Texas Lottery Commission - 3-19-01 1 1 2 3 4 5 6 * * * * * * * * * * * * * * * * * 7 8 TEXAS LOTTERY COMMISSION 9 MEETING 10 11 March 19, 2001 12 13 * * * * * * * * * * * * * * * * * 14 15 16 17 18 BE IT REMEMBERED that the TEXAS LOTTERY 19 COMMISSION meeting was held on March 19, 2001, from 20 8:33 a.m. to 2:24 p.m., before Mary Angela Freeman, 21 CSR in and for the State of Texas, reported by 22 machine shorthand, at the Offices of the Texas 23 Lottery Commission, 611 East 6th Street, Austin, 24 Texas, whereupon the following proceedings were 25 had: WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 2 1 2 APPEARANCES 3 4 Chairman: Mr. C. Tom Clowe Jr. 5 Commissioners: 6 Ms. Elizabeth D. Whitaker Mr. Anthony J. Sadberry 7 General Counsel: 8 Kimberley L. Kiplin 9 Deputy General Counsel: Ridgely Bennett 10 Executive Director: 11 Linda Cloud 12 Deputy Executive Director: Patsy Henry 13 Governmental Affairs Director: 14 Nelda Trevino 15 Financial Administration Director: Bart Sanchez 16 Charitable Bingo Operations Director: 17 Billy Atkins 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 3 1 INDEX 2 3 Appearances . . . . . . . . . . . . . . . . . 2 4 AGENDA ITEMS 5 Item Number 1 . . . . . . . . . . . . . . . . 4 Item Number 2 . . . . . . . . . . . . . . . . 4 6 Item Number 3 . . . . . . . . . . . . . . . . 11 Item Number 4 . . . . . . . . . . . . . . . . 12 7 Item Number 5 . . . . . . . . . . . . . . . . 16 Item Number 6 . . . . . . . . . . . . . . . . 17 8 Item Number 7 . . . . . . . . . . . . . . . . 18 Item Number 8 . . . . . . . . . . . . . . . . 19 9 Item Number 9 . . . . . . . . . . . . . . . . 19 Item Number 10 . . . . . . . . . . . . . . . . 30 10 Item Number 11 . . . . . . . . . . . . . . . . 48 Item Number 12 . . . . . . . . . . . . . . . . 48 11 Item Number 13 . . . . . . . . . . . . . . . . 30 Item Number 14 . . . . . . . . . . . . . . . . 31 12 Item Number 15 . . . . . . . . . . . . . . . . 45 Item Number 16 . . . . . . . . . . . . . . . . 47 13 Item Number 17 . . . . . . . . . . . . . . . . 51 14 Reporter's Certificate . . . . . . . . . . . . 52 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 4 1 CHAIRMAN CLOWE: Good morning. It is 2 8:33, and we are at the March 19, 2001 meeting of 3 the Texas Lottery Commission. I'll call the meeting 4 to order at this time. My name is Tom Clowe. 5 Commissioner Sadberry and Commissioner Whitaker are 6 here. We have a full quorum for this meeting, and 7 we are ready to begin on the agenda as posed. 8 The first item on the agenda is the 9 consideration and possible consideration on the 10 service of Texas Lottery Commissioner Anthony 11 Sadberry. I would like to comment this morning that 12 we presume that this may well be Commissioner 13 Sadberry's last meeting. We have a new individual, 14 Mr. Walter Criner, who has been appointed by the 15 Governor. It's my understanding that in order for 16 him to be sworn in, as the Legislature is in 17 session, that he must be approved by the Senate 18 prior to taking the office. So he is not a sworn 19 commissioner at this time. Commissioner Sadberry 20 continues in full authority in his office for this 21 meeting and in the future until that event occurs. 22 Nonetheless, it is my presumption this 23 may well be Commissioner Sadberry's last meeting. 24 And in the event that that is true, I think it's 25 appropriate for myself and perhaps Commissioner WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 5 1 Whitaker to express our feelings about the service 2 that he has given the State, this agency, and the 3 pleasure that, certainly, I have taken in the 4 association of being a co-commissioner with him, in 5 my case, for a little over two years. I have not 6 been able to speak with Commissioner Sadberry except 7 in open conference and in executive session, with 8 the exception of the time that I visited with him in 9 his office prior to my appointment. 10 My first visit with him set the 11 keynote for our relationship, in that I found him 12 very open, very knowledgeable, and he was eager and 13 willing to inform me and help me prepare myself for 14 my role as Commissioner, based on his experience. 15 He has served from the very beginning and, of 16 course, is the mother lode of knowledge, the history 17 of this Commission, and he's never forgotten 18 anything. And for newcomers such as myself and 19 Commissioner Whitaker -- if I may use that term -- 20 you know, that's been indispensable for us. 21 And we're going to miss his knowledge 22 and his recollection of history, and we'll just have 23 to go on and do the best that we can. I often say 24 that Commissioners are worth just what they get 25 paid, and in Commissioner Sadberry's case, that's WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 6 1 not true. The Commission and the State got a lot 2 more than its money's worth from him and for the 3 service that he has given this agency. And it is 4 the kind of dedication and willingness to give up 5 personal time and business time and be part of a 6 commission for a state agency that Commissioner 7 Sadberry has so wonderfully demonstrated that makes 8 our system of Government in the United States and in 9 this state work. 10 If it were not for individuals such as 11 him, who are not compensated, who are not elected, 12 but will step forward and accept an appointment and 13 take on the obligation that comes with taking the 14 oath, we would not have the kind of Government of 15 the people, by the people, and for the people that 16 we have that makes this country so great. 17 So Commissioner Sadberry, I do not 18 want to get evangelical -- I've been accused of 19 that -- but I do want to have you know how 20 sincerely I feel about the great experience I've had 21 in working with you, and tell you that you will be 22 sorely missed, and we wish you bigger and better 23 accomplishments. 24 Commissioner Whitaker, I'll give you 25 your shot. WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 7 1 COMMISSIONER WHITAKER: All right. 2 Well, I will mirror all the comments made. I've 3 served on the Commission now for a year, and in that 4 time I've gotten very fond of you. When I heard 5 that you were resigning, I thought, oh, no. 6 Although I look forward very much to serve with Mr. 7 Criner, you are wonderful, and we all admire you 8 greatly, and you have pitched in at every level and 9 have been just one of those people you know you can 10 count on to make the hard decisions, to have the 11 right balance in judgment, and I look forward to 12 having you as my friend forever. Thank you for your 13 hard work and your commitment. 14 COMMISSIONER SADBERRY: Thank you both 15 and thank you all very much. I certainly feel 16 highly honored. It's been quite a privilege to be 17 called upon to serve the people of our state and to 18 work with our agency and its staff and the public at 19 large and the interests that we all serve. It's a 20 very high mark in my experience, and one that I 21 treasure, I will treasure, and treasure your 22 relationships, and the trust and confidence in what 23 we have done together. It doesn't get any better 24 than this. I am not happy to go. I made -- I want 25 it very clear I made the decision to go. I WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 8 1 consulted with those -- several persons with whom I 2 have trust and confidence about it. I do believe 3 strongly that there comes a time when it's time to 4 go, to allow others to serve. These positions do 5 not belong to us, they belong to the State in our 6 leadership, and I value that there are others who 7 can come on and serve and continue these efforts. 