1 1 COMMITTEE FOR PURCHASE FROM PEOPLE WHO ARE BLIND OR 2 SEVERELY DISABLED 3 4 5 6 7 ************************* 8 PUBLIC HEARING 9 DALLAS, TEXAS 10 January 19, 2006 11 ************************* 12 13 14 15 16 17 18 19 20 21 Reported By: Joie Ann Rivera 22 Job # 55050 2 1 INDEX 2 Page 3 Appearances.................................... 3 4 INTRODUCTION: 5 MS. KIMBERLY M. ZEICH....................... 4 6 OPENING STATEMENT: 7 MR. STEVE SCHWALB........................... 5 8 SPEAKERS 9 MR. JAMES GASHEL............................... 11 10 MR. BRAD SAATHOFF.............................. 19 11 MR. GUINN ROGERS............................... 31 12 MS. EILEENE MEHTA.............................. 41 13 MR. ALLAN BERGMAN.............................. 50 14 MR. JERRY BETTENHAUSEN......................... 66 15 MR. RICHARD GILMARTIN.......................... 78 16 MR. STEVE COPELAND............................. 86 17 MR. MIKE TURNER................................ 100 18 MR. GORDON BRYSON.............................. 105 19 20 Reporter's Certification....................... 123 21 22 3 1 PUBLIC HEARING FOR THE COMMITTEE FOR PURCHASE FROM 2 PEOPLE WHO ARE BLIND OR SEVERELY DISABLED was taken on 3 January 19, 2006, from 10:04 a.m. to 12:20 p.m., before 4 Joie Ann Rivera, CSR in and for the State of Texas, 5 reported by machine shorthand at the Earle Cabell Federal 6 Office Building, 1100 Commerce Street, Red River 7 Conference Room, Dallas, Texas. 8 9 A P P E A R A N C E S 10 11 Mr. Steve Schwalb, Chairperson 12 Mr. Leon A. Wilson, Jr., Executive Director 13 Mr. Patrick Rowe, Deputy Executive Director 14 Ms. Angela Phifer, Executive Assistant 15 Ms. Stephanie Hillmon, Assistant General Counsel 16 Mr. Rick Beaman, Committe Member, Department of Air Force 17 Mr. Osborne Day, Committee Member, Private Citizen 18 Mr. Robert Kelly, Committee Member, Private Citizen 19 Ms. Kimberly M. Zeich, Member of Committee Staff 20 21 22 4 1 INTRODUCTION 2 MS. ZEICH: We would like to go ahead and 3 begin the hearing. And, again, thank you for 4 being here and taking your seats. 5 This meeting is being convened by the 6 Committee for Purchase From People Who are Blind 7 or Severely Disabled, which is the independent 8 Federal agency responsible for administering the 9 Javits-Wagner-O'Day Act. The hearing relates to 10 the Committee's consideration of revisions to 11 agency regulation for the qualifications required 12 of both central nonprofit agencies and nonprofit 13 agencies, to participate in the JWOD program, and 14 also the guidelines under which executive 15 compensation will be considered, as either 16 influencing or not influencing a fair market 17 price. 18 The Committee is represented today by 19 several presidentially appointed members, whom I 20 will now introduce. At the head table, we have 21 Steve Schwalb, our chairperson and Department of 22 Justice representative. We have Mr. Rick Beaman, 5 1 representing the Department of the Air Force. We 2 have Mr. Osborne Day, private citizen, and also 3 Mr. Bob Kelly to my immediate left, private 4 citizen member. I'd also like to introduce our 5 senior staff. The Committee's executive director, 6 Lee Wilson, is here to my right, and also deputy 7 executive director, Patrick Rowe, to my right. 8 Mr. Schwalb is going to make a brief opening 9 statement, and I will then return to address the 10 process for testimony and to introduce each 11 speaker as his or her turn may come up. 12 Mr. Schwalb? 13 MR. SCHWALB: First of all, thanks to 14 everybody for being here, taking time from your 15 schedule to provide this opportunity for input. 16 The Committee really appreciates the interest you 17 demonstrate today by your attendance. This is the 18 second of our three hearings. Our first was in 19 Arlington, Virginia, and next week we have the 20 third one in San Francisco. The Committee 21 strongly believes that accountability and 22 stewardship and value form the foundation for 6 1 maintaining and growing employment opportunities 2 for people who are blind or have other severe 3 disabilities under the JWOD program. We, in the 4 Committee, have a statutory responsibility for 5 determining the suitability and products and 6 services proposed for the Federal cocurrent list 7 and to determine that the price paid by the 8 Government for each item is fair. This 9 responsibility includes determining whether 10 central nonprofit agencies and the individual 11 nonprofit agencies are qualified to participate in 12 the program and whether the delivery of the 13 products or services can be sustained at fair 14 market prices. We take these responsibilities and 15 our authority to carry them out very seriously. 16 At the same time, the Committee has decided it is 17 appropriate to hold a public hearing on these 18 issues in order to obtain a broad and adverse 19 perspective. Specifically, as our notice 20 indicated, our Committee is seeking input on two 21 broad areas. 22 First, alternative approaches to determine 7 1 that central nonprofit agencies and nonprofit 2 participating agencies are initially qualified to 3 participate in the program, and then qualify to 4 continue to participate in the program. And 5 secondly, alternative approaches and mechanisms to 6 assess the fair market price set by the Committee 7 and paid by Federal departments of agencies is not 8 burdened inappropriately by excessive executive 9 compensation clauses. These broad topics are 10 addressed by the questions that we published in 11 the notice. 12 So on behalf of the Committee, I'd like to 13 assure you that we intend to be very careful and 14 thorough in our consideration on the relevant 15 factors, and particularly the input received from 16 our program state holders. In addition to the 17 current opportunity to provide testimony or to 18 provide written statements through the end of this 19 month, the Committee, of course, will continue to 20 solicit public input through the Federal register 21 when we make any specific regulatory changes. So 22 we look forward to your constructive suggestions 8 1 and Kim will now describe the rest of the process 2 for todays hearings. 3 Kim. 4 MS. ZEICH: Thank you, Mr. Schwalb. All of 5 today's speakers were notified in advance by the 6 Committee staff, and their names are listed on the 7 handout that's available in the back of the room. 8 I've been checking in with most of the speakers 9 and I'd like to just take a moment and make sure 10 that the folks I haven't checked in with yet are 11 here. 12 Is Guinn Rogers in the room? 13 MR. ROGERS: Yes. 14 MS. ZEICH: Okay. Thank you very much. And 15 you are speaking? 16 MR. ROGERS: Yes. 17 MS. ZEICH: Okay. Nancy Keating? 18 I haven't seen John Murphy from Portland. 19 Maybe those folks are coming in late. 20 Sharon Spratt? Ms. Spratt are you here? 21 Steve Copeland, ARC Diversified, are you 22 planning to speak today? 9 1 MR. COPELAND: Yes, ma'am. 2 MS. ZEICH: Okay. Thank you. 3 I'm not seeing Michael Carney. 4 Mike Turner of PACE, Are you planning to 5 speak? 6 MR. TURNER: Yes, ma'am. 7 MS. ZEICH: Thank you. And Tom O'Brien? 8 He's not present at this time? Thank you very 9 much. 10 Just a few comments before we get started. 11 I would ask each speaker to go ahead and identify 12 yourself and the organization that you represent 13 as you come up to the podium, and again, we do ask 14 for your cooperation in keeping your remarks 15 limited to approximately five minutes, so that we 16 can accommodate the entire list. We have a 17 timekeeper today, she'll notify me when the time 18 has expired. And as I'll be introducing each 19 following speaker, I'll normally stand up when you 20 have about a minute left in your time. So if you 21 wouldn't mind beginning to come to closure at that 22 point, we would sure appreciate that. 10 1 Our chairperson will solicit questions from 2 the Committee members after each person has 3 presented their comments, and again, we would ask 4 for brevity in your responses to those questions. 5 Please note that the testimony will only be 6 heard and comments will only be considered to the 7 extent that they address the questions listed in 8 the Committee's Federal registered notice of 9 December 16. As Mr. Schwalb referenced, we are 10 also accepting written statements. Those may 11 accompany the oral testimony or they may be 12 submitted individually and they must be received 13 by January 31, 2006. 14 Before we proceed, I do have two 15 administrative announcements also. Depending on 16 how time goes this morning, we will call for a ten 17 minute break at about the half way point and at 18 the discretion of our chairperson. Also, if 19 everyone would please take a moment to turn off or 20 mute any cell phones, pagers or electronic 21 devices, we would sure appreciate that as well. 22 At this time, I would like to invite the 11 1 first speaker, Mr. James Gashel, to the podium. 2 MR. SCHWALB: And I would like to just 3 supplement one additional sort of housekeeping 4 remark. Our reporter today is going to do her 5 very best, and I'm sure she's going to be very 6 capable of keeping up with the proceedings, but as 7 you-all can appreciate, when people speak 8 inarticulately too fast, use acronyms, et cetera, 9 it's hard to do. So I alerted her that she has 10 full license to interrupt the speaker to clarify 11 or to ask them to make it clear so that we can 12 make sure we get an accurate record. So please, 13 bear with us in your remarks. Thank you. 14 James? 15 MR. GASHEL: Thank you very much, 16 Mr. Chairman and Members of the Committee. I 17 really appreciate the opportunity to be here this 18 morning and my name is James Gashel. I am 19 executive director for strategic initiatives of 20 the National Federation of the Blind. My written 21 statement has been submitted and I'll just do my 22 best to summarize that. 12 1 I would begin by saying that when the 2 Committee originally published a notice back in 3 2004, I believe it was, on this governance 4 regulation, I submitted a comment to the effect 5 that if you can regulate the top -- that is 6 referring to pay, I know this is broader than pay 7 -- then you can also regulate the bottom. And 8 that's really going to be a theme of what I'm 9 trying to say here in my remarks. And I think 10 that that's acknowledged in the notice, that 11 governance isn't just a question of executive pay, 12 but there are lots of other issues that come up in 13 the question of governance of a nonprofit or 14 central nonprofit agency in the 15 Javits-Wagner-O'Day program. I know you're going 16 to hear from a lot of nonprofit executives that 17 really don't want a ceiling on pay. In the case 18 of the National Federation of the Blind, we 19 represent the direct labor workers. In our case, 20 often these people are employed by national 21 industries for the blind affiliates. And we're 22 very mindful of the fact that there are examples 13 1 of executive pay in the program in excess of half 2 a million dollars a year or more, but there are 3 also examples of pay to blind and disabled workers 4 of 50 cents an hour or less. And we think that 5 just as you can regulate against abuse at the top, 6 if the Committee is going to establish a 7 governance regulation, I think there is also an 8 obligation to regulate against abuse at the 9 bottom. Placing a ceiling on executive pay while 10 failing to build a floor under the labor pay, 11 would actually be worse than doing nothing. 