Board of Directors Minutes - October 20, 1998

A meeting of the Board of Directors of the Universal Service Administrative Company (USAC) was held at the Ronald Reagan Building/The International Trade Center, 1300 Pennsylvania Avenue, N.W., Washington, D.C., on Tuesday, October 20, 1998. The meeting was called to order at 9:05 a.m. EDST by Lisa Rosenblum, Chair. Ms. Cathy Howard, Executive Assistant to Cheryl Parrino (CEO of USAC), acting as Secretary to the Board, called the roll.

1. Approval of minutes of Monday, July 20, 1998, and Wednesday, August 26, 1998 – On a motion duly made and seconded, the Board unanimously approved the minutes, as distributed, of the July 20, 1998, and August 26, 1998, USAC Board of Directors’ meetings.
   

2. Draft USAC By-Laws – Several concerns with the By-Laws were brought to the table: (1) grammatical and punctuation errors; (2) how to use telecommunications and video conferencing for the Board meetings in light of the fact that all Board meetings are considered public meetings; and (3) rotating or staggered terms of office. Ms. Parrino addressed each concern: (1) Before the draft By-Laws go to the FCC, grammatical errors, punctuation, and redlining will be cleaned up and removed from the draft document so that it is more consistent with the format of the USAC Reorganization Plan; (2) Video conferencing is just one of many telecommunications options to use in place of face-to-face meetings and these options are covered in general terms under Item #6 in the By-Laws; and (3) The terms of office are yet to be determined by the final order from the FCC, but USAC counsel feels that once this is done, the FCC will provide wording under Items #3 and 4 to ensure staggered terms. Board members were invited to send any comments or suggested changes to the By-Laws to Ms. Parrino by October 23, 1998, before the document is shared with the FCC.
   
   On a motion duly made and seconded, the Board unanimously adopted the following resolution:
   

   RESOLVED, That the USAC Board of Directors authorizes the USAC staff to share the draft By-Laws with the FCC staff and Commissioners.

3. Executive Committee Proposal – Ms. Parrino outlined the proposed resolutions for the Executive Committee. Several concerns with the proposal were brought to the table and the following suggested changes were asked to be made: (1) Add language to note that the powers of the Executive Committee may be exercised between Board meetings; (2) Delete the words "whether in the ordinary course of business or otherwise" under Item #2 of the resolution; (3) Reword Item #4 to require the Executive Committee to bring any long-range business plans that are developed to the full Board for approval before implementation; and (4) Add language to note that the Executive Committee will have the authority to implement Board resolutions.
   
   On a motion duly made and seconded, the Board unanimously voted to lay the motion concerning the Executive Committee Proposal on the table until revisions could be made to the proposed resolution.
   
   After the mid-morning recess, on a motion duly made and seconded, the Board unanimously agreed to take from the table the motion relating to the Executive Committee Proposal. A member asked exactly how the members of the Executive Committee would be determined. The Board amended the resolution to cover this issue.
   
   On a motion duly made and seconded, the Board unanimously adopted the following resolution:
   

   RESOLVED, That the USAC Board of Directors approves the formation of an Executive Committee and is hereby designated, which committee shall have and may exercise the following powers and authority of the Board of Directors of USAC between Board Meetings in the management of the business and affairs of USAC: (1) authorize the preparation and issuance of RFPs; (2) negotiate and enter into contracts up to $750,000 and authorize the same; (3) consider and take action regarding personnel issues; (4) develop and recommend to the Board a long-range business plan and implement as directed by the Board; (5) review the initial budget and other financial information; (6) operate and manage the business of the Corporation in the ordinary course of business; and (7) any additional authority delegated to the Executive Committee by a resolution of the whole Board. However, in no event shall such committee: (i) have the power to approve, adopt, or recommend to USAC’s stockholder(s) any action required under Delaware law to be submitted to stockholders for approval, or (ii) have the power to adopt, amend, or repeal any USAC By-Law, and
   
   RESOLVED, That the Executive Committee shall consist of five (5) USAC Board members, including the chair of the USAC Board, an at-large representative, a representative of the High Cost and Low Income Committee, a director who, under the USAC By-laws, represents rural health care providers, and a director who, under the USAC By-laws, represents schools and libraries, and

   RESOLVED, That the Executive Committee’s meetings shall be open to the public and be held in Washington, D.C.

