1 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 TEXAS LOTTERY COMMISSION 4 AUSTIN, TEXAS 5 6 7 REGULAR MEETING OF THE § 8 TEXAS LOTTERY COMMISSION § THURSDAY, DECEMBER 9, 2010 § 9 10 11 12 13 COMMISSION MEETING 14 THURSDAY, DECEMBER 9, 2010 15 16 17 BE IT REMEMBERED THAT on Thursday, the 9th day 18 of December 2010, the Texas Lottery Commission meeting 19 was held from 9:07 a.m. to 11:48 a.m., at the Offices of 20 the Texas Lottery Commission, 611 East 6th Street, 21 Austin, Texas 78701, before CHAIRMAN MARY ANN 22 WILLIAMSON and COMMISSIONER J. WINSTON KRAUSE. The 23 following proceedings were reported via machine 24 shorthand by Aloma J. Kennedy, a Certified Shorthand 25 Reporter. 2 1 APPEARANCES 2 CHAIRMAN: 3 Ms. Mary Ann Williamson 4 COMMISSIONERS Mr. J. Winston Krause 5 GENERAL COUNSEL: 6 Ms. Kimberly L. Kiplin 7 DEPUTY EXECUTIVE DIRECTOR: Mr. Gary Grief 8 DIRECTOR, CHARITABLE BINGO OPERATIONS: 9 Mr. Philip D. Sanderson 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 TABLE OF CONTENTS 2 PAGE 3 PROCEEDINGS - THURSDAY, DECEMBER 9, 2010........... 4 AGENDA ITEM NO. I - Meeting Called to Order........ 7 5 AGENDA ITEM NO. II - Report, possible discussion and/or action on calendar year 6 3rd quarter conductor information.................. 15 7 AGENDA ITEM NO. III - Report by the Bingo Advisory Committee Chairman, possible 8 discussion and/or action on the Bingo Advisory Committee’s activities, including 9 the November 30, 2010 Bingo Advisory Committee meeting and report on the FY 2010 10 Work Plan.......................................... 17 11 AGENDA ITEM NO. IV - Report by the Charitable Bingo Operations Director and possible 12 discussion and/or action on the Charitable Bingo Operations Division’s activities, 13 including updates on staffing, licensing, accounting and audit activities, pull-tab 14 review, special projects, and upcoming operator training.................................. 20 15 AGENDA ITEM NO. V - Report, possible 16 discussion and/or action on lottery sales and revenue, game performance, new game 17 opportunities, advertising, market research, trends, second chance drawings, and game 18 contracts, agreements, and procedures.............. 21 19 AGENDA ITEM NO. VI - Report, possible discussion and/or action on transfers 20 to the State....................................... 26 21 AGENDA ITEM NO. VII - Report, possible discussion and/or action on the 2010 22 demographic report on lottery players.............. 7 23 AGENDA ITEM NO. VIII - Report, possible discussion and/or action on the agency’s 24 contracts.......................................... 27 25 4 1 TABLE OF CONTENTS (CONTINUED) 2 PAGE 3 AGENDA ITEM NO. IX - Report, possible discussion and/or action on the lottery 4 operations and services procurement................ 28 5 AGENDA ITEM NO. X - Report, possible discussion and/or action on the amendment 6 to the agency’s instant ticket manufacturing and services contracts and advertising contract.... 30 7 AGENDA ITEM NO. XI - Report, possible 8 discussion and/or action on the agency's HUB program and/or minority business 9 participation, including the agency's Mentor Protégé Program.................................... 31 10 AGENDA ITEM NO. XII - Report, possible 11 discussion and/or action on the 82nd Legislature........................................ 34 12 AGENDA ITEM NO. XIII - Consideration of 13 and/or report, possible discussion and/or action on external and internal audits and/or 14 reviews relating to the Texas Lottery Commission, and/or on the Internal Audit 15 Department’s activities............................ 37 16 AGENDA ITEM NO. XIV - Report, possible discussion and/or action on GTECH Corporation...... 37 17 AGENDA ITEM NO. XV - Report by the Executive 18 Director and/or possible discussion and/or action on the agency’s operational status, 19 agency procedures, and FTE status.................. 38 20 21 22 23 24 25 5 1 TABLE OF CONTENTS (CONTINUED) 2 AGENDA ITEM NO. XVI - Consideration of the 3 status and possible entry of orders in: A. Docket No. 362-10-0085 – La Tejana 4 Meat Market B. Docket No. 362-10-5874– National 5 Truck Stop C. Docket No. 362-10-5877 – El Patron 6 Drive-Thru D. Docket No. 362-10-5878 – Magic Food 7 Mart E. Docket No. 362-10-3281 – Sunco 8 Marketplace No. 1 F. Docket No. 362-10-4408.B – Michael 9 Beard G. Docket No. 362-10-3780.B – Tammy 10 Hunter.................................... 38 11 AGENDA ITEM NO. XVII - Public comment.............. 43 12 AGENDA ITEM NO. XVIII - Commission may meet in Executive Session: 13 A. To deliberate the duties and evaluation of the Executive Director pursuant to 14 Section 551.074 of the Texas Government Code. B. To deliberate the duties and evaluation 15 of the Internal Audit Director pursuant to Section 551.074 of the Texas Government Code. 16 C. To deliberate the duties and evaluation of the Charitable Bingo Operations Director 17 pursuant to Section 551.074 of the Texas Government Code. 18 D. To deliberate the duties of the General Counsel pursuant to Section 551.074 of 19 the Texas Government Code. E. To deliberate the duties of the Human 20 Resources Director pursuant to Section 551.074 of the Texas Government Code. 21 F. To receive legal advice regarding pending or contemplated litigation pursuant to 22 Section 551.071(1)(A) and/or to receive legal advice regarding settlement offers 23 pursuant to Section 551.071(1)(B) of the Texas Government Code and/or to receive 24 legal advice pursuant to Section 551.071(2) of the Texas Government Code, including but 25 not limited to: 6 1 TABLE OF CONTENTS (CONTINUED) 2 AGENDA ITEM NO. XVIII (CONTINUED) 3 4 First State Bank of DeQueen et al. v. Texas Lottery Commission 5 Texas Lottery Commission v. Leslie Warren, Texas Attorney General Child 6 Support Division, Singer Asset Finance Company L.L.C., and Great-West Life & 7 Annuity Insurance Company Department of Texas, Veterans of 8 Foreign Wars et al. v. Texas Lottery Commission et al. 9 John Doe v. Texas Lottery Commission and Greg Abbott, Texas Attorney 10 General Employment law, personnel law, 11 procurement and contract law, evidentiary and procedural law, and 12 general government law Lottery Operations and Services 13 procurement and/or contract........... 