8 That's probably the highest complement you can have, 9 that business will go on as you know it, and should 10 not end here, and will not end here. 11 And so for all considerations, I think 12 this is good and appropriate, and certainly, I will 13 always treasure it. Thank you very kindly. 14 CHAIRMAN CLOWE: Linda, I'm going to 15 ask you and Kim and Billy if you have any remarks to 16 make on the record. 17 MS. CLOUD: Well, losing Commissioner 18 Sadberry is like losing one of our start-up 19 employees, and that's always a problem. So those 20 people have the foundation of what this agency's all 21 about, and we will miss him. We may be still 22 calling on him. He may not be free of us yet. But 23 I personally -- I am very fond of Commissioner 24 Sadberry. He's been a great leader for me, a mentor 25 for me, and I will miss him greatly. WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 9 1 CHAIRMAN CLOWE: Kim, anything? 2 MS. KIPLIN: Well, Commissioner 3 Sadberry, we've been in the trenches, seems as 4 though, for quite a long time, and we've seen a lot 5 of water over the bridge. I know I'm definitely a 6 better lawyer for having you as a mentor and as a 7 Commissioner, and I will always treasure that, and I 8 look forward to whatever the future holds, and 9 hopefully, we'll be able to stay in contact. 10 I think that you provided such a good 11 sounding board with the judgment and confidence that 12 you brought, your insight and your wisdom to this 13 Commission, especially as a start-up commission. It 14 just -- for me, having you here -- I know you're a 15 Commissioner but also as a lawyer, was a tremendous 16 safety net for me as a general counsel. And I tried 17 not to impose that burden too much on y'all. I know 18 what my responsibilities are, but it definitely gave 19 me comfort to know that I had that kind of a caliber 20 of a person serving as Commissioner. You will be 21 missed my me, for sure, and I wish you well and 22 God's speed on all of your future endeavors. 23 MR. ATKINS: I think Linda said it 24 best when she talked about losing a start-up 25 employee. I remember what now seems like a lifetime WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 10 1 ago, when the first three Commissioners met for the 2 first time at Scholz' across the street from the 3 Comptroller's Office as we transferred out of the 4 Comptroller's Office to our own Commission. And 5 here we are seven, eight years later, and we've 6 survived. 7 And being the Charitable Bingo 8 Director, I've had, Commissioners, I think, a unique 9 opportunity to work with Commissioner Sadberry as 10 the bingo representative, and like Kim says, there 11 have been some interesting times, but we've 12 progressed through all of it, and I think, 13 Commissioner Sadberry, how the bingo division and 14 this agency as a whole has benefited has been your 15 impeccable integrity that you have brought to every 16 decision, every discussion that I know that I have 17 had with you. And I do appreciate that. I give you 18 my sincere thanks and add my fond wishes for your 19 future. 20 CHAIRMAN CLOWE: I know there are many 21 of you on the staff who would like to say something, 22 and I'm appreciative of that, but in fairness to the 23 agenda, we'll just ask you to visit with 24 Commissioner Sadberry at a point where we recess 25 this meeting, and I think, on the record, and WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 11 1 formally, now, we've pretty much said it all. 2 Thank you so much for your great 3 service. 4 COMMISSIONER SADBERRY: Thank you. 5 CHAIRMAN CLOWE: The next item is 6 typical of what we do in Government, hail and 7 farewell, you know. I would like to comment that 8 Commissioner Whitaker has been reappointed by the 9 Governor. 10 Kim, correct me if I'm incorrect on 11 this, as a sworn City Commissioner, she continues to 12 serve even though she is required to go through the 13 confirmation process. 14 MS. KIPLIN: Yes. 15 CHAIRMAN CLOWE: And Mr. Walter Criner 16 has been appointed -- Mr. Walter Criner Sr. from 17 Houston, Texas, has been pointed to the Lottery 18 Commission, and having, as I said before, been 19 appointed during the session, it is a requirement 20 that he be confirmed by the Senate before he can be 21 sworn. 22 I had hoped that Mr. Criner could be 23 here today, and I am still hopeful that he may 24 arrive, and if that's the case, I will want to 25 introduce him -- WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 12 1 MS. CLOUD: Commissioner, he had a 2 conflict today. He will be here tomorrow to meet 3 with Billy and Wednesday to meet with staff. 4 CHAIRMAN CLOWE: Great. So he'll get 5 started on the learning process, and we'll have the 6 opportunity, hopefully, to introduce him to others 7 and on the record at our next meeting in April. 8 His resume and his activities are 9 lengthy, and it's a very impressive accomplishment 10 list that I have been furnished. He has served on a 11 number of state agencies and has experience in 12 Government, and I will withhold any further comments 13 on his background until I can introduce him in the 14 session to you here and on the record. 15 We'll go on now to the next item on 16 the agenda, which is discussion and action on 17 lottery sales and trends. Tony, will that be you 18 and Linda? 19 MS. SMITH: Yes, sir. Good morning, 20 Commissioners. For the record, my name is Toni 21 Smith, Marketing Director of the Texas Lottery 22 Commission. 23 Good morning, Commissioners. To look 24 at year to date total sales for the week ending 25 March 17, sales were 1,646,528,907. This is at WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 13 1 14.67 percent of fiscal year 2000 total sales to 2 date of 1,435,864,173. The weekly averages 3 currently, 56,776,858, which, again, reflects a 4 14.67 percent increase from last year's weekly 5 average of 49,512,557. 6 To look at sales by product for the 7 week ending March 17th, instant tickets are 8 currently at 972,698,251. They represent 59 percent 9 of sales compared to last year's instant ticket 10 yearly sales date of 886,856,212, and at that time 11 represented 61.76 percent of sales. But that does 12 reflect a 9.68 percent increase over last year for 13 the instant product. 14 To look at Lotto Texas, we're 15 currently at 453,451,176. It represents 27.54 16 percent of sales compared to 320,852,157 last year, 17 sitting at 22.35 percent of sales. And this 18 reflects a 41.33 percent increase over last year's 19 Lotto Texas sales. And I'd like to say I think 20 that's contributed to our matrix change, and there's 21 a memo that follows so we can talk about that. 22 And then just briefly, to look at the 23 week ending, total sales for this past week, 3-17, 24 were 52,134,664. This was down 47.26 percent from 25 the previous week of 3-10-01, with total sales of WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 14 1 98,847,904. The primary factor for this decrease 2 was the $85,000,000 jackpot getting hit. So we saw 3 some substantial growth there, and we're back to 4 starting all over again. 