   On a motion duly made and seconded, the Board unanimously adopted the following resolution appointing the Executive Committee members:
   

   RESOLVED, That the Executive Committee shall consist specifically of the chair of the USAC Board of Directors (Lisa Rosenblum), the chair of the Schools and Libraries Corporation Board of Directors (Kathleen Ouye), the chair of the High Cost and Low Income Committee (Heather Burnett Gold), the chair of the Budget and Finance Committee (Don Lynch – subject to change based on the dissolution of the Budget and Finance Committee), and a designee from the Rural Health Care Corporation Board of Directors (Dr. Jay Sanders).

4. Personnel Policies – This item was listed as an Executive Session item on the agenda; however, the Board agreed that the some of the documents were appropriate to discuss in open session.
   
   Board members felt that the various Statements of Ethical Conduct for Directors and Employees noted as Attachments D, E, & F in the agenda item memo were appropriate for employees, but would cause multiple conflicts for directors in terms of the directors accepting any sort of compensation from the very companies they represent.
   
   On a motion duly made and seconded, the following amended resolution was proposed to respond to these concerns:
   

   RESOLVED, That the USAC Board approves the following USAC documents for use by USAC effective January 1, 1999: "Personnel Policies, General Information"; "Employment Application"; "Statement of Ethical Conduct for Directors and Employees"; "Statement of Ethical Conduct, Definition of Gifts Prohibited"; "Statement of Ethical Conduct, Disclosure Form for USAC Employees"; and "Business and Travel Expenses of USAC Representatives," with the direction to the USAC CEO to revise the "Statement of Ethical Conduct for Directors and Employees," "Statement of Ethical Conduct, Definition of Gifts Prohibited," and the "Statement of Ethical Conduct, Disclosure Form for USAC Employees" by striking the word "director" and indicating that these documents affect only employees of USAC and not the directors. The Board further directs the USAC CEO to develop new and separate "Statements of Ethical Conduct" to be used for directors only.

   After some preliminary discussion regarding the documents—the "Summary Table," the "Personnel Policies, General Information," the "Employment Application," and the "Business and Travel Expenses of USAC Representatives" noted as Attachments A, B, C, & G in the agenda item memo—the Board decided that it was more appropriate to discuss these matters in Executive Session.
   
   On a motion duly made and seconded, the Board unanimously voted to lay the amended motion relating to Personnel Policies on the table to be brought back during Executive Session (see Agenda Item #29).
   

5. Notice of Proposed Rulemaking and Notice of Inquiry (CC Docket 98-171) – Mr. Haga explained to the Board that the FCC is proposing to streamline the reporting requirements associated with the administration of different industry programs. The Notice of Inquiry from the FCC asks for input on consolidating the billing and collection function for all the programs. The USAC Board of Directors considered whether USAC should submit comments in the initial round of the proceeding, and if so, the scope of the comments. Members of the Board debated whether the suggested points to be made in the comments as outlined in the agenda item memo were advocating a policy position, and if so, if it is appropriate for USAC to advocate policy. The Board as a whole agreed that USAC is an administrative body and past discussions on this topic have made it clear that one of the functions of USAC is NOT to advocate policy. It was felt that comments could be made without getting into policy matters by limiting the comments to the administrative matters and capabilities of USAC. Ms. Parrino said that a draft copy of the comments would be sent to each member of the Board for the Board’s input before the comments are submitted to the FCC on October 30, 1998.
   
   On a motion duly made, seconded and carried, the Board voted to direct the USAC CEO to submit comments to the FCC on its Notice of Inquiry in CC Docket 98-171 and to limit those comments to the administrative matters and capabilities of USAC. Mr. Frank Gumper dissented.
   