43 14 AGENDA ITEM NO. XIX - Return to open session for further deliberation and possible action 15 on any matter discussed in Executive Session....... 44 16 AGENDA ITEM NO. XX - Adjournment.................. 44 17 REPORTER'S CERTIFICATE............................ 46 18 19 20 21 22 23 24 25 7 1 P R O C E E D I N G S 2 THURSDAY, DECEMBER 9, 2010 3 (9:07 a.m.) 4 AGENDA ITEM NO. I 5 CHAIRMAN WILLIAMSON: Good morning. I 6 would like to call the meeting of the Texas Lottery 7 Commission to order. Today is December the 9th. The 8 time is 9:07. Commissioner Krause is present, so we 9 have a quorum. 10 AGENDA ITEM NO. VII 11 CHAIRMAN WILLIAMSON: We are going to skip 12 down to Item No. VII which is the report, discussion 13 and/or action on the 2010 demographic study on lottery 14 players. 15 Mike, this is your item. 16 MR. FERNANDEZ: Okay. Good morning, 17 Chairman, Commissioner. My name is Mike Fernandez, 18 Director of Administration. 19 As you know, the agency is required to 20 have conducted every two years a survey and study, a 21 demographic study of lottery players. In that study 22 we're required, as you also know, to present to the 23 leadership prior to each legislative session. 24 With me this morning, I have Dr. Jim 25 Granato, the Director of the Hobby Center for Public 8 1 Policy, whose staff conducted the survey. 2 With that, I will turn it over to 3 Dr. Granato. 4 DR. GRANATO: Thank you very much. 5 The survey is part of an ongoing process, 6 and we continue what we've done in the past so there is 7 continuity. We did a random digit dialing method of 8 surveying individuals. There is a cell phone component. 9 It's approximately 19 percent of the sample, which is in 10 keeping with national trends. So about 80 percent is 11 landline and about 20 percent is cell phone. We expect 12 those trends, with increasing cell phone use, to 13 continue. It's clearly an age-based issue. 14 A survey was conducted between August 4th 15 and August 21st. The response rate for all individuals 16 was approximately 22 percent. For landline it was 17 23 percent. And for cell percent, it was about 18 17 percent. 19 Now, 30 years ago in the good old days 20 when we did phone surveys, it was approximately 70 21 percent. But due to telemarketing and a variety of 22 other things, the response rates on surveys done by 23 phone have dropped considerably. And there was a bit of 24 concern on the part of survey methodologists on how this 25 affects the quality of the survey. 9 1 What I can tell you is that what we're 2 finding here is consistent with what we're finding in 3 other surveys that we do, and nationally. Random digit 4 dialing, using the telephone, is approximately between 5 20 and 30 percent in terms of response rate these days. 6 In terms of the sample details, there were 7 1,691 surveys that were completed. Usually we do 1,700, 8 but there were a couple of folks that we talked to that 9 would say yes, they participated. And later on they 10 realized they didn't, so we had to remove them from the 11 sample. The margin of error is approximately 2.4 12 percent, with a sample of 1,700. And the rule there is 13 one over the square root of the sample size. So what 14 we're saying, there is a five percent chance that the 15 sample that we have, the results we have, differ from 16 the true population average, so it's fairly accurate. 17 The methodology, as I said before, is done 18 using random digit dialing. And for the sample 19 selection, we use Survey Sampling International, which 20 is a well-known firm that's been doing this for decades. 21 In terms of the revenue forecast, we 22 project, based on our survey, revenues of approximately 23 $2.84 billion. The upper bound is $2.9 billion; the 24 lower bound is $2.77 billion. 25 Now, a word about sensitivity of those 10 1 estimates. Part of this is based on the average spent 2 in a month that people recall. But imagine if people 3 recall that spent, instead of $38.92 a month, they said 4 $45. If you have $45 as a recollected amount that 5 people spend in a month, the revenue forecast jumps up 6 to $3.28 billion. If, on the other hand, they had 7 recollected it was $35 billion -- or $35 a month, the 8 forecast would drop to $2.55 billion. So we're talking 9 about people's memories and recollections here. And 10 when there is some error there, that can affect this 11 revenue forecast we present to you today. 12 In terms of general findings, 13 participation rates are down this year. Last year it 14 was approximately 41.7 percent of the individuals 15 surveyed played at least one game. This year it was 16 approximately 34 percent. 17 In terms of the amount spend per month for 18 each game, the average this year was $38.92. Last year 19 it was $45. In 2008, it was approximately $37, so we're 20 about where we were in 2008. 21 Reasons for this? We think, although it's 22 beyond the scope of this survey, you don't have to be a 23 genius to realize the economy is not doing that well. 24 And if you drill down into the survey details, you can 25 see the people that play the most are the people that 11 1 are employed. So when unemployment rates are peaking up 2 or people not afraid they're going to lose their job, 3 you can see they're not spending as much on the lottery. 4 In terms of demographic differences 5 between people that play and people that don't play, we 6 see significant differences in employment status, 7 marital status, children under 18 living in households 8 and Hispanic origin. In other words, people that are 9 employed, married, have children living in the household 10 that are under 18 and are of Hispanic origin, those 11 combined categories are more likely to play. 12 One other issue that's not in this slide I 13 want to get to you -- or present to you is district 14 participation across the districts. Participation is 15 down for everyone. Victoria remains to be the highest, 16 with 45.1 percent. San Antonio spent the most median 17 per month; that was $17. The biggest drop, though, 18 between this year and last year was in El Paso. The 19 participation rate went from 56 percent to 25 percent. 20 And spending in El Paso went from $19 to $10. 