5 CHAIRMAN CLOWE: Well, you're already 6 up to 11,000,000. 7 MS. SMITH: Yes, sir, we are. 8 MS. CLOUD: 15, I beg your pardon. 9 CHAIRMAN CLOWE: 15? Well, you know, 10 the sign in Temple said 11 this morning, when I went 11 by. 12 MS. CLOUD: We'll check that out. 13 CHAIRMAN CLOWE: I thought it was 15, 14 and I saw that 11, and I thought, well, I guess -- 15 MS. CLOUD: We've been having some 16 problems with our billboards keeping up so we need 17 to make sure -- 18 MS. SMITH: We have a representative 19 with us this morning, and I'm sure he's on his way 20 to make a call to check that out for us. 21 Also included in your packet is the 22 memo regarding the Lotto Texas jackpot summaries 23 since we had the matrix change. And you can see 24 that since the matrix change took place on July 16, 25 2000, the Lotto Texas jackpot has only been hit 10 WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 15 1 times compared to the previous 34 week period where 2 we had been hit 22 times. And even since the 3 85,000,000 we have had three rolls and we are now at 4 15. So I think, again, it continues to prove its 5 success. 6 Linda, did you have other comments on 7 sales? 8 MS. CLOUD: Just that it's -- as the 9 Commissioners know, it proved to be a very exciting 10 time for us. We had our winners come in Friday for 11 publicity. They actually came in Thursday to claim 12 their prize and then came back Friday to do media 13 for us. And we had a roomful of people. Half of 14 those people in the room probably were police 15 officers. And we felt very safe. But they were a 16 really nice couple, and seemed to be very happy 17 having won the jackpot. So they were taking home, 18 after taxes and after the cash value option, around 19 36,000,000 so that's got to be a big change, 20 probably, for their lives. 21 CHAIRMAN CLOWE: I was here Thursday, 22 and I heard Keith Elkins planning that press 23 release -- press conference with Linda. And Keith, 24 I want to congratulate you on the handling of that. 25 I read the article in the Dallas paper which was on WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 16 1 the front page with a colored picture, and the 2 article in the Waco paper, and I presume the 3 coverage was similar all over the state. It was the 4 lady's birthday, I think, on Thursday, and Linda 5 acquired, along with Keith, a birthday cake, and 6 made an occasion of that. And there was a nice 7 personal touch there for this young couple, 8 where -- you know -- it's a state agency doing 9 more than just what's required of it. And there was 10 a warmth and a reaching out, which I think 11 demonstrates the culture within this agency. 12 So Keith, I wanted to say to you I 13 think that came off very nicely, and I know you 14 played a big part, and thank you. 15 Toni, the next item on the agenda is 16 also yours, doing with advertising, promotion, and 17 print media. Do you have anything to add in that? 18 MS. SMITH: Just a brief update on 19 advertising. In the general market, our 20 scratch-off, the second of the three animated coin 21 campaign spots called Fountain will begin to air 22 March 26 through April 15. Then for online we are 23 working on the new concepts that have been approved 24 for the Texas Two Step Game. Shooting of those 25 spots will take place on April 3rd and 4th in WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 17 1 Houston, and they will air on the week of May 14th. 2 In the minority market, scratch-off, 3 Lotto, Pick 3, and Cash 5 spots continue to run on 4 Stations BET Network, Univision, and Telemundo. And 5 the Texas Two Step spot will begin to run the week 6 of April -- 7 CHAIRMAN CLOWE: You're going to have 8 to learn how to handle that. 9 MS. SMITH: I know. And that's all I 10 have, sir. 11 CHAIRMAN CLOWE: All right. 12 MS. SMITH: Thank you. 13 CHAIRMAN CLOWE: Any questions or 14 comments? Thank you, Toni. The next item is yours, 15 Linda, the lottery operator procurement and operator 16 consultant item. 17 MS. CLOUD: Ridgely will report on 18 this. 19 MR. BENNETT: Good morning, 20 Commissioners. For the record, my name is Ridgely 21 Bennett. I'm the Deputy General Counsel. We are 22 please to report that the Texas Lottery Commission 23 issued its request for proposals for lottery 24 operations and services on March 16th, and I'd be 25 happy to answer any questions if you have them. WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 18 1 CHAIRMAN CLOWE: There was a 2 collective sigh of relief, I assume. 3 MR. BENNETT: Definitely. 4 CHAIRMAN CLOWE: I'd like to, on 5 behalf of the Commissioners, thank all of those in 6 this agency that participated in that. I had a long 7 visit Gary Grief this morning about his involvement 8 and his focus of involvement. And I'm sure that's 9 true with others throughout the agency. And I want 10 to say thank you for the extra work and the time 11 that went into that, and we look forward to that 12 process being fulfilled. 13 MR. BENNETT: Yes. 14 CHAIRMAN CLOWE: Thank you, Ridgely. 15 MR. BENNETT: Thank you. 16 CHAIRMAN CLOWE: The next item is to 17 do with the internal auditor and action on the state 18 audit reports. She has informed me that there's no 19 activity in regard to this item, and so we can pass 20 over that. 21 And we are now at the next item, which 22 is the discussion or action on the possibility of a 23 production studio and its procurement. Linda, 24 that's for you and Ridgely. 25 MR. BENNETT: Thank you, WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 19 1 Commissioners. Once again, I'm Ridgely Bennett, the 2 Deputy General Counsel. The Commission has 3 announced that M&S Works is the apparent successful 4 proposer for the production studio RFP, and I'd be 5 happy to answer any questions, if you have any. 6 MS. CLOUD: Commissioners, there will 7 be no contract award on this until it's been 8 approved by the Legislature. 9 CHAIRMAN CLOWE: Okay. I think that 10 needed to be said. Very good. 11 MR. BENNETT: Thank you. 12 CHAIRMAN CLOWE: Thank you. I think 13 we are now to Nelda Trevino and a report on the 14 discussion and action on the 77th Legislature, 15 including those proposals. 16 MS. TREVINO: Good morning, 17 Commissioners. For the record, I am Nelda Trevino, 18 the Director for the Governmental Affairs 19 Department. First, I guess I want to let you know 20 that we provided you some updated tracking reports. 21 You should have two reports, one titled Lottery and 22 Bingo Legislative Tracks, and the other is our 23 Comprehensive Tracking Report. Just to kind of 24 bring you up to speed, the bill filing deadline was 25 March the 9th. There have been over 5,500 bills and WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 20 1 resolutions filed, and out of those bills and 2 resolutions, we are tracking 181 of them. 3 I do want to provide you with status 4 on several of the bills since our last Commission 5 meeting, and I'm going to be referring to the 6 tracking report that is titled Lottery and Bingo 7 Legislative Track. 