12 According to program data, approximately 45,000 13 direct labor employees worked a total of 14 40,794,368 hours during the fiscal year of 2004, 15 and received total compensation of about 16 $326,000,000 for the services they provided. 17 Their average annual compensation was about $8,000 18 a year for showing up during an entire year and 19 working an average of 900 hours per individual. 20 If I were a JWOD nonprofit executive earning 21 compensation of half a million dollars a year and 22 benefits and perks on top of that, I would 14 1 actually be quite ashamed to report annual pay for 2 my workers of $8,000 a year. Assuring more 3 full-time work and fair compensation, I think 4 would be my main responsibility. Likewise, the 5 failure to produce better results for members of 6 my workforce would also be my responsibility. I 7 would not consider producing lots of low-wage jobs 8 and part-time work as a badge of honor. 9 Now, the problem with the present discussion 10 of governance is that it is concentrating almost 11 exclusively on executive pay. Good governance in 12 the JWOD program, when we're talking about 75 13 percent of the direct labor being done by blind 14 and disabled workers, good governance should also 15 mean producing full-time jobs and fair pay for 16 blind and disabled people. This is the mission of 17 the JWOD program. Delivering high quality results 18 for blind and disabled workers is not just a 19 matter of how well we pay the executives, it's 20 also a matter of how well we pay the workers. 21 Rather than being exclusively concerned about 22 regulating against excessive executive pay at the 15 1 top, this Committee should also fulfill its 2 responsibility to regulate against worker abuse at 3 the bottom. I think the point has been made. I 4 just want to now say that what I would do is I 5 think that the time has really come to require at 6 least a minimum wage for any hour worked under the 7 JWOD program. I'm talking about the JWOD program 8 only. At least a minimum wage for any hour worked 9 in the JWOD program, and for experienced workers, 10 to institute the policy of the prevailing wage for 11 any hour worked under the JWOD program. 12 I realize that in saying that, I'm skipping 13 over a lot of details, but clearly that is not a 14 hard concept to understand. It's not complicated. 15 Establishing a wage floor for work performed in 16 the JWOD program is more a matter of principle 17 than of procedure. More than that, it's just the 18 right thing to do, and if I were on this Committee 19 I would view it as a moral imperative. The Fair 20 Labor Standards Act was enacted for American 21 workers in 1938. We're almost 70 years beyond 22 that now, and it seems to me that the time has 16 1 come for there to be a wage floor for blind and 2 disabled workers who are producing products and 3 services that are used by the Federal Government. 4 I think this Committee has a responsibility of 5 making sure that happens. I would just point out 6 two other things in addition. I don't think we're 7 just talking about a wage floor. Benefits should 8 be comparable. There should be no distinction 9 between the benefits, the value and the type of 10 benefits provided to blind and disabled workers, 11 and nondisabled workers or people in middle 12 management or at the top. Why should it be that 13 people who have full-time jobs and great pay get 14 excellent benefits on top of that and many of the 15 workers don't get any benefits because they're 16 part-time workers and receive very low pay, and in 17 many cases called clients not employees. The time 18 has come to end this kind of distinction. 19 Finally, I would just say that the time has 20 also come for affiliates of the JWOD program to 21 accept the right of their employees to collective 22 bargaining. Other American workers have this 17 1 right, but yet we still find organizations 2 affiliated with the Javits-Wagner-O'Day program 3 that resist collective bargaining. The rights of 4 American workers in the JWOD program should be 5 recognized, respected and not resisted. The 6 current consideration of government standards for 7 nonprofit agencies in the JWOD program is 8 unquestionably the result of recent scrutiny by 9 news media and Members of Congress. People are 10 asking why, if this Committee's price 11 determinations contribute, or they're asking if 12 this Committee's price determinations contributed 13 to the appearance of unchecked excessive executive 14 pay. But I think you should be asking a different 15 question. A more pertinent question. Why does a 16 program with gross receipts of over $2 billion 17 only produce an average annual wage for the direct 18 labor workers of just about $8,000 per worker per 19 year for 75 percent of the direct labor performed 20 in this program? I know there are lots of 21 explanations for this, but some would call it 22 exploitation. The law requires that at least 18 1 75 percent of the direct labor hours must be 2 performed by blind or severely disabled persons 3 working in the JWOD eligible agencies. 4 MS. ZEICH: Excuse me, Mr. Gashel. 5 I'm sorry. Your time is up. If we could 6 just ask you to please -- 7 MR. GASHEL: Thank you. I was just actually 8 at that point. Speaking on behalf of these 9 employees, good governance demands that you take 10 their circumstances into account. If the blind 11 and disabled employees are doing at least 12 75 percent of the production work, as required 13 under the law, then I think that this Committee is 14 required to consider and give their situation its 15 time, its care and its consideration during this 16 proceeding. Thank you very much. 17 MR. SCHWALB: Thank you, Mr. Gashel. Do the 18 Committee members have any questions? 19 MR. KELLY: Yes, I do. Mr. Gashel, I 20 appreciate your comments. This is Bob Kelly. In 21 your opinion, would a limitation of the CEO's 22 compensation open up more money for blind workers 19 1 without regulating the worker's pay? 2 MR. GASHEL: It might, but I wouldn't be 3 assured that it would. There are a lot of these 4 agencies that don't pay their CEOs, in any way, 5 that are sort of out of line or over the top and 6 still pay their workers wages that are 7 exploitation wages. So I don't think you can do 8 it just by regulating against the top. Frankly, I 9 don't -- I mean, I understand abuse wages that are 10 over the top, but that's not so much the problem. 11 I'm concerned about what's happening at the bottom 12 and I think you need to regulate both and I think 13 it's a matter of governance. 14 MR. KELLY: Okay. 15 MR. SCHWALB: Very good. Thank you. 16 MS. ZEICH: Our next speaker is Mr. Brad 17 Saathoff. 18 MR. SAATHOFF: Good morning. My name is 19 Brad Saathoff. I'm the president of operations 20 for BH Services in Rapid City, South Dakota. And 21 on behalf of the Board of Directors of BH 22 Services, Incorporated, a nonprofit corporation 20 1 located in Rapid City, South Dakota, we want to 2 thank the Committee for the opportunity to comment 3 on questions and issues regarding nonprofit 4 corporation qualifications and executive 5 compensation. Our nonprofit corporation is a 6 community rehabilitation program, CRP, which 7 contracts at Ellsworth Air Force Base in South 8 Dakota, and off the Air Force base in Nebraska. 9 We agree that governance in the CRP is extremely 10 important as the CRP has been serving the 11 community in which we operate, individuals we 12 employ, and the Federal and state laws, rules, and 13 regulations under which we operate. There already 14 exists the tremendous amount of oversight on the 15 operations of CRPs through the Department of 16 Labor, IRS, and a variety of state and local 17 agencies. There is also transparency that is 18 required of the CRP's operation within their 19 community. The current rules, regulations, and 20 standards are continually being reviewed and 21 modified by Congress, the IRS and state agencies, 22 and therefore, how we operate is in a constant 21 1 challenge. 2 In the publication Nonprofit Business 3 Advisor sample here, is a survey which finds solid 4 oversight at most nonprofits. This can be found 5 in Attachment No. 1 in the handout that Dennis 6 just gave you. In regard to the Committee's 7 desires for information and perspectives on good 8 governance practices, we have the following 9 comments: 10 Regarding Question No. 1: The public's 11 criteria reports on current operating practices, 12 but some are too specific, as we note in 13 Attachment No. 2, where we comment on the 14 best 14 practices. 15 Regarding Question No. 2, regarding the 16 additional criteria: We feel that the criteria 17 for governance should primarily be based upon the 18 requirements of the IRS and should only follow in 19 principle those suggested by the panel on the 20 nonprofit sector. 21 Regarding No. 3: We do not believe that the 22 national accreditation or state licensor should be 22 1 a substitute for the requirements of the Committee 2 to ensure for appearance to nonprofit agency 3 governance practices. National accrediting bodies 4 generally focus their reviews on various programs, 5 services, supports, and outcomes providing 6 individuals with disabilities, plus other 7 customers. They have very few standards on 8 specific Board governance. They also spend very 9 little time on their surveys on compliance with 10 governance practices. The standards for national 11 accreditation vary from organization to 12 organization, and state license and requirement 13 also vary significantly from state to state. Even 14 if accredited agencies review the public, the 15 corporate governance practice is to be minimal, 16 the agency may still meet the national accrediting 17 standards. The same holds true for state agencies 18 providing license and reviews, as governance is 19 only one small part of their oversight reviews. 