6. Draft Request for Proposal (RFP) for Payroll, General Accounting, Financial Services, and Reporting – This item was listed as an Executive Session item on the agenda; however, the Board agreed that this item was appropriate to discuss in open session.

   Ms. Parrino briefly outlined the timeline for the RFP as noted in the agenda item memo. A Board member asked the question that if the Board approved this RFP in draft form, did Ms. Parrino expect there to be any further significant changes. Mr. Parrino said that some suggested changes had come in, but none of significance. Another Board member asked why this issue was even before the Board, as it seemed that this action is within the scope of the USAC CEO’s responsibilities as delegated by the Board. Ms. Parrino pointed out that the USAC CEO has been delegated authority to authorize contracts under $100,000; the resulting contract of the RFP will likely exceed that amount. If the Executive Committee is approved, it will have the authority to authorize contracts up to $750,000 and could probably take care of this issue at that time. The Board agreed that the USAC CEO should be responsible for the actual details of the RFP and its issuance. If the contract exceeds the approved limits, then the USAC CEO should bring this issue back to the Board for approval.
   

7. Election of Robert Haga as Acting Secretary/Treasurer of USAC – This item was listed as an Executive Session item on the agenda; however, the Board agreed that this item was appropriate to discuss in open session.
   
   After a brief discussion, on a motion duly made and seconded, the Board unanimously adopted the following resolutions:
   

   RESOLVED, That the USAC Board of Directors elect Robert Haga as Acting Secretary/Treasurer of the Universal Service Administrative Company (USAC).
   
   RESOLVED, That the Board thanks Mr. Ed English for his dedicated service to the Universal Service Administrative Company in its first year of operation.

   The Board directed the USAC CEO to find an appropriate gift for Mr. English that would express USAC’s gratitude for his service.
   

8. NECA Contract Extension – This item was laid over to Executive Session (see Agenda Item #29).
   

9. Status of USAC Systems Development – Mr. John Ricker informed the Board that the five data systems that the Board approved in order for USAC to provide the means to comply with the operational requirements of the FCC’s directives and the provisions of the Telecommunication Act of 1996 have been developed. As outlined in Attachment A of the agenda item memo, two of the systems are currently in production and operational, two more systems should be operational by the end of October 1998, and the last system should be operational by March 1999.
   

Budget and Finance Committee Report Issues (Items 10 – 18):

10. Selection of Public Accounting Firm for Performance of the 1998 USAC Audit – This item was listed as an Executive Session item on the agenda; however, the Board agreed that this item was appropriate to discuss in open session.
    
    Mr. Don Lynch, chair of the Budget and Finance (B&F) Committee, reported that the B&F Committee interviewed the three public accounting firms that responded to the Request for Proposal that was sent to a total of six firms. The three firms were Deloitte Touche, Arthur Andersen, and KPMG (Peat Marwick). Since Arthur Andersen is currently involved in NECA audits, the B&F Committee felt that synergies would be gained by selecting the same audit firm. However, the B&F Committee felt there would be no advantage in changing the procedures already in place for the Low Income Program review by NECA. The B&F Committee also agreed that it became apparent during the interviews that there is some confusion concerning the audit of Form 457 information and the FCC’s expectations as to the scope of this audit and that further clarification from the FCC should be sought.
    
    On a motion duly made and seconded, the Board unanimously adopted the following resolution:
    

    RESOLVED, That the USAC Board of Directors has determined to engage Arthur Andersen, based on the recommendation of the Budget and Finance Committee, for the 1998 USAC Audit of its financial statements and an agreed-upon procedures audit of its internal control environment. The Board also accepts the Budget and Finance Committee’s recommendation that USAC seek further direction from the FCC regarding the recommended scope of the review of the underlying carrier data reported in Form 457. USAC should request Arthur Andersen to include that scope of review in its audit program. The Board accepts the Budget and Finance Committee’s recommendation that the Board engage NECA for the review of the Low Income Program information.