8 First of all, in regards to the 9 General Appropriations Bill, as you-all know, on 10 March 5th we went before the Senate Finance 11 Committee and the Full House Appropriations 12 Committee for markup of our agency's budget. Both 13 committees adopted LBB's recommendations. The 14 difference between actions that were taken by the 15 two committees has to do with the capital 16 expenditure for the drawings and production studio, 17 based on the difference, and that is that the House 18 Appropriations Committee did approve the request for 19 that capital and budget expenditure, and the Senate 20 Finance Committee did not. This should be an item 21 of discussion during the conference committee when 22 those discussions take place on the Appropriations 23 Bill. 24 I do want to mention, during the House 25 Appropriations Committee, while there were no major WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 21 1 issues raised in regards to charitable bingo, there 2 was some very flattering remarks that were made by 3 some of the committee members, and I think, as Billy 4 indicated earlier in remarks to Commissioner 5 Sadberry's input, we've come a long way with 6 charitable bingo, and I think the Committee 7 recognizes that, as it's stated by the record. 8 If I could, I would like to begin to 9 just go down some of the bills. Starting out with 10 House Bill 646 by Representative Delwin Jones, this 11 would exempt charitable bingo conductors from sales 12 tax on the purchase of bingo equipment. This bill 13 was heard in the House Ways & Means Committee last 14 week and was left pending. Billy Atkins was there 15 as a resource witness. There were no questions from 16 the Committee members of Billy. And again, that 17 bill was left pending. There is a companion bill by 18 Senator Madla, that is Senate Bill 413. House Bill 19 891 by Representative Puente, this is the bill that 20 would authorize the Lottery to participate in a 21 multi-state lottery game. This bill has been voted 22 out from the House Licensing Committee, and as of 23 this date has not been scheduled for the full House 24 to consider. House Bill 1521 by Representative Ron 25 Wilson, this is relating to the benefits from the WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 22 1 Employees Retirement System for our commissioned 2 peace officers. This was part of our agency's 3 legislative proposals. This was heard in the House 4 Pensions & Investment Committee, and was left 5 pending in that committee. Commander Pitcock was 6 there as a resource witness who provided some 7 testimony. And again, that bill was left pending. 8 House Bill 1730 by Representative 9 Goolsby, this is also part of our legislative 10 proposals. This is relating to the surveillance 11 vehicle used in our enforcement functions. This 12 would allow an exemption from the Transportation 13 Code Requirement that state agency vehicles must 14 bear the agency's name. This bill was heard in the 15 House Licensing & Administrative Procedures 16 Committee last Monday, and was also left pending. 17 Deputy Commander Joe Franco was there as a resource 18 witness. The committee had no questions of him, and 19 again, that bill was left pending. A Senate 20 companion bill by Senator Armbrister, Senate Bill 21 817, has also been filed. House Bill 1795 by 22 Representative Kino Flores, this is relating to the 23 use of cardminding devices during a bingo occasion. 24 This bill would eliminate the 40 percent provision. 25 House Bill 2119 by Representative Pat Haggerty, this WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 23 1 is relating to authorizing a progressive bingo 2 game. This is also part of the agency's legislative 3 proposals. While there has been no action taken on 4 this bill, we have responded to a fiscal note 5 request, and we have estimated that the State would 6 experience a positive fiscal impact of $3.9 million 7 in the biennium to the State, with an equal amount 8 going to local governments. 9 House Bill 2479, by Representative 10 Debra Danburg, this is relating to amusement 11 redemption machines. This bill would authorize up 12 to five amusement redemption machines at any one 13 location except where Bingo is conducted, pursuant 14 to commercial lessors' license, where up to 30 of 15 these amusement redemption machines would be 16 allowed. 17 We have received a fiscal note 18 request, and at this time, based on the information 19 that we do have, we are not able to determine what 20 sort of fiscal impact this might have on charitable 21 bingo. House Bill 2578 by representative Pat 22 Haggerty, this is relating to subpoena and 23 investigative authority for the regulation of 24 Bingo. This is also part of the agency's 25 legislative proposals. WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 24 1 House Bill 2629 by Representative 2 Arlene Wohlgemuth, this would authorize a business 3 to conduct bingo as a community service if the 4 following conditions are met. That would be that 5 players would have to be 55 years or older, the game 6 is open to the public, and there is no charge for 7 playing materials, and prizes are of nominal value. 8 House Bill 2916 by Representative 9 Craig Eiland, this is relating to pull tab and 10 Instant Bingo, and it is our understanding from the 11 bill author's office that this language in the bill 12 would conform with our administrative rules. House 13 Bill 3057 by Representative Ron Wilson, this is 14 relating to the administration of the lottery. This 15 would require an annual rather than a biannual 16 demographic study that would increase the prize 17 amount that the retailer may pay on a winning 18 ticket. House Bill 3186 by Representative Robert 19 Puente, this is relating to preference of Texas 20 bidders for certain state procurements. And this 21 amends state purchasing requirements that are stated 22 in the General Services Commission's statutes. And 23 while the Lottery is exempt from GSC 24 requirements -- purchasing requirements, the 25 provisions in this bill would be applicable to the WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 25 1 Lottery. A Senate companion bill, Senate Bill 1366 2 by Senator Van de Putte has also been filed. 3 MS. WHITAKER: Excuse me. That 4 doesn't just relate to the Lottery, though. That 5 particular bill is -- 6 MS. TREVINO: No. 7 MS. WHITAKER: -- across the board, 8 right? 9 MS. TREVINO: That's correct, 10 Commissioner Whitaker. It is provisions amending 11 the General Services Commission statutes that would 12 be applicable to all state agencies. And begins, 13 since the State Lottery Act specifically exempts the 14 Lottery from GSC requirements, although this bill 15 has a certain provision that says that the lottery 16 would be required under these provisions. 17 House Bill 3234 by Representative Art 18 Reyna, this is relating to the regulation of bingo. 19 This is also part of the agency's legislative 20 proposals. This includes the agency's recommended 21 cleanup language, plus the elimination of the 40 22 percent requirement on cardminding devices and the 23 elimination of the 5 percent prize fee on prizes 24 less than $5.00. A Senate companion bill, Senate 25 Bill 1504 by Senator Lucio has also been filed. WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 26 1 House Bill 3255, by Representative Art Reyna, this 2 would allow multi-organization Bingo, which is two 3 or more licensed conductors at the same premise 4 conducting multi-organization games, with a 5 commission approved automated Bingo service. 