21 For the game results and the changes from 22 last year, participation rates for all games are down, 23 or statistically the same from last year. That is 24 within the margin of error. But if you look at the 25 nominal figures, they're still down. 12 1 The frequency of purchases. Weekly 2 purchases are down. But what's interesting is that 3 monthly purchases or purchases where you recollect 4 you've purchased a few times a year, they're either up 5 or the same. The average time played, the number of 6 times you've played, is either down or statistically the 7 same as last year. Again, this is for every game we 8 looked at. And again, in terms of dollars spent for all 9 games, they're either down or statistically the same as 10 last year. 11 Now, one other thing we do is, we compared 12 game results, so you're comparing each individual game 13 versus the entire span of games and looking at any games 14 that have different demographic characteristics in terms 15 of participation. For example, if we look at Lotto 16 Texas, age is a significant marker. People that are 17 older play Lotto Texas as opposed to the average game. 18 Or if you looked at Powerball, gender was a significant 19 indicator. That is, men were more likely to play 20 Powerball than women. Or, for example, Mega Millions 21 this year as opposed to last year, Mega Millions is 22 down. 23 Here's some figures of some of the games. 24 These reflect participation rates. As you can see, this 25 is a span of the entire universe of surveys I've been 13 1 taking in terms of participating in any game. And you 2 can see there's been basically a downward trend in the 3 last four years. I mean, the exception, of course, is 4 last year. But you can see things are moving downward. 5 In addition, the change from this year from last year is 6 significant; it's statistically significant. That's not 7 a chance change. That actually is something that's 8 real. So there's been a drop this year. 9 For Pick 3 day, we see a drop nominally. 10 But here, since the sample size is only 84 for this, 11 that change, even though you see a nominal difference, 12 it's not statistically different. So we can see there's 13 some stability here, even though nominally you see a 14 change. 15 For Cash 5, you see again a drop. Here, 16 Cash 5, the sample is 95. The margin of error is plus 17 or minus 10.3 percent. So again, it's within the margin 18 of error. It's down nominally; but again, it's within 19 the margin of error. 20 Lotto Texas, there's stability here as 21 well. We've seen a drop since 2007, but the last three 22 years have been relatively stable. The margin of error 23 is 5.1 percent here. So again, nominally it's down 24 slightly but, again, within the margin of error. Texas 25 Lottery scratch-off down slightly but again within the 14 1 margin of error. The sample here was 3 point -- or the 2 sample here was 308. The margin of error was 5.7. 3 Texas Two-Step, again, nominally -- same 4 pattern you're seeming here. Nominally there's a drop 5 but again within the margin of error, since Texas 6 Two-Step had a sample of 54, and the margin of error was 7 13.6, plus or minus. 8 Mega Millions, it's a drop from 52 to 9 40 -- approximately 53 to 40. The sample here is 228. 10 And we have plus or minus 6.6 percent as a margin of 11 error. So this one, there is a drop nominally and 12 statistically. 13 Megaplier is approximately the same. 14 Again, the sample here is 52. And we've got a plus or 15 minus 14 percent margin of error here. 16 And that concludes my presentation. I 17 will be glad to answer any questions. 18 CHAIRMAN WILLIAMSON: Thank you. 19 Commissioner, do you have any questions? 20 COMMISSIONER KRAUSE: Oh, I don't know if 21 I have a question so much. I guess that I'm gratified 22 to see that the survey indicates that people who are 23 employed are the people who play and that participation 24 reflects people's, I guess, concern about their 25 employment situation and that kind of thing. So I'm 15 1 gratified about that. 2 And that confirms, I guess, my view that 3 what we're offering here is an entertainment option for 4 people and that they have the self-discipline to cut 5 back when they should, and that's appropriate. 6 That's it. 7 CHAIRMAN WILLIAMSON: Thank you. 8 MR. FERNANDEZ: Thank you. 9 CHAIRMAN WILLIAMSON: All right. Thank 10 you. 11 AGENDA ITEM NO. II 12 CHAIRMAN WILLIAMSON: All right. We will 13 go back to Item II, report, possible discussion and/or 14 action on calendar year third quarter conductor 15 information in bingo. 16 Bruce, this is yours, please. 17 MR. MINER: Good morning, Commissioners. 18 For the record, my name is Bruce Miner, Manager of 19 Taxpayer Services of the Charitable Bingo Operations 20 Division. And I'm here to present to you a summary of 21 the first three quarters for 2010, as recorded by our 22 licensed authorized organizations. 23 This chart shows a comparison of gross 24 receipts for the first three quarters of each year, from 25 2007 through 2010. And as you can see, gross receipts, 16 1 the top line shown here, shows a slight drop from '09 to 2 2010. Regular bingo continues its downward trend for 3 each year. Electronic card-minding device sales remain 4 flat, while instant bingo sales continue an upward 5 trend. 6 This next chart shows a comparison of net 7 receipts for the first quarters of each year, for '07 8 through 2010. And this slide captures the trend for net 9 receipts, which are gross receipts minus prizes. And 10 the total net receipts shown here in green have dropped 11 almost to the level they were in 2008. 12 These next slides will overlay the 13 comparison between the required distribution, the net 14 proceeds and the actual reported distributions. First 15 we have the required distributions, utilizing the 16 35 percent calculation we used prior to October 1, 2009, 17 and it shows the amount of the required distributions, 18 for the first three quarters of '07 through 2010 ranged 19 from a high of $8.5 million last year to a low of 20 $7 million this year. 21 We compared a calculated required 22 distribution to the actual net proceeds for the same 23 period. As defined in the revised Bingo Enabling Act. 24 Gross receipts minus prizes and expenses equals net 25 proceeds. 17 1 And this last slide overlays the reported 2 charitable distributions that show the actual 3 distributions compared to the amount required to be 4 distributed, and the net proceeds. Organizations 5 continue to distribute more than they are required for 6 their charitable purposes. 