0001 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 TEXAS LOTTERY COMMISSION 4 AUSTIN, TEXAS 5 6 16 TEXAS ADMINISTRATIVE CODE § § 7 §402.500, §402.506, §402.511 § 8 9 PUBLIC COMMENT HEARING ON RULEMAKINGS 10 TUESDAY, NOVEMBER 13, 2007 11 12 BE IT REMEMBERED THAT on Tuesday, the 13 13th day of November 2007, the above-entitled public 14 comment hearing was held from 10:00 a.m. to 11:40 15 a.m., at the Offices of the Texas Lottery Commission, 16 611 East 6th Street, Austin, Texas 78701, before 17 SANDRA JOSEPH, OFFICE OF THE GENERAL COUNSEL. The 18 following proceedings were reported via machine 19 shorthand by Aloma J. Kennedy, a Certified Shorthand 20 Reporter of the State of Texas, and the following 21 proceedings were had: 22 23 24 25 0002 1 APPEARANCES 2 ASSISTANT GENERAL COUNSEL: 3 Ms. Sandra Joseph 4 SENIOR AUDIT MANAGER: 5 Mr. Marshall McDade, Jr. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0003 1 TABLE OF CONTENTS 2 PAGE NO. 3 PROCEEDINGS - TUESDAY, NOVEMBER 13, 2007 4 4 COMMENTS ON BEHALF OF FORT WORTH BOOKKEEPING (IVES) 5 5 COMMENTS ON BEHALF OF SUPER BINGO, 6 TEXARKANA, TEXAS (SMITH) 10 7 COMMENTS ON BEHALF OF 19 CHARITIES (COLWELL) 19 8 COMMENTS ON BEHALF OF FAMILY BINGO CENTER, FORT WORTH, TEXAS (HUNTER) 24 9 COMMENTS ON BEHALF OF SAGINAW LIONS 10 CLUB (ANDERSON) 27 11 COMMENTS ON BEHALF OF THOMPSON ALLSTATE BINGO SUPPLY (BAKER) 30 12 COMMENTS ON BEHALF OF SEVERAL CHARITIES 13 AND A BINGO HALL (WHITE) 34 14 COMMENTS ON BEHALF OF THE BINGO INTEREST GROUP (BRESNEN) 44 15 COMMENTS ON BEHALF OF ALL SAINTS BINGO 16 UNIT TRUST (TAYLOR) 64 17 COMMENTS ON BEHALF OF AMERICAN VETERANS POST 52 (HUTCHINGS) 69 18 REPORTER'S CERTIFICATE 72 19 20 21 22 23 24 25 0004 1 P R O C E E D I N G S 2 TUESDAY, NOVEMBER 13, 2007 3 (10:00:00 a.m.) 4 MS. JOSEPH: Good morning. I would 5 like to call the hearing to order. My name is Sandra 6 Joseph, Assistant General Counsel. With me is 7 Marshall McDade, Manager - Audit Services, Bingo 8 Division. We're here this morning to receive public 9 comments on three proposed rules. Those are Proposed 10 Rule 402.500 pertaining to general records 11 requirements, Rule 402.506 pertaining to disbursement 12 records requirements, and Rule 402.511 pertaining to 13 required inventory records. 14 This rule was published on November 9, 15 2007, in the Texas Register, with a comment period of 16 30 days. The earliest possible date of adoption for 17 this rule would be December 9, 2007. We will accept 18 written comments through December 9th. If anyone 19 chooses to submit written comments, we will be happy 20 to receive those 21 At this time I would like to have sworn 22 in anyone who plans to present comments today. This 23 is not an evidentiary testimony but it is -- excuse 24 me -- an evidentiary proceeding. However, we do take 25 these comments very seriously and know that you're 0005 1 giving them to us in a very serious frame of mind. So 2 I would like you to raise your right hand at this time 3 if you plan to offer testimony. 4 (Witnesses sworn by Ms. Joseph) 5 MS. JOSEPH: I have a number of 6 appearance forms here today, and I will just go 7 through and call the names. And if you would like to 8 offer your comments at that time, you may come 9 forward. 10 Suzanne Taylor. 11 MS. TAYLOR: If it wouldn't be a 12 problem, can you put my comments -- because I 13 commented during the BAC meeting -- and I just wanted 14 to make sure that somebody mentions the items I'm 15 interested in. And so can you slide me down to the 16 bottom of the stack? 17 MS. JOSEPH: All right. 18 MS. TAYLOR: Ill let other people get a 19 chance to speak. 20 MS. JOSEPH: Okay. All right. We can 21 do that. 22 Sharon Ives. 23 COMMENTS ON BEHALF OF FORT WORTH BOOKKEEPING 24 MS. IVES: Good morning. My name is 25 Sharon Ives. I'm with Fort Worth Bookkeeping, and my 0006 1 office represents over 19 unit bingo halls. I'm here 2 today to comment on Rule 402.500, General Records 3 Requirements. 4 Paragraph (a), "Licensees must maintain 5 all information and records relating to bingo for four 6 years," my concerns are the words "all" and "records." 7 I was wondering, would that pertain to all winning 8 bingo papers, event tickets and pull-tabs? If that is 9 the case, and if I'm reading this correctly, you're 10 talking a lot of storage here. That's a lot of 11 information to be maintaining for four years. 12 On Paragraph (c) on the same rule, 13 "Licensees must make available," my experience in the 14 past, whenever we do go through an audit with the 15 Bingo Division, that a lot of these organizations are 16 not on a calendar reporting period. A lot of them are 17 on a physical reporting period. It seems like 18 whenever the organizations go through an audit, their 19 CPAs have a lot of that information in order to 20 complete the Form 990. And we've had problems in the 21 past where the auditors are requiring that 22 information. So basically we have to get with the 23 CPA, put their 990's on hold, which I'm sure that 24 you're aware that they are on a timeline, and the 25 penalties are pretty stiff with the IRS if that 990 is 0007 1 filed late. So I have concerns on that. 2 Rule No. 402.506 relating to the 3 Disbursement Records Requirements, Paragraph (a), 4 right after "cancelled checks," I would like to have 5 inserted "or check images." Out of all of the 6 financial institutions that we deal with, none -- and 7 I repeat "none" -- of the banks return the actual 8 cancelled check. 9 On No. (6), Paragraph (6), "Other 10 federal, state, and local documentation which may 11 include tax returns, 1099's and property tax 12 receipts," the word "other," the way that I interpret 13 that, would include the 990's and the organizations' 14 state franchise tax returns. 15 No. (9) -- 16 MS. JOSEPH: Excuse me. Are you saying 17 that would be a problem if it included those other 18 items? 19 MS. IVES: That is correct. 20 On No. (9), after the word "cancelled 21 checks," I would like to have inserted "or check 22 images," for the same reasons as previously stated. 23 Rule 402.511, inventory, Paragraph 24 (b) -- "b" as in "boy" -- my interpretation of 25 perpetual inventory to me is the same as the 0008 1 disposable card sale summary. They both contain the 2 same information. I don't see why you would be 3 required to complete both of those. Any time that you 4 have to move numbers from one piece of paper to 5 another piece of paper and so on, you always have room 6 for error which, as you know, that would be a 7 violation. 8 Paragraph (c), the unaccounted for 9 disposable bingo cards and pull-tab bingo tickets, 10 there have been cases, I guess in the past, where a 11 floor worker or an usher is out on the floor selling 12 papers for the upcoming game and you will have your 13 papers that stick together. The same thing with the 14 pull-tabs. When you're sitting there counting out 20 15 pull-tabs at a time or 50 pull-tabs at a time, those 16 pull-tabs are going to stick together. The way that 17 this paragraph is written, if that was to happen, that 18 the organization would have to reimburse the bingo 19 account with non-bingo funds, the prizes and the prize 20 fee associated with that human error. 21 MS. JOSEPH: Excuse me. How do you 22 know when that was happened as opposed to something 23 else hasn't happened to the tickets or paper? 24 MS. IVES: Well, on the pull-tab 25 tickets, you know exactly how many pull-tabs are in 0009 1 that deal of tabs. You have your flare card. It 2 tells you if you have -- and this is the same with 3 event tickets. Whether it's 280 tickets per deal or 4 if you have 3,000 tickets per deal, you would know at 5 the end of the sale for that complete deal if you have 6 a tab or a ticket that's not accounted for. 7 The same thing on the floor papers. 8 Each usher is issued X amount of papers to go out on 9 the floor to sell. Take, for instance, if you, you 10 know, give -- if you issue an usher 25 floor papers 11 and they're a dollar a paper, when that usher comes 12 back up, he or she should have $25. If not, they 13 would have the amount of money plus the amount of 14 papers to equal the $25. If that's not the case, then 15 you either -- you know, you have a sheet missing. And 16 that is accounted for already on the usher sales 17 summary that's part of your daily cash report. 18 And those are my comments for today. 19 MS. JOSEPH: Thank you very much, 20 Ms. Ives. 21 MS. IVES: Thank you. 22 MS. JOSEPH: Charles Hutchings. 23 MR. HUTCHINGS: Let me pass for the 24 time being. 25 MS. JOSEPH: Trace Smith. 0010 1 COMMENTS ON BEHALF OF SUPER BINGO, TEXARKANA, TEXAS 2 MR. SMITH: Good morning. My name is 3 Trace Smith. And I would like to go over the three 4 rules that you have for consideration. 5 The first rule, on 402.500, (a) 6 "Licensees must maintain all information and records 7 pertaining to bingo for four years," the word "all" 8 encompasses a lot of storage concerns. There's other 9 rules that I'm understanding that are up for 10 consideration later on that pertain to winning bingo 11 cards, pull-tabs, et cetera. 12 It's my understanding as a hall 13 operator that we have anywhere from 50 to 60 winning 14 cards per night. If you average that out over a year, 15 you can get up to as high as maybe 100,000 winning 16 cards, not including your pull-tabs, of your 50-cent, 17 quarter, one dollar winners. You've got an exorbitant 18 amount of storage that you're going to require the 19 charities to have, and that costs money. That's a 20 financial burden on the charities that I'm associated 21 with. 22 Moving on to 402.506, the same thing 23 that Sharon has said. (a), like to get inserted "or 24 check images," but I would like to note that when you 25 do request check images from your bank, that is an 0011 1 extra charge that the charities are required to come 2 up with. I know it's a minimal charge, but if you add 3 all of these things up together -- the storage, the 4 extra charge for the checks, you know, the extra 5 little bookkeeping things that we're required to do -- 6 it all adds up to the charities getting a smaller 7 piece of the pie. You've only got so much money to 8 work with. And if you nickel and dime it out over 9 little things, it may not be significant on this 10 particular issue, but it is significant in the overall 11 picture. 