6 House Bill 3336, by Representative 7 Barry Telford, this bill would create interagency 8 counsel on problem gambling and a blue ribbon panel 9 on problem gambling. The interagency counsel would 10 consist of representatives from 19 agencies, 11 including the Lottery Commission, and the Charitable 12 Bingo Division. The blue ribbon panel would be 13 composed of at least 13 members appointed by the 14 Governor, Lieutenant Governor, and the Speaker. 15 While not a companion bill, a similar bill in the 16 Senate has been filed by Senator Carona, and that is 17 Senate Bill 1197. 18 House Bill 3360, this is relating to 19 Pull Tab Bingo. This is also part of the agency's 20 legislative proposal. This bill would expand the 21 time and location where pull tabs could be sold. 22 House Bill 3361, this Bill would allow bingo 23 licenses to be summarily suspended for failure to 24 pay taxes or fees required under the ad. This is 25 also part of the agency's legislative package. WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 27 1 HJR-98 by Representative Richard 2 Raymond, this would place a proposal on the ballot 3 to amend the State Constitution, dedicating the 4 revenue from the Lottery to public schools. It also 5 states that it would prohibit the Lottery from 6 advertising the beneficiary of its revenue. Senate 7 Bill 257, this is the Bill that would impose a fine 8 on a minor to purchase a Lottery ticket. This is 9 the Bill by Senator Carona. This bill has passed 10 out of the Senate and has been referred over to the 11 House Licensing and Administrative Procedures 12 Committee. Senate Bill 390 by Senator Wentworth, 13 this is the Bill that would allow an exception to 14 the Open Meetings Act, to allow the Commissioners to 15 deliberate and negotiate a contract with the Lottery 16 operator, which is also part of the agency's 17 legislative proposals. This has been voted 18 favorably from the Senate State Affairs Committee, 19 and is scheduled for Senate floor debate today. 20 A House companion Bill filed by 21 Representative Paul Hilbert, and that is House Bill 22 3139. The last Bill that I'll mention is 1720, by 23 Senator David Cain, this bill would eliminate the 40 24 percent requirement on electronic cardminding 25 devices, and would require the continued sale of WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 28 1 bingo paper. 2 I'll be happy to answer any 3 questions. 4 CHAIRMAN CLOWE: I had one question 5 about a bill. And I missed the number, Nelda, where 6 I'm unfamiliar with it, where you said it authorizes 7 the retailer to vary the amount of the prize 8 payout? Did I misunderstand that? 9 MS. TREVINO: You're talking about 10 House Bill 3057, Chairman Clowe? 11 CHAIRMAN CLOWE: If you say so. 12 MS. TREVINO: Yes, this is the bill 13 that -- 14 CHAIRMAN CLOWE: It piqued my interest 15 about the variability there. Could you explain that 16 to me. I'm not acquainted with that. 17 MS. TREVINO: Well, right now in the 18 Statute there is a threshold of $600.00 that states 19 that the Commission would pay that -- any dollar 20 amount over $600.00. So we currently require 21 retailers to pay any price up to $599.00. What this 22 provision does is change that threshold from $600.00 23 to $1,000. 24 And there are a couple of issues that 25 we would like to raise to Chairman Ron Wilson's WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 29 1 attention that we have not had an opportunity to, in 2 regards to the particular provision. 3 CHAIRMAN CLOWE: Thank you. Nelda, 4 did you cover the new rule regarding the fleet 5 vehicle management in that comment you made on the 6 Legislature, or do we need to cover that? 7 MS. KIPLIN: No, that's a separate 8 item. 9 CHAIRMAN CLOWE: Okay. That's fine. 10 Anything further? 11 MS. TREVINO: No, sir. 12 CHAIRMAN CLOWE: Okay. 13 MS. TREVINO: Again, just to answer 14 any questions? 15 CHAIRMAN CLOWE: No questions, I 16 think. Thank you, Nelda. 17 MS. TREVINO: Thank you. 18 CHAIRMAN CLOWE: Then Kim, we'll call 19 on you for the discussion relating to the vehicle 20 fleet management. Sorry I got confused. 21 MS. KIPLIN: No, that's all right. 22 Commissioners, we would like to ask that you pass 23 this item from your agenda, and we'll bring it back 24 as a later agenda item. The Rule has been drafted 25 but has not been shared with people within the WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 30 1 agency for their review and consideration. It's a 2 proposal that would be a proposed rule making 3 procedure. 4 CHAIRMAN CLOWE: All right. Very 5 good. If there are no objections for passing -- if 6 it meets with the Commissioners' approval, I'd like 7 to move on with the public agenda. And moving right 8 along -- and if you're ready, Kim, we'll just move 9 into Item Number 13, and following that, have our 10 reports from the Executive Director and the 11 Charitable Bingo Operations Director prior to a 12 motion to go into executive session. 13 MS. KIPLIN: Commissioners, what you 14 have in your notebook are contested case proposals 15 for decision of proposed orders we've received from 16 the State Office of Administrative Hearings. All of 17 the proposed PFDs that are in your notebook are 18 Lottery retailer related cases. There's nothing 19 unusual about any of these that I'm aware of. At 20 this point, we would like to ask that you approve 21 the administrative law judge's recommendation, which 22 is to revoke the licenses for those that are listed 23 in the Open Meetings Notice. 24 COMMISSIONER WHITAKER: I take it that 25 there is no one here to speak in defense of any of WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 31 1 these; is that correct? 2 MS. KIPLIN: Not that I'm aware of. 3 COMMISSIONER WHITAKER: Okay. Then so 4 move. 5 COMMISSIONER SADBERRY: Second. 6 COMMISSIONER CLOWE: And that would be 7 regarding, under Item 13, letters A through I. 8 MS. KIPLIN: That is correct. 9 COMMISSIONER CLOWE: All right. All 10 in favor, say aye. 11 (The Commissioners and Chairman 12 respond "aye".) 13 CHAIRMAN CLOWE: Opposed, no. 14 The vote is 3-0 in favor. We'll sign 15 those orders. We're going to pause for just a 16 minute, Linda, and sign these, and then we'll go 17 forward with your report. 18 MS. CLOUD: Okay. 19 CHAIRMAN CLOWE: Linda, we're ready 20 for your report on Item Number 14, please. 21 MS. CLOUD: Okay. Commissioners, on 22 February 15th, we transferred to the foundation's 23 school fund $58,576,653.00, making a total transfer 24 from the start-up until now of $8,446,000,743.00. 25 Robert is not in the room. Is he on WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 32 1 the way? 2 MS. HENRY: He had a baby-sitter 3 problem. 4 MS. CLOUD: Oh, okay. I'm sorry. Do 5 you want to make the HUB Report? 6 MS. HENRY: Okay. 7 MS. CLOUD: Patsy will make the HUB 8 Report. 9 MS. HENRY: Basically, I think what 10 you have in your notebooks this morning is just an 11 update of where we're at on our percentages, but 12 also, there is a summary for you of what has gone on 13 with the Minority Development Division over the last 14 month since your last meeting. 