7 In your notebook is additional information 8 from an analysis conducted by Arlette Taylor, our 9 Operational Planning and Performance Coordinator. 10 And that concludes my report at this time. 11 Are there any questions? 12 CHAIRMAN WILLIAMSON: Thank you. 13 Commissioner, do you have any questions? 14 COMMISSIONER KRAUSE: No, ma'am. 15 CHAIRMAN WILLIAMSON: All right. Thank 16 you, Bruce. 17 AGENDA ITEM NO. III 18 CHAIRMAN WILLIAMSON: We will go on to 19 Item No. III, report by the Bingo Advisory Committee 20 Chairman on their activities and the year-end work plan. 21 And I understand the Chairman is here today. 22 MS. ROGERS: Yes, ma'am. Good morning, 23 Commissioners. For the record, my name is Kimberly 24 Rogers, and I am the Chair of the BAC, Bingo Advisory 25 Committee. 18 1 We had our meeting on November 30th here 2 in Austin. And all members were present except 3 Ms. Beilue and Mr. Weekley. Our minutes were voted on, 4 approved and accepted. 5 Next we recognized the new appointed 6 members, which were myself, Kimberly Rogers, Mr. Earl 7 Silver and Mr. Kenneth Messer. We also gave recognition 8 to Ms. Pat Gifford, who is no longer on the BAC. 9 We next had a motion for presiding 10 officers. I was nominated and it was unanimously 11 passed, to be the chair. I appointed Mr. Earl Silver as 12 Vice Chair. 13 Next Ms. Nelda Trevino gave her report on 14 the 82nd Legislature dates. She gave us a lot of 15 information on dates that are going to be upcoming in 16 2011 that we should really look at and pay attention to, 17 and she will bring further information to us. 18 Ms. Phil Sanderson gave the third quarter 19 2010 bingo data report. And it does seem apparently 20 we're having a little bit more of the economy hitting 21 us, too. Figures are down a little bit. 22 Our next six items, we talked about 23 different rules. It was the charitable use of proceeds 24 for recordkeeping, charitable use of proceeds, the unit 25 agreements definitions, units accounting, and delinquent 19 1 purchasers. This is in your notebooks, so those are 2 basically a summary of the comments that we had, nothing 3 too major. 4 Melissa Young gave her report on the 5 accomplishments that the BAC has done over the past 6 fiscal year. And we formed a nomination committee, 7 because we will have three seats becoming available in 8 2011, so we are prepared to take nomination forms and 9 ready to go through those. We also formed a committee 10 for the annual report. So in March when those numbers 11 come out, we can get on that. 12 The last item that we talked about was in 13 reference to security. There seems to have been an 14 incident in Waco, and so we talked over different 15 issues -- minimal cost to the individuals at the bingo 16 hall all the way up to, you know, the most expensive, 17 putting in surveillance cameras and things of that 18 nature. 19 Committee members were advised that our 20 next meeting would be around the time of February or 21 March. And there was no public comment. The meeting 22 was adjourned at 11:48. 23 And I will be happy to answer any 24 questions that you might have. 25 CHAIRMAN WILLIAMSON: Commissioner, do 20 1 you have any questions? 2 COMMISSIONER KRAUSE: I do not. Thank you 3 for the report. 4 CHAIRMAN WILLIAMSON: Thank you very much. 5 MS. ROGERS: Thank you so much. 6 AGENDA ITEM NO. IV 7 CHAIRMAN WILLIAMSON: We will continue on, 8 then, on Item No. IV, Charitable Bingo Operations 9 Director and their activities updates. 10 Phil, if you will provide us that 11 information, please. 12 MR. SANDERSON: Commissioners, I emailed 13 you the report last week. I have a hard copy if you 14 would like to look at it again. But other than what's 15 in that report, I have nothing to add. Things are 16 moving along. We're issuing more licenses than we have 17 in the past, with less staff, and we're trying to just 18 keep our head above water and float along. 19 CHAIRMAN WILLIAMSON: All right. I 20 appreciate it. 21 Commissioner, do you have any questions 22 for Phil? 23 COMMISSIONER KRAUSE: Just keep up the 24 good work. 25 MR. SANDERSON: Thank you. 21 1 CHAIRMAN WILLIAMSON: And I know you're 2 struggling to deal with certain things. And, as I said, 3 just prioritize and we'll go from there. 4 MR. SANDERSON: We are. Thank you very 5 much. 6 CHAIRMAN WILLIAMSON: Thank you. 7 AGENDA ITEM NO. V 8 CHAIRMAN WILLIAMSON: All right. Let's go 9 on to Item No. V, report, possible discussion and/or 10 action on lottery sales and revenue, game performance, 11 new game opportunities, advertising. 12 And I believe, Kathy and Robert, this is 13 your item, please. 14 MS. PYKA: Yes. Thank you, Madam Chair. 15 My name is Kathy Pyka. I'm the Controller for the 16 Commission. And with me to my right is Robert Tirloni, 17 our Products Manager. 18 Commissioners, the first chart that we 19 have for you this morning reflects comparative sales 20 through the week ending December 4, 2010. Total Fiscal 21 Year 2011 sales through this 12-week period are 22 $923.7 million, a decrease of $40.8 million compared to 23 the $964.5 figure for the previous fiscal year. 24 Commissioners, the last time we were 25 before you, we presented sales through October 30th. 22 1 And at that point, we had a decline of $44 million. So 2 you can see we're starting to chip away at that decline 3 year over year. 4 Our Fiscal Year 2011 instant ticket sales 5 reflected on the second blue bar are at $693.8 million, 6 which is an $18 million decline from the previous fiscal 7 year. And then our on-line sales reflected on the 8 second red bar are at $229.9 million, which is a 9 $22.9 million decline from the $252.7 million figure for 10 Fiscal Year 2010. 11 Our next slide includes the cumulative 12 average daily sales comparison for Fiscal Years 2009, 13 2010 and 2011. As reflected by total cumulative sales, 14 our daily sales average for Fiscal Year 2011 is at 15 $9.7 million, which is a 3.2 percent decline from Fiscal 16 Year 2007 -- or 2010 sales, and it's a 2.7 percent 17 increase over our Fiscal Year 2009 sales. 