The 3rd meeting of the Interim Joint Committee on Licensing and Occupations was held on Friday, August 26, 2005, at 10:00 AM, at Brown-Forman Corporation in Louisville, Kentucky. Representative Denver Butler, 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, Julian M. Carroll, Julie Denton, Daniel Mongiardo, and Damon Thayer; Representatives Tom Burch, Larry Clark, W. Milward Dedman Jr, Dennis Horlander, Dennis Keene, Stan Lee, Reginald K. Meeks, Charles Miller, Jon David Reinhardt, and Susan Westrom.
Guests: Dr. Joe McCormick, Executive Director, Linda Renschler, Director of Student and Administrative Services, Carl Rollins, Director of State Relations, and Mel Latier, Staff Economist, Kentucky Higher Education Assistance Authority; Arch Gleason, President, Howard Kline, Chief Financial Officer, Mary Harville, Corporate Secretary/General Counsel, and Chip Polston, Vice President of Communications and Public Participation, Kentucky Lottery Corporation; Representative Tommy Thompson; Juva S. Barber, Government Affairs Director, Home Builders Association of Kentucky; Oliver H. Barber, Jr., Barber Banaszynski & Glidewell PSC; Betsy Smith, National Certification Commission for Acupuncture and Oriental Medicine; and Shelley Ochs, Kentucky State Association for Acupuncture.
LRC Staff: Vida Murray, Ann Seppenfield, Bryce Amburgey, and Susan Cunningham.
Phoebe Wood, Chief Financial Officer of Brown-Forman Corporation welcomed the committee members to its corporate offices and gave a brief overview of the company's operations and mission. The chairs thanked Brown-Forman for hosting the meeting and applauded Brown-Forman for being a good corporate citizen.
The first item on the agenda was approval of the minutes from the July 8, 2005, meeting. A motion was made, and with a second, the minutes were adopted by voice vote.
Arch Gleason, President of the Kentucky Lottery Corporation (KLC), and Dr. Joe McCormick, Executive Director of the Kentucky Higher Education Assistance Authority (KHEAA), gave an update on the status of the KLC and the Kentucky Educational Excellence Scholarship (KEES) funds. Mr. Gleason said there has been some revenue loss since the Tennessee Lottery began its scratch-off games in January 2004 and went online in April of that year. He said the largest erosion in sales came when the Tennessee Lottery was admitted into the Power Ball game, and estimated total losses of sales to Tennessee at $70 million. He said to maintain the viability of its lottery games, the lottery needs to have well-developed games. The impact of the Tennessee Lottery is more pronounced in the counties bordering Tennessee. Bordering counties where sales have declined are Allen, Clinton, Fulton, Simpson, Whitley, Bell, Calloway, McCreary, Monroe, Todd, Cumberland, Logan, Christian, Graves, Trigg, and Wayne. These counties previously accounted for about 18 percent of the Lottery's sales statewide but this year were down to 11 percent. Mr. Gleason said challenges the lottery faces are the continuing growth of the Tennessee Lottery, the maturing product mix, and the expansion of more active forms of gaming in neighboring states. He added that states with more aggressive games show a 5.5 percent growth annually in revenue compared to Kentucky's growth of 2.1 percent. He told the committee that Indiana has five riverboats generating over a $1 billion in net win and approximately $360 million in taxes. He said that in West Virginia the net yield from video lottery terminals or slot machines at racetracks was approximately $370 million with a tax rate of about 43 percent. Mr. Gleason said that another challenge the lottery faces is the statutory proscription against advertising where lottery proceeds go. He said that a KLC-sponsored study showed that most Kentucky residents were unaware that most of the KLC's proceeds went to fund scholarships and grants. The study also supported advertising how lottery proceeds are spent. He concluded by saying that he believed the lottery could advertise how the proceeds are spent responsibly and encouraged the members to eliminate the proscription.
