The 4th meeting of the Interim Joint Committee on Licensing and Occupations was held on Friday, October 13, 2006, at 10:00 AM, at Yum! Brands Inc. international headquarters 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, Perry B Clark, Robert J (Bob) Leeper, Daniel Mongiardo, and Damon Thayer; Representatives Tom Burch, Larry Clark, Ron Crimm, Jon Draud, Dennis Horlander, Joni L Jenkins, Dennis Keene, Reginald K Meeks, Charles Miller, Jon David Reinhardt, Ron Weston, and Susan Westrom.
Guests: Jonathan Blum, Chief Public Affairs Officer, Yum! Brands, Inc.; Norman Brown, Executive Director, and Lee Harris, General Counsel, Kentucky Real Estate Commission; Shelley Ochs, President, Kentucky State Acupuncture Association; Bill Schmidt, Executive Director, and Mike Rodman, Assistant Executive Director, Kentucky Board of Medical Licensure; Tony Royalty, Executive Director, and Alan Wagers, Director of the Division of Licensing, Office of Charitable Gaming; and Steve Davis, Deputy Inspector General, Cabinet for Health and Family Services.
LRC Staff: Vida Murray, Bryce Amburgey, Tom Hewlett, and Susan Cunningham.
Jonathan Blum, Chief Public Affairs Officer, Yum! Brands Inc. welcomed the committee members to the Yum! Corporate Headquarters, restaurant support center. Mr. Blum said that when PepsiCo, Pizza Hut, Taco Bell, and Kentucky Fried Chicken were merged, the new company name was Tricon Global. However, in 2002 when Long John Silvers and A&W Root Beer were purchased, the company changed the name to Yum!, which is the stock market ticker symbol. Mr. Blum said that Yum! Brands generates approximately 27 billion dollars in revenue each year with about a billion dollars back to shareholders. He said that the company is continuing to expand and said in China there would be one new restaurant opened every day of the year, all year long and that expansion is also planned in India and Russia.
Next, Representative Butler asked for the meeting to be called to order and the roll called. There being a quorum, Representative Butler called for a motion and second to adopt the minutes of the September meeting. The minutes were adopted by voice vote.
Next on the agenda, Norman Brown, Executive Director and Lee Harris, General Counsel of the Kentucky Real Estate Commission told the members that the number of licensees is increasing, which was a common trend across the nation; however, he expected this to slow in the future. Mr. Brown said that the number of complaints received by the commission has also increased recently. He indicated that he believes this is due to the new license applicants being required to have a criminal background check, adding that applicant complaints would be included with consumer complaints. Lee Harris said that in 2007 the commission would propose requiring a post-license course for all new licensees. She noted that this would have to be taken in the first 18 months of new licensure. Ms. Harris said the commission would also ask for an emergency provision to handle possible problems with escrow accounts. She observed that the current process can be long and drawn out and that an escrow account could be emptied before the commission would be able to take action. Ms. Harris also said there was a continuing problem with unlicensed brokers from out-of-state that come into Kentucky to sell property. Ms. Harris concluded by saying that the criminal background checks on new licensees was taking up to 12 weeks to obtain. She remarked that if the commission could use the National Crime Information Center (NCIC) system through the Kentucky State Police, they could have a report in 48 hours, allowing them to issue a license in a more expeditious manner.
Senator Tapp asked if other states were requiring a post-license test and why the commission wanted to implement the testing. Ms. Harris said that she did not have the exact data; however, it seemed to be a common practice. She stated that the course, which would be offered by real estate schools, would give new licensees added information that was not covered in the pre-licensing course. Mr. Brown added that some brokerage offices trained new licensees in writing contracts and listing; however, some brokers did not do any practical training. Mr. Brown said that the course was approximately 36 hours of course work. Senator Tapp asked if there was support from brokers throughout the state. Mr. Brown said that he had met with a group who did like the idea and were considering taking the course if it were offered. Ms. Harris indicated that the Kentucky Association of Realtors had done a study which supported an additional, advanced licensing course for new licensees. Representative Westrom said that she had just received her real estate license and that she received continuing education classes as part of her membership dues with the Lexington Board of Realtors. She also indicated that her associated agency provided training in practical knowledge. Ms. Harris said the commission was trying to cut down on the number of consumer complaints they received. Representative Westrom suggested that the commission raise the required number of continuing education hours rather than adding a new course. Mr. Brown said that the industry was interested in practical education for new licensees and that about 4,000 realtors were on their own and did not have an agency to provide additional training. Representative Westrom expressed her concern that the proposed mandatory training could be burdensome for new licensees. Representative Reinhardt asked what the cost of the course would be, and who would be responsible for paying for the test. Ms. Harris said that at this time there were no plans for an exit test. Mr. Brown added that the cost was set by the schools and was competitive. Representative Butler told Mr. Brown that the commission needed to talk to the licensees to find out if more course work was needed.