18 The jackpot games are highlighted in the 19 white font, and they reflect a daily average of 20 $1.3 million for this fiscal year. It's a $221,000 21 decline from the last fiscal year. And certainly this 22 decline is attributed to Lotto Texas and the Mega 23 Millions game. 24 At this point last fiscal year, Lotto 25 Texas had a $76 million jackpot in October of 2009, and 23 1 Mega had a $200 million jackpot, and we're not seeing 2 those jackpot levels this fiscal year. 3 Our daily games are included in the green 4 font. And we have just over -- or just under a 5 $1.1 million daily average for this fiscal year, which 6 exceeds the two prior fiscal years. Highlighted within 7 this group are Pick 3 sales, which are up just over a 8 percent over last year, and our Daily 4 sales were up 9 just over 9 percent from last fiscal year. 10 Instant ticket sales are in the yellow 11 font at the bottom, at $7.3 million as a daily average, 12 which is a decline of $111,000 from the prior fiscal 13 year. 14 With that, Robert will now provide an 15 overview of actual sales by game. 16 MR. TIRLONI: Good morning, Commissioners. 17 For the record, my name is Robert Tirloni. I'm the 18 Products Manager for the Commission. 19 So this slide is in similar format to the 20 one you just looked at a moment ago. It's comparing our 21 current Fiscal Year 2011 to the previously fiscal year, 22 2010. Again, the product categories are grouped by 23 jackpot games, daily games and instants. 24 The jackpot games are down $22.6 million 25 year over year. Again, as Kathy just mentioned, that's 24 1 mainly due to declines in Lotto Texas and Mega Millions. 2 Powerball, Powerplay and even Texas Two-Step are showing 3 gains. We have a nice roll going on Two-Step right now. 4 We're at a million dollar jackpot for tonight, so that's 5 pretty good for the Two-Step game, to be able to roll up 6 to that amount. 7 The daily games are down just slightly 8 year over year. They're down overall $300,000, and our 9 instant games are down $18 million year over year. We 10 have had for the past two weeks a good uptick in instant 11 ticket sales, two really good solid weeks, and we are 12 trending ahead of last year this week, so we hope to 13 finish this week off well. 14 And we have a very good, I believe, strong 15 holiday suite of games, and I've given you some ticket 16 samples to look at, at your leisure. And we're seeing 17 good results from those holiday games, and we also have 18 advertising out to support the holiday suite of games. 19 So that seems to be going well and I believe 20 contributing to the good instant weeks that we've been 21 seeing here recently. 22 So, as Kathy said, we're slowly starting 23 to chip away at that decline, and we hope to be able to 24 continue to do so through the holidays and into the next 25 calendar year. 25 1 MS. PYKA: And I believe Gary had some 2 remarks as well this morning. 3 MR. GRIEF: Thank you, Kathy. 4 Commissioners, one remark related to sales 5 I wanted to share with you. My understanding is, the 6 Multi-State Lottery Association, which manages and 7 operates the Powerball game, is scheduling a meeting for 8 the middle of this month, at which time I believe they 9 will be considering some changes to the Powerball game, 10 several of which could have a very positive effect on 11 the level to which jackpots might roll in the future. 12 If that occurs, we will likely be coming back to you in 13 January or February with a potential rule change to that 14 game. As you know, we're not a member of the 15 Multi-State Lottery Association; we just have the 16 ability to sell that game here in Texas. 17 And then the other item that's under this 18 particular agenda item is second-chance drawings. I 19 know that both Commissioners are aware of an issue that 20 we had with the Jumbo Bucks III second-chance drawing. 21 You have in front of you copies of both the letter that 22 I recently sent so Scientific Games as well as the press 23 release which the agency issued yesterday. 24 And I will be happy to answer any 25 questions that you might have. 26 1 CHAIRMAN WILLIAMSON: Commissioner, do you 2 have any questions? 3 COMMISSIONER KRAUSE: I don't have any 4 questions, Madam Chair. 5 CHAIRMAN WILLIAMSON: All right. 6 MS. PYKA: Thank you, Commissioners. 7 MR. TIRLONI: Thank you. 8 CHAIRMAN WILLIAMSON: All right. Thank 9 you. 10 AGENDA ITEM NO. VI 11 CHAIRMAN WILLIAMSON: Kathy, I guess the 12 next item, No. VI, is yours, transfers to the state, 13 please. 14 MS. PYKA: Yes, thank you. Again for the 15 record, Kathy Pyka, Controller for the Commission. 16 Commissioners, Tab VI does include 17 information on the agency's transfers to the state. Our 18 first report includes the transfers and allocations to 19 the Foundation School Fund, the Texas Veterans 20 Commission and the allocation of unclaimed prizes 21 through the period ending October 31st of 2010. Total 22 cash transfers to the state amounted to $140 million 23 through this second month of the fiscal year. 24 The second page of your notebook includes 25 the detail on the $140 million. Included with that was 27 1 $138.6 million transfer to the Foundation School Fund, a 2 $1.3 million transfer to the Texas Veterans Commission, 3 with a balance of $24,000 transferred from unclaimed 4 prizes. This represents a 17 and a half percent 5 decrease, or $29.4 million under the amount transferred 6 to the Foundation School Fund through the same period 7 last fiscal year. 8 Commissioners, included also in your 9 notebook is a report of cumulative sales, expenditures 10 and transfers from 1992 to the present. At this point 11 in time, through October of this fiscal year, our 12 cumulative transfers to the Foundation School Fund are 13 at $12.8 billion. 14 I would be happy to answer any questions. 15 CHAIRMAN WILLIAMSON: Thank you. 16 Commissioner, do you have any questions? 17 COMMISSIONER KRAUSE: No, ma'am. 18 CHAIRMAN WILLIAMSON: All right. Thank 19 you. 20 MS. PYKA: Thank you. 21 AGENDA ITEM NO. VIII 22 CHAIRMAN WILLIAMSON: Let's go on to Item 23 VIII, report, possible discussion and/or action on the 24 agency's contracts. 25 Mike Fernandez, please. 28 1 MR. FERNANDEZ: Again, good morning, 2 Commissioners. My name is Mike Fernandez, Director of 3 Administration. 4 This item is our quarterly posting of 5 contracts for your information. If you have any 6 questions, I would be happy to answer them. 7 CHAIRMAN WILLIAMSON: I don't have any 8 questions. 9 Commissioner? 