The fourth meeting of the Interim Joint Committee on State Government was held on Tuesday, October 11, 2005, at 1:00 PM, in Room 149 of the Capitol Annex. Representative Mike Cherry, Co-Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Damon Thayer, Co-Chair; Representative Mike Cherry, Co-Chair; Senators Walter Blevins, Julian Carroll, Carroll Gibson, Ernie Harris, Alice Kerr, Elizabeth Tori, and Johnny Ray Turner; Representatives Adrian Arnold, Eddie Ballard, Joe Barrows, Sheldon Baugh, James Bruce, Dwight Butler, Perry Clark, David Floyd, Danny Ford, Derrick Graham, Mike Harmon, Melvin Henley, Charlie Hoffman, Jimmie Lee, Gerry Lynn, Paul Marcotte, Lonnie Napier, Jon David Reinhardt, Tom Riner, John Will Stacy, Kathy Stein, Jim Wayne, Mike Weaver, and Brent Yonts.
Guests: Carl Metz, Goodwill Industries of Kentucky; Debbie Ignatz, National Industries for the Severely Disabled (NISH); Jim Hammond, Indiana Association of Rehabilitation Facilities; David Girdner, Pennyroyal Center; Robert Copley, Sr., Louisville, KY; Barbara Rollins, Lexington KY; Mark Honeycutt, Personnel Cabinet; Angela Robinson, Finance and Administration Cabinet; Ellen Benzing and Jerry Miller, Commerce Cabinet; Arch Gleason and Chip Polston, Kentucky Lottery Corporation (KLC).
LRC Staff: Joyce Crofts, Betsy Johnson, Alisha Miller, Karen Powell, Stewart Willis, and Peggy Sciantarelli.
Representative Cherry announced that donations to the LRC Hurricane Relief Fund would be accepted during the meeting in the special donation box. Representative Ballard announced funeral arrangements for the mother of Hopkins County's state Senator Jerry Rhoads. The minutes of the September 28 meeting were approved without objection, upon motion by Senator Kerr.
The first item on the agenda was discussion of 06 RS BR 71, relating to governmental purchasing of goods and services from nonprofit agencies and work centers serving the blind or severely disabled. Representative Jim Wayne, sponsor of the legislation, said that there are a number of disabled Kentuckians who are not able to compete on a level playing field in the free enterprise system. He said that BR 71 attempts to remedy this situation by carving out some of the state work for the disabled population in a reasonable way that will help the state coffers and not hurt the taxpayer.
The following persons spoke in support of BR 71: Carl Metz, Government Affairs Specialist, Goodwill Industries of Kentucky; Debbie Ignatz, Manager of State Relations, NISH; Jim Hammond, Executive Director, Indiana Association of Rehabilitation Facilities; David Girdner, Director of Developmental Disabilities Services, Trace Industries (Pennyroyal Center); Robert Copley, Sr., AFHA; and Barbara Rollins.
Dr. Metz gave the opening remarks and introduced the other speakers. He provided the Committee with a one-page handout entitled "The Benefits of BR 71." Dr. Metz said that BR 71 would provide effective implementation for the state use legislation that has been on the books in Kentucky since 1982 [KRS 45A.465-470]. He explained that BR 71 would establish a State Use Commission and empower it to designate a central nonprofit coordinating agency to work with individual community rehabilitation programs (CRPs) and facilitate the connection between state purchasing and the capacity of individual CRPs to provide goods or services.
Ms. Ignatz said that NISH is one of two national central nonprofit agencies that administer the Javitts-Wagner-O'Day Act, which created a federal program in the 1930s to provide training and employment opportunities for Americans with disabilities. She said she is also a founder and past president of the State Use Programs Association, as well as former director of the Tennessee state use program. She spoke regarding state use programs and their relevance.
In summary, Ms. Ignatz said that Kentucky has not taken full advantage of its state use legislation enacted in 1982. As a result, many Kentuckians with disabilities remain unemployed and are recipients of public entitlement dollars when, instead, they could be employed in meaningful jobs through a strong state use program. The passage of BR 71 will help toward the accomplishment of this goal.
The 2000 Census indicates that almost 297,000 Kentuckians between the ages of 21 and 64 self-reported that they were unemployed and disabled. Kentucky ranks 16th in the nation in this appalling statistic, exceeded only by national statistics which indicate that approximately 70 percent of people with disabilities—roughly 20,000,000 persons—throughout the country are unemployed.