20 Therefore, the Committee should ask specific 21 governance questions on their application that 22 would ensure that the internal structure for 23 1 governance minimizes opportunities for 2 impropriety, and therefore, makes them eligible 3 for participation. The initial application for 4 participating in the program, and an updated set 5 of information could be requested by the 6 Committee's staff and reviewed in their annual 7 review of operations of that CRP. 8 Comments on No. 4: There should be no more 9 variance on the benchmarks for public agencies who 10 receive contracts from the Committee. For 11 example, the selection of Board members may be set 12 by state statute, however, there should be a 13 section added for private nonprofit corporations 14 that have contracts with the JWOD program, and 15 their Government's benchmarks should be very 16 similar. 17 Regarding No. 5: The size and physical 18 location, world, inner city, et cetera, and the 19 amount of revenue should be a factor in assessing 20 appropriate governance practices. The Committee 21 should, therefore, determine what variance they 22 would accept in these practices, taking into 24 1 consideration the human resources available and 2 the size of the corporation the JWOD contract 3 compared to their total operation. 4 Comments on No. 6: Once the Committee has 5 determined their criteria for governance, they 6 should request that information be included on the 7 initial application and it could be updated every 8 three years. Basic information, such as an annual 9 CPA audit, minutes of meetings with compensation 10 for the executive is established, list the Board 11 members and their affiliation within the 12 community, would help to minimize opportunities 13 for impropriety. 14 No. 7: The Committee should utilize its 15 authority to conduct periodic compliance visits, 16 as well as request the submission of governance 17 information that is to be required. 18 On No. 8: Our comments are to eliminate the 19 potential conflict of interest the CRP should 20 have, a conflict of interest policy, and there 21 should be evidence within the Board's midst, that 22 their policy has been reviewed and signed by its 25 1 members. This policy should follow the guidelines 2 of the IRS. 3 On the 9th question: Financial 4 responsibility of the CRP could primarily be 5 reported through an independent audit by a 6 certified public accounting firm. The governance 7 practices and adoption of salary, budget, and 8 operations would be examined within this audit. 9 We have some comments on executive 10 compensation also. Just to highlight it real 11 quick, because it looks like my time is up. It's 12 very difficult to take into consideration the 13 facts that there is no absolute dollar amount that 14 could equitably account for the vast differences 15 of complexity, services, types of programs, 16 numbers of individuals served, other Government 17 and private fiscal resources and accompany rules 18 of impacting the operation of each corporation. 19 Therefore, it becomes very difficult to set a 20 mandatory dollar amount. 21 MR. SCHWALB: Thank you for those comments. 22 You indicated you shouldn't have a national 26 1 accreditation substitute for our responsibility, 2 but do you see it possible that there will be 3 both, the national accreditation, but we'd also 4 have oversight and responsibility in other areas? 5 MR. SAATHOFF: I'd like to invite Dennis 6 Popp, our CEO to come up and comment on that also. 7 MR. POPP: Yes. I've served on some 8 national accrediting Boards -- 9 MR. SCHWALB: Can you speak into the 10 microphone? 11 MR. POPP: I'm sorry. I'm Dennis Popp, CEO 12 of BH Services. And generally as we've said here, 13 accreditation primarily looks at program services, 14 supports, outcomes, in regard to the dollars, the 15 public dollars that go into that program. They're 16 not designed primarily just to look at governance, 17 and that's our issue here. And they do spend just 18 a minimal amount of time and they primarily look 19 at, did you get the CPA audit, do you have a Board 20 of Directors, do they meet, do they represent the 21 community and the best type of people to be there, 22 period, not how many, not what kind of audits did 27 1 the Board perform, none of those other things that 2 you're alluding to here. So accreditation is not 3 your answer. Your answer wants you to find the 4 specifics that you want or the standards of 5 governance can easily be obtained through written 6 documentation that is supplied by the CRP to your 7 staff. 8 Thank you. 9 MR. BEAMAN: I have a question, and just 10 fair warning, I'm going to ask the same question 11 to all of the people representing RCRP. I don't 12 want you to address it during your remarks because 13 I don't want it to count against your time and the 14 mental process that you have to inject my question 15 into an affirmative reply, but I will ask 16 everybody this question, and it's going to be a 17 follow-up on to the last speaker's suggestions, if 18 you will, or in Mr. Gashel's philosophical points 19 he made. 20 But I wondered if you wanted to comment for 21 the record on the subject he addressed, 22 particularly as it relates to the workers. Like 28 1 should there be a minimum wage for everybody, 2 full-time job verses part-time, collective 3 bargaining. From all your perspectives as 4 operators of the CRPs that are here to speak, and 5 again, I will ask you this question after your 6 remarks, but if you want to think about your 7 answer and I'll start with you, and, I'm sorry, I 8 didn't mean to leave you out. But if your CEO 9 wants to join you in your response, that's fine, 10 but we would appreciate this quite frankly. That 11 is a question that has been an additional theme 12 offered by another speaker, and I think it's going 13 to be a question that we are going to have to 14 grapple in one way or other in moving forward to 15 some sort of proposed rule, and we'd like to have 16 as much input on that subject as we can. 17 MR. POPP: We have found that the majority 18 of the employees are being paid at the wage rate 19 that was established by the Department of Labor. 20 However, when you start new contracts or you bring 21 individuals on into the initial learning phase, 22 there is a provision that allows you to pay less 29 1 to see if their level of productivity can be 2 enhanced through training and through supports. 3 Onces that's accomplished, they generally are at 4 the 95 to 100 percent level of productivity. If 5 you start out though and say everybody has to be 6 at that wage rate, you're going to eliminate a lot 7 of individuals with more severe limitations. 8 That's not what the governance committee is for. 9 They are constantly looking at how to increase 10 employment for those with severe limitations. You 11 cannot do that in an operational phase, in a 12 business phase, by mandating that. So that the 13 provisions and the Fair Labor Standards Act that 14 allows for that to occur have been very 15 productive. 16 However, there are also the guidelines that 17 you've established that says that the productivity 18 must be there, and we're very proud of the fact 19 that this is probably for 90 plus percent of our 20 employees, has been a change. But there are 21 limits as to who can we bring into the program 22 otherwise. 30 1 MR. BEAMAN: I appreciate that. And just to 2 clarify, I don't pose a position on this one way 3 or the other, but I think he's made a popular 4 suggestion, and I think it would be to our 5 advantage to get input on. I'm not intending to 6 have a debate on it or for you to individually get 7 defensive or somehow are going to feel that back 8 and forth. I just thought that that question was 9 on the table before, and the whole governance 10 across the workforce is a question I think we all 11 can relate to. So this gives us time to get as 12 much input as we can. Thank you for that. 13 MR. POPP: If I may add just one other 14 thing. The minimum wage versus the prevailing 15 wage rate is also a factor and many of our -- most 16 of our employees are at the minimum wage, not at 17 the prevailing wage. 18 MR. SHCWALB: Thank you. Any other 19 questions? 20 MS. ZEICH: I'd like to invite the next 21 speaker present to come up to the podium. Guinn 22 Rogers. 31 1 MR. ROGERS: You have to bear with me, 2 please. I do have some sight limitations. It 3 makes it somewhat difficult for me to read. 4 MR. SCHWALB: Take your time. 5 MR. ROGERS: Ladies and gentlemen, thank you 6 for the opportunity to meet with you. My name is 7 Guinn Rogers. I am president and CEO of Goodwill 8 Industries of San Antonio serving West Texas and 9 Southern New Mexico located in El Paso, Texas. 10 I'm also Chair of the Southwest Association of 11 Goodwill representing 25 local nonprofit agencies 12 in six states. I would like to address the topic 13 of governance generally, and specifically Items 1, 14 2, 3 and 9 in the announcement. I'm going to step 15 away from this, because I think it's going to be a 16 little bit more distracting than if I just 17 basically say my piece. 18 With regard to governance in general, I 19 agree that in some organizations throughout our 20 country providing services to folks who are blind 21 or severely disabled, that there are some abuses, 22 that there are some issues with regard to 32 1 compensation and governance. However, I believe 2 overall the states do a very good job of governing 3 or regulating and setting up standards for 4 organizations. My own experiences is that many 5 states recognize the differences in the 6 communities and really try to leave the 7 organizations to themselves to be able to do 8 what's necessary in their own communities. So, I 9 believe there are a lot of things that are 10 currently done through the stats and also under 11 existing Federal regulations, and to place more of 12 a burden on organizations to comply with other 13 regulations, I think, would defer funds and 14 resources from what our true mission is, and 15 that's to help provide good jobs for people who 16 have disabilities and who are blind. 17 Getting to the specific items, Item No. 1. 18 It is, again, please forgive me. I've gotten 19 lost. Well, the size of a governing body is 20 really determined by the organization. Some 21 organizations are smaller and they don't need a 22 large group of people. Some organizations need a 33 1 large board of directors because their intent is 2 to do a lot of fund-raising and they need a lot of 3 contacts in the community. Many organizations 4 find it difficult to find good quality board 5 members. I recently lived in a very small 6 community of about 38,000 people and we had over 7 70 nonprofit organizations trying to recruit good 8 board members. In El Paso, we had a population of 9 700,000 and we have over 700 nonprofit 10 organizations also trying to find good quality 11 board members. And it's extremely difficult when 12 you have some organizations that have board 13 members, over 40 people, and then other ones who 14 work just fine with about 9, 10, 11 board members. 15 So it depends on how the organization is going to 16 be operating, what it expects from its board 17 members. 