10 COMMISSIONER KRAUSE: No, ma'am. 11 AGENDA ITEM NO. IX 12 CHAIRMAN WILLIAMSON: All right. Let's 13 continue on, then. Item No. IX, report, possible 14 discussion and/or action on the lottery operations and 15 services procurement. 16 MR. FERNANDEZ: Again, Commissioners, this 17 is a posting item that we have every Commission meeting 18 since we began the review of RFPs for the replacement of 19 our lottery operator services contract. And I can 20 report to you today that we are well into negotiations 21 on that item. And again, our target is to -- I believe 22 our scheduled target is to have a contract signed by 23 December the 17th, and I believe we're running a little 24 ahead of that schedule. 25 Mr. Grief, do you have any comments? 29 1 MR. GRIEF: I have nothing further to add. 2 CHAIRMAN WILLIAMSON: All right. 3 Commissioner, do you have any questions? 4 COMMISSIONER KRAUSE: I just hope we're 5 not getting beat up too bad on that. 6 MR. FERNANDEZ: Well, we're trying not to. 7 We have Ms. Pyka in there with us, you know, and she 8 doesn't -- 9 CHAIRMAN WILLIAMSON: Yes, you have the 10 girls with you, don't you? 11 (Laughter) 12 MR. FERNANDEZ: I'm not going there; I'm 13 not going to that. 14 COMMISSIONER KRAUSE: Praise the Lord and 15 pass the ammunition. 16 CHAIRMAN WILLIAMSON: Now, I can say that, 17 because these women told me that. 18 MR. FERNANDEZ: You certainly can, but I 19 would not venture there. 20 (Laughter) 21 MS. PYKA: Thank you. 22 CHAIRMAN WILLIAMSON: All right. Thank 23 you. 24 25 30 1 AGENDA ITEM NO. X 2 CHAIRMAN WILLIAMSON: Let's go on to Item 3 No. X, report, possible discussion and/or action on the 4 amendment to the agency's instant ticket manufacturing 5 and services contract and advertising contract. 6 MR. FERNANDEZ: Yes. Commissioners, this 7 is to advise you of staff's intent to amend a number of 8 contracts, to amend our instant ticket printing 9 contracts and to also amend our advertising services 10 contract. 11 And what we wanted to bring to your 12 attention is, this is a direct result of a letter that 13 Gary authorized last month to begin sending to our 14 vendors, asking for a voluntary reduction in rates. 15 This was the first round of those letters that went to 16 our printing contractors and our advertising 17 contractors. 18 And I'm happy to report to you that we're 19 realizing or we will realize reductions in those rates 20 from one percent to five percent. So we are going to 21 move forward to amend those contracts, to take advantage 22 of that, and that will become effective 1 January, and 23 that was the first round. And at Gary's instructions, 24 we intend to continue that, working with our vendors to 25 see if we can realize additional savings. So we wanted 31 1 to advise you of that. 2 CHAIRMAN WILLIAMSON: Thank you. 3 Commissioner, do you have any questions? 4 COMMISSIONER KRAUSE: No, ma'am. 5 CHAIRMAN WILLIAMSON: And I want to 6 commend you and Gary and everybody else on the staff for 7 doing that. And those of you that are here from some of 8 our vendors, thank you very much. I'm sure you read the 9 papers, too, and see what's going on in Texas, and I 10 think it's just a matter of time. Well, as we know, 11 they're going to scrub everywhere. So the Lottery 12 appreciates your efforts as well and the staff. Thank 13 you. 14 MR. FERNANDEZ: Thank you. 15 AGENDA ITEM NO. XI 16 CHAIRMAN WILLIAMSON: Let's go on to Item 17 No. 11, report, possible discussion and/or action on the 18 agency's HUB program and/or minority business 19 participation, including the Mentor Protégé Program. 20 Joyce, this is your item, please. 21 MS. BERTOLACINI: Good morning, 22 Commissioners. For the record, my name is Joyce 23 Bertolacini, coordinator of the TLC's Historically 24 Underutilized Business Program. 25 The Fiscal Year 2010 statewide HUB report 32 1 was released on October 15th by the Comptroller of 2 Public Accounts. Included in your notebooks today are 3 summary reports that compare and analyze the TLC's 4 Fiscal Year 2010 performance to that of the previous 5 fiscal year. 6 The agency's overall HUB participation for 7 Fiscal Year 2010 was 22.2 percent. This represents HUB 8 expenditures as a percent of the total agency 9 expenditures that are captured by the statewide HUB 10 report. Our overall Fiscal Year 2010 HUB participation 11 rate decreased slightly from our FY 2009 percentage of 12 23.1 percent, so less than one percent change. 13 During this reporting period, however, the 14 agency exceeded three of the four HUB category goals, 15 and I believe that may be -- that's pretty significant. 16 The HUB participation that we had increased very 17 significantly in this special trade construction 18 category, from 23.18 percent to 60.64 percent and also 19 improved in the commodity purchasing category from 20 50.62 percent to 54.75 percent. 21 During Fiscal Year 2010, the TLC was 22 ranked 18th by total expenditures captured by the annual 23 statewide HUB report. Of the 18 largest spending 24 agencies, the TLC ranked No. 6 by overall HUB 25 percentage. 33 1 Regarding the agency's Mentor Protégé 2 Program, we have one active mentor protégé relationship 3 which remains in effect until December 5th of 2011. The 4 relationship is between GTECH Corporation and Business 5 Assets Enterprises, L.P. The two companies have been 6 meeting regularly to discuss the protégé's business 7 structure and development of the temporary services 8 aspect of her business. 9 I would be happy to answer any questions 10 that you would have. 11 CHAIRMAN WILLIAMSON: Thank you. 12 Commissioner, do you have any questions? 13 COMMISSIONER KRAUSE: What kind of 14 business does she have? 15 MS. BERTOLACINI: She actually has several 16 lines of business. One is packaging. And I believe the 17 temporary services aspect of her business may be more 18 recent. But I know that she originally started in 19 office supplies, and she's been supplying packaging for 20 quite sometime. 21 COMMISSIONER KRAUSE: Does she provide any 22 of those services to our commission? 23 MS. BERTOLACINI: She's providing them to 24 GTECH -- 25 COMMISSIONER KRAUSE: Okay. 34 1 MS. BERTOLACINI: -- directly, yes. 2 COMMISSIONER KRAUSE: Okay. 3 CHAIRMAN WILLIAMSON: All right. Well, as 4 always, I'm very proud of how the Lottery does, because 5 everybody that's above us, it's all higher education, so 6 I think that speaks volumes about how proactive we are 7 as well as our contractors, allowing us to help us get 8 to those goals. So once again, good job, staff, and 9 everyone involved and everyone else that participates in 10 that. So thank you. 11 MS. BERTOLACINI: Thank you, 12 Commissioners. 