12 Moving down to (A), the name and 13 address and phone number of the person or entity 14 selling goods or services, or providing the service, 15 if we could maybe insert "or" right after "and." 16 Sometimes on an invoice the supplier does not list 17 their phone number or it may be the company name, the 18 address and not a phone number. It may be the company 19 name and the phone number. I think as long as they're 20 able to be contacted in some way or form, I think that 21 would suffice. And also I'm not sure if that would 22 allow the Lottery Commission to go in and audit them 23 as well, to make sure that their bookkeeping is 24 correct. 25 MS. JOSEPH: So is your suggestion to 0012 1 say the name, address -- 2 MR. SMITH: And/or. 3 MS. JOSEPH: -- and/or phone number? 4 MR. SMITH: Yes. 5 MS. JOSEPH: All right. 6 MR. SMITH: Also on (B), "a complete 7 description of goods or services purchased," sometimes 8 that's not always applicable. For instance, if you 9 have a toilet overflow and a plumber issues you an 10 invoice for plumbing work, you may not remember which 11 toilet overflowed or which sink got stopped up. 12 That's almost nit-picky -- pardon the expression. 13 And on (C), "the amount of each product 14 sold or service provided," I believe the word "sold" 15 is intended to say "purchased." I'm not for sure on 16 that. I need a clarification on that. 17 Going down to No. (3), the "Rent 18 forgiveness letter signed by the commercial lessor 19 stating the amount of any rent amount permanently 20 reduced or forgiven," it was my understanding that 21 there was not enough room to keep a lease agreement 22 somewhere, so we don't have room either. 23 Going down to "(A) Position(s)" -- 24 MS. JOSEPH: Could you clarify that? 25 MR. SMITH: What? 0013 1 MS. JOSEPH: You said it's your 2 understanding there's not enough room to keep a lease 3 agreement. 4 MR. SMITH: Someone -- rumor mill had 5 it, I guess. Maybe I should leave that alone, then. 6 MS. JOSEPH: Okay. I'm not sure what 7 you're referring to. 8 MR. SMITH: Okay. Well, we'll just -- 9 MR. BRESNEN: I'll go back to it. 10 MS. JOSEPH: All right. 11 MR. SMITH: Steve will come back to 12 that. 13 MS. JOSEPH: Mr. Bresnen said he would 14 address that. Thank you. 15 MR. SMITH: Going down to "(A) 16 Position(s) worked," I'm not sure why we need that on 17 there. If you're working in a bingo hall, you're 18 registered anyway, you're authorized to work. I'm not 19 sure why we need that. That's another line on a 20 longer sheet of paper we have to keep up with. 21 Going to No. (9) on the "Bank 22 statements, deposit slips and cancelled checks," I 23 would like to also get in "or check images" on that as 24 well. And I would like to add, a lot of this is 25 redundant stuff that we're having to keep time and 0014 1 time again that we've already kept his information 2 somewhere in our paperwork, and we're having to keep 3 it on multiple different places. 4 Going to 402.511, "Required Inventory 5 Records," I guess my main question on this -- and it's 6 not stated anywhere -- is all of this going to be 7 retroactive or is it going to be from time of 8 institution, because there is some of this that is in 9 here that is not exactly in the form that's requested, 10 it's in other forms. Are we going to have to pay 11 someone to go back and put it into the forms 12 prescribed? 13 Going to (a) and (b) on 402.511, I 14 believe that there's rules that are already pertaining 15 to this. I'm not sure why we need two more rules for 16 this. 17 On (c), my question is, it says "The 18 licensed authorized organization is responsible for 19 reimbursing its bingo account with non-bingo funds for 20 gross receipts, prizes and prize fees associated with 21 missing or unaccounted for disposable bingo cards and 22 pull-tab bingo tickets." My question is, is slippage. 23 And I can use Wal-Mart for an example. Wal-Mart 24 understands that there is going to be a certain amount 25 of slippage due to human error, misplacement, that 0015 1 sort of thing. 2 And as what Sharon had testified to 3 earlier, sometimes when you're out on the floor -- I 4 deal with operations, so I'm seeing this on a first- 5 hand basis on a day-to-day operation type deal -- you 6 do have people that when they sell a card, they 7 accidently give away one, just because they're stuck 8 together. 9 Is it my understanding that when it 10 comes down to your inventory, if you're missing one 11 card, the charity is going to have to write a check 12 back to their bingo account for that? I understand 13 that there's going to be a minimal amount of slippage. 14 I'm not saying that an exorbitant amount should be 15 forgiven, but there should be some allowances there 16 for nominal slippage. 17 Also I'm not real sure here -- I'm 18 trying to understand this -- when it says "prizes." 19 The player is paid the prize. Why must -- and are you 20 asking the general fund to reimburse the bingo fund 21 for prizes paid out? That's very unclear, because it 22 sounds like when you have a bingo paid out to the 23 customer, that the general fund has to reimburse the 24 bingo account for that prize paid out. That's a 25 double hit, if I'm understanding this right. 0016 1 Going down to No. (1), "Disposable Card 2 Sales Summary--a record that contains the perpetual 3 inventory of disposable bingo paper purchased. Each 4 serial number must be recorded on a separate sheet. 5 The summary must include the following," I'm not real 6 certain on this, but I believe that the disposable 7 card sale summary is a summary of sorts and not a 8 perpetual inventory. I believe those are two 9 different things. I'm not sure if you're requiring to 10 have two different things or -- I'm unsure if you have 11 maybe transposed a name or a different document there 12 Also that the serial number must be 13 recorded on a separate sheet. In the particular hall 14 where I work, we play anywhere from 25 to 40 games a 15 session, and that could lead up to maybe 20 to -- 16 depending on where you are in your inventory, you 17 could have anywhere from 15 to, say, 30 serial numbers 18 a night. If that's the case and it must be recorded, 19 each session on a separate piece of paper, you get 20 into an exorbitant amount of paperwork that you have 21 to keep up with, transposed numbers from day-to-day. 22 As you well know, if you have to list 23 20 different 16-digit serial numbers, you have a 24 greater margin of error for transposition of numbers. 25 It's very, very easy when you're doing that time and 0017 1 time and time again, transposing numbers. It's like 2 you're setting yourself up for failure by doing it on 3 a different sheet. If you're able to maintain that on 4 the same sheet -- like you have your blue at the 5 front, your gray at the second -- and on the same 6 line, it's not so hard to make a mistake. 7 Also when you're asking for (C), the 8 invoice date and number, you're creating two jobs 9 there. A lot of times the people that get the 10 inventory in, when they get the inventory in and check 11 it off of the sales sheet or the packing list, that's 12 sent to a bookkeeper, and the bookkeeper has the 13 inventory so -- has the invoice. Excuse me. A lot of 14 times, if you're asking for that on your disposable 15 card sale summary or perpetual inventory -- I'm not 16 sure which we're asking for here -- that's not readily 17 available. It creates two different jobs that the 18 charity would have to maintain. That goes back to a 19 little bit more piece of the pie taken out. 20 (E) and (F), I believe that those seem 21 to be the same, number of faces on and the number of 22 sheets of. And then you're asking for the number of 23 sheets or packs in a package. I'm not real clear on 24 that. It seems to be the same. 25 Also on (G), the color of the paper and 0018 1 border. It's my understanding that in industry 2 standard, the color of the paper is the border color. 3 The color of the paper is always, that I've always 4 seen, black numbers on white paper. It may have a 5 colored border. I'm not real sure if you're asking 6 for the same thing or not there. 7 Basically on an overviewing of all of 8 this, it's very redundant, asking for a lot of 9 recordkeeping. And not that recordkeeping is a bad 10 thing in and of itself. But when you make it 11 redundant and it also ties to other rules, we have to 12 keep in mind that when you ask for something now, it's 13 going to affect something later. And what I'm talking 14 about is keeping of the bingo cards for four years. 15 You know, if you're looking at 100,000 sheets per 16 year, not including your pull-tabs -- because I know 17 some places in Texas sell 20 and 30 deals of event 18 tickets. You know, is that to say that they're going 19 to have to keep all those 25- and 50-cent winners over 20 the period of four years? 21 And that will sum up what I have to 22 state on these. 23 MS. JOSEPH: And what hall are you 24 associated with? 25 MR. SMITH: With Super Bingo in 0019 1 Texarkana. 2 MS. JOSEPH: And what is your position 3 with them, your association? 4 MR. SMITH: I'm the hall manager, head 5 usher. 6 MS. JOSEPH: All right. Thank you very 7 much. 8 Stephanie Colwell. 9 MS. COLWELL: Hi. 10 MS. JOSEPH: Good morning. 11 COMMENTS ON BEHALF OF 19 CHARITIES 12 MS. COLWELL: Stephanie Colwell. I'm a 13 bookkeeper for about 19 charities. 14 Starting with Proposed Rule 402.500(a), 15 "Licensees must maintain all information and records 16 relating to bingo for four years," the word "all" 17 again, is that open to the auditor or is that open to 18 interpretation to the charity? I'm not real sure what 19 records they're referring to. And, again, all 20 information is a lot of information for each charity 21 to store and keep record of. 22 402.500(c), "Licensees must make 23 available all information and records relating to 24 bingo upon request of the Commission," how far is that 25 request given in advance? Because, again, some of our 0020 1 records are held by the charities, some are held by 2 the bookkeeper, some are held by the bingo hall -- 3 like inventory -- and some are held by the CPA. So 4 there's a lot of information to gather for the 5 auditor. 6 Going to Rule 402.506(a), I know that 7 our bank does not return checks, cancelled checks 8 anymore. In fact, they don't even return images. I'm 9 sure that we could ask for them for a fee. I don't 10 know what that fee is, but I would like to include 11 "images" in this proposed rule. 12 402.506, No. (1), "Invoices, itemized 13 billing statements, or" -- I would like to include "or 14 agreement" in there -- "or sales receipts," because 15 some expenses are on agreement, not on invoice. 