The 2nd meeting of the Interim Joint Committee on Licensing and Occupations was held on Friday, September 19, 2003, at 10:00 AM, in the Iroquois High School Auditorium. Senator Gary Tapp, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Gary Tapp, Co-Chair; Representative Denver Butler, Co-Chair; Senators Tom Buford, Brett Guthrie, Daniel Mongiardo, Larry Saunders, Tim Shaughnessy, and Jack Westwood; Representatives Tom Burch, Larry Clark, Dennis Horlander, Joni Jenkins, Paul Marcotte, Reginald Meeks, Charles Miller, Ruth Ann Palumbo, and Jon David Reinhardt.
Guests: Dennis Langford, Commissioner, Billy Perkins, Electrical Inspector, and Frank Dempsey, General Counsel from the Department of Housing, Buildings, and Construction; Frank Shoop, Chairman, Bernard J. Hettel, Executive Director, and Frank Jones, Jr., Vice Chair from the Kentucky Racing Commission; Dr. Joe McCormick, Executive Director, Carl Rollins, Vice President, State Relations, and Linda Renschler, Director of Student and Administrative Services from the Kentucky Higher Education Assistance Authority; Margaret Gibbs, Chief Operating Officer, and Howard Kline, Chief Financial Officer from the Kentucky Lottery Corporation; and Nancy Black, Executive Director from Division of Occupations and Professions.
LRC Staff: Vida Murray, Jack Jones, Ann Seppenfield, Judy Fritz, and Susan Cunningham.
Chairman Tapp called the meeting to order. The motion was made and seconded to approve the minutes of the last meeting and was adopted by voice vote.
Dr. Joe McCormick gave an overview of the Kentucky Educational Excellence Scholarship (KEES) program to the committee. He said that in 1998, the General Assembly created a merit-based, as well as a need-based, scholarship program to be funded by lottery proceeds. He said that twenty-three other states have merit-based scholarships. Dr. McCormick said that there are several unique characteristics about Kentucky’s program: an application is not required because there is a data link between high schools and colleges and universities; the amount of the award is based on a student’s year-to-year performance rather than a cumulative four-year grade-point average (GPA); a college student may regain eligibility if the award is lost due to low grades; the cumulative GPA for college students after the first year is 2.5, which is lower than most state merit programs; and other need-based financial aid does not reduce the KEES award thus increasing the number of students going to college.
Senator Shaughnessy asked what percent of college students were staying in Kentucky to use scholarship money and what the enrollment was by gender. Dr. McCormick responded that approximately 50 percent of Kentucky high school seniors are going to college, but cautioned that the percentage was below the national average.
Senator Tapp asked about the college graduation rate of those receiving KEES money and whether there was a way to track students by GPA to see who stays in school and graduates. Dr. McCormick said the Kentucky Higher Education Assistance Authority (KHEAA) has access to all students enrolled in the state who accept KEES money; however, about 50 percent of the high school graduates either went out-of-state or did not take scholarship money.
Senator Guthrie addressed the students in the audience by noting that the KEES program may not be funded at its present level, but the moneys will be available and they will be prorated. Senator Shaughnessy responded that those students presently receiving KEES money had, in essence, entered into a contract with the KHEAA and are guaranteed the agreed upon amount. If moneys are prorated, they must apply to new students entering the program.
Margaret Gibbs and Howard Kline from the Kentucky Lottery Corporation told the committee they were facing competition from surrounding states. Competition includes the new Tennessee lottery, which will affect approximately 11 percent of sales; the expansion of riverboats in Indiana, with round-the-clock gaming; and the establishment of a land based casino at French Lick Resort. He added that Ohio and Illinois are considering video lottery terminals at race tracks. The presenters said they felt that one of the major challenges for the lottery was that the public did not know how the proceeds were distributed. A 2002 marketing study revealed that most Kentuckians were not aware that Lottery dividends went to support education. The same study found that 55 percent of the public plays the Kentucky Lottery, and 63 percent of former players would play again if they knew the proceeds went to education. However, there is a statutory prohibition against the Lottery Corporation advertising how it disperses its proceeds. Ms. Gibbs told the committee that the Corporation sends legislators a monthly report as well as an annual report of sales and dividend transfers.
Representative Miller asked if the placement of slots at the race tracks or other specified places would hurt the Lottery. Ms. Gibbs said that if slots were run by an entity other than the Lottery Corporation, proceeds would be hurt. Mr. Kline added that in states such as Louisiana where the State Police operate the video lottery terminals, lottery proceeds have suffered substantially.
Representative Marcotte asked why there were no projected figures earmarking unclaimed prize money from unredeemed lottery tickets to the Affordable Housing Trust Fund. Mr. Kline said during the last session the funding was changed, putting unclaimed prize money in the KEES reserve program.