18 With regard to compensation of Board 19 members, to my knowledge, most states do not allow 20 compensation for Board members outside of 21 reimbursement for expenses that they incur as 22 Board members, and I think that's very reasonable. 34 1 There are certain circumstances where a Board 2 member might be an employee of the organization 3 and whether that Board member should have a vote. 4 That would be where an individual serves on a 5 Board essentially to represent the persons being 6 served. It doesn't make sense if that person is 7 going to be on the Board and voting that they not 8 be allowed to be an employee of that organization. 9 So this particular practice is recommended by a 10 lot of accrediting organizations and also by other 11 organizational standards and that kind of thing. 12 I think that's a good idea for folks. 13 With regard to audits. I know that our 14 organization requires, Goodwill Industries, 15 international membership organization, requires it 16 in order for us to be a member, that we have 17 annual audits and that they be done by CPA firms, 18 et cetera and that this be done by the direction 19 of the Board. And we do that because it's the 20 appropriate thing to do, and we do support that. 21 I'd like to thank you-all for this 22 opportunity to speak. Again, I apologize for 35 1 getting out of line on this. 2 Mr. SCHWALB: Thank you very much. 3 Questions? 4 MR. KELLY: Maybe you mentioned it or it 5 just went by me, but what is your opinion about 6 the compensation issue? 7 MR. ROGERS: With regard to executive 8 compensation? I'll tell you this, I don't make 9 half a million dollars a year. Our organization 10 is -- our last year we had a total revenue of 11 about $5 million. Of that $5 million, about 12 $40,000 was JWOD money. My compensation is 13 $83,000 a year, which is less than two percent of 14 our annual agency income. To be honest, I think 15 you need to take into consideration how large a 16 piece of the pie you guys have as a part of any 17 organization as to what you're looking at with 18 regard to executive compensation. I don't think 19 my compensation is out of line. We do salary 20 surveys locally, statewide, regionally. We also 21 do national compensation surveys to try to ensure, 22 that within our own organization that the 36 1 compensation that we have is fair to folks who we 2 work with. Within our own organization, to touch 3 on a little bit of the other end of it, none of 4 our employees are paid less than minimum wage. We 5 recently gave an across the board average pay 6 increase to our employees of three percent. Some 7 make a little more, some a little less. 8 MR. KELLY: I feel uncomfortable asking you 9 this, but I'll do it anyway since you volunteered. 10 I didn't ask how much money you made or your 11 compensation. 12 MR. ROGERS: That's okay. 13 MR. KELLY: I appreciate it. If you can put 14 a dollar sign to it, what would be your benefits? 15 MR. ROGERS: My benefit package? 16 MR. KELLY: Yeah. 17 MR. ROGERS: Roughly 13,000. 18 MR. KELLY: Okay. Thank you. 19 MR. SCHWALB: Well, you had a little 20 advanced warning of the next question. You've 21 answered to some extent by saying that your 22 employees are all paid minimum wage or more, I 37 1 think you just said. The proposal that I think 2 Mr. Gashel has on the table also includes 3 full-time employment opportunity, presumably, for 4 those who want to work full-time not to tell them 5 to work full-time, but be given an opportunity and 6 issues associated with collective bargaining and 7 financial benefits and so on. And maybe you've 8 already answered some of that, but if you want to 9 fill in any of the blanks, go ahead. 10 MR. ROGERS: Absolutely. I fortunately or 11 perhaps unfortunately was involved in a collective 12 bargaining situation of a JWOD contract about 18 13 years ago. And I believe my own feeling, at that 14 time, and I don't think it's changed very much, is 15 that it actually had a negative impact on the 16 folks that we are trying to provide jobs for. The 17 truth is, the reality of the situation is that 18 there are a lot of folks who we work with who do 19 not have the productivity to meet the 95 percent 20 standard or whatever was mentioned earlier. I 21 believe the standard we used to use was about 22 85 percent opportunities to meet the full payment. 38 1 I would rather see more people working and gaining 2 the self-esteem to make their lives better than to 3 provide fewer jobs at a higher pay rate. 4 Collective bargaining, in many cases, does benefit 5 an employee, especially if the management of the 6 organization is taking, truly taking advantage of 7 those folks. And the place for unions and 8 collective bargaining in our country has certainly 9 a very robust history and has shown that in many 10 cases collective bargaining helps. It also shows 11 that it can hurt, and I think that needs to be 12 taken very, very seriously. The true mission, 13 really, as I see it of this program, is to provide 14 the opportunity or more opportunity for people who 15 are severely disabled or blind to be able to work 16 and to expand those opportunities through opening 17 up Federal contracting. There's only so much 18 money that can be paid to perform any particular 19 job on any particular contract. And if you 20 increase the pay for individuals, which makes it 21 artificial to what they can actually produce, you 22 get much less work for much more money. And to 39 1 you guys, to Government, to we as taxpayers, 2 that's not a good deal. 3 MR. SCHWALB: Okay. Thank you. 4 MR. DAY: Osborne Day, Committee member. 5 Would you kindly tell us how you choose who 6 is disabled and who is not? I'm always troubled 7 by the definition of disabled. It is such a huge 8 spectrum of ability. 9 MR. ROGERS: Well, within our organization, 10 we use the Federal definition under the 11 Rehabilitation Act, the ADA, et cetera. It would 12 be a recommendation that you-all do the same. It 13 makes it much simpler, but we don't really make 14 the decision as to who has the disability. That 15 decision is made by, first of all, the individual 16 themselves. Secondly, it's made by someone who 17 would be considered qualified to make that 18 determination. Usually a medical doctor, 19 provider, psychologist, et cetera. Someone who 20 through experience or education could be 21 determined as a qualifying individual. Myself, I 22 consider myself as having a disability. I also 40 1 consider that I have managed to be able to 2 overcome many parts of that disability. I think 3 it's a great thing for folks to be able to do 4 that. 5 I hope I answered your question. 6 MR. DAY: Thank you. Well, it still seems 7 very vague to me. 8 MR. ROGERS: It has to be. You cannot 9 specifically say, "This person has this particular 10 diagnosis, therefore they have a disability." 11 Because within any spectrum or within any 12 diagnosis, within any particular circumstance that 13 a person has, there is a broad range of what they 14 can be capable of doing. You need to think of 15 disability as functional as well as diagnostic. 16 If a person is able to overcome a particular 17 disability to do a job, to be able to do that job 18 well, then you're right. 19 Does that person still have a disability? 20 Technically yes. But functionally, they've 21 been able to overcome that disability. If we have 22 a person who is doing a job and we're able to 41 1 accommodate that individual, does that -- and 2 they're able to perform at 100 percent with that 3 accomodation, without that accomodation maybe they 4 can only perform at 40 percent. Does that person 5 have a disability? Absolutely they do. We've 6 accommodated that to make it possible for them to 7 be more productive. So that vagueness is 8 inherent. It must exist. 9 MR. SCHWALB: Thank you. As Osborn knows, 10 this is another question, actually, but I'm saying 11 what he's proposed is another question beyond our 12 scope. Because that can really be a whole other 13 subject about hearing about it and determination 14 of disability and not whether employability and so 15 on, so -- but it is another issue we are grappling 16 with separately. 17 Thank you for you comments. 18 MS. ZEICH: The next speaker is Eileen 19 Mehta. 20 MS. MEHTA: Mr. Chairman, Members of the 21 Committee, I want to apologize first for my 22 laryngitis to you and the court reporter. My name 42 1 is Eileen Mehta. I'm an attorney for Goodwill 2 Industries of South Florida, Inc., a JWOD 3 participating nonprofit corporation. Thank you 4 for the opportunity to comment at this public 5 hearing. We are, as you see, distributing written 6 materials and I will summarize them. 7 As we respond to your questions, we 8 recognize that you have initiated this effort to 9 safeguard the continued current of integrity of 10 the JWOD program. We are very proud of our 11 accomplishment, and for over 15 years the JWOD 12 program has contributed significantly to our 13 success. In addition, our achievements are 14 largely attributable to good governance practices 15 and effective executive leadership. The 16 accomplishments of Goodwill South Florida reflect 17 well on the merits of the JWOD program and the 18 work of this Committee. I'll briefly describe 19 some of those accomplishments in a short form to 20 our specific comments on governance and executive 21 compensation. 22 Goodwill South Florida has helped thousands 43 1 of people with severe disabilities by using the 2 comprehensive human service model. A copy of our 3 model for 2004 is included in your packet, and I 4 encourage you to review them at your leisure. 5 In 2005, Goodwill South Florida operated 6 with $62.5 million in revenues. Of that number, 7 5.8 percent were public funds, 94.2 percent were 8 from Goodwill South Florida entrepreneurial 9 activities. In 2005, you served 3,620 people; 10 2,302 graduated and left the program; 1,443 were 11 placed in competitive community employment. We 12 generated $29.4 million in earnings for people 13 with severe disabilities, a significant 14 contribution. This represents a phenomenal return 15 of $8.32 per each dollar of public funds received. 16 These earnings created $6.7 million in new payroll 17 taxes. Goodwill South Florida serves one of the 18 poorest, most culturally diverse populations with 19 severe disabilities in America. 97 percent are 20 below the poverty level. 71 percent are 21 minorities and acculturation profits. We serve 40 22 different nationalities. We communicate in three 44 1 official languages. 2 In addition to providing job opportunities, 3 our experience with JWOD has enabled us to develop 4 many other opportunities and expand beyond the 5 JWOD program so that we can provide other 6 opportunities for the severely disabled 7 population. Due to the expansion of our 8 commercial customer base in 2005, JWOD represented 9 only 40 percent of our revenues, and in 2006, the 10 JWOD dollars will be reduced to 36 percent. 