16 (1)(A), I would like that to read "The 17 name and contact information," because, again, 18 sometimes they have the address, sometimes they have 19 the phone number, but they almost always have the 20 name. 21 (1)(B), I would like to delete 22 "complete description." I think a description of 23 goods or services is enough. 24 (1)(C), "the amount of each product," I 25 think that should be "purchased" also instead of 0021 1 "sold." I don't know if that was a typo or if I just 2 don't read it right. 3 Going down to No. (3), rent forgiveness 4 letters signed by the commercial lessor, I was under 5 the impression that once rent wasn't received by a 6 charity, that you couldn't go back and collect it 7 anyways. So a rent forgiveness letter, it just seems 8 like that's already understood. If you don't get 9 their rent, I don't understand why you need the 10 paperwork to support it. If the check wasn't written, 11 then obviously they're not getting the rent. 12 (4)(A), the positions worked, I don't 13 see how that matters to the Lottery because the 14 Lottery Commission registers all these employees to 15 work. And there's only so many positions for each 16 employee to work, and I don't see where it really 17 matters what position they held while the bingo 18 occasion going on. 19 No. (5), "Federal and state payroll tax 20 returns, deposits, and receipts," I'm not sure what 21 receipts that's referring to. The deposit receipts? 22 No. (9), again, cancelled checks or 23 images. I think "images" should be inserted. 24 No. (11), "Game schedules and pricing 25 structure documents including the date(s) of any 0022 1 changes to these documents." Any time a charity 2 changes the pricing structure, that's on their daily 3 worksheets. I don't see why we should have a separate 4 form or a separate file to write down all the dates 5 and the changes of this that's already on their daily 6 worksheets, and that includes the date and how much 7 they charged. 8 Rule 402.511(a), I don't understand the 9 difference in a perpetual inventory and a disposable 10 card summary. It seems like if those are two separate 11 things, then you're putting the same information in 12 two different places, where I just see that as 13 redundant. I think there should just be one place for 14 all the information." 15 (c) The licensed authorized 16 organization is responsible for reimbursing its bingo 17 account..." Again, that's human error and it's going 18 to happen. I don't see why we should have the 19 organization pay for employee error if it's nominal. 20 Going down to No. (1), disposable card 21 sales summary, "Each serial number must be recorded on 22 a separate sheet." That's a lot of paperwork again, 23 and it's already in the disposable card sale summary 24 and it's on the invoices. 25 Going to letter (D), serial and series 0023 1 number, the series numbers are already on the invoices 2 and the serial number is already in the inventory. 3 "(E) Number of faces and number of 4 sheets," that's already in the invoices also. 5 I don't know what (F) is, "number of 6 sheets or packs in package." It seems like number of 7 sheets and number of sheets or packs in package are 8 the same thing. It's the same difference. It's still 9 the number of sheets. 10 (G), color of the paper and the border, 11 I don't see why this makes any difference. 12 "(H) Number of sheets or packs 13 remaining after each occasion," that is already in the 14 inventory. 15 Several of these things going down are 16 already on the daily worksheet or they're already in 17 the inventory. And, again, it's redundant. It's the 18 same thing, the input on several different forms, and 19 that makes for a lot of work. And, again, human error 20 is going to happen. 21 And I'm also curious as to if these 22 things pass if they will be retroactive or if they 23 will be going forward. The rules are kind of 24 confusing. And I feel like if these things were to 25 pass, then maybe they should be inserted into the 0024 1 rules that are already in place so that we can read 2 through them and not have to go back and forth to this 3 rule and then go back to that rule, because it's open 4 to interpretation. 5 That's it. Thank you. 6 MS. JOSEPH: Thank you, Ms. Colwell. 7 Tammy Hunter. 8 COMMENTS ON BEHALF OF 9 FAMILY BINGO CENTER, FORT WORTH, TEXAS 10 MS. HUNTER: Good morning. Tammy 11 Hunter. I represent Family Bingo in Fort Worth. I 12 have just -- basically on all the pull-tab summaries 13 and on the log of all the paperwork for the bingo 14 cards and all this, it's already an existing rule. We 15 already do this. Basically everything is logged on 16 the daily sheet, so I don't feel that we should have 17 to log on separate sheets. We already do this. It's 18 in an existing rule. 19 Like as far as .511, Paragraph (a), 20 it's just a repetition on what we already do. We 21 already write these inventories down for the 22 individual boxes and the disposable bingo cards. 23 Also on (c), as far as logging for the 24 bingo account, it's just extra work. The money is 25 already accounted for. Our rule is that the employees 0025 1 pay the shortage on their card summaries as if -- the 2 employee is hand-counted out 25 cards. They go out on 3 the floor. If they come back with five cards and $19, 4 I know they went out -- you know, the cashier keeps a 5 record. They went out with $25. So it's their -- you 6 know, it's their error, so they need to pay the 7 shortage. Each employee is given a certain amount of 8 money to start out with, as a bank, throughout the 9 day. That bank needs to be returned back in, plus 10 their shortages. And that's how we do things as our 11 rule. 12 As far as No. (1), we already do all 13 this. It's the existing rule. Everything is already 14 logged. And I don't see the purpose of logging 15 everything on a separate sheet of paper. 16 MS. JOSEPH: Let's see. And you're 17 on -- 18 MS. HUNTER: Paragraph (1). 19 MS. JOSEPH: Okay. Rule .511? 20 MS. HUNTER: Yes. I'm sorry. .511. 21 MS. JOSEPH: All right. 22 MS. COLWELL: And it's on (1). 23 MS. JOSEPH: Okay. 24 MS. HUNTER: All of this information 25 that we have, it's already an exiting rule. As far 0026 1 as -- you know, as far as logging the series on one 2 sheet, I don't see why we wouldn't be able to log 3 several series on one sheet. It saves time of filling 4 out all the information that's required on the sheet 5 that we hold back; therefore, it would save time by 6 being able to fill all that out on one sheet and put 7 several series down on that one sheet. I don't see 8 the purpose of doing that. It's just extra paperwork 9 for us to fill out on that. 10 And basically on (2) for the pull-tab 11 summaries, that is also an existing rule, that we 12 already do all this information on a daily basis. 13 It's done per session on a daily basis. And all this 14 is already accounted for, so I don't see any reason to 15 add to the paperwork by doing everything separately 16 when everything is already accounted for, for the day, 17 as separate distribution papers. 18 And also as far as keeping all the 19 bingo paperwork, the bingo papers for four years and 20 the inventory, we have a very small bingo hall and it 21 has a capacity of 200 people. We are limited on our 22 space. And we don't have enough room on our shelves 23 to hold back that many. We play paper only. We have 24 no electronic bingos. So, therefore, we have a lot 25 more paperwork than some of the other halls. That's a 0027 1 lot of paper to hold, you know, for four years. And 2 we really just don't have the space to hold all four 3 years' worth of papers in inventory. 4 And that's all I have. 5 MS. JOSEPH: How big of a stack of 6 paper do you think it would be for one evening? 7 MS. HUNTER: We have several games a 8 session and all the paper cards that go with that. We 9 have two sessions, so it's quite a bit. We have 10 probably -- probably about at least 10 of our 11 worksheets that we fill out our information on our 12 card summaries and our tab summaries. And then we're 13 talking about 15 games per session on paper. We don't 14 have, you know, little things that print out on the 15 computer. We're paper only. We have no computers. 16 So we're going to have to store all of this in a very 17 small area, and it takes up a lot of space. 18 MS. JOSEPH: Okay. I was just trying 19 to get a visual. Okay. All right. Thank you very 20 much. 21 MS. HUNTER: Thank you. 22 MS. JOSEPH: Cathy Anderson. 23 COMMENTS ON BEHALF OF SAGINAW LIONS CLUB 24 MS. ANDERSON: Hello. My name is Cathy 25 Anderson. I'm from Town and Country Bingo in Fort 0028 1 Worth, Texas. I'm here on behalf of Saginaw Lions 2 Club and, of course, all the organizations that play 3 at our bingo hall. 4 I am here to talk about 402.511, 5 because this here is causing a major -- it will cause 6 a major problem with our bingo hall, only because we 7 have already complied with all of your rules, all of 8 the administrative rules from July of '06. I mean, we 9 go by the book on everything that we do there, all the 10 paperwork and everything. We passed all of our 11 audits; no problems. 12 And I don't understand why you are 13 asking us to keep doing more repetitive -- more 14 repetition on all of our procedures and everything. 15 For example, the perpetual inventory in your 16 disposable card sales summaries, those two are the 17 same. And for y'all to keep repeating yourself over 18 for us to do more of this -- a lot of this -- I'm just 19 trying to say, a lot of this is redundant stuff that 20 is just repetitive. 21 I mean, there is no reason for us to 22 keep writing the same colors, the same numbers, 23 whenever it's already been wrote down two or three 24 times already during the course of a night. Most of 25 our paperwork already shows all of this, including the 0029 1 invoices on the papers that come in. 2 Something else I would like to also 3 bring up is No. (d) -- no. I'm sorry -- No. (c), of 4 course. Whenever y'all are discussing unaccountable 5 card sales and pull-tabs and stuff like that where we 6 come up short, like Tammy had mentioned, our bingo 7 hall also, we seat almost 500 people inside our bingo 8 hall, and there are mistakes that are made strictly by 9 human error, of course. And if there is a problem, we 10 do make our workers pay for the shortages; therefore, 11 the money is already going back into the account 12 So there is not a problem -- or there 13 should not be a problem with anything that happens to 14 come through. There has been on occasion -- just very 15 seldom, but it did happen recently where we paid out 16 too much money on one of the organizations, to a 17 customer. We paid out $500 instead of the $237 that 18 should have been paid out. Of course, the worker had 19 to make that up, because they're the ones that paid it 20 out, along with the cashier that made the mistake. No 21 mistakes go -- I mean, if it is caught by y'all or by 22 us or by anybody, it does get taken care of from the 23 worker that does cause the problems. 