Representative Meeks asked why the legislature statutorily prohibits the Lottery from advertising that the lottery proceeds were going to education. Senator Shaughnessy responded that it was an amendment to the enabling legislation. He indicated that there was some concern that earmarking proceeds would drive sales.
Senator Westwood said that before 1998, people thought that the Lottery money was going to the General Fund, and asked what actually went to education before 1998. Mr. Kline responded that one year $214 million went to the SEEK program; he also said that in the 2004 fiscal year 40 percent will go to merit-based scholarships, 40 percent to the need-based scholarships, and $3 million to the literacy program with the remaining amount going to the General Fund. In 2006, 100 percent of the lottery money will go to the scholarship programs, except for the $3 million going to literacy.
Senator Shaughnessy said he believed the Lottery was doing a good job of informing the public where the money goes without driving sales by encouraging gambling.
Representative Burch said if all the Lottery’s profits went into education it did not mean education was going to get more money, and if there was going to be advertising it should say that the lottery money was in addition to money that was put in the budget for education. Dr. McCormick commented that the public thinks of education as kindergarten through grade 12 instead of post-secondary education, which is where the money is actually going. He also commented that 58,600 applications for need-based scholarships have been denied.
Next on the agenda, Dennis Langford, Commissioner of Housing, Buildings and Construction, said House Bill 115 was passed on the last day of the 2003 session and required the department to have in place by June 24, 2003, a board and licensing program for electrical workers. The department’s activities included working with local governments, setting up a web-based application, and establishing a grandfathering period. The department has met with everyone who has jobs that are related to or that tie into electrical work. The Electrical Advisory Committee meetings have been open in order to have input from attendees. One problem faced was how to prevent local governments who had previously issued electrical licenses from having to rebate money for a license already issued. This was achieved by creating a “pending license” where licensees could wait until their local license expired before applying for a state license. The board is working with the Administrative Regulations Review Subcommittee to establish a staggered renewal process. There have been 14,087 licenses issued since June 24, 2003. Fifty-nine percent of the licenses so far have been done online and have been paid for online with credit cards.
Suzanne Long told the committee that the wording in the bill allowed the department to borrow money for initial administration; therefore, $950,000.00 was borrowed from the Division of Plumbing to be repaid over the next two years without interest. To implement an online application process the department’s technology and equipment were updated. This included installing new servers, desk top computers, and tablet computers, and providing digital cameras for field staff. Since going on line $1.8 million dollars has been collected in fees with $1.3 million of that being credit card payments.
Department staff demonstrated for the committee how to go online and fill out an application for an electrical contractor license.
Frank Dempsey told the committee that regulations have been drafted and filed. He said six groups have been identified as qualified to provide continuing education to electricians and that the Electrical Advisory Committee had developed a code of ethics for licensees. He said each licensee is required to have six hours of continuing education per year. Therefor, if a person has both an electrical contractor’s license and a master electrician’s license, he or she would have to have 12 total hours.
Senator Buford asked for clarification of the grandfathering program since some small cities do not require proof of qualifications to hold an electrical license. Mr. Langford said this was a concern for the board and the reason continuing education is required to renew a license.
Senator Tapp commented that putting an electrical license in escrow could be expensive for the electrician. Mr. Langford responded that electrical inspectors do not perform electrical work while serving as inspectors in order to avoid a conflict of interest; therefore, their license goes into inactive status. While in the inactive status, they continue to pay license fees and take continuing education courses. This would keep their license’s available until they are no longer electrical inspectors.
In summary Frank Dempsey indicated that the advisory board has thus far approved procedural guidelines concerning continuing education; drafted a code of ethics; and discussed grounds for disciplinary activities. Other areas to be addressed include the following: determining the extent of supervision required for unlicensed workers; selecting an examination; and establishing policies that recognize the interconnectedness between electrical work and other fields such as heating, ventilating and air conditioning (HVAC).
Mark Yates, a Louisville contractor, testified that he felt the department needs to be more lenient with its continuing education policy. He thought it was burdensome for persons with dual licenses to be required to receive 12 hours of credit.
Next on the agenda Bernie Hettel told the committee that on March 14, 2003 the Lexington Herald-Leader reported that the Auditor of Public Accounts had received an anonymous complaint that the Racing Commission was misappropriating funds. The Auditor’s Report covers several issues. The first was the Backside Improvement Commission, which was created in legislation in 1980. The purpose of the commission was to improve living conditions at Turfway Park and Ellis Park. The commission members were appointed by the Governor’s office, and money spent was approved by the Executive Director. The auditor’s opinion was that the Executive Director’s position should be abolished. The Racing Commission has agreed, and the director resigned effective August 15, 2003. Furthermore, by Executive Order, the Backside Improvement Commission has been abolished and the Kentucky Racing Commission will assume its duties.
