:  12/31/05
21                 1801 North Lamar Boulevard
                   Mezzanine Level
22                 Austin, Texas  78701
                   (512) 474-4363
23   
24   
     JOB NO. 050525KAF
25