Next on the agenda, Shelley Ochs, President of the Kentucky State Acupuncture Association, told members that association members were very pleased with the cooperation and efficiency shown by the Medical Licensure Board. She said that soon after July 15, 2006, an application for the acupuncture license was on-line and that 10 temporary licenses have already been issued. Ms. Ochs observed that Kentucky was now in step with the region, since becoming the 44th state to issue certification for acupuncturists. She said that there is one national exam that is recognized by all states, with the exception of California, which administers its own exam. Ms. Ochs stated that about 3,000 hours of training is required, equivalent to 90 semester hours. Mike Rodman, Assistant Executive Director with the Medical Licensure Board, told members that the board was very pleased to work with the acupuncturists. He said that in September there was a meeting with the Acupuncture Committee. Dr. Maureen Flanery was appointed chair, with Ms. Ochs appointed secretary. He remarked that the committee has developed a fee schedule and is working on promulgating regulations. Mr. Rodman said that if someone questioned an acupuncturist certification the person could call the Medical Licensure Board to verify certification, and when permanent certificates were issued, they would be listed on the Medical Licensure Board's Web site.
Representative Draud asked where the licensees are located in the state. Mr. Rodman said that there had been four applicants from out-of-state and that the others were in Northern Kentucky, Louisville, and Lexington. He stated that the practitioners were not widely distributed right now. Representative Burch said that he had worked on a sub-committee for acupuncture 12 years ago, and he was glad that everyone had come together.
Representative Butler recognized former Representative Bill Donnermeyer and asked if he would like to address the committee members regarding new bingo regulations. Mr. Donnermeyer said charitable gaming was good for small organizations. He remarked that most small bingo organizations operating before the charitable gaming laws went into effect used small "hard cards." He said that charging from 80 cents to $1 more was enough to put small charities out of business because competition had grown. Mr. Donnermeyer added that larger operations are also making money by selling pull-tabs. He said he felt that regulations should be reviewed regarding fines. Mr. Donnermeyer indicated that charities were filing their reports; however, the Office of Charitable Gaming was behind in reviewing reports. A charity could make the same mistake more than once and be fined multiple times because the reports were not being reviewed in a timely manner. Representative Keene noted that in the past three years charitable revenue had decreased by approximately $4 million because smaller charities and churches could not afford to have bingo any longer.
Senator Carroll asked if there was an organization to represent small bingo halls state-wide. Mr. Donnermeyer said Ron Morris represented the small charities and that they had a good rapport with the agency. Representative Clark stated that the larger bingos were running the smaller bingos out of business because they could not compete, and he suggested that there be a monetary threshold to allow the smaller bingos to use the "hold cards," and any new bingo would use the new type of cards. Representative Meeks asked what effect smoking bans were having on bingo attendance. Mr. Donnermeyer responded that some bingo halls had created a separate section for smoking only. Representative Butler said the smoking bans were a local ordinance issue.
Also present from the Office of Charitable Gaming were Tony Royalty, Executive Director, Alan Wagers, Director for the Division of Licensing, and Leah Boggs, Assistant Director for the Division of Licensing. Ms. Boggs told members that the office was happy to have the opportunity to discuss problems with new regulations that went into effect on March 31, 2006. Ms. Boggs said that the office was a professional licensing agency and that the people licensed were charities operating a business. She stated that gross receipts in 2003 were $587 million, and at the end of 2005, gross receipts were down to $547 million. Ms. Boggs said that the 40% retention had actually increased state wide from 55.48% to 59.46% at the end of the first quarter this year. She indicated that the total number of licensees has remained consistent since 1994. She said that the office took two years to write the new regulations, meeting with groups of charities, veterans and the Catholic Diocese. She noted that these groups were allowed to have input and make changes. Ms. Boggs said that there has never been a good way to track paper, allowing no accounting for the money paid for these games. She remarked that the charities were not trying to cheat; however, filling out records and filing reports causes them hardship. Ms. Boggs said the new regulations would help new charitable groups because they were broken down by topic, and new forms were easier to understand and file.
