Call to Order
Chairperson Bob Cramer called the meeting to order at 1:00 pm with
a quorum present.
Minutes of Previous Meeting
Mr. Cramer asked for discussion of the September 19, 2001 Minutes.
There was no discussion.
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Motion: |
Dick Stoffer moved the Minutes of September
19, 2001 stand approved as submitted. Daryl Henze seconded the
motion, and it passed by unanimous vote. |
FY02 Budget Update
Lynn Walding reported due to a 6% cut to the original base budget,
elimination of the Licensee Education Fund and unfunded employee pay
raise amounts, the division’s appropriation for FY02 was approximately
$140,000 less than the previous year’s budget. With the recent
4.3% cut to the revised budget, the total effect has been a 12% reduction
in the alcohol appropriation this fiscal year. In reviewing how this
cut will impact the agency, the focus has been on three core functions:
1) alcohol sales, 2) licensing, and 3) enforcement. Enforcement was
identified as the weakest function.
Tobacco operations were reported incorrectly in the Commission booklet.
The FY02 Total Spending Authority was $1,402,420 with a total change
in operations of $108,756 or a 7.2% reduction in appropriations.
Revised Table of Organization
The reorganization took into account: 1) budget reductions, 2) span
of control, and 3) adjustments the Administrator felt were necessary
to enhance efficiency. Services have been reduced to core functions
only and no layoffs have been necessary at this time.
Budget Cuts
Lynn Walding approached the Department of Management with a proposal
to raise certain fees in the warehouse as an alternative to the 4.3%
budget reduction. Although Management was not opposed to it, the proposal
would have to go through the Legislature; therefore, the division
had to take the 4.3% reduction. Mr. Walding will visit with
the Appropriations Chairs to make them aware of how the 4.3% was implemented
and what it means to Iowans.
Span of Control
The span of control ratio recommended for all state agencies is one
supervisor to 12 employees. The division had a span of control of
1 supervisor to 7 employees, which was lower than the ratio of 1:12
recommended by the Governor. The span of control under the reorganization
is 1:24.
Enhanced Efficiency Adjustments
The alcohol field investigators were previously domiciled in their
homes working 10-hour days in the field on a four-day workweek. Changes
made were:
- Field investigators are now domiciled in Ankeny working 8-hour
days in the office on a five-day workweek eliminating travel expenses.
- Two vehicles were reverted to the state vehicle fleet and two
were retained for the investigators use when they do wholesale
audits and background checks.
- Compliance checks will be done by local law enforcement with
investigators providing their expertise and assistance from in-house.
- The investigators will do special projects.
- Investigators will support special events such as RAGBRAI by
phone.
- The investigators may still do bootlegging investigations because
bootlegging directly affects the operation. Gaming, after-hours
violations, etc. will be done by local law enforcement.
Mr. Stoffer asked if the Commission should be concerned regarding
enforcement issues. Enforcement has been a service provided; however,
under Iowa Code it is not the responsibility of this agency and
therefore it is not a core function. Mr. Walding said a letter
would be sent to all law enforcement agencies notifying them of
the change.
In response to a question by Ms. Collins, Jim Kuhlman gave background
information on enforcement responsibilities since 1972. Mr. Cramer
suggested the historical perspective should be addressed in a letter
to the legislature requesting reinstatement of money for enforcement.
Mr. Walding commented that all agencies have been cut 4.3% and all
are crying for more funding. Since the chief law enforcement authority
for alcohol is the Department of Public Safety, and since they have
had $6 million restored to their budget, enforcement should deserve
further consideration from that department.
Jim Green, RAGBRAI representative, commended the work the field
investigators have done in the 10 years he has been associated with
RAGBRAI. The investigators were unable to work RAGBRAI this year
and, without their assistance, there were more challenges for law
enforcement according to Mr. Green. Law enforcement personnel are
stretched to the breaking point during RAGBRAI and the investigators
were of great assistance because they took care of any illegalities
with regard to alcohol. Mr. Walding commented RAGBRAI is a good
example of a public safety risk resulting from lack of funds to
enable the investigators participation in any way other than phone
support. The state will lose four investigators in the field who
are very well trained in alcohol laws and who have good rapport
with law enforcement personnel.