11 We strongly support accreditation as a 12 necessary requirement to ensure that 13 not-for-profits are aware of and meet national 14 standards for vocational rehabilitation. We hold 15 three accreditations, one in which is from the 16 Commission on Accreditation of Rehabilitation 17 Facilities. There are also ISO 9001:2000 18 registered. Accreditation provides important 19 standards to ensure guidance by qualified 20 professionals, individualized program plans and 21 assistance in achieving maximum potential, 22 competitive community employment and independent 45 1 living. We do not believe that Committee rules 2 should override local, state or other Federal 3 requirements. We strongly agree that 4 accreditation should be recognized as having the 5 qualification. If the Committee wants to provide 6 a list of acceptable accredited organizations, we 7 believe that CARF should be included on that list 8 because of their long experience in this field. 9 By demonstrating commitment to stewardship, public 10 accountability and transparency, Goodwill South 11 Florida has maintained management and general cost 12 at 4.6 percent of revenues, while the industry 13 norm is over 14 percent. This makes Goodwill 14 South Florida one of the most cost-effective 15 nonprofit organizations in America. In addition, 16 our Board adopted seven new policies to 17 voluntarily comply with the provisions of the 18 Sarbanes-Oxley Act. 19 On the issue of executive compensation at 20 Goodwill South Florida, CEO compensation is 21 reviewed and established by a committee of the 22 Board of Directors, which rotates the chair 46 1 periodically. Four different directors have 2 served as Board chair over the last five years. 3 We have created a standing committee on 4 compensation to ensure full performance with 5 Section 4958 of the Internal Revenue Code. The 6 CEO compensation is based on comparative data 7 gathered from comparable organizations by a board 8 of directors who are qualified in human resources 9 compensation issues. At least eight directors 10 fully deliberated in compensation decisions. The 11 CEO did not have any input and did participate in 12 those deliberations. Goodwill South Florida 13 recommends that the Committee permit the nonprofit 14 agency of Board of Directors to make executive 15 compensation decisions on regulations and 16 guidelines established by the IRS. Those 17 regulations have all the appropriate guidelines 18 and penalties to ensure the protection of the 19 public trust. We do not believe that a factual 20 basis is to demonstrate any correlation between 21 executive compensation and fair market price. 22 In regard to services, JWOD prices are tied 47 1 to prices from the commercial market, general and 2 administrative calculated to 9.5 percent as 3 calculated on the NPA's subtotal of all costs for 4 a given contract. 5 Regarding products, JWOD contract prices are 6 also tied to the commercial market as a result of 7 actual incurred costs on all materials and 8 components. We are not the exclusive contractor 9 on the majority of our JWOD products. Thus, even 10 under the JWOD Program, competition influences 11 price. The Committee's regulation requires that 12 the prices on these contracts cannot be more than 13 an established percentage above existing 14 concurrent award price. 15 Finally, JWOD contracts are fixed price 16 contracts. We do not believe that excessive 17 salaries or bonuses can be added to the pricing 18 calculation because of the fixed price nature of 19 the contract. 20 Thank you for this opportunity to discuss 21 these highly relevant issues. Please know that 22 the JWOD program is an instrument in changing the 48 1 lives of thousands of people in South Florida with 2 severe disabilities, who otherwise would not be 3 employed. This year after experiencing three 4 hurricanes, the strong moral support of this 5 Committee and the financial assistance from NISH 6 have ensured that the JWOD program will continue 7 to be a major contributor in providing work 8 opportunities for people with severe disabilities 9 in Southern Florida. 10 Thank you for your considerations of our 11 comments, and thank you for helping so many 12 severely disabled people in South Florida. 13 MR. SCHWALB: Thank you. 14 Any questions? 15 One person already asked the question I 16 anticipated. Are you an employee of Goodwill or 17 you outside counsel? 18 MS. MEHTA: I am outside counsel. 19 MR. SCHWALB: Outside counsel, okay. Well, 20 then maybe you don't want to take that question to 21 the extent. Do you want to add anything to the 22 record relative to the question about compensation 49 1 of blind employees and benefits and floors and 2 collective bargaining? You know, the issue I'm 3 talking about? 4 MS. MEHTA: I can answer it to the best of 5 my knowledge and if you have additional questions, 6 Sherri Hungate, of Goodwill South Florida is here. 7 But many of the people or most -- the majority of 8 our employees are severely disabled employees and 9 make in excess of $6.40 an hour. We have a 10 Federal minimum wage in Florida that is actually 11 higher than the Federal minimum wage. It's been 12 said before by previous speakers, but there are 13 many people who are so severely disabled that 14 their productivity is substantially impaired, and 15 if we could not make some accomodation for those 16 people they would not be employed. We have 17 people, for example, who need special 18 transportation with special-equipped vans. They 19 can't work eight hours. They couldn't work eight 20 hours. So we have to make accommodations, and we 21 think that those people, above all others, need 22 your support. And certainly, if we were paying 50 1 them minimum wage, that would affect your fair 2 market price. We need your help in protecting 3 those people. Thank you. 4 MR. SCHWALB: Thank you. 5 MS. ZEICH: The next speaker, Mr. Allan 6 Bergman. 7 MR. BERGMAN: Good morning, Mr. Chairman, 8 Members of the Committee. My name is Allan 9 Bergman, and for the past 18 months I've had the 10 privilege of serving as president and CEO of 11 Anixter Center, a large diverse community-based 12 agency that is 86 years old, Chicago's 13th 13 largest charity according to "Crain's Business 14 Magazine" and provides an array of community 15 services and supports over 5,000 individuals with 16 disabilities per year. 17 We have an annual operating budget of over 18 $33 million, employ nearly 450 staff, have a 19 collective bargaining unit of Service Employees 20 International of 250 members and it has been in 21 existence for 25 years. 22 As part of our array of services and 51 1 supports, similar to some of the prior presenters, 2 we are a JWOD contractor with GSA and that revenue 3 source and the jobs that it creates for 4 individuals with disabilities accounted for 3.74 5 percent of our total revenues in FY '05. 6 I applaud this Committee for taking the 7 initiative to protect the integrity of the JWOD 8 program. And the employment opportunities it has 9 provided, continues to provide and needs to 10 continue to provide individuals with severe 11 disabilities and blindness. In this era of 12 post-Enron corporate scandals, and they seem to 13 continue, Sarbanes-Oxley and the recent scandals 14 for some of us still, United Way of America and 15 the most recent allegations of questionable 16 governance and accountability of the American Red 17 Cross, we need to raise the proverbial bar for 18 transparency and accountability in this sector. 19 I fully endorse your intent as stated in 20 your NPRM of December 16th 2005, to ensure proper 21 accountability standards, provide effective 22 stewardship, and demonstrate a strong value 52 1 proposition for Federal customers. In fact, I 2 would suggest this statement applies to everything 3 we do for all of our founders at Anixter Center, 4 public and private, and individual donors and 5 should be true for all similar agencies 6 functioning in today's increasingly competitive 7 and complex multi-level regulatory environment. 8 During the past 38 years -- I started when I 9 was in kindergarten -- I have served as a CEO of 10 five other nonprofit agencies, two at the local 11 level in Texas, including one here in Dallas, one 12 at the local level in California, one at the state 13 level in California, and one at the national level 14 inside the Beltway. 15 In my national years, both at United 16 Cerebral Palsy and Brain Injury Association of 17 America, I did a great deal of organizational 18 development work with our affiliates. I've been 19 around long enough to see the evolution from, if 20 you will, the "mom and pop" voluntary 501c3 that 21 started in the 50's and 60's evolving into a then 22 Government funding and the Board walked away and 53 1 the staff did it all and they showed up and got 2 their name on the letterhead, to now evolving best 3 practice, from what I consider the best Board 4 source and independent sector, and now theory and 5 text about governance from people like Carver to 6 Drucker to Tecker. 7 I'm also an active member of the American 8 Society of Association Executives and serve as a 9 member of its Key Philanthropic Organizations 10 Committee. 11 To the NPRM, I've given you extensive 12 written comments, some of which I'll be revising 13 based on the special and legal counsel this 14 morning and getting further clarification. 15 You've listed 14 practices and asked a 16 number of questions. The first two: Are they 17 comprehensive and is there need for additional? I 18 would suggest, and I've given you some specific 19 guidance, some of them could be tweaked to be more 20 specific. But I want to specifically address No. 21 2. I strongly recommend no employee of the 22 organization should be a voting member of the 54 1 Board. The CEO should serve as a nonvoting 2 ex officio member of the Board. I base this on 3 personal experience and legal counsel. In 4 addition, the Board itself should adopt and 5 periodically review a written job description for 6 the Board of Directors itself to make sure of its 7 own duties and accountability. 7 and 14 seem to 8 be inconsistent the way they're currently written. 9 Again, I believe firmly the full Board should hire 10 the executive director. The full Board sets the 11 executive's compensation. The Committee may do 12 the work, but the Board has to do it. It is their 13 job. It's one of the most important jobs. They 14 must support the executive director and evaluate 15 the director's performance at least annually. I 16 asked for that in my new position. It's like be 17 careful what you ask for. You just might get it. 18 I've just overgone my first 360 review with 24 19 evaluations by individual Board members compiled 20 by an outside HR consultant on my direct reports, 21 self-reports, interviews with my direct reports 22 all folded in and then the compensation reviews. 