Twenty-two of the 45 states with state use legislation have active vibrant programs; 870 community-based rehabilitation programs that employ people with disabilities participate in state use programs nationwide. Last year active state use programs employed over 43,000 individuals with disabilities, earning wages totalling more than $135 million. More than 5,800 of these individuals were placed in private competitive employment as a result of their training and job experience. State use programs provide training, meaningful employment and fair wages to people with disabilities; the opportunity to become self-sufficient; and encourage efforts to deinstitutionalize people with disabilities. State government customers receive quality products and services at a competitive price without the hassle of administering competitive bids. State use programs also benefit taxpayers by increasing the tax base, while the state's cost of caring for people with disabilities decreases.
National studies have shown a positive savings of 10-35 cents for every dollar of purchases made through state use programs. The programs also stimulate economic growth in local communities. Currently, over 80 distinct services and 340 different products are provided nationwide to state government customers through state use programs.
Last year the State Use Programs Association completed an economic benefit study to determine whether employment of persons with disabilities in state use programs reduces their use of government entitlements and increases their contribution to the economy. (Ms. Ignatz provided committee members with a flyer relating to the study by Mathew Greenwald & Associates, Inc.) The study surveyed 1,171 individuals and indicated that usage of entitlement programs either decreased or were totally eliminated. Conversely, the study showed that these workers increased their fair share of taxes and payments to the government, with an average annual savings of $2,200 per worker. In closing, Ms. Ignatz encouraged the Committee to support BR 71.
Mr. Hammond provided two handouts to the Committee: "State Use Committee 2004 Annual Report/The Power of a Purchase," and an excerpt from "Indiana's State Use Program: A Review of Its Impacts." He said that one of the cornerstones of a successful state use program is having a commission. He went on to say that Indiana's commission, which has eight members, provides legitimacy to the program, oversight, monitoring, and helps to resolve disputes. Statutory duties include approving qualified not-for-profit organizations as vendors to the state—not supplanting but complementing responsibilities of the Department for Administration; assigning products and services on an equitable basis; and approving fair market prices. It is important to have a central coordinating agency to assist the work of the commission. In Indiana, the agency is the Association of Rehabilitation Facilities. The commission also is responsible for looking at whether the program would have a negative effect on small and minority business; whether state employees would be disenfranchised or lose their jobs; and how the state can retain more business.
Mr. Hammond said that a modest amount of sales have occurred during the brief history of Indiana's state use program. In 2005, there has been $9.2 million in sales; 40 products or services are being provided; 36 of 55 rehabilitation facilities are participating in the program; and, most importantly, 2,100 people with disabilities are working on approved state use projects and earning about $2 million in wages. He said that Indiana studied its program in 2003, prior to the sunset review by the Indiana Department of Legislative Services. The study looked at less expensive buying through the program; whether there was a reduction in public assistance for the workers; and whether there was an improvement in the quality of life of the workers. There were resounding positive results in all three areas. Saving money was a primary concern. In some instances, products and services in the program were less expensive—e.g., the rest area program. Though some commodities were not always less expensive through the program, they were always within the fair market price.
He said that one advantage of having a commission is to ensure that taxpayers get a fair price for their tax dollars. According to information from the accounting and consulting firm Crowe Chizek, for every person making at least $10,000, there was a return of $10,705 annually. Sixty-six percent of participants in the study said that their earnings from state use jobs were their primary source of income, often replacing Social Security, SSI, and SSDI monies. More than 80 percent indicated they were better off because they were working. In closing, Mr. Hammond said the record speaks for itself. He said that consumers with disabilities, the state of Indiana, and community rehabilitation programs have embraced the program and that it has been mutually beneficial. He thanked the Committee for considering BR 71 and offered his assistance in the future if needed.
Mr. Girdner spoke from the perspective of an individual community rehabilitation program. He said that Trace Industries has had challenges in finding work during the last few years. He went on to say that for some of their work they have a waiver from the U. S. Department of Labor that allows payment of sub-minimum wage. However, Trace Industries has to bid on every contract as if they are paying the going wage in that area of the state. Outsourcing has also made it harder to find business. A Kentucky State Use Commission would help assuage some of the difficulties.