Ms. Boggs said that in 2002, the office started a free training session the first Tuesday of every month, and for those groups that could not come to Frankfort, the office went to them. She stated that the office had updated the training manual to match the new regulations, this manual is given out at all training sessions, and it is available on the office's Web site. The office also has a CD available. Ms. Boggs said that since April 1, 2006, there had been over 1,000 people trained on the new regulations, and there was a special training session for the veterans groups. Ms. Boggs added that the office is not writing violations on the new regulations, but is writing warnings and helping the charities to understand what they are doing wrong. Ms. Boggs said that in the past the office had not required charities to report inventories of pull-tabs and paper. She indicated that now an inventory was required every quarter. Ms. Boggs said that the economy has had an effect on bingo, along with higher gas prices and the smoking ban. Ms. Boggs stated that the office's other large concern was the Catholic organizations and schools and their unsold raffle tickets. She said that churches and schools were mailing out raffle tickets with no accountability. She noted they were currently working on having the parishioners come in to pick up tickets. Ms. Boggs said that regarding the hard cards, she had talked to Mr. Donnermeyer prior to the regulation being filed. She remarked that he had asked her if there could be an exemption for groups that gross more than $2,500, since that was the statutory limit. She said that the office agreed to this request, adding that hard cards were unauditable because there was no product to reconcile against since the cards were not numbered. She indicated that there were about 15 organizations that continue to use hard cards, so the office will grandfather these groups but will require any new groups that file for a new bingo license to use paper.
Tony Royalty, Executive Director of the Office of Charitable Gaming, told committee members that the office had reduced the amount of fine approximately one year ago. He said that, due to concerns voiced at town meetings, the office was now sending warning letters to charities. He observed that the office found that the charities would pay the fine; however, they were not correcting their reporting errors. Therefore, the office determined to have more training. He said that the Catholic Conference was concerned about $1.4 million that had been taken from the office's account. Mr. Royalty added that the audit department had previously been behind, so money accumulated.
Mr. Ron Morris representing the Charitable Gaming Association, presently composed of distributors, hall owners, and charities across the state, said that members of his association had worked with the office for approximately one year to make the regulations work. He noted that there were some inconsistencies when the regulations went into effect; however, after meeting with staff the problems were worked out. Mr. Morris said there was a good effort on both sides to work out misunderstandings.
Representative Keene asked how the economy was affecting gaming. Ms. Boggs said there was no specific data; however, charitable gaming was considered a gaming dollar which was typically the first to go when people felt pinched. Representative Butler said that in the next session the committee should look at defining a charity.
Representative Butler recognized VFW State Commander Brian Duffy and asked him if he would like to make a statement. Commander Duffy said that the veterans endorsed all the statements made by Mr. Donnermeyer. He stated that he felt that the Office of Charitable Gaming's regulations were punishing the good charities in order to catch the bad gamers. He said that the VFW's, the American Legion's and the Am Vet's were old demographics who were easily intimidated by the forms the office required for reporting.
Representative Burch commented that there was a difference between listening to charities and complying with what the charities were asking for, adding that the small charities should have a separate tier for small charities so they would not have to close. Representative Reinhardt asked if the forms could be simplified.
Next on the agenda, Representative Burch explained a prefiled bill, not yet assigned, regarding the University of Louisville Equine School. He said that in 1986 legislation was passed to set up a pari-mutuel tax to run the school, generating approximately $800,000 per year. He observed that simulcasting had reduced the amount of money that the school was receiving, and during the last four years the school received money from the General Fund. He said that last year over $300,000 had been given to the school. Representative Burch said that the bill increased the simulcasting percentage. He noted that the school provides training for stewards, and for workers who struggle with alcohol and substance abuse. He told members that the school wanted to have a symposium that would showcase the school's training and progress. He said that it would not cost the state money. Rather, the money would come from pari-mutuel tax as originally intended.
Next on the agenda was Administrative Regulation 902 KAR 20:074, Operation and services; outpatient health care center. Steve Davis, Deputy Inspector General for the Cabinet for Health and Family Services, was present to answer questions. Senator Tapp made a motion with a second from Representative Draud, and the regulation was adopted by voice vote.
There being no further business to come before the committee the meeting was adjourned at 12:21 p.m.