55 1 So we're clean in doing it and we're trying to be 2 ahead of the curve. 3 On your conflict of interest statement, 4 great, but I think it needs an additional PS. 5 Every member of the Board needs to sign a conflict 6 of interest statement annually and more frequently 7 if any material changes occur in the director's 8 circumstances. 9 I want to go to where do you go with all of 10 this and accreditation. I concur with my 11 colleague Dennis Popp, whom I haven't seen in ten 12 years. Accreditation doesn't get you there. 13 That's not what they do. They don't focus on 14 governance. They focus on program. I strongly 15 recommend then that the Committee agree upon a 16 final list of required policies and practices from 17 the ones you've got, others you're going to 18 integrate and then issue a final rule. I 19 recommend then the Committee develop a 20 declaration/certification form, a check list, if 21 you will, with each of these characteristics 22 listed and defined for each organization to 56 1 review, individually check and submit the 2 certification form annually as part of its Form 3 404 report. This declaration/certification form 4 must be signed by the following four individuals, 5 the Chair of the Board, the Treasurer of the 6 Board, the President/CEO, and the CFO with 7 appropriate citations, obviously, and your 8 signature lines regarding penalties for fraudulent 9 information. I think that gets to the level of 10 stewardship and accountability and transparency 11 you're asking for without having to load you up 12 and us with tons and tons of paper to then go 13 through, but basically to say we either did or we 14 didn't do it. 15 One final point. This is going to take 16 time. This is an evolving bar, and if you believe 17 that the implementation of these rules truly will 18 improve transparency and accountability of the 19 JWOD program, as I do, then I would encourage you 20 to work with the national agencies that provide 21 funding for nonprofit agency Board and staff 22 leadership, training, and technical assistance in 57 1 these practices and to allow the nonprofit 2 agencies up to 24 months to achieve compliance on 3 the best practice governance rules other than the 4 already mandated IRS policy on compensation 5 because that one is nailed. There are nice rules 6 in the section and it's in my written testimony 7 and others have referred to it. 8 I've also attached our recent Board of 9 Directors job description or conflict of interest 10 statement, and the independent sector code of 11 ethics. 12 Thank you. And I'd be happy to answer any 13 questions. 14 MR. DAY: You've had lots of experience and 15 you've been around a long time. What do you see 16 now as the most prevalent abuses that we should be 17 looking out for? 18 MR. BERGMAN: Let me respond to that for 19 about ten seconds, Mr. Day. And let me add in 20 terms of "been around for a long time." I also 21 wear another hat, which I didn't enter into the 22 testimony, which I probably should have or I'll be 58 1 slapped around by my family. I have and a 2 daughter with developmental disabilities and a 3 stepdaughter with very severe disabilities from 4 something called Rett Syndrome, so I sort of live 5 in both parts of this world. 6 The most egregious issues -- you know, it's 7 like everything else, there's a few bad apples in 8 the basket and I think, unfortunately, that's what 9 gets the public limelight, that's what gets the 10 newspaper headlines and the TV news investigative 11 reporters on whatever issue it is, and then we 12 paint everybody with a broad brush. 13 Are there some abuses in executive 14 compensation? 15 It appears there may be from stuff that I've 16 read. 17 Are there boards that are asleep at the 18 wheel? 19 I believe absolutely so. I have to be 20 careful because I now work for one. I would say 21 we have transformed our Board of Directors in the 22 last 15 months from a Board of Directors that was 59 1 pretty passive, and what I'll call rubber-stamped, 2 and things were going along just fine, to one that 3 is now actively engaged. We've moved from 4 traditional Board meeting agendas to strategic 5 direction issues. Those things don't have to go 6 in here, but I think getting Board members to 7 appreciate -- and then as someone said, "Find ones 8 who are willing to serve." They have a major 9 responsibility and public trust. As one of my 10 lawyers taught me years ago 501c3 tax and defense 11 status is not a right, it's a privilege, and with 12 a privilege comes responsibilities. 13 And that's why I'm saying, I think it's 14 going to take a couple of years to begin to make 15 some major cultural changes from some 16 organizations. I'm not saying all, and I don't 17 have numbers. I think smaller, less sophisticated 18 are going to need more time, but I can tell you 19 there's a fair number of folks who run very 20 sophisticated 20, 30, 40 million dollar 21 corporations and they're not close to what I see 22 in this list that you've currently proposed. But 60 1 I don't think generally wages are out of wac. 2 Again, we don't have the option of stock options 3 and dividends and all the things that go on in the 4 Enron world. So what the compensation is, is what 5 it is. I'm not aware of very many of my 6 colleagues in this country who have ever gotten 7 terrific golden parachutes where, you know, they 8 get five years of salary after they leave. It 9 happens once in a while. I think most people in 10 this field, and by that, I mean all of the 11 disability services, not just JWOD having gone 12 into this to get rich. People do this because 13 they wear the mission on their sleeve. They 14 believe in what they're doing. I believe in what 15 I'm doing. I think the people you've heard from 16 this morning do. And sometimes you just need a 17 little push, a little something to say, you've got 18 to raise the bar. Does that help? 19 MR. DAY: Thank you. 20 MR. SCHWALB: Sounds like you've already had 21 some experience with collective bargaining on one 22 of the issues in the questions I was proposing. 61 1 So if you want to just reflect on that experience 2 a little more and then if you want to address the 3 question about minimum floor wages and benefits 4 and full-time work opportunities for the Board 5 members. 6 MR. BERGMAN: Sure. First, let me start out 7 with current JWOD program, which as I mentioned 8 earlier, it only involves 46 people. It's with 9 general services administration. It's custodial 10 work in Federal office buildings, customs houses 11 in downtown Chicago. Those 46 workers have an 12 average wage of $10.50 an hour and a healthy more 13 fair line of $2.59 an hour. So we're there with 14 prevail and we're there with minimal. But I would 15 be less than honest if I didn't say that to some 16 extent. Because we've got high levels of 17 productivity, we have nothing to do with setting 18 the price, as you know. That's all associated 19 with GSA and whatever, and then we have to make it 20 work. The people clearly are people with 21 disabilities. Are they the people with the most 22 severe disabilities? No. So that's my walk in to 62 1 the other side. I think in the last decade we 2 have begun to learn a lot about how to modify the 3 environment, and not just through ADA, through 4 technical training and environmental changes to 5 look at how to enhance productivity for people 6 with the most severe disabilities. And I'll brag 7 a little bit. We just successfully competed for a 8 major Department of Labor grant from the Office of 9 Disability Employment policy, one of five in the 10 country to really learn how to engineer something 11 called customized employment. I'm not sure if I 12 rule that as work within a JWOD environment 13 because this really starts from inside the 14 preferences of the person and working probably 15 with small business. We're going to work with 24 16 people who have been deemed nonfeasible for 17 sheltered work under the subminimal wage who are 18 in day training programs. We've identified them, 19 their families. We just had our first PA's visit 20 on-site just before I left there yesterday and the 21 day before. We are raising the bar. 22 And so I think the question becomes, as Jim 63 1 pointed out, there may be in some places 2 exploitation. I think the flip side as a 3 disability advocate is, I don't want to tolerate 4 it either. That is equally bad. So I think the 5 people are producing and need to earn the 6 appropriate wage they aren't getting. But I think 7 to pay somebody a prevailing wage of minimum wage 8 whose level of productivity today is significantly 9 below 50 percent, 40 percent, that's a hoax and 10 that will drive costs way up, if you want to talk 11 about being able not to compete. 12 Collective bargaining. I guess if there was 13 a sense that there were egregious violations of 14 the Fair Labor Standards Act, Department of Labor 15 law and regulation, people's rights and there were 16 not mechanisms for them to grieve them in the 17 organization. We've got a human rights Committee. 18 We've got a grievance set of procedures. We've 19 got outside people who sit on that, and then I get 20 to review them after they've done it. And I can 21 tell you fortunately or unfortunately, I've had 22 four in the last nine months. And I've upheld all 64 1 of the grievances because they were correct to be 2 on the side of the worker as opposed to our staff. 3 So I think that's another set of issues. I'm not 4 sure in the current environment if the collective 5 bargaining goal is to raise wages and yet, a fixed 6 market price determines how much the size of the 7 contract is, we're going to have productivity 8 issues, we're going to have efficiency issues. So 9 I think we've got to learn as we go, but I think 10 the Board is going to be looking at this in the 11 next year or two. It's who is the focus of the 12 JWOD program and what is the definition of 13 disability? Right now it's disability 14 determination probably more often tied to the 15 Social Security Administration. 16 I have one other thought. I have my 17 fingerprints sitting on a piece of legislation 18 called The Ticket to Work a More Incentive 19 Improvement Act, in terms of the healthcare side. 20 The Medicaid buy-in and being able for people to 21 continue Medicare when they choose to go to work. 22 Unfortunately, Social Security administration is 65 1 still having a great deal of difficulty in helping 2 people understand the newest work incentive. They 3 never got it right like all the rest of us. I 4 think if this Committee could take on as an 5 additional responsibility trying to figure out 6 with them how do we make these things come 7 together, because I can tell you, we've had people 8 in some of our work programs, not necessarily in 9 JWOD, who are fearful of working enough hours to 10 lose their benefits and we sit and we explain to 11 them. In Illinois we have a high percent of the 12 poverty Medicaid buy-in. In two years there are 13 46 people in the state who have exercised that 14 buy-in. There's something wrong here and I'm not 15 sure if it's just the provider agency's 16 responsibility. I'm not saying it's just yours. 