Mr. Girdner described some of Industries' products and contracts. He noted that their on-time delivery and quality of product and services meet or exceed any competitive company in the country. He added that, if BR 71 is enacted, Kentucky already has many community rehabilitation programs in place with the focus and expertise to operationalize an active state use program.
Mr. Copley said that his 50-year old daughter Rebecca is severely retarded and is employed by Independent Industries, a Louisville CRP. He noted that he was speaking today in place of Bremer Ehrler, former secretary of state, who was unable to attend because of his wife's illness. He said that Mr. Ehrler, like himself, has long been actively working on behalf of the mentally retarded. He spoke of the many ways in which the CRP has benefited his family and asked the Committee to give full consideration to BR 71.
Ms. Rollins, a client of OWL (Opportunity for Work and Learning), a work-oriented CRP in Lexington, Kentucky, providing vocational services to individuals in the central Kentucky area, said she has been totally blind for 12 years. She explained how OWL has benefited her and how passage of BR 71 would benefit all people with disabilities.
With the Chair's permission, Dr. Metz read a letter to Governor Fletcher written by Mary Luft of Lexington, whose daughter and son-in-law are employed at OWL. In the letter Ms. Luft urged passage of BR 71 so that nonprofit agencies like OWL "can get enough work to keep the doors open and provide services for all their clients." Dr. Metz provided a copy of the letter for LRC files.
Representative Stein commended the work of Employment Solutions, a nonprofit organization in Lexington which assists people with significant employment barriers throughout the Bluegrass Region. Dr. Metz explained that Employment Solutions is a member of the Kentucky Association of Community Employment Services (KACES), which is supporting BR 71, as are the Kentucky Association of Goodwill Industries, the Council on Mental Retardation, and Arc of the Bluegrass.
Representative Riner said that "disability" and "severely disabled" are not defined in BR 71. He asked whether the legislation would apply to persons with learning disabilities and hidden disabilities. Dr. Metz said that it would—that it is comprehensive in scope. Representative Wayne told Representative Riner that he would be glad to talk with him about amending the definitions section of the bill.
Representative Floyd asked Ms. Ignatz how many of the 297,000 disabled and unemployed Kentuckians she referred to would be employed if BR 71 was enacted. She said it would depend on how large a state use program in Kentucky would grow and that a program would be limited only by the amount of effort put into it.
Representative Yonts said he has a relative at the Opportunity Center in Muhlenberg County and that the program there is excellent. He also said he supports BR 71.
Representative Barrows asked whether there are disincentives that might deter the disabled from seeking employment. Mr. Girdner said there is a perception of disincentives. He said that many of the mentally ill, in particular, fear going to work. Mr. Hammond agreed that there are disincentives. He said that Indiana adopted a program called Med Works, which allows persons to go back to work without losing their medical benefits. Representative Barrows suggested getting additional information on the disincentive issue. Representative Wayne said that is an excellent point. Dr. Metz said it is his understanding that the Commonwealth is currently studying the feasibility of implementing a buy-in program which would make it possible for folks who are eligible for Medicaid to go to work and still retain their Medicaid benefits if they pay a certain level of premium.
Representative Marcotte said he believes BR 71 has merit and that he may later sign on as a co-sponsor. He asked whether Dr. Holsinger (Cabinet for Health and Family Services) is supportive of the program. Dr. Metz said they have not sought his support yet but plan to do so. Representative Wayne said that they have talked with the Finance and Administration Cabinet.
Senator Thayer said he thinks it is important for the Committee to know Secretary Holsinger's views regarding the legislation and also to consult with Finance and Administration Secretary Robbie Rudolph prior to the January legislative session. Representative Wayne said that is an excellent suggestion and that it is his goal that the bill be a team effort.
Next on the agenda was review of Executive Order 2005-891, dated August 19, 2005, relating to reorganization of the Personnel Cabinet. Mark Honeycutt, General Counsel, represented the Cabinet.