24 Thank you 25 MS. JOSEPH: Thank you. 0030 1 Ronald Baker. 2 MR. BAKER: Sandy -- 3 MS. JOSEPH: Good morning. 4 MR. BAKER: -- Marshall, how are 5 you-all? 6 MS. JOSEPH: Okay. Thank you. 7 COMMENTS ON BEHALF OF THOMPSON ALLSTATE BINGO SUPPLY 8 MR. BAKER: My name is Ronnie Baker. 9 I'm Regional Sales Manager for Thompson Allstate Bingo 10 Supply. 11 I sit before you as probably one of the 12 distributors who has had the opportunity to work for 13 several as well as a national manufacturer. And when 14 I got into this business, I was a manufacturer at the 15 time. It was legal to hold two licenses in Texas. 16 And I'm looking at your rules. And 17 402.511, Paragraph (c), "The licensed authorized 18 organization is responsible for reimbursing its bingo 19 account with non-bingo fund for gross receipts," I 20 have a real concern with the way that's written, 21 because as a former manufacturer and as a distributor 22 for three different manufacturers of paper products, 23 it is routine that sets of paper come in damaged and 24 missing books. 25 The manufacturer to us is supposed to 0031 1 put some type of marker on the box or in the box 2 telling us that it's missing books. Sometimes that 3 doesn't happen, which means that it goes out to the 4 non-profits, they sell it and they come up short. 5 That is a huge -- or that can be a 6 potentially huge problem for a non-profit, because 7 most of the people that I deal with don't have the 20 8 years of expertise that I have in this industry. And 9 I can tell you, when you call upon the non-profits to 10 account for every single sheet of paper -- and they 11 try very hard -- but when they come up short -- and 12 there's four different manufacturers of paper that 13 come into Texas. They all embody certain qualities. 14 Some of them make them more desirable. But the bottom 15 line is, they come up short, both on sets as well as 16 sales paper. 17 So if a charity comes to me and says, 18 "Hey, you-all shorted me three books," I'm going to 19 reimburse them what my cost on that book is or that 20 piece of paper is, which could be less than one penny 21 or maybe as much as 13 cents. So the end results is 22 that a small hall that charges $10 to $20 a book -- 23 and that's where they make their money. They have no 24 electronics. They don't do event tickets -- all of a 25 sudden, they're called upon to reimburse out of their 0032 1 general fund anywhere from $30, $50 or $60, and that 2 can happen. And the non-profits -- and in the 20 3 years that I've done this, bingo is not growing; it's 4 shrinking. And the more we call upon the non-profits 5 and take the money out of their pocket and make it 6 harder, the less that charitable bingo is going to be 7 vibrant here in Texas. 8 I would strongly urge you-all, because 9 as a distributor and as a representative for 10 manufacturers, to rethink this rule, because it 11 unfairly punishes the non-profits. 12 The general concern that I have, 13 because in working for Douglas Press for two years and 14 traveling 16 states -- East Coast, West Coast -- is, I 15 have been able to look at the rules and regulations. 16 And the more that we stack on accounting rules for 17 non-profits and the harder we make it, the less that 18 they play bingo, the more misunderstandings there are 19 and the more punitive fines come their way. 20 I will tell you that the State of 21 Texas -- and I was proud to say -- has always been a 22 leader in the charitable bingo industry here in the 23 U.S. And my concern is the fact that you're going to 24 penalize the charities for mistakes that a 25 manufacturer may make, and that's not right. 0033 1 Having manufactured books in San 2 Antonio, Texas, for more than seven years, if the glue 3 was mismixed, there was a real possibility that four 4 or five, six sheets of paper would stick together. If 5 we're cutting a 36 sheet, which is the standard for 6 the industry, and making that into books and we get a 7 cross-cut, that memes that we're going to lose six 8 books, because that comes out of the manufacturing 9 process. There is a whole myriad of reasons why this 10 particular rule should not be adopted. 11 And I'm open for questions on 12 manufacturing or distribution. 13 MS. JOSEPH: All right. When you say 14 this particular rule should not be adopted, are you 15 referring just to Paragraph (c) of rule, Proposed Rule 16 .511, or are you referring to the entire rule? 17 MR. BAKER: I'm referring to the entire 18 rule. We don't -- it's not needed, I mean. And I was 19 kind of running through this. And I will apologize, 20 because I haven't read the whole thing. But some of 21 the verbiage, like if you go down to (F) where it says 22 "number of sheets or packs in a package," I mean, you 23 know, most people in the bingo industry know that is 24 books in a set, you know. So the verbiage is even 25 confusing in some of these rules. 0034 1 But, you know, guys, I've done this 20 2 years, I traveled 16 states. Our rules are fine. I 3 deal with auditors all the time; I deal with 4 non-profits. And every time we add something to the 5 process, it makes it more difficult for the charities 6 to make a buck. And, you know, goodness knows, we're 7 under siege right now. 8 So if you don't have anymore questions, 9 I appreciate your time. Thank you. 10 Marshall. 11 MS. JOSEPH: Thank you very much, 12 Mr. Baker. 13 MR. BAKER: You're welcome. 14 MS. JOSEPH: Ronda White. 15 Good morning. 16 COMMENTS ON BEHALF OF 17 SEVERAL CHARITIES AND A BINGO HALL 18 MS. WHITE: Good morning. I'm Ronda 19 white, and I represent several charities and a charity 20 bingo hall. I work with day-to-day operations and 21 some bookkeeping that's done on the hall level itself. 22 A couple of my concerns to Rule 23 402.500, that (a) again, it's saying all records, and 24 that could include as many as 30 or 40 paper bingo 25 winners a day, 20 or 30 computer winners a day. 0035 1 Depending on how good your pull-tab sales are, you may 2 be looking at several hundred dollars' worth of 3 50-cent or dollar pull-tab winners a day; event 4 tickets, several -- you know, several hundred dollars' 5 worth of small winners there, plus the big winners 6 themselves. It's real unclear what "all" means and 7 how much extra work that's going to put on someone on 8 just trying to run day-to-day operations. 9 We go to -- it's 402.506. I have a 10 note here on starting with No. (4), payroll records, 11 including list of employees showing positions worked, 12 dates, numbers of occasions in a single day. Most of 13 the halls that I have been to myself playing bingo and 14 the one I work at, one particular worker may do three 15 or four jobs in one day, just to be cost effective. 16 They may sell pull-tabs and some type of bingo cards 17 on the floor before the session starts. Then they 18 come turn their stuff in, get on the caller stand, 19 call a session, come down from there, go to the 20 counter, help the cashier through a half-time break, 21 then work the floor the second session, sell pull-tabs 22 after bingo. 23 Usher, I think, includes a lot of that. 24 And when you start having to break down and list every 25 little thing they did, is this requiring you to pay 0036 1 them so much per position they serve that day or -- I 2 don't know how a lot of halls work, but that seems 3 like a lot of extra stuff just to keep up with just to 4 run a bingo session. 5 Let's see if that was all I had on 6 that. 7 402.511, I agree with a lot of these 8 people. I want to know if this is going to be some 9 retroactive stuff. Am I keeping my records the way I 10 was told to a year ago and now these rules are going 11 to change it? Am I going to have to back up and 12 change a lot of that stuff so it fits what these rules 13 say we're required to do now? Am I going to be in 14 violation of some rules? 15 A lot of this stuff -- oh, I'm sorry. 16 I skipped what I really wanted to say on 402.506. We 17 had No. (11) regarding the price structure and game 18 schedule. And depending on how competitive you try to 19 be within your area against other halls in that area, 20 places like Oklahoma where these people leave and go 21 to for the weekend, sometimes our prices, prizes, 22 things like that could change daily and per session. 23 Say you're charging so much for a 24 computer pack for the first session and you have, you 25 know, 30 people less than you expected you would get. 0037 1 Well, when you're in a hall where you're getting 2 120 -- maybe -- people a day and you're 30 people 3 short, you look at what you bring in and what you've 4 got to pay out that day that you have guaranteed, your 5 mind starts thinking, "What can I do to get these 6 people to spend a little more money? What kind of 7 special can I run"? 8 These are things that change just 9 minute-per-minute, trying to get some money behind 10 that counter to make our prizes we have promised we 11 would pay out. So things like that can change daily. 12 And it looks like they're asking for us to keep a 13 record of that and put it in a file somewhere forever. 14 All of that stuff is already listed on the daily 15 paperwork we do every day, every session, so it seems 16 like just some more work. 17 Then back down to 402.511, I said about 18 the retroactive, if these were going to be retroactive 19 or not. A lot of these things they're asking us to 20 keep up with, there's already a paper trail that you 21 can follow, an auditor could follow, from the time 22 that stuff comes in the door of our bingo hall until 23 it's thrown away because it's used and the money is 24 put in the bank by the bookkeeper, then it's listed 25 again on the quarterly report. There's paper trails 0038 1 where you can follow almost every sheet of paper that 2 comes in that hall already, just by obeying the rules 3 we already have. And it seems like some of this stuff 4 is asking you to keep up with it in two or three 5 different places, when all the information is already 6 there. 