13 AGENDA ITEM NO. XII 14 CHAIRMAN WILLIAMSON: All right. Let's go 15 on to Item No. XII, report, possible discussion and/or 16 action on the 82nd Legislature. 17 MS. TREVINO: Good morning, Commissioners. 18 For the record, I'm Nelda Trevino, the Director of 19 Governmental Affairs. 20 As reported at the last Commission 21 meeting, prefiling of legislation for the 82nd 22 Legislature began on November the 8th, and the 23 Legislature will convene its regular session on January 24 the 11th, 2011. 25 We have begun our practice of providing 35 1 you legislative bill-tracking reports of bills filed 2 that impact the agency. And we have provided you this 3 morning with a copy of an updated report. There have 4 been more than 600 bills that have been prefiled so far, 5 and we are currently tracking 29 of those bills. 6 And just as a reminder, the layout of the 7 tracking report is laid out in sequential order with 8 House bills and House joint resolutions being listed 9 first, and then that's followed by Senate bills and any 10 Senate joint resolutions that are also filed. And as we 11 go through the session, you'll note in the bill history, 12 you know, as the progress as any of those bills, as they 13 go through the process, those will be noted in the Bill 14 History section. 15 There have been some bills that have been 16 filed that are specifically related to the agency that I 17 would like to highlight today for you, and these include 18 the following: That is HJR 32 by Rep. Richard Raymond, 19 and this joint resolution would amend the constitution 20 to dedicate lottery proceeds to fund public education 21 and would prohibit any advertising that would promote 22 the purchase of tickets for the purpose of supporting 23 education. 24 The other bill is House Bill 382, by 25 Rep. Jose Menendez, and this bill relates to authorizing 36 1 poker gaming and creates a Poker Gaming Division here at 2 the Lottery Commission for the regulation of those 3 activities. 4 We will continue to be providing you bill- 5 tracking reports on a regular basis throughout the 6 legislative session, and we'll also provide you separate 7 notification on any bills that are specifically related 8 either to the Lottery or to charitable bingo. 9 Additionally, once the session begins and 10 bills are scheduled to be considered by committees, the 11 Legislative Budget Board will be requesting fiscal note 12 responses from the agency on legislation that may impact 13 the agency, and this is a document that provides 14 estimated fiscal impact on that particular bill, 15 including any administrative costs that we anticipate 16 for implementing that particular piece of legislation. 17 Lastly, as you're aware, state agencies 18 have been asked by the leadership to plan on an 19 additional budget reduction of 2.5 percent for Fiscal 20 Year 2011, and agency management is reviewing the budget 21 at this time in order to identify those budget 22 reductions. 23 And this concludes my report. I will be 24 glad to answer any questions. 25 CHAIRMAN WILLIAMSON: Thank you. 37 1 Commissioner, do you have any questions? 2 COMMISSIONER KRAUSE: I have no questions. 3 CHAIRMAN WILLIAMSON: Okay. Thank you. 4 MS. TREVINO: Thank you. 5 AGENDA ITEM NO. XIII 6 CHAIRMAN WILLIAMSON: Let's see. Let's go 7 on to Item XIII, consideration of and report or any 8 discussion on external and internal audits in the 9 Internal Audit Department. 10 Cat. 11 MS. MELVIN: Thank you, Madam Chair, 12 Commissioner. For the record, Catherine Melvin, 13 Director of the Internal Audit Division. 14 Aside from ongoing internal and external 15 audit and review projects, I don't have any items of 16 update at this time, but I'm happy to answer any 17 questions. 18 CHAIRMAN WILLIAMSON: Thank you. 19 Commissioner, do you have any questions? 20 COMMISSIONER KRAUSE: No, ma'am. 21 CHAIRMAN WILLIAMSON: All right. Thank 22 you. 23 AGENDA ITEM NO. XIV 24 CHAIRMAN WILLIAMSON: Item XIV, report, 25 possible discussion and action on GTECH Corporation, our 38 1 current operator. 2 Gary, this is your item. 3 MR. GRIEF: Commissioners, other than the 4 information in your notebooks, I have nothing further to 5 report on that item. 6 CHAIRMAN WILLIAMSON: Commissioner, do you 7 have any questions? 8 COMMISSIONER KRAUSE: I do not. 9 AGENDA ITEM NO. XV 10 CHAIRMAN WILLIAMSON: Let's go on to XV. 11 Gary, this is you again. 12 MR. GRIEF: Likewise, under that item, 13 Madam Chair, unless the Commission has any questions, I 14 have nothing further to report, other than what's in the 15 notebooks. 16 CHAIRMAN WILLIAMSON: All right. 17 Commissioner, do you have any questions? 18 COMMISSIONER KRAUSE: Seems pretty 19 straightforward. No. 20 AGENDA ITEM NO. XVI 21 CHAIRMAN WILLIAMSON: Then let's go on to 22 Item No. XVI, consideration of the status and possible 23 entry of orders in cases posting on the agenda. 24 Kim, this is your item, please. 25 MS. KIPLIN: Commissioners, this morning I 39 1 would like to take Letters A through D together. These 2 are all lottery cases, the same subject, is insufficient 3 funds being available at the time the lottery swept. 4 Cases proceeded to the State Office of Administrative 5 Hearings. The Administrative Law Judge has recommended 6 revocation of the license in each of these cases. Staff 7 recommends you adopt the Administrative Law Judges' 8 recommendation. 9 CHAIRMAN WILLIAMSON: Okay. Just as an 10 aside, how often do we sweep accounts? 11 MR. GRIEF: Weekly. 12 MS. KIPLIN: Weekly. 13 CHAIRMAN WILLIAMSON: Weekly. Okay. Just 14 curious. 15 Commissioner, do you have any questions 16 or -- 17 COMMISSIONER KRAUSE: I do not. I would 18 be happy to make a motion -- 19 CHAIRMAN WILLIAMSON: Please do. 20 COMMISSIONER KRAUSE: -- to adopt staff's 21 recommendation on these cases. 22 CHAIRMAN WILLIAMSON: I second the motion 23 on these four that have been presented. 24 Is there a vote? 25 COMMISSIONER KRAUSE: Aye. 40 1 CHAIRMAN WILLIAMSON: Aye. 2 Motion passes 2-0. 3 MS. KIPLIN: Thank you, Commissioners. I 4 have orders on these. And I'll hand these to you, 5 Commissioner Krause. 