Senator Carroll said he has a problem with Section V-B, which creates an Office of Merit System Referral within the Department for Personnel Administration. He asked whether the provisions in that section have been examined for compliance with KRS 13A.130. Mr. Honeycutt said that it is under review and that the Office of Merit System Referral has not yet been implemented. He noted that the Office is under consideration by the Governor's Merit System Blue Ribbon Task Force. Senator Carroll asked whether a regulation will be promulgated to name the organizational entities that the Office will comprise. Mr. Honeycutt said that the executive order gives the Commissioner of the Department authority to establish organizational units at and below the division level, through an administrative order signed by the Cabinet Secretary, once the Office is established and its requirements and needs are known. Senator Carroll asked whether the administrative order will be issued by the time the General Assembly is asked to ratify the executive order in the next regular session. Mr. Honeycutt said he hopes so but that it depends on the recommendations of the Blue Ribbon Task Force and the requirements of the new office. Senator Carroll asked whether the executive director's duties with respect to "design, development, and implementation of a system of merit system referrals for state merit system positions" is deemed to comply with KRS Chapter 18A. Mr. Honeycutt said the Cabinet and members of the Blue Ribbon Task Force are looking at the legality of the provisions to ensure that the executive order is in compliance with the law. Representative Cherry said that he also is interested in the questions raised by Senator Carroll.
Representative Barrows said he has reviewed the proposed recommendations of the Task Force and that they are fairly generic and do not seem to provide much guidance on the direction of the Office of Merit System Referral. He said he is interested in the status of the Office's implementation. Mr. Honeycutt said he understands that an executive director for the Office has been appointed and that the Cabinet is now studying goals, procedures, statutory compliance, and other issues pertaining to the Office.
Representative Barrows asked for a breakout of the reorganization's projected annual cost of $2-2.5 million. Mr. Honeycutt said that the Cabinet's biennial budget request will break out the costs. He said it is his understanding that the cost of the new Office will primarily be for salaries and that no additional office space will be required. Representative Barrows asked about the 35 additional positions anticipated by the executive order. Mr. Honeycutt said that the majority of those positions will be for administration of the self-insured health insurance program; the other major position request will be for HRIS, the new $25 million computer system authorized by the legislature to improve the 1982 system that is currently in use. He then briefly discussed other positions included in the reorganization. Representative Barrows said he would like to know how many of the 35 positions are merit and how many are nonmerit, as well as the classification and qualification requirements for the merit positions. He noted that the Administration has changed the qualification requirements for certain positions and said he is interested in how those changes relate to this reorganization. Mr. Honeycutt said he would get that information for Representative Barrows.
Representative Graham asked whether any of the reorganization has been implemented. Mr. Honeycutt said that the Office of Merit System Referral has not been implemented; however, the Cabinet is moving forward on other parts of the reorganization. Representative Graham said his main concern is that the reorganization complies with the law but that he is also concerned about cost. He said, too, that it appears to him that nonmerit, politically-appointed principal assistant positions have just been renamed in the executive order. Mr. Honeycutt said that none of the positions to be appointed as part of the reorganization will be principal assistants. He said that the executive director classification was established in the mid-1980s and that the commissioner and division director classifications have been around for a long time. He went on to say that costs have been projected by the Cabinet and LRC but that actual costs will not be known until after the reorganization is fully implemented. (Later in the discussion, Representative Cherry pointed out that the $2-2.5 million cost estimate is the Cabinet's estimate and is stated in the "Fiscal Impact" section of the reorganization plan.) Representative Graham said he would have hoped that creation of the Office of Merit System Referral could have awaited the recommendations of the Blue Ribbon Task Force. Mr. Honeycutt said that the Governor's initial concern was to ensure that the reorganization is in compliance with KRS 18A.140 and that it is the Cabinet's goal to ensure that there is compliance. Representative Graham said he wants to work with the administration but also make sure that the reorganization is proper and legal.
Representative Wayne said he is concerned and also confused as to why the Governor would create the Office of Merit System Referral before the Blue Ribbon Task Force completes its work. Representative Cherry said he understands that the reorganization was done prior to formation of the Task Force. He added that the Task Force is not focusing on the new Office because it is not yet in operation. He also said it is conceivable to him that the Governor and Personnel Cabinet may decide the Office is not needed; however, if they intend to keep it, the Office will be subject to the scrutiny of the 2006 General Assembly.