7 When we go down to (b), I'm really 8 confused on what a perpetual inventory, what the 9 Lottery Commission considers a perpetual inventory and 10 what they consider a card sale summary. I thought 11 those were the same thing, because the sheets I use in 12 my inventory book are sheets I got probably when this 13 was under TABC at some point, that say the word 14 "disposable card sale summary." That is a perpetual 15 inventory in my mind. I may be incorrect about that. 16 But it seems like some of these rules 17 are calling the same thing two different things. And 18 in some places, it seems like the disposable card sale 19 summary is being referred to as actually the worksheet 20 we do at bingo every day, so it's a paper trail thing 21 again. You can look at a bingo worksheet from that 22 particular occasion that day, find that serial number 23 for that color of card, go to that perpetual inventory 24 book, see what you started with, what you finished 25 with, how much money you have to have for those cards. 0039 1 And it seems like it's asking us to put 2 that same information at least one more place, when we 3 already deal with, as some of these people have said, 4 stacks and stacks of cards and paperwork and things 5 you have to keep up with already that are already 6 included in that paper trail that I mentioned earlier. 7 Down here on (c), several people have 8 spoken to this already, talking about missing or 9 unaccounted for, disposable cards, pull-tabs. The 10 gentleman that just spoke before me is right. We get 11 these things where it says -- you open a box of cards 12 and it says "One book missing." Am I going to be 13 required to go through a set of 1,000 books and find 14 that one card missing so I can list that for somebody 15 so that I'm not required to turn in $5.00 at the end 16 of the session for that book that's missing? 17 If I have to go through those packages 18 and find where it is, then I have to know what day we 19 put it out. Were we $5.00 short that day? Did I put 20 that $5.00 in, because when I counted down I was 21 short? There are a lot of -- there is a lot of 22 slippage, as someone said earlier, in things that are 23 missing. 24 And sometimes we get this stuff and 25 there's not a little thing that says, "Five books 0040 1 missing." But you open a package and you count it, 2 and there are five books missing. And if you don't 3 catch that before you start that bingo occasion -- and 4 those cost $5.00 each -- I'm putting it $25 at the end 5 of the night. 6 So we already do an exorbitant amount 7 of inventory to try to prevent that from happening 8 already. I spend -- if I'm at the bingo hall for six 9 hours, say two sessions of bingo, two hours of that is 10 probably paperwork. The other three is actually 11 conducting the bingo session and making sure 12 everything flows like it should and my customers want 13 to come back there again, you know, making it a 14 successful day. 15 The same thing goes for the instant 16 winners, pull-tabs, the event tickets. I've opened 17 those boxes and counted them, and there are 30 18 missing, and I opened the seal myself. Now, we count 19 those, band them to issue them to the workers. But 20 there are times when we're really busy and we're 21 handing them a handful of stuff, just to try to make 22 payout that day. You know, sometimes this is go, go, 23 go for the three hours you're three non-stop, trying 24 to make enough to pay the bills, pay the employees, 25 the charity to get money. 0041 1 And I've opened boxes of these 2 pull-tabs where there's two serial numbers mixed 3 together. I've sold them where I didn't even realize 4 it was short, no winners ever turned in. There's a 5 lot of room in this for error on several different 6 levels and slippage. And we're already trying to keep 7 up with all of that now. 8 They mentioned earlier about cards 9 getting stuck together. At my hall, we also make up 10 our shortages. But there are times where I've took -- 11 the way these are packaged, some things come in a 12 hundred, some things come in 250, some things are 13 padded at 25 books. And when you get down to (E) and 14 (F) under that same rule, 402.511, different 15 manufacturers and different kinds of paper are 16 packaged different ways in different amounts. You can 17 buy them loose, you can buy them padded. 18 I've sat and just picked up a pad to 19 issue to a worker. And because I've done it, I know 20 it should be like an 01 on top or whatever. I just 21 took it out of the package, there's two missing off 22 the top. If I wouldn't have caught that, I'm making 23 an employee pay two dollars. If I don't catch it at 24 that particular period, at the end of the night, it's 25 short. If I'm short two dollars, I don't know for 0042 1 sure who sold that package, then the charity is going 2 to be required to make that up. 3 So the slippage thing is -- you know, a 4 nominal amount of slippage, I should say, is something 5 we really need to look at and not expect the charities 6 to make up a lot of this, because we do a lot of 7 extensive paperwork to make sure they're getting the 8 money they're supposed to get each night already. And 9 to ask them to cover for little stuff like this is 10 really a big burden on them. You know, if they don't 11 have any money, I don't have a job. So it's my job to 12 make sure they get what they're supposed to get each 13 day. 14 Once again, just a clarification on 15 perpetual inventory, disposable card sales, daily 16 worksheets. It sounds like a lot of this stuff, 17 they're calling the same thing two or three different 18 names in these rules, and we already have rules to 19 cover them. 20 And let's see. I had down on Part (2) 21 of that -- yes, Part (2) -- it sounds like in some of 22 this, they're asking us to write, say, the pull-tab, 23 the tickets for -- say the event tickets, whatever, it 24 sounds like they may be asking us to write when these 25 were purchased and an invoice number and how much they 0043 1 cost. Are they asking us to write this on the daily 2 worksheet that I fill out every day? Or is this 3 asking for it to be in an inventory kept somewhere 4 else? 5 Some of our manufacturers actually 6 bring us an invoice when they deliver our stuff. So I 7 have that invoice number to put in those inventory 8 books. But some of them, we get the stuff, the 9 invoice is actually mailed to the office. All I have 10 is a purchase order number. And, you know, is that 11 going to be okay to write that purchase order number 12 on my perpetual inventory that I keep for pull-tabs? 13 And we have like a pull-tab log which 14 shows when something was sold. The office may have 15 when something was purchased. Then they also have to 16 show when it was sold. We're showing how much we have 17 sold them for. This acts like -- this sounds like 18 they're also asking us to put how much we bought them 19 for, how many were in a deal. 20 A lot of that stuff is already kept in 21 the pull-tab log itself and on the paperwork that we 22 do daily to show how much money we should have at the 23 end of the session. It's also on the invoice. It 24 sounds like they're asking us to write the same 25 information three, four, five places, and that's a lot 0044 1 of work. 2 I think that's it, just a lot of 3 redundancy in this. And it seems like they're asking 4 us to do things that we already do once or twice, 5 again. I think that covers it 6 MS. JOSEPH: Thank you very much. 7 Ms. White. 8 Steve Bresnen. 9 COMMENTS ON BEHALF OF THE BINGO INTEREST GROUP 10 MR. BRESNEN: Thank you. My name is 11 Steve Bresnen. I'm here on behalf of the Bingo 12 Interest Group. I would like to say generally that 13 we're opposed to the adoption of all three rules, and 14 make some general comments as to why. 15 I think you can tell from the 16 testimony, we asked people to come today who work 17 day-to-day in the bingo hall, and they reviewed these 18 rules themselves. And what they see in the rules 19 presented to them is a lot of repetition and 20 redundancy. And let me explain why I think that is. 21 In the preamble to the rule, the agency 22 says that these requirements are found in existing 23 rules and we don't see any conflict, the agency 24 doesn't see any conflict, and you're doing the review 25 that's required by the Government Code of all your 0045 1 rules, and then you'll assess whether the reasons for 2 adopting the rules in this chapter continue to exist 3 and take appropriate action. 4 I think after talking with staff, it's 5 clear to me that your initial idea was to try to 6 reconcile the various rules through that review 7 process. I think the way the agency is going about 8 this is causing people to see a repetition. And at 9 the same time they're saying, "We already do this." 10 So we're concerned about conflicting rules and about 11 the regulated community being able to follow the rules 12 easily without doing unnecessary work. 13 And just, for example, the requirement 14 for a perpetual inventory -- and that's presented in 15 proposed 402.511 -- already exists in two existing 16 rules. 402.301(e)(3)(C) is for cards and paper, and 17 402.300(g)(3) is for pull-tabs. I believe those are 18 the existing rules that the existing perpetual 19 inventory is being carried out under. 20 I think another reason that people are 21 confused in seeing repetition is the terminology is 22 getting scattered. And I think it will be in the 23 agency's interest and certainly in the regulated 24 community's interest, to the extent that we can very 25 carefully delineate what we're talking about in these 0046 1 rules. And as it's been stated in previous testimony, 2 where in .511, you refer to a disposable card sale 3 summary, and then it says, "a record that contains the 4 perpetual inventory." 5 I think people are thinking of sales as 6 being accounted for in one way, which they're doing on 7 a daily basis, including a lot of the information 8 that's going to be required in this other rule that's 9 coming up later that's not the subject of this 10 hearing, and a perpetual inventory. I think our 11 terminology is getting crossed here. 12 And what you're describing in .511 13 seems to be a perpetual inventory; and, yet, you're 14 getting this confusion by this insertion of what 15 appears to be additional terminology. And so I think 16 one of the reasons we're opposed to adopting these 17 rules as they are, or without so much change that 18 you're going to need to republish anyway, is that 19 you're creating apparent redundancy and your 20 scrambling terminology is going to be extremely 21 difficult for people in the regulated community to 22 follow. 