11. Contingency for Administration of the Universal Service Cost Model – On behalf of Mr. Lynch and the B&F Committee, Mr. Ricker briefly explained that a budget contingency to implement and administer the Universal Service Cost Model should be included in the 1^st Quarter Budget of 1999 to be submitted to the FCC with the November 2, 1998, filing. Although USAC has not yet been ordered by the FCC to administer this model, it is one of the options under consideration; therefore, USAC should be prepared for this responsibility.
    
    On a motion duly made and seconded, the Board unanimously adopted the following resolution:
    RESOLVED, That the USAC Board accepts the recommendation made by the Budget & Finance Committee to include an estimate of $500,000 in the first quarter of the 1999 Budget for the cost of running the Universal Service Cost Model.
    

12. 1999 Budget and Resolution on 1^st Quarterly Budget – Mr. Lynch reported that the B&F Committee feel that efficiencies and synergy should be seen once the companies merge. He noted that this budget does not include the $500,000 contingency item for running of the Universal Service Cost Model.
    
    On a motion duly made and seconded, the Board unanimously adopted the following resolution:
    

    RESOLVED, That the USAC Board of Directors accepts the recommendation made by the Budget and Finance Committee to adopt a 1^st Quarter budget for USAC of $1,583,700 + $500,000 contingency for running the Universal Service Cost Model.

13. 1^st Quarter 1999 Revenue Projection and Resolution on November 2, 1998, Filing with the FCC for the 1^st Quarter of 1999 – On behalf of Mr. Lynch and the B&F Committee, Mr. Ricker gave up-to-date revised figures for Attachment A of the agenda item memo. (See Attachment A – revised fields are shaded.)
    

    On a motion duly made and seconded, the Board unanimously adopted the following resolution:
    

    RESOLVED, That the USAC Board of Directors, having reviewed a summary of the current status of telecommunications service provider revenues for January through June 1998, at its meeting on October 20, 1998, and based on the recommendation of the Budget and Finance Committee, hereby directs the staff be authorized to proceed with the required November 2, 1998, filing on behalf of USAC. Staff may make adjustments if additional data becomes available or errors are discovered and to reflect changes required as a result of FCC orders.

14. Follow-up to FCC Letter on Treatment of De Minimis Status – Mr. Lynch reported that the Budget and Finance Committee felt that refunds should be given back as soon as possible and suggested that since the FCC allows USAC to transfer monies between funds, this should be done in order to cover the refunds. Another Board member asked if there was some way to communicate to these entities that a refund was coming. Ms. Parrino said that the semiannual filing would automatically trigger the refunds when de minimis status is established and that the carriers would know this and expect the refund.
    
    On a motion duly made and seconded, the Board unanimously adopted the following resolution:
    

    RESOLVED, That the USAC Board of Directors, having reviewed at its meeting on October 20, 1998, a summary of the current status of the de minimis issues which have been brought to the attention of the FCC, and based on the recommendation of the Budget and Finance Committee, hereby directs the staff to proceed with the inclusion of the funding requirements for refunds due to changes in the de minimis status of carriers in the November 2, 1998, filing. Staff is hereby directed to process the required refunds as soon as possible. The Board recognizes that inter-fund transfers will be necessary to allow these refunds to be issued.

15. Form 457 Late Filing Penalty – Mr. Lynch reported that the Budget and Finance Committee discussed how difficult it has been to get the companies to submit their FCC Form 457s on time and/or to submit accurate reports. The B&F Committee hopes that penalties will instill a sense of urgency in meeting the deadlines and in paying more attention to accuracy. Mr. Lynch informed the Board that it does indeed have the authority to apply penalties and assured the Board that none of these penalties are high enough to cause bankruptcy for any of the companies. In response to a Board member inquiry, Mr. Ricker briefly reviewed the many efforts to contact these companies to encourage timely and accurate filings. Some simply do not respond at all. Mr. Ricker pointed out that each day that a company is late negatively affects USAC’s ability to analyze and process the data and provide an accurate filing to the FCC. In response to a Board member inquiry as to where the penalty money would go, Mr. Robert Haga noted that the penalties would go to offset future contributions. He went on to say that the penalties would be assessed based on the size of the contributions. Mr. Lynch said that there was nothing scientific in how the penalty numbers were arrived at; they were just thought to be appropriate amounts based on overall contributions so far. Ms. Parrino said that the Board could always structure the penalties to increase as each day goes by that a company is in violation, but that this idea should be reviewed in the future after the penalties are applied and the impacts assessed.
    