Representative Cherry thanked Mr. Honeycutt. The Committee next reviewed the Finance and Administration Cabinet's administrative regulation 200 KAR 5:080 (Sponsorships). Angela Robinson, staff attorney, represented the Cabinet. The Commerce Cabinet was represented by Ellen Benzing, General Counsel, and Jerry Miller, Director of Finance and Administration. As stated in the LRC staff summary, this new regulation would establish parameters under which an executive branch agency may enter into a written contract for sponsorship from a business. The staff summary also lists two remaining issues that the Committee may want to address: whether the Finance and Administration Cabinet has authority to promulgate the regulation; and whether the omission of certain language suggested by the Executive Branch Ethics Commission permits too broad a standard for determining whether a business entity can "bid" on a sponsorship. At its August 9, 2005, meeting, the Administrative Regulation Review Subcommittee (ARRS) amended the regulation to clarify that evaluation factors used shall insure "best value" as defined in KRS 45A.070(3).
Representative Barrows asked about the amendment proposed by the Executive Branch Ethics Commission. Ms. Robinson said that the Cabinet had worked with the Ethics Commission on the wording for the amendment and that the Commission had approved the language, although it did not precisely mirror the language originally suggested by the Commission.
Representative Barrows asked about the statutory authority issue. Ms. Robinson said that, prior to ARRS review, the ARRS staff attorney agreed with the Finance and Administration Cabinet's position that the Cabinet has statutory authority to promulgate the regulation under KRS 45A.035.
Representative Barrows inquired further about the use of sponsorships. Ms. Benzing said that the Commerce Cabinet is comprised of agencies that would benefit from the regulation. She said that the Horse Park and the Kentucky Fair Board are often approached by entities wishing to enter into advertising agreements with the Commonwealth. She went on to say that the Cabinet feels the regulation sets parameters for these agreements, or sponsorships—which have occurred in the past but for which there have not previously been any guidelines. Mr. Miller explained that the genesis of the regulation related to the Cabinet's desire to promote special events without having to seek funding from the General Assembly, and to clarify any "gray" areas so that it would not be necessary to seek an ethics opinion for each solicitation of a sponsorship.
Representative Barrows said it appears from the definition of sponsorship that naming rights would not be governed by the regulation. Ms. Robinson agreed, stating that she believes the intent is that naming rights are to be competitively bid. Representative Barrows said he would like to know whether sponsorships are governed by the Model Procurement Code. He also suggested that sponsorships should be addressed statutorily in order to explicitly authorize their use and refine the utilization process.
Representative Cherry said he thinks the regulation is worthy but that he believes the question of statutory authority needs to be addressed. He said he would be willing to work with the agency to draft appropriate legislation.
Representative Wayne said he has reservations about granting the executive branch broad authority for sponsorships. He said that one of government's roles is to regulate business for the common good and that there should not be a close marriage between business and government. He suggested taking a cautious approach so that the spirit of the law is not violated.
Representative Lee, a member of ARRS, said that when ARRS reviewed the regulation there was a great deal of discussion regarding the question of statutory authority. He said that ARRS staff attorneys assured the members that the Finance and Administration Cabinet has authority to promulgate the regulation. He added that legislation might be needed to reconcile the difference of opinions on this issue. Representative Bruce suggested possibly deferring the regulation until the question is resolved.
Without objection, Representative Cherry recommended that the Committee report its review of the regulation but not take any action at this time. Representative Barrows said he thinks it would be helpful for the Committee to have basic information about past use of sponsorships and future plans for their use. He said there are questions about whether they should be limited to specific events rather than broadly authorized. He added that the idea is good but that the guidelines need to be fine-tuned.
The final item on the agenda was a status report on the Kentucky Lottery Corporation, presented by Arch Gleason, President and CEO; and Chip Polston, Vice President of Communications, Government and Public Relations. They provided members of the Committee with copies of their PowerPoint presentation.
In summary, Mr. Gleason said that the lottery is doing well—better than anticipated after the startup of the Tennessee lottery (TELC). Sales have grown from $486.5 million in FY 1993 to $725.3 million in FY 2004. With the start of the Tennessee lottery, sales dropped off slightly in FY 2005 to $707.3 million. Profits in FY 1993 were $100 million; in FY 2004, profits were $185.2 million and $169.3 million in FY 2005. The impact of the Tennessee lottery is significant. Loss of revenue in the 16 counties adjacent to the Tennessee border after startup of TELC was approximately $48 million. During the same time period there was a sales increase of approximately 5.6 percent in the rest of Kentucky. Sales loss has been fairly consistent with predictions for the second year of the TELC.