6 Yes. With your permission, we would like 7 to pass Letter E -- that's the Sunco Marketplace 8 No. 1 -- until the next Commission meeting. The 9 gentleman did not receive sufficient notice in his mind 10 for today's meeting, and we certainly don't want to 11 disadvantage him, so we would like to pass that one. 12 CHAIRMAN WILLIAMSON: All right. 13 MS. KIPLIN: That leaves remaining two 14 bingo cases. In each of these cases, that's Letter F 15 and Letter G. And particularly with Letter F, Michael 16 Beard, the staff proceeded at the State Office of 17 Administrative Hearings in a contested case proceeding 18 to have him removed from the registry due to a 19 disqualifying criminal conviction. It was an offense of 20 moral turpitude. The ALJ agreed with the staff's 21 position and has issued a proposal for a decision 22 recommending removal from the registry for his 23 disqualifying criminal conviction. Staff recommends 24 that you vote to adopt that. 25 CHAIRMAN WILLIAMSON: Is there a motion? 41 1 COMMISSIONER KRAUSE: I make a motion that 2 we adopt staff's recommendation on these two cases. 3 MS. KIPLIN: Thank you. On just the 4 Michael Beard. If I could visit with you -- 5 CHAIRMAN WILLIAMSON: Kim, let's go ahead 6 and vote on that motion, since he already made a motion. 7 MS. KIPLIN: Okay. 8 CHAIRMAN WILLIAMSON: Okay. I second. Is 9 there a vote? 10 COMMISSIONER KRAUSE: Aye. 11 CHAIRMAN WILLIAMSON: Aye. 12 Motions passes 2-0. 13 All right. Sorry. Next item. 14 MS. KIPLIN: No, that's fine. 15 On Item G -- this is the Tammy Hunter 16 case -- this case proceeded to a contested case at the 17 State Office of Administrative Hearings. The subject of 18 this particular matter was Ms. Hunter closing games, 19 pull-tab games before the prizes had all been awarded 20 and then filing false reports based on what was 21 remaining top prizes that had not been paid. 22 An investigation occurred. And at that 23 time the investigator had warned her that her conduct 24 was not in compliance with the Act. Subsequent to that, 25 there was another investigation, and she was continuing 42 1 to do the same thing. 2 The staff recommended removing her from 3 the registry and proceeded to contest the case. The 4 Administrative Law Judge recommended a $1,000 penalty. 5 Staff didn't agree with that and post the hearing was 6 able to reach an agreement with Ms. Hunter to where she 7 would agree to be removed from the registry for three 8 years, and that is now what is before you. 9 And I will tell you that what's in your 10 notebook is really the proposal for a decision, because 11 the agreement finally came to fruition within the last I 12 would say three to four days. And so the staff is 13 recommending that you vote to adopt the memorandum of 14 agreement and enter a consent order removing her from 15 the registry for three years. 16 CHAIRMAN WILLIAMSON: And this is in lieu 17 of the $1,000? 18 MS. KIPLIN: This is in lieu of the $1,000 19 penalty that the ALJ recommended. 20 CHAIRMAN WILLIAMSON: All right. 21 Commissioner, do you have any other 22 questions? 23 COMMISSIONER KRAUSE: No. But I'm ready 24 to make a motion on the case -- 25 CHAIRMAN WILLIAMSON: If you will make a 43 1 motion, please. 2 COMMISSIONER KRAUSE: -- to accept staff's 3 recommendation on that docketed matter. 4 CHAIRMAN WILLIAMSON: I'll second. 5 Vote? 6 COMMISSIONER KRAUSE: Aye. 7 CHAIRMAN WILLIAMSON: Aye. 8 Motion passes 2-0. 9 AGENDA ITEM NO. XVII 10 CHAIRMAN WILLIAMSON: And at this time I 11 have no public comment. And, yes, this is a record. 12 AGENDA ITEM NO. XVIII 13 CHAIRMAN WILLIAMSON: So at this time we 14 will adjourn for a 15-minute break, and then we will go 15 into executive session. So at this time I move that the 16 Texas Lottery Commission go into executive session to 17 deliberate the duties and evaluation of the Executive 18 Director, Internal Audit Director and Charitable Bingo 19 Operations Director and deliberate the duties of the 20 General Counsel and Human Resources Director and to 21 receive any legal advice on pending or contemplated 22 litigation. 23 Is there a second? 24 COMMISSIONER KRAUSE: Second. 25 CHAIRMAN WILLIAMSON: All in favor? 44 1 COMMISSIONER KRAUSE: Aye. 2 CHAIRMAN WILLIAMSON: Aye. 3 The vote is 2-0. 4 So after our 15-minute break, we will go 5 into executive session, at 10:05. 6 MS. KIPLIN: And for the record, I need to 7 cite the statutory references to the Government Code. 8 With regard to the personnel matters, it 9 would be Section 551.074 of the Texas Government Code. 10 With regard to receiving legal advice, it would be 11 Section 551.071(1)(A, (1)(B) of the Texas Government 12 Code and also Section 551.071(2) of the Texas Government 13 Code. 14 CHAIRMAN WILLIAMSON: All right. Thank 15 you. 16 COMMISSIONER KRAUSE: Duly noted. 17 (Recess for executive session: 9:50 a.m. 18 to 10:53 a.m.) 19 AGENDA ITEM NO. XIX 20 CHAIRMAN WILLIAMSON: The Texas Lottery 21 Commission is out of executive session. The time is 22 10:53 a.m. And there is no action as a result of the 23 executive session. 24 AGENDA ITEM NO. XX 25 CHAIRMAN WILLIAMSON: So I think at this 45 1 time, Commissioner, if you'll move to adjourn. 2 COMMISSIONER KRAUSE: I make a motion that 3 we adjourn this meeting. 4 CHAIRMAN WILLIAMSON: I second. 5 All in favor? 6 COMMISSIONER KRAUSE: Aye. 7 CHAIRMAN WILLIAMSON: Aye. 8 Meeting is adjourned. 9 (Commission meeting adjourned at 10 10:53 a.m.) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 46 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 Shorthand 5 Reporter in and for the State of Texas, do hereby 6 certify that the above-mentioned matter occurred as 7 hereinbefore set out. 8 I FURTHER CERTIFY THAT the proceedings of 9 such were reported by me or under my supervision, later 10 reduced to typewritten form under my supervision and 11 control and that the foregoing pages are a full, true 12 and correct transcription of the original notes. 13 IN WITNESS WHEREOF, I have hereunto set my 14 hand and seal this 20th day of December 2010. 15 16 17 ________________________________ 18 Aloma J. Kennedy Certified Shorthand Reporter 19 CSR No. 494 - Expires 12/31/10 20 Firm Registration No. 276 Kennedy Reporting Service, Inc. 21 8140 North Mo-Pac Expressway Suite II-120 22 Austin, Texas 78759 23 24 25