Senator Tapp asked how much it would cost KLC to advertise where the moneys go. Mr. Gleason said that the advertisement could be done within the lottery's existing advertisement budget and that he could provide samples of other states' advertisements to show how responsible advertising can be done. Even though no evidence showed growth after advertising it did help with public understanding. Representative Lee asked if the amount of money that has to be given out in prizes was set in statute. Mr. Gleason said it was not set in statute and that the lottery's games were designed to pay out 60 percent overall. Last year the players won $21 million more than they were expected to win; however, in other years payouts have ranged between 58 and 59 percent. Senator Denton asked if expanded gambling in Kentucky would have an adverse impact on lottery sales. Mr. Gleason responded that there would be an effect, adding that there is evidence that the impact is less in those states where the lottery has been involved in managing the expansion of gaming. Senator Mongiardo asked if tickets were currently being sold on-line in Kentucky or other states. Mr. Gleason said no, and that there was a question of the legality of purchasing tickets via the Internet. This is because it is impossible to restrict a state's sales to its own residents since an Internet server could be located off shore and the Federal Wire Act prohibits wagering across state lines. Senator Buford commented that two previous Attorneys General have opined that a constitutional amendment is not necessarily needed to authorize expanded gaming or video lottery terminals (VLTs) if it is done through the Kentucky Lottery. Mr. Gleason said the Lottery's opinion is that the expansion could occur by legislation and not a constitutional amendment.
Dr. Joe McCormick said the net lottery proceeds are dedicated to three college student-aid programs: the Kentucky Educational Excellence Scholarship (KEES) Program; the College Access Program (CAP); and the Kentucky Tuition Grant (KTG) Program. The KEES Program provides up to $500.00 per year for four years in high school based on a students' grade point average (GPA) and includes a $500.00 bonus based on ACT scores. Both CAP and KTG are need-based. In 2005, the state provided $157 million for these three scholarships. Dr. McCormick expressed his worry that the need will soon be greater than the moneys available for the programs. He said national trends show that increases in tuition are making college less affordable and that state financial support for public higher education has not increased at the same rate. He said that the Kentucky Higher Education Assistance Authority (KHEAA) spends all the money it receives from the lottery proceeds every year and could spend more if more was available. Dr. McCormick said his fear was that not enough funds will be available in the 2007-2008 school year. He said that out of 100 freshman today, only 38 will go to college four years from now, and it was an unacceptable goal for Kentucky.
Representative Reinhardt asked how students found out about the scholarship money. Dr. McCormick said students were notified by KHEAA beginning in the eighth grade, adding that there are 12 outreach counselors who visit high schools all year long. Senator Thayer asked what the minimum GPA was for a student to qualify for a KEES merit-based scholarship and asked if the GPA should be raised to reward higher-performing students. Dr. McCormick said 2.5 was the minimum GPA and was chosen at the time KEES was enacted, to encourage average- or lower-performing students to improve.
Next on the agenda, Representative Tommy Thompson told the committee members that he would sponsor legislation in the upcoming session to protect consumers in Kentucky who were building or remodeling a home. The bill, almost identical to House Bill 61 in the 2005 session, would require all residential contractors in Kentucky to obtain certification. They would be required to have a minimum of $250,000 of general liability and property insurance, comply with the workers' compensation laws, and enter into a written contract with the customer setting out the terms, such as the cost of the project. The residential contractor would be required to supply a one-year warranty for work done. Also, the contractor would be required to obtain six hours of continuing education annually, or have a designated agent of the firm complete the hours. There would be a $100 application fee annually, and contractors would be required to post their registration certificate on the job site. Representative Thompson said there was a threshold of $2,500. If any contract was less than $2,500, the requirement would not apply. A local community could apply with the state to administer the program, and currently Louisville, Lexington, and Bowling Green have registered builder programs. Penalties include license revocation and the assessment of a fine. There will be exemptions for persons performing light construction or commercial construction. Representative Thompson said this bill would protect consumers who are building or remodeling their home, as well as allowing them a course of action for unsatisfactory or shoddy work.
Senator Denton asked how a designee going to continuing education would help the residential contractor, and expressed concern that the retired "handyman" or person doing small jobs was not "grandfathered." Representative Thompson said it would be set in administrative regulations that a principal of the company would have to attend. He said regarding notice to any person doing work, the person would have to show his or her certification when applying for a permit to do his or her work. Senator Tapp said he had concerns about the $2,500 threshold being too low and asked how the bill defined "light commercial." Juva Barber said "light commercial" was not defined, just "residential construction." Representative Lee asked why commercial contractors were exempt. Representative Thompson said there was discussion during the last session that one bill could not contain everything necessary for both commercial and residential issues. He said the feeling was that residential certification was more important for consumer protection. Representative Meeks asked how many complaints were filed with the Attorney General's office for incomplete or poor work. Juva Barber replied that last year, the Attorney General's office had 60 complaints that they could mediate. She further said that typically the Office of Housing, Buildings and Construction gets called and the Office does not have the capacity to keep records of the calls. Senator Buford asked if a person who owned an apartment building, but did not live in it, who hired a painter or had carpet replaced would be required to obtain persons who were certified. Representative Thompson said those people would be exempt.