The annual growth rate in the U. S. lottery industry has averaged about 5.5 percent as a whole for FY 1996 through FY 2004. The growth rate is very much driven by the states with more aggressive forms of gaming, such as Keno-style games or video lottery. States like Kentucky that have stayed with traditional games have had an average growth rate during that same time period of about 2.1 percent. During that nine-year period, Kentucky lottery sales have grown 41.5 percent, with average growth of about 4.5 percent; profits have grown an average of 36 percent, or about four percent annually. In order to achieve greater sales, products must pay more in prizes. In calendar year 2004, the five Indiana and Illinois riverboat casinos had a net win of $1.3 billion, with attendance just under 14 million.
A 2005 survey by the U. of L. Urban Studies Institute shows that 84 percent of the citizens of the Commonwealth are unaware that KLC has contributed more than $2 billion to the Commonwealth; 86 percent are unaware that the majority of proceeds fund scholarships and grants; and 80 percent feel they do not get enough information on how KLC proceeds are spent. Further, 92 percent would support advertising how proceeds are spent, but this would require legislative change. KLC strongly believes that advertising would benefit both the citizens and the Commonwealth, and it has been done very well in many other states.
KLC is working to offset sales losses by continuing to grow instant ticket product sales, which have sustained enough growth to overcome the impact of the TELC. KLC is also constantly looking for new alternatives. Modest growth in sales, profits, and dividends is projected for FYs 2005-2010. Concluding his presentation, Mr. Gleason pointed out that operating expenses of the lottery have declined over the past five years, with FY 2005 having the lowest operating expenses in dollar terms since FY 1998.
Representative Bruce asked whether the number change in the Powerball game has affected sales. Mr. Gleason said that, although the change in the odds is somewhat to the disadvantage of the player, it contributes to larger jackpots which, in turn, attract greater sales. He noted that other changes to the game sweetened the second prize and that overall odds of the game remain about the same.
Representative Arnold asked whether there has been any research of lottery states that have gone to expanded gaming. Mr. Gleason said there have been studies and that KLC has monitored those states. He went on to say that the best example of a state similar to Kentucky where expansion of gaming took place outside the lottery would be Louisiana. In that state, lottery sales prior to expansion were about $400-500 million. Prior to the recent hurricanes, lottery sales were under $300 million, and profits were about $100 million. By comparison, Kentucky's sales are approximately $700 million, and profits are nearly twice as much. Louisiana has video lottery at racetracks and riverboat casinos, which has had a dramatic impact on the lottery. Conversely, in states where lotteries have been party to expansion—e.g., West Virginia, Delaware, and Rhode Island—there is good evidence that they have been better able to sustain their core lottery products, while not retarding the growth of the more aggressive forms of gaming. Mr. Gleason said he thinks there is compelling evidence that if expansion were to take place in Kentucky through KLC, there would be a better chance of sustaining the growth and present level of revenues realized from lottery games.
Representative Ballard said people have asked him why Lotto South jackpots are not published in many of Kentucky's newspapers. Mr. Gleason said that KLC occasionally features Lotto South in banner advertisements, usually across the bottom of the front page or sports section. That game, however, is dramatically dwarfed by Powerball, and Powerball makes a much better strip advertisement. He noted that when Powerball jackpots are elevated, other games also sell better.
Representative Henley asked about the impact of Kentucky's cigarette tax increase on lottery sales in counties bordering Tennessee. Mr. Gleason said they have not specifically looked at that to see if there is a direct correlation. He said that from KLC's standpoint, the biggest impact came when Tennessee joined Powerball and Tennessee residents bought their tickets at home instead of driving to Kentucky.
Representative Clark said it is amazing to him that 86 percent of Kentuckians do not know that the lottery funds scholarships and grants. Mr. Gleason said, in his opinion, this questions would arise much less often if KLC were allowed to advertise that information. He said that research indicates that citizens think they should know more about that but that the General Assembly has not been receptive to changing the law, which specifically prohibits KLC from mentioning in its advertisements the programs that benefit from the lottery.
Representative Cherry thanked Mr. Gleason and Mr. Polston. He announced that the last meeting of the Committee is scheduled for November 16. Business concluded, and the meeting was adjourned at 3:10 p.m.