Order Entry personnel will begin working a five-day week November
16th. Licensees will place orders between 7:30 am and 2:30 pm Monday
through Thursday. Staff will assist with licensing issues on Fridays.
In response to a question by Mr. Henze about opposition from employees
or licensees regarding the change, Mr. Walding responded some employees
probably preferred their previous schedule; however, he believes
the new schedule will provide better service to customers. There
have been no complaints to date from licensees.
Other changes made were:
- Alcohol and Tobacco Enforcement have been combined into one
section.
- Products and Licensing were also combined.
- Judy Seib’s previous responsibilities have been split with
Ms. Seib retaining the hearings portion and doing special projects.
- Karen Freund has been assigned as a lead worker for licensing
issues.
- Curt Thompson has been assigned as a lead worker for alcohol
enforcement.
Sales Report
Sales are _% ahead of last year. Traditionally, liquor prices go up
1-3% each year so in effect sales are really down. There was one additional
sales day in October this year. The holiday show merchandise was shipped
over a two-week period in October last year; this year the merchandise
was shipped over a three-week period with one of those weeks extending
into November. Mr. Kuhlman expects dollar sales will be fairly even
at the end of November. Sales continue to be flat.
Post September 11th Sales Report
There does not appear to be any change in alcohol consumption in Iowa
as a result of the September 11th terrorist attacks. Holiday show
sales were very good which indicates that retailers still have confidence
in their business or they couldn’t resist taking advantage of
some of the discounts. If the latter is the case, it will reflect
in future sales.
Sheila Douglas, Iowa Wholesale Beer Distributors Association, reported
beer sales are down about 1%. Sales were hit heaviest the week following
the attacks because of sports events being cancelled. Ms. Douglas
believes that beer sales will steadily rise.
Product Buy-Out Report
There are fewer products available to purchase on the buyout program
this year according to Jim Kuhlman. Suppliers continue to watch their
inventory levels closely leaving smaller quantities for the division
to purchase. Year-to-date, the dollar profit is down approximately
$99,000.
Financial Report
There are two significant changes on the financial report. The Liquor
Trust Fund Balance is considerably less this year and the General
Fund Transfers are up $1 million in comparison to last year. The division
is required by GAP accounting to maintain funds in the Liquor Trust
Fund Account to pay for future payables. If there is sufficient money
in the Liquor Trust Fund, the division transfers the excess money
to the General Fund. Net income is up slightly and expenditures are
down. If sales continue at the current pace, the division should be
able to make the projected transfers without any reduction to the
General Fund.
Holiday Show
The annual holiday show was held September 23 and 24th at the Sheraton
Four Points Hotel on Merle Hay Road. Attendance increased by 13% with
130 retailers in attendance. Following the show, all retailers were
given the opportunity to purchase left over items. Approximately 33,000
cases were sold at the show, which is a wholesale value of $4.6 million.
The net profit to the division will be $1.2 million.
Industry Meeting Report
Immediately following the Holiday Show, there was a meeting with industry
representatives. Attendees were local retailers, local representatives,
representatives from distilleries, vendors, importers, J. A. Jones
Company personnel and staff. Items discussed were:
- Holiday show
- Listing/Delisting policy
- Use of gravity flow rack to stock high-priced, slow-moving items
- Defective merchandise return
- White sale — lowering markup for one day on all merchandise
In response to a question by Mr. Henze, Jim Kuhlman replied there
is no restocking charge on merchandise returned. Bob Cramer, once
again, stated there should be a restocking fee and an increase in
the split case fee. The service indirectly, through the Jones Company,
costs the state money. Restocking and split case fees could reduce
over-all cost.
Imposing a split case fee and raising the bailment fee were the
proposed increases in fees suggested to the Department of Management
in lieu of the 4.3% budget cut according to Mr. Walding.