    On a motion duly made and seconded, the Board unanimously adopted the following resolution:
    

    RESOLVED, That the USAC Board of Directors accepts the recommendation of the Budget and Finance Committee to adopt the Form 457 Late Filing Penalty Schedule as stated below and directs staff to notify the carriers of the penalties:
    Form 457 Late Filing Penalty:
    

    (Applicable to March 1, 1999, data collection and all future periods)
    Grace Period of 5 business days
    Rate = .00005 applied to total end-user billed revenue
    Minimum Late Filing Penalty = $100
    Maximum Late Filing Penalty = $5,000
    Director- Level (staff) approval needed to waive penalty – extenuating circumstances

16. Report on Accounts Receivable
    

17. Report on Collection Efforts of USAC and the FCC
    

18. Report on the Status of Mandatory Netting for Nonpayers

    Mr. Lynch reported that the B&F Committee had a lengthy discussion on these three items. He said they reviewed the actions being taken by the FCC and USAC to get companies to comply with the FCC orders as outlined in the memos for Agenda Items #17 and 18. The B&F Committee believes that reasonable steps are under way to collect the money.
    

High Cost and Low Income Committee Report Issues (Items 19-23):

19. High Cost Program Status Report – Ms. Gold, chair of the High Cost and Low Income (HC/LI) Committee, briefly reviewed the ETC Status of the High Cost Program as outlined in the agenda item memo. She reported that there were no significant changes for the 4^th Quarter.
    

20. Low Income Program Status Report – Ms. Gold briefly reviewed the ETC Status of the Low Income Program as outlined in the agenda item memo. She reported that only one of the CLECs designated as ETC has requested reimbursement: revenues continue to accrue as if all carriers have requested reimbursement, which keeps the program on target for the $500 million.
    

21. Preliminary 1st Quarter 1999 Projections – Mr. Ricker, on behalf of Ms. Gold and the HC/LI Committee, updated the projected number in the agenda item memo for the Local Switching Support under the High Cost Program from 105.7 M to 103.7 M bringing the Total to 446.1 M. He noted that the Low Income Program is growing at a rate of 1.8 percent per month in terms of requests for reimbursements. In response to a Board member’s inquiry as to why this number is accelerating at such a rate, Mr. Ricker explained that only 35 states had programs in place prior to January 1, 1998, as additional state programs are put in place, many more companies are taking advantage of the program. The number of customers applying is less than the total eligible and as those individuals become knowledgeable about the program, applications should increase.
    

22. Calculation of the Cap on the High Cost Support Fund Using a Split Year for Rural and Nonrural Companies – Ms. Gold briefly mentioned that the HC/LI Committee feels strongly that staff needs to work with the FCC on how to calculate the cap.
    
    On a motion duly made and seconded, the Board unanimously adopted the following resolution:
    

    RESOLVED, That the USAC Board of Directors accepts the recommendation made by the High Cost and Low Income Committee to direct the USAC staff to seek clarification from the Commission on how the split-year capping of the high cost loop portion of the fund should be administered.

23. Implementation of the New Universal Service Rules – Ms. Parrino said that USAC continues to inform the FCC of the time that will be necessary to implement the new rules and to understand the model if USAC is selected to administer it. USAC has asked the FCC to build in enough lead-time for implementation. Ms. Gold reported that the HC/LI Committee recommends formally filing comments regarding the timeframe issue for implementation ONLY if the FCC asks for comments.
    