17 But I think if we're really serious about people 18 having meaningful lives, meaningful wages and 19 benefits, then we have got to do a much better job 20 of taking current law and past law, making it 21 user-friendly, consumer-friendly and incentive 22 both providers and individuals with disabilities 66 1 and their families to want to go to work and be 2 part of mainstream workforce. We now have a lot 3 of the skills to make that happen, but there are 4 massive psychosocial barriers in doing this. 5 MR. SCHWALB: Thank you. 6 MS. ZEICH: Our next speaker. Mr. Jerry 7 Bettenhausen. 8 MR. BETTENHAUSEN: Good morning, and thank 9 you for this opportunity to comment on the 10 Committee's proposals on nonprofit governance and 11 executive compensation. 12 I'm Jerry Bettenhausen, CEO of Work Services 13 Corporation CRP, located in Wichita Falls, Texas, 14 120 miles from here. We currently employ 592 15 people with disabilities in our JWOD projects. 16 I have comments in three areas, Board member 17 tenure, executive compensation, and what I 18 consider possible duplication in Federal 19 monitoring. 20 With regard to nonprofit governance, I know 21 that the Committee has listed 14 best practices 22 for nonprofit agencies. I am pleased to report to 67 1 you that Work Services Corporation has written 2 policies which address all 14 best practices. I 3 would, however, like to elaborate on Best Practice 4 4, which states, "The organization bylaws should 5 set forth term limits for service of Board 6 members." 7 WSC Bylaws, Article IV, Section 6 states: 8 A, Board members will serve a three-year term; B, 9 Board members may be reappointed on completion of 10 their term." 11 In accordance with provision B, Board 12 members who are committed to the organization 13 mission, who have a desire to continue to serve 14 and who actively provide oversight and guidance to 15 the organization are routinely reappointed as 16 Board members. Although new directors are 17 recruited and appointed as vacancies occur, we 18 generally have vacancies every one to two years, 19 other directors have served as many as five 20 consecutive terms. The counsel, guidance, 21 experience, and pro bono professional services 22 provided by these long-term directors is 68 1 invaluable. Respective directors are difficult to 2 recruit and often they are unable or unwilling to 3 make the investment of time and effort or they are 4 uncomfortable with the fiduciary responsibilities 5 of Board membership. Also, in our community, and 6 I suspect in other communities throughout the 7 United States, a zeal for public service is not as 8 widespread as it has been in the past. I believe 9 that the Work Services Corporation Board has 10 implemented measures, which I have details in my 11 written comments, to prevent director misconduct, 12 regardless of tenure. Importantly, we oppose any 13 rule which would prevent Board members from 14 serving consecutive terms. 15 I have several comments on executive 16 compensation. First, I have never considered 17 executive compensation as a factor in contract 18 pricing or fair market price. We use PR-3 as a 19 market-based price analysis process in determining 20 contract pricing. Concurrently and independently, 21 the contracting activity develops the Government 22 estimate of cost. Ultimately, both parties agree 69 1 to a fair and reasonable contract price. 2 Executive compensation is not a consideration. 3 Second, I'm aware of recent media coverage, 4 which questions the propriety of executive 5 compensation for several JWOD affiliates. I do 6 not believe that the alleged excesses reported in 7 these articles represent our community in general, 8 and we should not overreact to a few sensational 9 media articles. I believe that a recent NISH 10 survey of IRS Forms 990 for producing CRPs, 11 confirms that the mean, median and the mode of 12 executive compensation for these CRPs is at or 13 below the national average for nonprofit agencies, 14 executive compensation, as reported by the 15 chairman of the Senate HELP Committee on October 16 20th, 2005. I think we need to provide this kind 17 of verifiable data to Congress and to other 18 stakeholders which demonstrate that media reports 19 of executive extravagance are rare exceptions for 20 JWOD producing CRPs. 21 Third, the relationship between executive 22 and line worker compensation can be exaggerated, 70 1 especially with respect to line workers who are 2 paid a subminimum wage. The WSC workforce of 800 3 includes 23 employees who are paid a subminimum 4 wage. These employees are paid based on their 5 individual productivity in accordance with 6 Department of Labor rules. Despite the subminimum 7 wage, the department where these employees work 8 does not produce revenues to cover expenses and it 9 is highly subsidized. WSC accepts this expense to 10 provide training and employment for our employees 11 with the most severe disabilities because we 12 believe that it is consistent with our mission. 13 My conversations with colleagues at other JWOD 14 producing CRPs indicates that this is the norm. 15 An out-of-context comparison of executive 16 compensation and subminimum wage can be extremely 17 misleading. For those employees who are at or 18 above the minimum wage, the Department of Labor 19 Bureau of Labor Statistics publishes wage data by 20 job classification for metropolitan statistical 21 areas throughout the United States. This would be 22 a good benchmark for those line workers who are 71 1 paid minimum wage or higher. 2 In conclusion, WSC applauds the Committee's 3 efforts to maintain credibility and protect the 4 JWOD program. We are concerned, however, that 5 monitoring compliance with the proposed rules 6 would divert resources from our primary job 7 training and job creating goals. All of our 8 energies and resources should be directed at these 9 primary activities. 10 Further, monitoring nonprofit agency 11 governance and executive compensation, duplicates 12 the responsibilities of another Federal agency, 13 the Internal Revenue Service. The IRS has the 14 authority to investigate complaints, conduct 15 audits, impose intermediate sanctions and withdraw 16 nonprofit status. IRS regulates the compensation 17 that may be paid to nonprofit agency executives. 18 Accordingly, we recommend that the Committee work 19 cooperatively and collaboratively with the IRS, 20 rather than establish a duplicate monitoring 21 system. If the Committee is concerned about the 22 fiscal management of a few isolated agencies, it 72 1 may simply report those agencies to the IRS. 2 Additionally, we believe that the Senate 3 Finance Committee and the Congress will soon 4 establish Sarbanes-Oxley type rules and guidelines 5 for nonprofit organizations. WSC recommends that 6 the Committee work in concert with the appropriate 7 congressional committees and with the IRS to 8 establish legislation and develop regulations, 9 which apply to all nonprofit organizations. 10 Once again, thank you for this opportunity 11 to comment on this proposed rulemaking. 12 MR. BEAMAN: Just for clarification, you 13 talked about 23 employees that receive subminimum 14 wage. Is that the Federal minimum wage or is that 15 below, let's say, service contract minimum wage? 16 MR. BETTENHAUSEN: It's below the Federal 17 minimum wage. And I can address the question that 18 sort of leads into the question about payment of 19 subminimum wage. I agree with Mr. Gashel's 20 comment that we ought to be able to increase the 21 wages and benefits for our most severely disabled 22 employees. And in fact, our Board has considered 73 1 that on a number of occasions. What we are 2 confronted with is the same thing that we see in 3 private industry and that is offshore competition 4 drives the price of the product so low that we're 5 not able to compete. The employees that I'm 6 talking about, and maybe you're familiar with the 7 work service paperclip contract. That's the only 8 place that we pay subminimum wage. And offshore 9 competition, I recently saw a box of 100 10 paperclips advertised by a national office supply 11 company at three cents a box. I can't even buy 12 the wire for that at that price. And so that's 13 something that we're faced with. 14 In spite of that, if we're able to do it we 15 already subsidize an operation. I believe that 16 our Board is moving in a direction where they may 17 just go to the Federal minimum wage in that area 18 as well. 19 I guess I'll go ahead and comment a little 20 bit about the collective bargaining question. I 21 agree the right to concerted activity is a right. 22 It is not a privilege and that should be extended 74 1 to all people, regardless of whether or not they 2 have a disability. We have collective bargaining 3 agreements with three labor unions. Approximately 4 60 percent of our workforce is represented by a 5 labor union. 6 I would add, sometimes there's an impression 7 that if a company needs a labor union they must be 8 a cold and heartless organization and that's why 9 the union is there in the first place. We 10 inherited all the unions in our contract. Most 11 unions have a successor clause, which protects 12 them when one organization takes over the 13 contract. And that's how we inherit the 14 contracts. 15 That being said, typically employees who are 16 represented by a labor union get better wages and 17 benefits. And, again, that right should be 18 extended to all employees. 19 MR. KELLY: I just have a question. What is 20 PR-3? 21 MR. BETTENHAUSEN: That is a pricing 22 procedure, which is specified by the Committee 75 1 staff and also in our case, NISH, and it is a 2 process we go through in establishing the prices 3 for our service contracts. 4 MR. DAY: I think you mentioned that it's 5 harder to get good people for public service, and 6 I think you were referring to directors. If 7 that's the case, do you believe it is more 8 difficult now and do you think it is going to be 9 prevalent and is there something we all should be 10 doing to alleviate that situation? 11 MR. BETTENHAUSEN: Yes. I was referring to 12 directors. And I think there are a number of 13 factors. 14 One of the things I mentioned was is that 15 there seems to be, whether it's participation in 16 service organizations or serving on nonprofit 17 Boards, there seems to be less of, I used the word 18 "zeal," for people to get involved in that. Also, 19 I think with a lot of the issues we've had both in 20 the private sector and also in the nonprofit 21 sector, prospective Board members are aware of 22 serving. There are additional responsibilities. 