Tobacco Report
Gary Marker reported tobacco compliance is considerably higher this
year. Over 10% of the checks for this fiscal year have been completed.
The first round of checks will be completed by the end of January
at which time, a report of expenditures for first round compliance
checks will be submitted to the Department of Health. The reporting
form has been revised to gather additional information needed for
SYNAR checks. Mr. Marker pointed out that there were 19 establishments
reported as “unable to complete checks” for the following
reasons: closed businesses, businesses that don’t sell tobacco
or conditions were unsatisfactory. Unsatisfactory conditions include
establishments that are unsafe or are not appropriate for juveniles
to go in.
In response to a question by Mr. Henze, Mr. Walding stated that the
report is sorted by vendor for the ITACom Committee members. Additionally,
the division has contracted with a company to put the databank on
the web page so anyone can search compliance results by city or retailer.
Nicole Watson reported on Iowa’s Tobacco Compliance Rate from
1994 to the present. When the FDA started contracting with states
at the local level for tobacco enforcement in 1997, there was a significant
drop in noncompliance. The noncompliance rate immediately increased
at the end of that program. Ms. Watson explained the most recent educational
brochure “Responsible Retailing” resulted from data collected
showing that 57% of the noncompliant retailers asked for ID and still
sold. This indicated that although the clerks were asking for ID,
they were not properly evaluating the ID.
Counsel’s Report
John Lundquist reported that all but approximately 12 of the 75 cases
set for hearing in December have been settled.
Mr. Cramer asked about the status of a case against Ron Hobbs. (Mr.
Hobbs contacted commission members regarding this case.) Mr. Lundquist
stated that Mr. Hobbs was convicted of bootlegging because of his
activities on RAGBRAI a few years ago. If a person is charged criminally
with bootlegging, it is the division’s discretion to determine
whether that conviction disqualifies them from selling in the future.
The facts of the Hobbs case were such that it was determined that
it should. Mr. Walding commented it is his understanding that Mr.
Hobbs is building or remodeling a new place in Danville. Mr. Walding
anticipates there will be a new application for a license from Mr.
Hobbs in the near future.
Mr. Lundquist explained if a license is revoked by the division, or
is an action of law, there are some crimes that if convicted, the
person who held the license is ineligible to reapply for a license
for a period of two years. Also, the premise that was subject to the
license that was revoked would be required to go dry for a year so
no one could operate in that building. The spouse of a person whose
license was revoked could apply for a license in another location.
Mr. Cramer asked if the division was putting a burden on cities by
doing away with enforcement. Mr. Walding responded local authorities
are the first step in getting a license, and they also have independent
authority to prosecute the cases before the city council. The local
license authorities, along with their local police departments, refer
their clients to the licensing staff, and if Mr. Lundquist determines
there is sufficient evidence to go forward, he can initiate a case
without the division’s investigators being involved. An order
from the Alcoholic Beverages Division Administrator is required to
close a bar; however, the Police Department could initiate an administrative
sanction either before the local authority or the division at which
time a sanction could be imposed or a license revoked. In addition
to local law enforcement, the Department of Public Safety initiates
many cases before the division’s hearing board. Mr. Lundquist
is authorized to prosecute the cases on behalf of the Department of
Public Safety.
Dram Shop Insurance Update
The Administrative Rules Review Committee is requiring a Regulatory
Analysis before the rule proceeds. Ms. Seib will prepare the analysis
trying to anticipate what the rate increases proposed in the rule
will do to premiums; however, the report will be speculative. When
the Analysis is completed, it will be published in the Administrative
Rules Bulletin and the comment period will be extended.
In response to a question by Mr. Cramer, Ms. Seib said that the insurance
companies, not the Alcoholic Beverages Division, determine the rates
based on risk and receipts. The division will look at 1) the
effects of a deductible; 2) a bond as an alternative; and 3) if a
bond is posted, a proposed amount.
Although bar owners are not objecting to an increase in coverage,
they are objecting that off-premises establishments do not have to
carry dram shop insurance. Licensees are also concerned about third
party liability and the fact that insurance companies tend to settle
the cases and then raise the licensees’ premiums. A licensee
also complained to Mr. Walding that the rule impacts him more as a
responsible restaurant owner because he sells more wine with dinner
as opposed to people “slamming” drinks.