24. 1999 Meeting Schedule – Ms. Parrino reviewed the proposed 1999 Board meeting dates and noted that each set of dates was on a Monday and Tuesday.
    

    On a motion duly made and seconded, the Board unanimously adopted the following resolution:
    

    RESOLVED, That the USAC Board of Directors schedule the following dates for the board meetings in 1999:
    January 25 & 26
    April 19 & 20
    July 19 & 20
    October 18 & 19

25. Schools and Libraries Corporation Report – Ms. Ouye gave a verbal report on the activities of the School and Libraries Corporation (SLC). SLC received a copy of a letter from Mr. Ken Brody to the FCC in which he submits his resignation from the SLC Board. Mr. Brody was an independent member. He stated in his letter that he thought the SLC Board was moving in the right direction.
    
    Most of SLC’s energies have been invested in getting out commitment letters for the 1^st funding cycle. They will be sent out in five waves of mailing. The main obstacle to issuing commitment letters is to obtain sign-off from PWC, GAO, and the FCC that adequate internal controls are in place. In a sample taken, the only concern was with eligible services. SLC staff and subcontractors are working round the clock to complete this work.
    
    The FCC established December 1 as the second-year application opening date. The SLC Board approved an 80-day application window versus a 75-day window as used in the first round. SLC plans to send packages of information regarding the second round applications around Thanksgiving. SLC also hopes to allow filing on-line by that time.
    
    SLC has conducted 40 outreach sessions in 28 states. A video package is also available. SLC has developed an impressive vendor manual to be used in extensive outreach session to the vendor community, especially small vendors.
    
    SLC unhappily noted the resignation of its CEO, Mr. Ira Fishman, but feels that the transition has gone well. It was noted that the SLC Board felt that Kate Moore is doing a great job so far stepping in for Mr. Fishman.
    
    Mr. Gumper reported that in the last couple of weeks SLC received final approval for all forms in order to provide reimbursements. USAC will issue checks within 10 days after being notified by SLC to process payment. The vendor selects whether it wants a check or credit.
    
    Ms. Ouye stated that it does not look like Congress will take any more action in this session relating to the programs.
    
    Ms. Ouye stated that there are sufficient funds to fund all telecommunications and Internet discounts. After that, by FCC order, SLC will go back to the 80-90 percent discount category for internal connections. There may be enough funding money to go beyond that discount level for internal connections. The fund is capped for the first 18 months.
    

26. Rural Health Care Corporation Report – Dr. Sanders, member of the Rural Health Care Corporation (RHCC) Board of Directors, provided a report from Lee Bailey, President of the Rural Health Care Corporation. Dr. Sanders reported that RHCC has received 1161 completed Form 465 applications. As outlined in the report, RHCC has found that most applicants are encountering many barriers in the program despite very intensive and extensive outreach efforts. The process has become very labor intensive.
    
    Not stated in the report, but a fundamental reality is the fact that an attending physician’s time for involvement in this program is not reimbursed. For instance, although the Health Care Financing Administration (HCFA) reimburses radiologists, it does not reimburse for any other specialty. RHCC is hopeful that HCFA will provide a resolution to this problem.
    
    RHCC proposes two recommendations in its report involving fiscal year compatibility with the Schools and Libraries Program so that the application does not have to be redone, and more legislative and regulatory changes.
    

27. Regulatory Report – Mr. Haga reported on universal service issues and proceedings for the period covering 7/1/98 to 10/5/98 as outlined in the agenda item memo and attachments that he provided for the Board. He specifically pointed out the following issues: (1) Notice of Apparent Liability for Forfeiture – 8/14/98, page 2; (2) NPRM/NOI regarding Consolidated Form for Reporting Data – 9/25/98, page 3; (3) Public Notice Seeking Comment on the USAC Plan of Reorganization – 7/15/98, page 4; and (4) Fifth Circuit Court of Appeals – Oral arguments are due to be held the week of November 30, page 7.
    