23 Now, if I could, I would like to go 24 rule-by-rule -- oh, but I also want to preserve this 25 issue of retroactivity. If these rules do, in fact, 0047 1 require something new to be done or to be done in a 2 different form, then the rule should be amended to say 3 that this will only apply to an occasion that occurs 4 after a date certain, which I would recommend be three 5 or four months in the future so everybody can get 6 caught up -- or maybe six months in the future -- so 7 everybody can figure out exactly what the rules are, 8 what's being done that's new and what new forms there 9 are and know that their previous conduct is going to 10 be gauged by the rules in effect. 11 And one final general comment. We know 12 that you have some rules that are proposed now, the 13 fair housekeeping and -- fair conduct and housekeeping 14 house rules rules, and then we also know that there 15 are some 16 additional rules that are coming along. 16 And I don't see how you can possibly maybe all these 17 things fit together without having a dramatic increase 18 in the number of violations out there, which is going 19 to drive up your costs, it's going to drive up the 20 charities' costs, it's going to send a lot of things 21 over to SOAH that don't need to go over there, because 22 I think it's not See-Spot-run enough for people to 23 actually follow and understand. Once this happens, 24 they're going to get the same information required in 25 a different form, in a different place in the rule. 0048 1 Now, I won't go through every one of them, because if 2 the transcript is done in time, I will just ask that 3 all the commentary about these rules that happened at 4 the BAC the other day, I'll just submit it as comments 5 for this time. That might be helpful to y'all. I 6 don't know -- what's the cut-off on comments, Sandy? 7 MS. JOSEPH: For this rule, 8 December 9th. 9 MR. BRESNEN: Okay. Well, maybe we'll 10 get the transcript in time and we can do that. And 11 I'll try to cut and paste and not be too redundant of 12 what we have here today. But I pointed out the other 13 day that some of information that's in these other 14 rules out here is also referenced in these rules. So 15 I think y'all have got a lot of coherence to achieve 16 that I can't see how you're going to do it as we sit 17 here today. 18 Now to talk about specific rules. In 19 402.500, you have heard repeatedly comments about Item 20 (a), Subsection (a) where there's a focus in on the 21 word "all." And I just want to be clear, this is not 22 a bunch of Democrats trying to avoid being impeached 23 back here. Okay? This is a serious comment. And 24 that is, it says, "Licensees must maintain all 25 information and records relating to bingo for four 0049 1 years." Well, literally it's all information and 2 records relating to bingo for four years. 3 I think what you mean is, the records 4 you're required to keep, keep them for four years; the 5 information you're required to keep, keep it for four 6 years. But right now it's all information and records 7 relating to bingo for four years. So I think some 8 wordsmithing can be achieved there, to just say, "If 9 you're required to keep it, keep it for four years," 10 so people can look either to the statute -- and you 11 might want to say, "If you're required to keep it 12 under the Bingo Enabling Act," or under these rules, 13 "keep it for four years." That way at least we're got 14 a fighting chance, when something is not there, to 15 say, "It's not in a rule and it's not in the statute." 16 And I'll come back to that in a minute, and I think 17 you'll see why. 18 I have a similar comment about the 19 language in (c), that information and records that are 20 required to be kept should be provided to the 21 Commission. I understand on the request to the 22 Commission -- and I think sometimes y'all have to 23 swoop in and get stuff, because things are happening 24 when they're happening -- but I do think you need to 25 make an arrangement for notification. It may be over 0050 1 in the audit rule. It seems like to me somewhere we 2 talked about this in the audit rule. But I would ask 3 that this Subsection (c) be linked up with the audit 4 rule and the compliance process rule that's out there, 5 to make it clear that y'all are going to ask, to give 6 somebody a reasonable time to assemble it if it's at 7 the CPA or it's in multiple places, that they get a 8 change to put it together. 9 It's been mentioned several times about 10 check images. I won't go over that again, except to 11 ask you to do it, because I understand those are not 12 always available. 13 Also, just back on -- sticking with 14 .500 here for just a minute, there are -- I think 15 you're going to have to decide, to the extent the 16 statute will allow you, which records have to be 17 maintained for four years and which ones can be 18 maintained for some shorter period of time. We know 19 that you have a rule out there under consideration, 20 for example, where all the winning bingo cards would 21 have to be maintained. 22 My calculation the other day was that 23 there would be 100,000 -- 25,000 a year for each of 24 four years that those winning bingo cards in a given 25 location would have to be maintained. This notebook 0051 1 is about a quarter inch thick and it has 50 sheets. 2 Assuming that that's all comparable, that's 41 feet 3 of -- linear feet of bingo cards, winning bingo cards 4 that would have to be maintained in one location. And 5 that's just for the winning bingo cards. That's not 6 for all the other stuff that people have to maintain. 7 It's just -- it's unreasonable. 8 So either the four years has got to be 9 whacked down to include only those things that are 10 necessary for y'all to get back to trace the money and 11 the inventory and things that are unnecessary either 12 in upcoming rules or existing rules, then we would 13 like to have those rules amended before this rule is 14 adopted so people know exactly what they need to keep 15 and it all works in the real world out there in the 16 bingo hall. 17 I'm going to try to suggest specific 18 amendments, including deletions, when I can. 19 Okay. I'm going to move to .506 now, 20 in the interest of time, 402.506. I referenced the 21 imaged checks. Okay. I would like to quibble a 22 little bit with the language in (b). (b) says, "The 23 records listed below are acceptable records that must 24 be maintained..." It's almost like when y'all started 25 writing that you meant, "These would be acceptable for 0052 1 documenting expenses," but then you said, "They must 2 be maintained." Well, if they must be maintained, it 3 doesn't really make any difference whether they're 4 acceptable or not, so I would suggest the deletion of 5 the word "acceptable," you know. 6 If what you mean is, "If you keep this, 7 this list, you're not required to keep anything else," 8 then I would suggest that you state it. But in just 9 the follow-up on that concept, in looking at (b)(1) -- 10 I'm sorry -- (b)(6), the introductory paragraph says 11 "Invoices or other appropriate supporting documents 12 must contain at least the following:" One of the 13 things that they must contain at least the following 14 of is "Other federal, state, and local documentation," 15 which may include some tax returns. 16 Well, "other" is an all-inclusive term. 17 You seem to be defining what's the minimum that you 18 have to have, but then using an all-inclusive term. 19 So I don't know how you say you have to have at least 20 everything else. To me, it doesn't make sense. 21 If No. (6) -- I'm not sure which words 22 modify what, if other federal, state and local 23 documentation -- I'm assuming there should be a comma 24 after "documentation." So if I put the comma in, I'm 25 not what "local documentation" means. And I'm not 0053 1 sure what "federal" -- actually, I'm not sure what 2 "federal, state, or local documentation" means. But 3 if you mean that you want the 1099s kept and tax 4 returns kept and a statement that shows you paid your 5 property taxes, then I think there's a better way to 6 say it. If those are to be maintained at the minimum, 7 then let's say what they are and not use "other." 8 Back up to No. (5), (b)(5) where it 9 says payroll tax returns, deposits and receipts, I'm 10 assuming that since you don't get federal or state 11 payroll tax receipts, that you mean a receipt for a 12 deposit of those things, and that may be redundant of 13 the word "deposit" where it is before. So anyway, you 14 can see there's confusion from folks that do this 15 every day, as to what that exactly means. That needs 16 to be fixed, to state exactly what you mean. 17 Back up to (b) -- well, (b) in general, 18 I've already suggested that the word "acceptable" 19 needs to be stricken. In the (b)(1), the word 20 "detailed" before "information" needs to be stricken. 21 If you want information, if you'll tell us what the 22 information is, we'll give it to you. But when you 23 say "detailed," I don't want to be down here arguing 24 later on about whether something was detailed enough. 25 Tell us the detail, and that's the detail that people 0054 1 will provide. 2 Similarly, the word "complete" in 3 (b)(1)(B) needs to be eliminated so we're not 4 quibbling over whether a description is complete or 5 incomplete. Also the word "sold" in (b)(1)(C) should 6 be "purchased." I think this is the same concept as 7 in (b)(1)(B), "complete description of goods or 8 services purchased" by the charity -- I guess is 9 implied there -- "the amount of each product 10 'purchased' or service provided" to the charity. I 11 think "sold" needs to be "purchased." I think that's 12 what you mean. 13 Now, just to clarify -- I won't spend 14 any time on this point -- but in (b)(2) and (3), there 15 was a practice a good while ago -- maybe before 16 y'all's time -- where the agency in charge of bingo at 17 the time -- it could have been the Controller; it may 18 have been TABC -- required the leases to be filed with 19 the agency, and it turned out that the agency had no 20 room to store all those leases out there. So I think 21 what Trace was referring to is, the state has 22 recognized that it can't retain all that stuff and is 23 asking y'all to recognize that to pare it down to just 24 what you need, because there are storage concerns out 25 there, and storage costs money. The more storage 0055 1 somebody has to have, the more rent they're going to 2 pay somebody, whether it's in a storage shed or to the 3 bingo hall owner. 