The second item in the report addressed the staff assigned to the Backside Improvement Commission. Mr. Hettel said that by eliminating all positions affiliated with the Backside Improvement Commission, savings in salaries are anticipated to be in excess of $300,000.00.
The third item in that report was the purchase and distribution of racing pins and courtesy passes. The Racing Commission pins have been a long standing racing tradition. Race tracks provide pins for their Turf Clubs. In the history of the Racing Commission, going back to 1906, the lapel pin did not change design until 1982. Governor Jones felt it necessary to change the pin to reduce the number in circulation. When Paul Patton was elected, he asked the Racing Commission to change the pin again. This reduced the total number of pins, and there are currently the lowest number of valid pins in circulation in the history of the Racing Commission. All 2003 pins were accounted for by the auditor who did a physical count, and all people who received pins are listed in the Auditor’s Report. The auditor suggested that the Racing Commission eliminate the use of passes when the current passes expire at the end of 2003.
The Commissioner’s special account was also addressed in the Report. The special account was made up of private contributions from commission members who donated the fees they receive from attending racing meetings. This money has been used for the past 12 years for beneficial gifts, trophies and honoraria for individuals. This fund was also used to purchase commission pins. The auditor recommends that the pins be purchased through a bidding process with the use of state funds.
Also, the Auditor’s Report questioned the enforcement of the claiming procedures. The auditor concluded that a voided claim form resulted in a loss tax moneys. When the current claim form supply is exhausted, the form will be changed to simplify the procedure. The auditor also wanted claim-form education to be in place; however, Mr. Hettel noted that there are racing officials at each track to assist with this process. The final part of the audit dealt with the personal service contract for Dr. Rick Sams. The Commission uses the Equine Drug Council to do research primarily in Kentucky to ensure the integrity of its testing and to find new and better ways to treat and take care of horses. Because Dr. Sams lives in Ohio and works for Ohio State University, money could not be used from the Equine Drug Council. The statute requires that the work be done in Kentucky. The Commission decided to write a Request For Proposal, (RFP) to pay Dr. Sams. In conclusion, Mr. Hettel noted that the auditor found no malfeasance or misappropriation of funds or accounting errors.
Representative Burch asked how much cash and investments were currently in the Health and Welfare Fund. He said that the Fund’s receipts have grown more than ten-fold, and questioned some investments, such as an old school that is to being renovated into apartments for backside employees. Mr. Hettel responded that the Racing Commission was a pass-through account for the Backside Improvement Commission, that at the beginning of 2003, receipts totaled $2.8 million from uncashed pari-mutuel tickets. These moneys went to the Kentucky Health and Welfare Fund. Regarding cash on hand, the last report showed a total of approximately $7 million in funds available in an investment portfolio. He stressed that because the Commission is only a pass-through account, questions regarding the Fund’s expenditures should be directed to Bob Benson or Don Ball. Frank Shoop said the Racing Commission was interested in getting the statute changed in the 2004 session so that it would have more authority over other equine boards.
The last person testifying was Nancy Black, Director of the Division of Occupations and Professions. She told the committee that an application for and fee schedule had been established by the Private Investigators Board. She said an examination for private investigators was being developed and would be ready by mid-October. Exam sites would be designated around the state, and tests would be computer-based, and given on demand so that an applicant may take the exam at any site once he or she has been approved. Regarding the massage therapists bill, Ms. Black indicated that she had met with members of the new board on September 11, 2003, to discuss the administrative regulation process and the importance of establishing an application and fee schedule in order to expedite the licensure of massage therapists. Ms. Black said that administering a new board was particularly problematic since no moneys are available for the board’s start-up.
Senator Tapp asked how many licensees do the twenty-one regulated boards represent. Ms. Black said there were over 50,000 licensees, not including inactive or terminated ones. The Division also manages a consolidated data base allowing online license verification and online license renewal with payment by credit card.
Representative Palumbo told Ms. Black that she and Senator Westwood would help the Massage Therapists Board implement the licensing process.
Senator Westwood asked Ms. Black if the money received from the potential licensees offset the expenses of starting the board. Ms. Black responded that someone had sent out an application form with the Division’s address on it; however, because the Board did not have regulations completed for applications or fees, the checks received and the applications could not be processed.
Senator Tapp asked Ms. Black if she would meet with Senator Westwood and Representative Palumbo and the Massage Therapist Board so that regulations could be written and fees could be collected.
Senator Tapp told the committee that a request had been submitted to change the November meeting date from November 14th to November 21st. With no other business, the meeting was adjourned.