76 1 Theres's a lot of critical analysis that goes on 2 and it's tough to be on a board. And so I think 3 people shy away from that. It's particularly 4 difficult. We've adopted Sarbanes-Oxley type 5 provisions for our Board. It's particularly 6 difficult in this day and age to get people who 7 are financial experts to serve on your audit 8 committee. They are in great demand and in our 9 Committee we have a population of about 100,000 10 There are probably a dozen people who qualify as 11 financial experts. And they are difficult to 12 recruit for board membership. 13 MR. SCHWALB: Thank you. You anticipated 14 your question -- I mean, your remarks very well. 15 Thanks for the follow-up. 16 By my count there are three more speakers, 17 which is -- there's several people that look like 18 they didn't make it. Let me just take a quick 19 roll call one more time to make sure we haven't 20 been joined by anybody because about now is where 21 we would take a break, but it doesn't make much 22 sense to take a break if we only have three 77 1 speakers. We'll just hear from them and finish 2 for the day, but just real quick one more time. 3 I'm going to call out your name. If you're 4 here, will you identify yourself so we can make 5 sure you're added to the list because right now we 6 show you as not being here. 7 Patti Black? 8 Nancy Keating? 9 John Murphy? 10 Bob Smith. 11 MR. SMITH: I'm here, Mr. Schwalb, but I'm 12 not speaking. 13 MR. SCHWALB: Okay. So you should be 14 crossed off then, correct? 15 MR. SMITH: Correct. 16 MR. SCHWALB: Steve Copeland. 17 MR. COPELAND: I'm here. 18 MR. SCHWALB: Are you going to speak? 19 MR. COPELAND: Yes. 20 MR. SCHWALB: Okay. I'll go ahead and put 21 you back on. So we have four more. 22 Mike Carney? 78 1 And Tom O'Brien. 2 Okay. With only four, let's just press on 3 and then we'll wrap it up and we can all go have 4 lunch. 5 MS. ZEICH: Mr. Richard Gilmartin, please. 6 MR. GILMARTIN: My name is Richard 7 Gilmartin, and I'm employed with Baptist 8 Healthcare and Lakeview Center, both based in 9 Pensacola, Florida. We're a comprehensive 10 nonprofit healthcare and human services system 11 with 5,500 employees operating in acute care 12 hospitals. Lakeview is an affiliated Baptist 13 Healthcare and provides behavioral health, child 14 welfare, and vocational services to some 30,000 15 individuals each year. We employ 2,000 people, 16 including 600 employees with severe disabilities 17 who are fortunate to work on JWOD contracts and 18 they'd be the first ones to tell you that very 19 thing in the importance that JWOD and their 20 employment means to their personal welfare. 21 Working for a nonprofit agency, which maintains 22 accreditations by the Joint Commission of 79 1 Accreditation Healthcare Organization and by CARF 2 and which has been honored with a Malcolm Baldrige 3 National Quality Award, we are no stranger to 4 externally impose standards in compliance 5 monitoring. 6 Do such policies make us a better 7 organization? 8 Yes, we believe they do. 9 Do they absolutely eliminate the possibility 10 of corporate malfeasance? 11 No, they do not. 12 Preventing fraud and other unethical 13 business practices is accomplished internally 14 through the unyielding energy and value of 15 oriented focus required to infuse a culture of 16 integrity and stewardship into the very foundation 17 of an organization. 18 We do not oppose the Committee's interest in 19 addressing requirements relative to governance for 20 participation in the program. To the extent that 21 an agency maintains accreditation by an 22 independent entity which includes a review of 80 1 generally accepted governance standards, such as 2 those proposed in the Committee's draft and 3 intent, we do not seek the benefit of the 4 Committee or its agents conducting a duplicate 5 review. Conducting such additional reviews 6 carries an extra cost to the NPA and such a charge 7 for conducting of the review with very little 8 value, if any, in return. 9 On the matter of executive compensation, we 10 agree with the Committee's position that serious 11 deliberation is required in a setting of 12 appropriate compensation. For this reason, we 13 utilize an independent source to accumulate market 14 data and perform the requisite analysis of all 15 executive staff positions compensation. Our 16 current practices target compensation at the 17 60th percentile of the data based on comparable 18 positions. That data is presented to the 19 Executive Compensation Committee of the Board. 20 They review it, they target the executive 21 compensation for each and every executive 22 position, and they do that at leisure to the 81 1 Executive Committee of the Board. We certainly 2 have no opposition to certify that this process is 3 conducted in our organization. 4 Our world has changed dramatically during 5 the 30 years that I have been in the field. 6 Nonprofits are now expected to maintain the state 7 of the art data management systems, recruit and 8 retain subject matter and technical experts and 9 operate world-class quality systems in order to 10 satisfy the customers who are not part of the 11 contract, but as our business partners. Many of 12 our organizations, like the one I'm from, are 13 highly complex with multiple business lines, 14 diversified fields, professional expertise and 15 numerous external monitors to satisfy. To 16 accomplish the objectives expected by our 17 customers and the Committee itself, we are 18 competing for leadership talents in the very same 19 large pools as for-profit corporations. Whatever 20 action the Committee intends to take, we simply 21 ask and remind you that our recent customer, the 22 Federal Government, expects that services and 82 1 products being purchased from JWOD to be delivered 2 to them with the same quality, efficiency and 3 competitive pricing as they can get from a 4 for-profit sector. 5 In closing, we are honored to participate in 6 the JWOD program and certainly appreciate the 7 issue at which it is going to be wrestled with as 8 you work to maintain the integrity and liability 9 of this program. The creation of jobs with severe 10 disabilities is a noble cause, one which Baptist 11 Healthcare Lakeview Center fully supports. 12 I want to thank you for your time. 13 MR. KELLY: Would you repeat what you said 14 concerning executive compensation? You said 15 something about percentile and I just didn't hear 16 it well or I didn't quite get it. 17 MR. GILMARTIN: Sorry. I've been known to 18 speak a little quick. Sorry about that. 19 The setting that we use, is we set the 60th 20 percentile -- 21 MR. KELLY: 16th? 22 MR. GILMARTIN: Six, zero. 83 1 MR. KELLY: Six, zero. 2 MR. GILMARTIN: -- of the market data as our 3 target to pay our executive staff. 4 MR. SCHWALB: I think I heard from your 5 remarks, that that survey would include what an 6 independent entity would determine to be for 7 companies as well. 8 MR. GILMARTIN: That's correct. 9 MR. SCHWALB: From which you consider 10 comparable, which you're recruiting, as you said 11 in your remarks? 12 MR. GILMARTIN: That's exactly right. 13 MR. SCHWALB: Is it your understanding that 14 it's common for the salary surveys to include 15 for-profit companies as well as nonprofit or 16 Government entities and other types of employers? 17 MR. GILMARTIN: For the survey we're doing 18 you're asking? 19 MR. SCHWALB: Yes. 20 MR. GILMARTIN: It's common and it is done 21 in the for-profit. Not in healthcare -- in the 22 healthcare field and in the vocational field. 84 1 It's only looking at comparable positions -- 2 comparable field, I should say. 3 MR. SCHWALB: Back to the other question 4 that everyone has been addressing. 5 Do you have any thoughts on the issue of 6 whether there should be a floor for the disabled 7 workers? 8 MR. GILMARTIN: We have chosen to set a 9 floor that is the Federal minimum wage or in 10 Florida, as was mentioned earlier, where we're 11 based out of. It's the state minimum which is 12 $6.15. 13 MR. SCHWALB: In your respect of 14 productivity? 15 MR. GILMARTIN: That's correct. At some 16 point, it becomes a mathematical decision, quite 17 frankly, which is not hard to calculate. An 18 organization can bear with differential to a 19 point, but at some -- beyond that point it becomes 20 a question of at what cost do you subsidize it? 21 What you're paying the individual versus what 22 they're producing or generating, in terms of 85 1 service. But we have chosen to set the floor at 2 the Federal minimum wage, or as I said, the state 3 minimum wage. 4 As to the CBA issue, it's interesting how 5 you phrase the question I thought. It's at least 6 my understanding, it is typically the work force 7 that elects to bring in or not bring in a 8 collective bargaining agreement. It's not so much 9 the employer that puts the fence up and prevents 10 that from happening. We've been fortunate, I 11 believe, to have employees who feel like they're 12 treated fairly, compensated fairly, and they have 13 now chosen to seek representation beyond that 14 through the existence of their own limitation. 15 MR. DAY: You said you have a minimum wage. 16 Does it cause any unhappiness amongst the workers, 17 some workers for doing a lot for -- and others and 18 not doing it for everyone? Does that cause a lot 19 of conflict? 20 MR. GILMARTIN: Yes, it does. I mean, 21 that's the simple answer. The more longer answer 22 is that we have to explain that's our mission, 86 1 that's what we're there for. Do we have people 2 that choose to believe as a result of that? 3 People lose who are nondisabled or at least not 4 severely disabled who are concerned and express 5 their concern at other people that are being paid 6 at or close to what they're being paid but not 7 producing on the same level? That does exist. 8 And they may choose to leave. 9 MR. SCHWALB: Thank you very much. We 10 appreciate it. 11 MS. ZEICH: The next speaker present is 12 Steve Copeland. If you will please come to the 13 podium. 14 MR. COPELAND: Thank you, Committee for 15 giving us the opportunity to speak today from ARC. 16 We appreciate everything that you-all do. I guess 17 I'm going to be the only independent Board member 18 so far that has been here to speak. 19 I'm a Board member with ARC in Cookeville, 20 Tennessee. I volunteer my time as a business 21 leader to that organization. And I just wanted to 22 go over some of our thoughts that we have about 87 1 your public. The good governance practices, is 2 what I mainly want to speak about today. We have 3 another Board member I think that is going to be 4 in San Francisco to discuss the employment 5 compensation part. It's hard to get in everything 6 you want to get in a five-minute time period.