4 Moving down now into the payroll 5 records, I agree with everybody who said that you 6 don't need the position worked. It's irrelevant. 7 Obviously, an expense has to be reasonable or 8 necessary, an expenditure. I think you can gauge that 9 from the general types of work that are to be 10 performed. People are performing multiple positions 11 without an econometric study of the labor force in a 12 given area. And considering it's only in a bingo 13 hall, I think you would be hard-pressed to delineate 14 positions worked and how much was accorded to each one 15 anyway. It's just another thing for somebody to 16 maintain and write down. My guess is, you're going to 17 get a lot of boilerplate: The usher, cashier, 18 assistant usher, et cetera. So boilerplate is not any 19 good to you anyway, so we would suggest you strike (A) 20 altogether. 21 Let me just go back over here and make 22 sure. 23 I agree with the Item (b)(1)(A) that -- 24 I'm sorry. I'm working off of two documents here, so 25 I realize I'm skipping around a little bit here. On 0056 1 (b)(1)(A), you may what to use the concept of include 2 contact information. Some of these, you know, they 3 can't -- the charities are going to have a hard time 4 regulating what's on the invoice at all times. So we 5 understand you've got to know who sold it and you've 6 got to have some way potentially of contacting them. 7 So if you would just include that concept, we would 8 appreciate it. 9 I might say that you need to include 10 the concept of a service agreement. Some of the 11 services that are provided, like the price -- we've 12 got price of each unit, total dollar amount billed, 13 amount of a product. Well, what's happening here, 14 particularly in the bookkeeping area is, somebody may 15 be charging per session. So I guess you could put the 16 price of each. We'll submit some language to you that 17 would put that service agreement item in there. 18 Also in item (b)(2) -- in fact, I think 19 you need to review all of the rules. Every time it 20 refers to an organization, you probably need to refer 21 to units as well. We seem to be focused on individual 22 entities out here and not including units in it. 23 Looking at (b)(8), there's got to be a 24 better way to say that, because we all read this, and 25 we can't figure out what in the world it means. It 0057 1 appears that some expenses are being paid that relate 2 to more than one category of expense. I can read the 3 language, but it might be that you could use an 4 example or you could state that better where people 5 know exactly what you're talking about. 6 I'm particularly concerned about Item 7 (b)(11). We're already in a discussion over in either 8 the house rules or the fair conduct rule about game 9 schedules, and so it's not needed in this particular 10 rule if it's going to be covered in the other rule. 11 This rule is about disbursements records. A game 12 schedule doesn't tell you about disbursements. The 13 pricing structure document doesn't tell you about 14 disbursements, prices or amount of money coming in. 15 Game schedule are, you know, what game 16 we're going to play. So it seems all of that is 17 inappropriate in the context of this rule. If it 18 needs to be addressed, it needs to be addressed 19 somewhere else. I'm opposed to addressing it anywhere 20 else for the reasons that we gave when we discussed 21 the other rules; and that is, those things change 22 frequently. There's not a reason in the world why 23 they shouldn't be able to be changed. 24 In particular, you've heard ample 25 testimony about night owls or specials at the end of a 0058 1 session. There are ways people hustle out there to 2 make their money and get enough money coming in to pay 3 their prizes. There's not a thing in the world wrong 4 with doing any of that. It needs to be done in order 5 to maximize the charities' receipts. And when things 6 are happening at a fast clip like that, having 7 somebody over there writing it down about the date it 8 changed and making a change to a pricing structure 9 document and a game schedule, if the sales information 10 is properly captured, you'll know how much money and 11 you'll know what was sold, and that should be 12 sufficient. 13 Also, nobody I've talked to knows what 14 a pricing structure document is. I don't know where 15 that language came from. I've not seen it in any 16 other rule. You know, in 12 years, I've never heard 17 anybody use the terminology in bingo or, frankly, any 18 other industry that I represent 19 Now, moving on to .511, I think this is 20 the area where we need to separate out and call a 21 perpetual inventory just that and include only those 22 items under the perpetual inventory item that are to 23 be in the inventory. Also this is an area where we 24 need to amend the existing rules that I have cited 25 earlier and take those references out so people are 0059 1 not confused as to whether that's something different. 2 It appears, when you say down in (d)(1) 3 that a disposable card sales summary is a record that 4 contains the perpetual inventory, that there must be 5 something in addition to the perpetual inventory, that 6 when you combine them is the disposable card sale 7 summary. But nobody I've talked to can tell what that 8 additional something is, because it seems like all the 9 items that are listed under that category are the 10 perpetual inventory. 11 So I think that's where some of your 12 confusion is coming from. I think we have got to 13 change the structure of this rule, both in that 14 section and in the pull-tab sales summary that 15 contains the same problem. Both rules contain 16 information that doesn't seem to belong in an 17 inventory but that is reflected on other documents 18 that are maintained in the hall and seem to be 19 anticipated by this future rulemaking which doesn't 20 have a proposed section number on it. So those things 21 that are not inventory matters need to come out of 22 here altogether, and the terminology needs to describe 23 what needs to go in the inventory. 24 I want to strongly emphasize that 25 requiring each serial number to be recorded on a 0060 1 separate sheet of paper as part of this inventory is 2 not a good idea. There's way, way, way too many of 3 them. We'll roll up the number and bring a truck and 4 bring the stuff in. But, you know, I would analogize 5 to what I did before with this tablet, that might make 6 82 feet of linear storage space. 7 My final comment about the rules is, 8 anything that's on the -- well, actually, it's my 9 next-to-final comment -- anything that's on the 10 invoice from the distributor ought to suffice. And to 11 have it in a separate record is going to lead to 12 transposition errors. I understand a lot of this is 13 already being done. And my guess is, there's probably 14 already a lot of transposition errors out there. But 15 any time you have to move bunches of numbers from one 16 place to another, you're going to have a problem. So 17 I would ask that if it's not absolutely necessary to 18 be on the inventory and it's available to you in a 19 distributor's invoice, then to use the invoice. 20 Now finally I want to pick up on what 21 Ronnie said about this Item No. (c). And it could be 22 that this Item No. (c) is, if not the most important, 23 certainly one of the most important. And I'm talking 24 about 402.511(c). I talked to the BAC at length the 25 other day about this. And he's made it clear that 0061 1 there are significant errors in the manufacturing of 2 these products out there and that they may not be 3 caught by the distributor or the charity. Sometimes 4 they are caught, but sometimes they're not. And this 5 puts everything on the charity. 6 And I would like to request that either 7 this rule be amended or I will petition for a 8 rulemaking to drag the manufacturers and the 9 distributors into the ditch and make sure that 10 everything they're providing and invoicing for is 11 actually in the box or in the package. The charities 12 are going to pay full net -- full retail on this, plus 13 prizes and plus prize fees; whereas, the dink to the 14 manufacturer and the distributor for shorting somebody 15 is one to 13 cents. 16 That seems unfair. Those are the 17 profit-making guys upstream. If anybody is going to 18 get dinked, they ought to get dinked. So it seems to 19 me that that whole concept needs a whole lot of work. 20 Also, it's in the required inventory 21 records rule, but none of that is a required inventory 22 record. (c) is about what happens if you have missing 23 or unaccounted for disposable bingo cards. So it's in 24 the wrong place. It needs to be in another rule if 25 the concept is going to be there at all. 0062 1 And then finally on that, I understand 2 the concept that if you're missing a pull-tab or bingo 3 cards, that the charity is out gross receipts. 4 Presumably that should have been sold if it's 5 unaccounted for, and they should have some money for 6 that. But assuming that it was a card that was sold, 7 or a pull-tab, it may have been a winning card or a 8 winning pull-tab. So they paid money out to their 9 customer, rightly so. If they didn't pay the money 10 out to the customer, they would be in trouble for 11 that. 12 So now we're going to make them pay the 13 money back for a prize that was rightly paid from 14 non-bingo funds. That don't seem right to me. I 15 understand from prize fees that the state needs to get 16 its money, and so I understand why that's in there. 17 Gross receipts are money coming into the charity. 18 Prize fees are money the charity is collecting for 19 remission to the state. But prizes are going the 20 opposite direction, and it makes no sense to me at all 21 to charge them with paying the prizes back. 22 And the use of non-bingo funds, the 23 rule does not address what if the charity has no 24 non-bingo funds? We know that there are organizations 25 that thrive substantially, if not completely, on 0063 1 proceeds from bingo. There's no prohibition's against 2 it. It's a good thing. It's helping people get along 3 in life. And, you know, I know of no reason to hold 4 people accountable from non-bingo funds that may have 5 already been distributed to their general fund. If 6 general fund money becomes non-bingo money, even 7 though it's net proceeds from bingo, once it crosses 8 that line from one account to the other, I've got no 9 problem. But if an organization has net proceed of 10 bingo in its general fund and is required by this rule 11 or something like it to reimburse, then it should be 12 able to do so with money from its general fund. 13 I think that's everything I have to 14 say, unless I can provide clarification. 