28. Miscellaneous
    

• Dates for Conference Calls or Meetings in December – Ms. Parrino requested meetings in December in light of the pending merger order from the FCC. The Board agreed to meet in Washington, D.C. on December 15, 1998, and to have a conference call on December 28, 1998. These dates are subject to change depending on the timing of the FCC order. The Board directed the USAC CEO to investigate with the FCC why all Board meetings need to be held in Washington, D.C.
  

• Expense Report Form is attached for submitting travel expenses for these quarterly meetings.
  

• USAC Board of Directors Address List Update – Inform Cathy Howard of any changes: Cathy Howard, Executive Assistant, USAC, 538 D’Onofrio Drive, Suite 201, Madison, WI, 53719-2055, 608-827-8872, choward@chorus.net.
  

• Board Materials for This Meeting and Future Meetings – Ms. Parrino asked the Board members what they thought of the current format changes to the Board materials. The Board as a whole felt that the changes were positive and that the agenda and attachments were easy to find and follow. Ms. Parrino asked if the Board would be agreeable to keeping the current quarterly Committee and Board binders that they now possess (Board – blue, HC/LI – red, B&F – black [will be Executive Committee color in future]) and just receiving the agenda items in the future to insert in the binders themselves. This would save considerably in material and mailing expenses for future quarterly meetings. The Board unanimously agreed.
  

29. Executive Session Issues
    
    On a motion duly made and seconded, the Board unanimously agreed to go into Executive Session and to take from the table the motion relating to Personnel Policies.
    

Agenda Item #4: Personnel Policies – Board members had two concerns with the "Personnel Policies, General Information," noted as Attachment B of the agenda item memo. First, Board members wanted some level of carryover of sick leave from one year to the next to cover the employee who has been there for more than a year and who then finds a need to use sick leave in the beginning of the year, but has none to fall back on. In cases of a short- or long-term disability, there is a waiting period before those benefits are paid. The waiting period should be considered when establishing sick leave carryover policy.

Second, the Board did not think it necessary to include in the "Personnel Policy, General Information" the item titled "Compensatory Time." This applies to full-time exempt employees. The consensus of the Board was that compensatory time for these employees should be at the discretion of the supervisor and does not need to be included in this document.

The Board will bring a revised resolution to the table during open session.

Agenda Item #8: NECA Contract Extension – Ms. Parrino provided information on the specifics of the NECA Contract Extensions.

On a motion duly made and seconded, the Board unanimously agreed to go into open session.

Agenda Item #4: Personnel Policies
On a motion duly made and seconded, the Board unanimously adopted the following amended resolution:

RESOLVED, That the USAC Board approves the following USAC documents for use by USAC effective January 1, 1999: "Personnel Policies, General Information"; "Employment Application"; "Statement of Ethical Conduct for Employees"; "Statement of Ethical Conduct, Definition of Gifts Prohibited"; "Statement of Ethical Conduct, Disclosure Form for USAC Employees"; and "Business and Travel Expenses of USAC Representatives," with the direction to the USAC CEO to revise the "Statement of Ethical Conduct for Directors and Employees," "Statement of Ethical Conduct, Definition of Gifts Prohibited," and the "Statement of Ethical Conduct, Disclosure Form for USAC Employees" by striking the word "director" from each document and indicating that these documents only affect employees of USAC and not directors. The Board directs the USAC CEO to develop new and separate "Statements of Ethical Conduct" which will apply to directors only. The Board directs the USAC CEO to include a carryover provision for sick leave each year in the "Personnel Policies, General Information" and that the carryover amount be enough to bridge the gap between sick leave and the waiting period before short- or long-term disability benefits are paid. The Board directs the USAC CEO to strike from the document "Personnel Policies, General Information" the entry titled "Compensatory Time."

There being no further business to attend to, Ms. Rosenblum adjourned the meeting at 12:07 p.m. EDST.

____________________________________
Robert W. Haga
Acting Secretary/Treasurer

December 15, 1998
Date