15 There was a round table discussion 16 session held with vendors, and we have had some 17 follow-up calls with regard to that round table 18 discussion. We felt like it went very well, had 19 lots of questions, had good attendance, and will 20 plan to -- for the next -- for the RFP, for the 21 operators' contract, we're planning to have a 22 similar kind of briefing for the vendors who have 23 responded or intend to respond to that, so that 24 everyone will be on board with the provisions, and 25 we won't have any missteps that would short circuit WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 33 1 that process for those vendors. 2 CHAIRMAN CLOWE: I think you had that 3 meeting the afternoon of our last Commission 4 meeting, didn't you? 5 MS. CLOUD: Yes, it was. 6 CHAIRMAN CLOWE: And how many 7 companies were represented at that meeting? 8 MS. HENRY: I want to say we had 23 9 participants. 10 MS. CLOUD: 21 vendors. It was a real 11 good attendance. 12 CHAIRMAN CLOWE: Great. 13 MS. HENRY: And basically, I think 14 that's it. The staff of the division has been 15 traveling routinely to forums in various cities 16 around the state to have a Lottery presence there 17 and interact with both vendors and other entities 18 similar to minority development divisions to do some 19 networking. So we're real pleased with their 20 progress, and we seem to be making good strides in 21 establishing that division and its relationship with 22 all of our existing vendors and potential vendors. 23 CHAIRMAN CLOWE: Very good. Anything 24 further? 25 MS. CLOUD: Not on the minority WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 34 1 report. FTEs, we have 311 active FTEs. We have 2 four in selection acceptance pending category, we 3 have 12 in the recruiting, screening, and 4 interviewing, we have one position being processed 5 for posting, and we have three vacant positions with 6 no HR activity at this time. 7 CHAIRMAN CLOWE: Where are you in the 8 process of the replacement for Robert Bell? 9 MS. CLOUD: This is Patsy's charge. 10 MS. HENRY: We currently have 17 11 candidates scheduled for interviews. We have 12 completed, I believe, six of those. We'll be 13 finished by the end of March, plan to have some 14 second round of interviews with a smaller group, and 15 hopefully be able to make an offer by the first of 16 May. 17 CHAIRMAN CLOWE: And the last time, I 18 think, I asked you about this, Patsy, you indicated 19 you had some strong applicants. 20 MS. HENRY: We do. Of course, we have 21 our in-house applicant, the Acting Director, who is 22 Chuck Wilson. We also have various folks that have 23 experience nationally and internationally in the 24 corporate world, some folks from Silicon Valley 25 area. We are fortunate, I think, at this point in WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 35 1 time to be seeing some free agents, if you will, 2 from the fallout of dot com and high tech industry 3 difficulties. So -- 4 CHAIRMAN CLOWE: Their misfortune may 5 be our good fortune. 6 MS. HENRY: Could be. 7 CHAIRMAN CLOWE: And also in this 8 area -- I see Bart Sanchez is in the room. I've 9 heard comments that we're having some positions in 10 the finance department that are needing to be 11 filled, and I'd like the Commission to hear a 12 comment about your search for people in that group, 13 and -- relative to outsourcing that's needing to be 14 done. 15 Could you give us a comment on that? 16 MS. HENRY: I can. If you'd like, I 17 think Bart could give you more specific information 18 and perhaps Jim Richardson, also, who is assisting 19 Bart in that effort. 20 CHAIRMAN CLOWE: I'm concerned about 21 that, and I think maybe the Commissioners would like 22 to hear where you are in that department. 23 MR. SANCHEZ: Good morning, 24 Commissioners. My name is Bart Sanchez, and I'm the 25 Financial Administration Director. We still have WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 36 1 the vacant position of the Assistant Director for 2 Financial Administration that was posted last June. 3 Seems like we have had some difficulty in -- I 4 guess, attracting qualified applicants, and I'm 5 probably in the process of reconsidering whether I 6 should change some of the criteria. 7 For example, certified public 8 accountants, I'm trying to see whether -- is there 9 another certification that that could fit, given 10 that I'm the CPA. And I'm also looking to see 11 whether other requirements that I had initially put, 12 I may have to reconsider maybe putting them as 13 preferred. I'm not having the fortunate timing as 14 on the IT side. I think on a financial side, I 15 think a lot of state agencies are really just trying 16 to fill a lot of vacancies, and I think that at the 17 higher level you go, I think you'll see probably 18 more -- less of a pull of applicants. And we also 19 have budget supervisor and other financial 20 supervisor vacancies. I'm considering whether I can 21 fill them with internal applicants to try to see 22 whether -- reconsider and try to revamp, realign 23 some of these positions. 24 I mean, right now I do have about 25 three or four temps. I mean, one in particular is WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 37 1 special projects, really helped me a lot during the 2 legislative session, and I guess my involvement in 3 the RFP Committee and some of the other have 4 probably distracted me somewhat. I'm probably going 5 to be focusing more in trying to get back to the 6 staffing needs of my division. And thinking in mind 7 that the audit within probably five months is coming 8 up, I mean, that's probably going to by my priority 9 now. I think the legislative session -- I think 10 I'm pretty comfortable. I think it's pretty much 11 behind me moreso than others. I feel comfortable in 12 that. So I'm going to focus on what I need to do to 13 get the division ready for the year in mind. 14 But we did -- with Patsy's help and 15 Linda's and Jim Richardson, we did, I guess, sign a 16 contract with a recruiter, and that hasn't really 17 come out as I would have thought. And then we also 18 posted the job on the Monster Dot Com on the 19 internet. So I think we just have to look as to 20 maybe I need to contact other resources' network on 21 what can we do differently. 22 CHAIRMAN CLOWE: How many CPAs do we 23 have, Bart, in the agency in your department? 24 MR. SANCHEZ: In my staff, we only 25 have with me two. WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 38 1 CHAIRMAN CLOWE: Two others? 2 MR. SANCHEZ: No. Just -- with me, 3 it's two. One additional. 4 CHAIRMAN CLOWE: What are you seeing 5 as the difficulty that you're running into? Does it 6 relate to compensation or benefits or the type of 7 opening that you have? Are you getting any feedback 8 on that? 9 MR. SANCHEZ: Some. I think maybe 10 it's a requirement -- I mean, really, you're not 11 going to find anybody really experienced in Lottery 12 operations. I myself wasn't experienced in that. I 13 was fortunate to have -- in bingos, I was familiar 14 with the agency. I'm also trying to look at whether 15 somebody can come with state agency experience. I 16 think that probably would attract people more, or 17 public accountancy, someone who does -- is familiar 18 with audits. I think that would be a right hand 19 person, to me, that I would be looking for. 20 CHAIRMAN CLOWE: Any questions? Jim, 21 do you have anything to add? Where are you? I saw 22 you a minute ago. 23 MS. CLOUD: Commissioners, one of the 24 things that makes it difficult for us to recruit 25 from out of state, like for other Lottery experience WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 39 1 type accounting individuals, is the fact that we 2 can't pay their travel. And that is a total 3 deterrent, for them to make a move and have an 4 expense of a move, and maybe not have that much of a 5 salary increase, but just change lotteries. There 6 are a lot of people out there in the Lottery 7 industry that would love to come to Texas, but that 8 is something that is a problem for us. 9 CHAIRMAN CLOWE: And you mean that we 10 cannot pay their travel expenses to be interviewed 11 and we cannot pay their travel -- movement of 12 household goods? 