15 MS. JOSEPH: I don't believe we have 16 any questions for you. Thank you very much. 17 MR. BRESNEN: Thank you. And I 18 appreciate everybody coming today. You've seen a lot 19 of faces that you sometimes don't see. Thank you so 20 much. 21 MS. JOSEPH: And, Ms. Taylor, do you 22 wish to add anything? 23 MS. TAYLOR: Yes -- not long though. 24 MS. JOSEPH: All right. Suzanne 25 Taylor. 0064 1 COMMENTS ON BEHALF OF ALL SAINTS BINGO UNIT TRUST 2 MS. TAYLOR: My name is Suzanne Taylor. 3 I'm here representing the charities at All Saints 4 Bingo Unit Trust. 5 And I want to note on the preamble to 6 Rule 402.500, one of the things that it says in there 7 that I thought was so funny, it's "including proposing 8 amendments to eliminate any redundancy in 9 requirements." And as you can tell by everybody 10 talking here -- I mean, the problem is, this stuff is 11 redundant. We're being required to write the same 12 numbers over and over on several different pieces of 13 paperwork. So it's a pretty awkward thing to say that 14 this is supposed to get rid of any redundancy when 15 that's all it's doing, is causing redundancy. 16 Under that same rule, I agree with what 17 everybody said about (a) and (c). But I've got to 18 tell you that (b) is the only good part of that rule, 19 and that's allowing organizations to use their own 20 paperwork as long as it contains the same information 21 required on the Lottery's paperwork. I think a lot of 22 the forms that we use in the day-to-day process of the 23 bingo hall are actually better than the forms the 24 Lottery is providing to us, because we've been in the 25 arena, and we know what's required to these forms to 0065 1 make the sessions work and to make the numbers come 2 out right and work, so that we can keep good records. 3 Under 402.506, if this is just -- in 4 the preamble it mentions that this is for the 5 maintenance of records relating to disbursements. And 6 at the very bottom it says that the Commission 7 believes the requirements in the proposed new rule are 8 consistent with existing IRS requirements, and goes on 9 with that 10 And I do believe that the IRS does take 11 cancelled checks as invoices, if there's not an 12 invoice, that a cancelled check substantiates the 13 purchase. So I don't know why cancelled checks 14 wouldn't be able to substantiate a bingo expense. I 15 agree with all the different items that Steve Bresnen 16 just finished talking to you about there, because it 17 was a lot of things that I already had highlighted 18 myself. 19 Going down to the payroll records in 20 (4), we also have a lot of workers that work several 21 different things. They might be working as a floor 22 worker for a while, and then they come back and work 23 as a cashier, and then they go up and do the calling, 24 and then they come back and they have to work the 25 tabs. So I think that trying to say this person is 0066 1 only being paid by the occasion or this person is 2 being paid by the hour, as long as we have down by 3 session how much they received for that session and 4 the jobs they did, I don't -- it worries me, trying to 5 substantiate all the additional information on here. 6 And down to item No. (11), the last 7 thing on that page, I see the same thing. Having to 8 try and keep game pricing and structures every time 9 you make a little change is going to create a huge 10 amount of paperwork. 11 Going on to 402.511, in the preamble it 12 says the purpose of the new rule is to clearly set 13 forth certain requirements. And when you read that 14 and then you hear how clearly everybody understands 15 this rule, it's pretty amazing that, unfortunately, it 16 hasn't cleared up anything but it's caused a lot of 17 confusion. 18 I thought I knew what a perpetual 19 inventory was until I read this rule, and I wasn't 20 quite sure, since perpetual inventory shows up under a 21 disposable card sale summary. I'm not sure if my 22 disposable card sale and my perpetual inventory is the 23 same thing or if these are two completely separate 24 items I'm supposed to be keeping. 25 We just finished having an audit of 0067 1 Camp Fire's books, and a lot of (inaudible) have them 2 a long time. We didn't get a single violation in 3 there. But now I'm not even sure if I'm keeping the 4 right records. I mean, at this point they're right, 5 but I'm not quite sure anymore what this is saying 6 either. 7 And putting each serial number under -- 8 (d)(1), putting each serial number on a separate 9 sheet, I mean, there's a lot of times when we bring in 10 a set of books and we use it two session. So you're 11 talking two sessions, two sessions, you can imagine. 12 Our inventory books now are pretty extensive. If 13 we're only allowed to put one item on each page, 14 you're going to have stacks of paperwork. Save the 15 trees. 16 Somebody told me, "Well, just put them 17 like you do now on the page. And when the Lottery 18 wants to come and inventory, you just cut those into 19 separate little pieces of paper and stack them all 20 together, and then they would be on a separate sheet." 21 So, I mean, I actually thought that was the best idea 22 I've heard yet 23 Under (d)(1)(H), it requires the number 24 of sheets or packs remaining after each occasion, 25 which is the normal way anybody does an inventory. 0068 1 You started with 1,000, you sold 200, you would have 2 800 left. 3 But then you get down to (P), "Now I 4 want the cumulative number of sheets sold." So why do 5 I have to add it both ways? Why do I have to add the 6 cumulative number sold and the number remaining? I 7 mean, one should be as good as the other. And I don't 8 know anybody that adds cumulative amounts sold. Any 9 inventory that you ever see has how many sheets are 10 remaining in it. 11 So (P) should just be gone totally. I 12 believe that an inventory should be just that, an 13 inventory showing what product you brought in, what 14 product you sold, how much is remaining. I don't 15 think the cost of the selling price per occasion or 16 the gross sales per occasion, that any of that has 17 anything to do with an inventory. That's contained in 18 your daily paperwork. And to have that in your 19 inventory book is making this not an inventory book 20 anymore 21 And the same goes under No. (2), 22 pull-tabs, when you have (H), the total prize payout 23 per deal, (L), the total gross sales per occasion, and 24 (M), the total prizes paid per occasion. This is all 25 stuff that should be kept in your daily paperwork, but 0069 1 it doesn't really have anything to do with inventory. 2 And inventory should be a thorough and accurate number 3 showing what was used and what's left after each and 4 every occasion. 5 So each and every one of these rules I 6 dislike, and I would propose not adopting any of them. 7 Thank you. 8 MS. JOSEPH: Thank you. 9 And Mr. Hutchings, do you wish to offer 10 any comments? 11 MR. HUTCHINGS: Please. 12 MS. JOSEPH: Charles Hutchings. 13 MR. HUTCHINGS: Yes. Good morning. 14 MS. JOSEPH: Good morning. 15 COMMENTS ON BEHALF OF AMERICAN VETERANS POST 52 16 MR. HUTCHINGS: My name is Charles 17 Hutchings. I'm with Amvets, Post 52, among other 18 things. 19 I believe that you guys have had quite 20 an earful with what seems or we perceive to be wrong 21 with the rules that you're trying to adopt here, so 22 I'll not go back over it. I echo what's been said. 23 I would like to point out one thing. 24 Up here it says, "There will be no adverse effect on 25 small businesses, micro businesses, or local or state 0070 1 employment. There will be no additional economic cost 2 to persons required to comply with the new rule as 3 proposed." 4 Well, that's hogwash. Pardon me. 5 That's just hogwash. There's going to be -- if you 6 take -- I took $40 a session, I believe it was for 250 7 commercial halls, 14 sessions a week for each hall, 8 and it came out to about $8 million, 7 -- upper 9 $7 million. If you look -- I think it was $32 million 10 the charity from bingo this last year, take $8 million 11 away, you have just dunced 25 percent of charities' 12 money. 13 I don't believe that you intend that. 14 I know the Legislature doesn't intend that. 15 25 percent gone, just to fill out paperwork. And the 16 paperwork is important, believe me. You know, we keep 17 lots of paper now. I think we keep adequate paper. 18 But I just -- it's just -- you know, it's just over my 19 head why, you know, anyone would want to put anything 20 in that would cause the charities to lose $8 million a 21 year. 22 Thank you. 23 MS. JOSEPH: Thank you, Mr. Hutchings. 24 Is there anyone else that would like to 25 offer comments at this time? 0071 1 If not, I will note for the record that 2 we had several people turn in witness forms and 3 indicate that they did not wish to testify but are 4 against adoption of the rules. That's Lou Kosanovich, 5 Don Webb, John Bradley and Martin McCafferty. 6 We do appreciate y'all taking time to 7 be here. We know that some of y'all traveled and, you 8 know, took a lot of time to do this. We are trying to 9 have rules that are clear, consistent, fair, make 10 sense. And we'll carefully consider all of your 11 comments, I assure you. 12 If there's nothing further, this 13 hearing is adjourned at 11:40. Thank you. 14 FROM THE AUDIENCE: Thank you. 15 (Hearing adjourned: 11:40 a.m.) 16 17 18 19 20 21 22 23 24 25 0072 1 C E R T I F I C A T E 2 STATE OF TEXAS ) 3 COUNTY OF TRAVIS ) 4 I, Aloma J. Kennedy, a Certified 5 Shorthand Reporter in and for the State of Texas, do 6 hereby certify that the above-mentioned matter 7 occurred as hereinbefore set out. 8 I FURTHER CERTIFY THAT the proceedings 9 of such were reported by me or under my supervision, 10 later reduced to typewritten form under my supervision 11 and control and that the foregoing pages are a full, 12 true and correct transcription of the original notes. 13 IN WITNESS WHEREOF, I have hereunto set 14 my hand and seal this 21st day of November 2007. 15 16 ________________________________ 17 Aloma J. Kennedy Certified Shorthand Reporter 18 CSR No. 494 - Expires 12/31/08 19 Firm Certification No. 276 Kennedy Reporting Service, Inc. 20 Cambridge Tower 1801 Lavaca Street, Suite 115 21 Austin, Texas 78701 512.474.2233 22 23 24 25