Next on the agenda Oliver Barber, Barber, Banaszynski & Glidewell PSC, along with Betsy Smith, Director of State Relations for the National Certification Commission for Acupuncture and Oriental Medicine (NCCAOM), and Shelley Ochs, licensed acupuncturist representing the Kentucky State Association for Acupuncture (KSAA), discussed proposed legislation to license acupuncturists in Kentucky. Mr. Barber said that the bill's purpose is to certify acupuncturists practicing in Kentucky. He said that persons qualifying would pass the examination administered by NCCAOM and obtain 1,800 hours of course training, including 300 clinical hours approved by NCCAOM. Betsy Smith told the committee that without regulation, the door is open for individuals to practice who may not meet recognized standards of competence and safety. This would place the health and welfare of people at risk. Some states that license acupuncturists require passage of multiple examinations, and some states are increasing their requirements for formal education. Ms. Smith said that the practice of acupuncture is more than inserting needles at various points on the body for different conditions and requires years of training and experience to practice correctly. Shelley Ochs, president of the Kentucky State Acupuncture Association, said the association has nationally board-certified acupuncturists, as well as other healthcare professionals as members. She said that people are going to border states to receive professional acupuncture treatment. Ms. Ochs said that the National Institutes of Health has awarded a grant for research in Kentucky on acute low back pain. She said that the University of Maryland's researchers will be going to the Ford truck plant to evaluate outcomes of patients who receive conventional treatments compared to integrated medicine treatments. A group will be treated with acupuncture over an eight-week period provided by three licensed-acupuncturists. Ms. Ochs said that Kentucky is one of eight states that do not license acupuncturists, adding that Illinois, Indiana, Tennessee, Ohio, West Virginia, and Arkansas do license acupuncturists. She said acupuncture is a safe and effective treatment that people are already using, although there are practitioners who are not certified. Thus, the public has no way of knowing who is professionally trained or trained by a weekend course. Ms. Ochs said that acupuncture has also been used to treat methamphetamine addiction and trauma.
Representative Butler said that the previous night WAVE-TV had aired a segment on the Mayo Clinic recommending acupuncture for patients when traditional medicine was not working. He further stated that people in Louisville were practicing acupuncture. Senator Denton asked what responsibilities the Medical Board of Licensure would have over the Acupuncture Board. Mr. Barber said it was important to keep the synergy between the medical community and the acupuncturists. Senator Carroll said that the unregulated practice of acupuncture was not illegal; however, something should be done to regulate the practice properly. Representative Larry Clark said that there was a pilot program in Jefferson County Drug Court where Judge Henry Webber used acupuncture treatment for people in his court. He said that the program was so successful that it had been expanded to other states. Senator Mongiardo asked if there were peer-review articles available that recommend acupuncture as a viable treatment. Ms. Ochs said there were a number of placebo-controlled, random clinical trials that have been published.
Representative Butler called the members, attention to the last item on the agenda under old business, the letter in the meeting folder in response to the resolution passed out of the committee in the June 10th meeting relating to more hirees in the Office of Housing, Buildings and Construction. Ryan Green with the State Budget Director's office said that at this time, the State Budget Director was not prepared to make any official statements. He said the Office had corresponded with Senator Tapp in the past two weeks regarding the challenges the resolution presented. Representative Clark said he wanted to see the salary range for the positions mentioned in the letter and noted that since the positions were budgeted but not filled for the first fiscal year, there should be adequate money. He asked the Office to communicate with Senator Tapp and Representative Butler concerning the salary range for the positions, the number of months for the salaries if not a full year, how much cost savings there were because the moneys were not used, and when the resolution would be finalized.
Representative Butler said if any members were interested in a tour of the Brown-Forman bottling plant they should meet in the lobby. Senator Thayer made a motion, there was a second, and the meeting was adjourned.