13 MS. CLOUD: Right. 14 MS. KIPLIN: Well, the travel expense 15 of the interview, I think there has been some issue 16 in the past, and we've been able to cover that, but 17 there is no provision in the General Appropriations 18 Act to pay moving expenses for a non-employee. It's 19 certainly contemplated and authorized for someone 20 who is a current employee of an agency who is 21 relocating within that agency to a different office, 22 and those moving expenses are authorized, as set per 23 the General Appropriations Act, but not for a new 24 hire. 25 MS. WHITAKER: Is that by Statute, WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 40 1 specifically? 2 MS. KIPLIN: Yes. 3 MS. WHITAKER: And it's your view, but 4 for that, we would have people now? 5 MR. SANCHEZ: No, not necessarily. 6 Certainly, I think it's a factor. I don't think 7 that, in and of itself, is the reason. 8 CHAIRMAN CLOWE: Very good. Bart, 9 would you give us an update on this particular area 10 at our next meeting, so the Commissioners can be 11 aware of our progress? 12 MR. SANCHEZ: Yes, sir. 13 CHAIRMAN CLOWE: And you still don't 14 want to answer that question about the controller's 15 charge. 16 MR. SANCHEZ: I would have to get my 17 book and look for that page. 18 CHAIRMAN CLOWE: All right. Well, we 19 won't go back. 20 MS. CLOUD: Lottery conferences, 21 Commissioners, I am scheduled, along with the two 22 internal auditors to go to Merritt Island, Florida 23 to an internal audit -- NASPL Internal Audit 24 Conference. I am on the executive staff of the 25 NASPL Officers, and one NASPL director has to go to WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 41 1 all of these offset individual conferences, and they 2 have appointed me to the Internal Audit Conference. 3 So that is the first week in April. And as long as 4 nothing else comes up that would interfere with 5 that, and so far I don't know of anything, I will 6 plan to go with our internal auditors to that 7 conference. 8 CHAIRMAN CLOWE: And where -- one of 9 them is in Florida and where is the other one, 10 Linda? 11 MS. CLOUD: This is just once a year, 12 and this is Florida. Florida is the host of this 13 conference, and they've chosen to have it at Merritt 14 Island. 15 CHAIRMAN CLOWE: That's the only one? 16 MS. CLOUD: That's the only one. 17 CHAIRMAN CLOWE: Anything further? 18 MS. CLOUD: We have a retailer town 19 hall meeting in Plainview on the 20th. 20 CHAIRMAN CLOWE: I've been to 21 Plainview. 22 MS. CLOUD: I've never been to 23 Plainview. 24 CHAIRMAN CLOWE: You're in for a 25 treat. How are you going to get there? WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 42 1 MS. CLOUD: On the State plane. In 2 order for us not to have to spend the night, we're 3 taking the State plane, and we will be looking 4 forward to another town hall meeting with our 5 retailers. That's tomorrow night -- tomorrow 6 afternoon, provided the weather doesn't get too bad 7 going there. 8 CHAIRMAN CLOWE: How many are 9 participating? 10 MS. CLOUD: How many retailers? 11 CHAIRMAN CLOWE: Uh-huh. 12 MS. CLOUD: I think they're counting 13 on about 60. Have you heard? 14 MS. SMITH: 67 as of Friday afternoon. 15 CHAIRMAN CLOWE: And they're coming 16 from where, Lubbock and -- 17 MS. CLOUD: Would be Lubbock and 18 Amarillo, maybe. 19 CHAIRMAN CLOWE: Is Idabel in it, a 20 little town outside of Lubbock? 21 MS. CLOUD: I'm going to tell you 22 something, those retailers along that state border 23 make a lot of money for the Texas Lottery. 24 CHAIRMAN CLOWE: They didn't tell you 25 anything about driving 150 miles to come to a WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 43 1 meeting, you know. 2 MS. CLOUD: It's probably something 3 for them to do. 4 CHAIRMAN CLOWE: It can get pretty 5 cold in Plainview. 6 MS. CLOUD: Can it? Uh-oh. 7 MS. KIPLIN: Commissioners, 8 actually -- I know Linda mentioned not having to 9 spend the night, but actually, just to make sure 10 that we have a good record on this, the Commission 11 looks at the use of the State plane and the expenses 12 associated with that versus associated expenses if 13 you had more difficult travel arrangements, in terms 14 of having to spend the night, and the cost. So it's 15 really just a cost comparison. 16 MS. CLOUD: And not only that, the 17 State in most cases, by use of the State plane, with 18 the number of people that we take, the State plane 19 turns out to be cheaper for us than a commercial 20 flight. And that's been the case up to now. This 21 one, I think there might have been a small 22 difference in the price, but the stay overnight 23 would have way offset the cost of the State plane. 24 CHAIRMAN CLOWE: And Plainview is not 25 served by commercial service, and you do have to fly WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 44 1 into Lubbock or Amarillo and then rent a car and 2 drive there, and then you have to drive back and 3 spend the night. And yet, I think it's important to 4 go to the smaller town, and it is certainly 5 important to continue your retailer forums that I 6 think are very beneficial. 7 MS. CLOUD: I think the retailers in 8 those areas, in the small towns seem to appreciate 9 much more that we've taken -- made it a point to 10 come to their towns. So I do think it is important 11 to reach out to them. 12 CHAIRMAN CLOWE: Very good. 13 MS. CLOUD: And that's my report. 14 CHAIRMAN CLOWE: Linda, there's a tab 15 in our notebooks that has nothing behind it, Length 16 of Service Recognition. Did that relate to 17 Commissioner Sadberry or was there another item that 18 you wanted to cover? 19 MS. KIPLIN: No, I think it might have 20 just been a hanger from the last time -- 21 MS. CLOUD: From the last meeting -- 22 CHAIRMAN CLOWE: A hanging tab? 23 MS. KIPLIN: It's not noticed for this 24 Commission meeting. 25 CHAIRMAN CLOWE: Very good. Billy, WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 45 1 may we call on you for your report, please? 2 MR. ATKINS: Yes, sir. Commissioners, 3 I'm happy to report that we are slowly getting our 4 positions filled. We're down to one remaining 5 vacant position in our Dallas regional office. We 6 have within this month filled two of those. So 7 those are slowly but surely becoming filled. I've 8 mentioned to you before that the September 1st 9 deadline for all organizations to have attended our 10 operator training program is still approaching. We 11 have posted notices on our website as well as 12 notification in our bingo bulletin, and last week we 13 sent notification, along with current schedule, to 14 all those organizations who our records show still 15 have not attended training, to inform them of the 16 deadline, and provide them with a list of upcoming 17 classes. 