Mr. Cramer commented that the division could define what is
going to be covered and what the criteria should be. Ms. Seib said
she would explore it; however, based on conversations with Ms. Burke-Boston
from the Insurance Division, it might result in a dead end. Mr. Cramer
suggested getting it changed in favor of the division.
The criteria should be determined on a sliding scale on the
basis of pouring to make it fair and equitable according to Mr. Cramer.
Ms. Seib will try to meet with bar and restaurant owners to get their
input on determining criteria and then ask the insurance agencies
to rate.
Binge Drinking on College Campuses
Lynn Walding reported that the division has started a “white
paper” summarizing the issues, the law, public comment and the
Commission’s recommendations regarding policy. Rather than give
specific language, the paper will state the Commission’s recommendations
and let legislators craft the language for any resulting bill. Upon
completion of the formal document, the white paper will be condensed
into an Executive Summary for the legislators. Mr. Walding said the
goal is to get the white paper to the Governor and the legislature
near the beginning of the session. Mr. Walding would like to
see the Commission recommend to the legislature that certain practices,
which are blatantly promoting irresponsible consumption patterns,
be curtailed by the Legislature..
Ms. Seib explained the paper will be laid out as follows: 1)
introduction, 2) definition of binge drinking, 3) how binge drinking
affects college campuses, 4) how binge drinking affects sexual assault,
5) second hand effects and societal costs of binge drinking, 6) how
advertising targets youth and binge drinkers around college campuses
and 7) how drink specials fuel binge drinking. In addition, Ms. Seib
will include the advantages and disadvantages of using home rule and
a summary of each speaker’s comments at the public forums. The
final section will be the Commission’s recommendations. A summary
of the different laws and administrative rules will be at the end
of the paper.
Mr. Cramer expressed his appreciation of the draft copy. He
asked that each commissioner be assigned a color to make corrections,
additions and comments in the word document, and that the commissioners
be prepared to make a recommendation at the next Commission meeting
regarding the laws on public intoxication, OWI and binge drinking.
Mr. Cramer feels the Commission has an obligation to put forth some
stringent, fair guidance to the Governor, Legislature and the public
explaining that the Commissioners arrived at their recommendations
by listening to bar owners, students, manufacturers and the general
public at public forums.
Chairman Cramer requested the following issues be included in the
white paper:
- debate on some of the ordinances
- how these things will impact rural Iowa and whether there would
be unintended consequences
- concerns regarding enforcement
- increased dram shop rates
- higher fines
- drivers licenses revoked
- servers not less than 18
- TIPS training
- the dynamics and problems associated with Home rule
Mr. Cramer requested the above information be condensed and
that the conclusion of the white paper include verbatim comments
from the commissioners. He asked that the final report be sent to
the Governor, the legislature and the general public to make them
aware that the Commission is trying to assist every community in
the state.
Daryl Henze pointed out that the summary of several state’s
laws previously prepared by Nick Podsiadly showed less than one-half
of the states as having laws. Mr. Walding said he would confirm
whether the information gleaned from a TIPS survey represented all
states or a compilation. Ms. Seib will scan the survey and e-mail
it to the Commissioners along with the draft white paper.
Other Business
Lynn Walding recently attended a meeting called the Iowa Alcohol Forum
where one of the key issues debated was reducing the blood alcohol
content (BAC) to .08. Based on federal DOT requirements, Iowa legislators
will eventually pass a bill reducing the BAC; however, the Commission
may want to express their views on whether they want to advocate passing
the .08.
Meetings
The next meeting will be a teleconference meeting in January. Commissioners
will be called to set a date and time. The legislature convenes January
14, 2002.
Adjournment
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Motion: Dick Stoffer moved
the meeting adjourn. Gayle Collins seconded the motion and the
motion carried. |
The meeting adjourned at 3:19 pm.
GAYLE COLLINS, Secretary
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