18 And finally, something new in your 19 notebook, Commissioners, is we have included a list 20 of news articles that have appeared around the 21 country and elsewhere relating to charitable bingo 22 or charitable gaming in other jurisdictions for you 23 to review. I think the most interesting thing that 24 you'll find out of all those articles is that it's 25 pretty much the same here as it is everywhere else. WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 46 1 The issues we have to deal with, everyone else does, 2 too. And that's my report. 3 CHAIRMAN CLOWE: Billy, did you attend 4 the Texas Elk State Association meeting in Seguin on 5 the 17th of this month? 6 MR. ATKINS: I did not. It's my 7 understanding that Roy Gabrio, our senior audit 8 supervisor, and Tom Lieck, the audit manager from 9 San Antonio, both attended that. 10 CHAIRMAN CLOWE: And will you be 11 attending the Red Man Conference of the Elks Club 12 that's coming up in March and June? 13 MR. ATKINS: Either I or Phil 14 Sanderson, the assistant director, will be at that. 15 CHAIRMAN CLOWE: If you would let me 16 know what your plans are, I would like to try to 17 accompany you to both of those meetings. 18 MR. ATKINS: To the Elks Conference in 19 June also? 20 CHAIRMAN CLOWE: Yes. 21 MR. ATKINS: Okay. 22 CHAIRMAN CLOWE: And you have a Bingo 23 Advisory Committee meeting coming up on May the 9th. 24 MR. ATKINS: That's correct. 25 CHAIRMAN CLOWE: Very good. Any WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 47 1 questions or comments for Billy? 2 At this time I'll ask if there's any 3 public comment from anyone in attendance. Seeing 4 none indicated, we are ready to go into executive 5 session. 6 At this time I move the Texas Lottery 7 Commission go into executive session to deliberate 8 the duties and evaluation of the executive director 9 and internal auditor and Charitable Bingo Operations 10 director, pursuant to Section 551.074 of the Texas 11 Government Code; to deliberate the duties of the 12 general counsel and security director, pursuant to 13 Section 551.074 of the Texas Government Code; to 14 receive legal advice regarding pending or 15 contemplated litigation and/or to receive legal 16 advice pursuant to Section 551.071 (1), (A) or (B) 17 of the Texas Government Code and/or to receive legal 18 advice pursuant to Section 551.071 (2) of the Texas 19 Government Code, including but not limited to matter 20 involving the Department of Justice pursuit of a 21 complaint regarding the Americans with Disabilities 22 Act; matter involving Request for Open Records 23 Decision in Attorney General Open Records File 24 Number 119718-98 relating to request for information 25 in connection with the lottery operator audit; WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 48 1 matter involving brokerage arrangements insofar as 2 HUB/minority business participation is concerned; 3 contract regarding the charitable bingo system, 4 employment law, personnel law, procurement and 5 contract law, and general government law. 6 Is there a second? 7 COMMISSIONER WHITAKER: Second. 8 CHAIRMAN CLOWE: All in favor say aye. 9 (The Commissioners and Chairman 10 responded "aye".) 11 CHAIRMAN CLOWE: Opposed, no. 12 The vote is 3-0 in favor. The Texas 13 Lottery Commission will go into executive session. 14 The time is 9:32 a.m. Today is March 15 19, 2001. 16 (The Texas Lottery Commission met in 17 executive session.) 18 (The Texas Lottery Commission returned 19 from executive session.) 20 (The proceedings resumed at 2:19 p.m.) 21 CHAIRMAN CLOWE: The Texas Lottery 22 Commission is out of executive session. The time is 23 2:19 p.m. Is there any action to be taken as a 24 result of executive session? Are there any motions 25 to be made? WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 49 1 COMMISSIONER SADBERRY: Yes, sir, Mr. 2 Chairman. I make a motion to approve the 3 evaluations of the Executive Director and Charitable 4 Bingo Operations Director. 5 COMMISSIONER WHITAKER: Second. 6 CHAIRMAN CLOWE: All in favor say aye. 7 (The Commissioners and Chairman 8 responded "aye".) 9 CHAIRMAN CLOWE: Opposed, no. 10 The vote is 3-0 in favor. Are there 11 any other motions? 12 COMMISSIONER SADBERRY: Yes, sir, Mr. 13 Chairman. I make a motion to approve a salary 14 increase in the amount of $416.66 per month so that 15 the monthly salary will be $9,166.66 for the 16 executive director, such increase to be effective 17 February 1, 2001. 18 COMMISSIONER WHITAKER: Second. 19 CHAIRMAN CLOWE: All in favor say 20 aye. 21 (The Commissioners and Chairman 22 responded "aye".) 23 CHAIRMAN CLOWE: Opposed, no. 24 The vote is 3-0 in favor. Are there 25 any other motions? WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 50 1 COMMISSIONER SADBERRY: Yes sir, Mr. 2 Chairman. I make a motion to approve a salary 3 increase in the amount of $1,043.00 per month so 4 that the monthly salary will be $7,084.00 for the 5 Charitable Bingo Operations director, such increase 6 to be effective February 1, 2001. 7 COMMISSIONER WHITAKER: Second. 8 CHAIRMAN CLOWE: All in favor say aye. 9 (The Commissioners and Chairman 10 responded "aye".) 11 CHAIRMAN CLOWE: Opposed, no. 12 The vote is 3-0 in favor. 13 My recollection is that we have 14 finished the public agenda as noticed prior to going 15 into executive session. We therefore have no 16 further business unless someone has some matter they 17 wish to bring before the Commission at this time. 18 COMMISSIONER SADBERRY: Mr. Chairman, 19 if I may, one further request. 20 CHAIRMAN CLOWE: Yes, sir. 21 COMMISSIONER SADBERRY: With respect 22 to the Charitable Bingo Operations director, I would 23 request that the Human Resources Department conduct 24 a reclassification study and report back to the 25 Commission. WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 51 1 CHAIRMAN CLOWE: We share in that, and 2 those are your directions. 3 Anything further? Then the final note 4 of this meeting will then be again to thank 5 Commissioner Anthony Sadberry for his years of 6 faithful, patient, and exemplary service, and wish 7 him God's speed. 8 COMMISSIONER SADBERRY: Thank you. 9 CHAIRMAN CLOWE: We are now 10 adjourned. 11 (Proceedings adjourned at 2:24 p.m.) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363 Texas Lottery Commission - 3-19-01 52 1 REPORTER'S CERTIFICATE 2 I, Mary Angela Freeman, a Certified Shorthand 3 Reporter in and for the State of Texas, do hereby 4 certify that the foregoing proceedings were reported 5 by me, and that the foregoing transcript constitutes 6 a full, true, and correct transcription of my 7 stenographic notes. 8 I FURTHER CERTIFY that I am neither attorney 9 nor counsel for, related to, nor employed by any of 10 the parties to the action in which these proceedings 11 were taken, nor do I have a financial interest in 12 this action. 13 WITNESS MY HAND, this the ____day of 14 ________________, A. D., 2001 15 16 17 ________________________________ MARY ANGELA FREEMAN, CSR 18 19 Certificate Number: 1168 Expiration Date: 12-31-01 20 Business Address: 1609 Shoal Creek Boulevard Suite 202 21 Austin, Texas 78701 Telephone Number: (512)474-4363 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512)474-4363