February 21, 2007 Meeting Minutes

	MINUTES
	DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND COUNCIL of ILLINOIS HOLIDAY INN SELECT - NAPERVILLE NAPERVILLE, ILLINOIS FEBRUARY 21, 2007
	John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:08 a.m. A quorum was present. Roll call was taken with the following members present:
	David Gibson Paul Kwak Charles Kwon Jerry Lewicki John Polak Also present were: H. Patrick Eriksen, Program Administrator's Office John J. McCarthy, Program Counsel Juho So, Program Administrator's Office Dorcee Lauen, Program Administrator's Office Mr. Polak informed members of the public that the focus of today's meeting would be primarily on the audit of the six (6) compliance programs.
	PRELIMINARY BUSINESS
	The minutes from the January 17, 2007 Council meeting were reviewed. On a motion by Mr. Lewicki and a second by Mr. Kwon, the minutes were approved by a vote of 5-0.
	REVIEW OF SEMI-ANNUAL FINANCIAL PROJECTIONS
	Mr. Eriksen reviewed the changes in assumptions made since the last set of projections were presented to the Council at their September 6, 2006 Strategic Planning meeting. • Annual tax on drycleaning solvents decreased $57,200. This resulted from using updated solvent usage numbers as reported by the Illinois Department of Revenue for the 2 nd and 3 rd quarters of calendar year. Impact over the remaining life of the Fund is a reduction in revenue of $772,000. • The number of licensed drycleaners was reduced from 1400 to 1350. This reduced annual license fee revenue by $101,000. Impact over the remaining life of the Fund is a reduction in revenue of $1,313,000. • Williams & Company's third party administration fee for FY07 and subsequent years was reduced to reflect the number of open remedial claims and the number of Fund insured drycleaning facilities. Impact over the remaining life of the Fund is a reduction in administrative expenses of $1,132,000. • Increased interest rate from 4% to 5%. The net effect of the above adjustments is a net increase in the projected deficit of $807,500. Mr. Polak noted that due to external factors, the Fund continues to experience a decline in the volume of solvent tax revenue collected. This begs the following questions: • How does the Council maintain Fund solvency in light of ongoing solvent usage decrease? • How do you balance the license fee and the solvent tax in a manner that is equitable that generates at least $3,000 per drycleaner per year? One alternative he suggested was to bring the license fees closer together in which there is not a variation as currently exists today ranging from $1,500 for the minimum fee to a maximum of $5,000 per drycleaner with an offset reduction in the perc tax, for example, possibly moving from $10 per gallon to $5 per gallon. This process would be something that would have to be phased in over a period of time. A second alternative, which would require a legislative change, would be to tier the benefits level for a two (2) tier system. For example, if someone wanted $150,000 of benefits, their license fee would be X dollars, and those wishing to maintain $300,000 of remedial program benefits would pay a license fee of Y dollars. This would help move the Fund solvency issue away from the volatility of declining solvent usage while equalizing the average dollars paid in to the Fund per drycleaner. Mr. Polak asked the Council “Is either option more palatable or easier to do?” Mr. Gibson replied he still believes a flat rate license fee across the board, such as $3,000 per drycleaner, would be the most equitable. Mr. Lewicki stated having two (2) different benefit levels could create confusion in the industry with most drycleaners opting for the lower benefit level even if they are not certain what their ultimate cleanup costs would be, resulting in drycleaners in essence not purchasing adequate coverage to fully clean up their facility. Mr. Polak responded that if you had a two (2) tiered benefit application, drycleaners would have to view it much like they view buying insurance. “What level of coverage do I need and what risk level can I afford?” Mr. Gibson added that if the Council looks at any type of legislation involving the license fees, solvent taxes or change in remedial program benefit level, they should address licensing drop stores at the same time. It is his opinion they should be licensed and pay into the Fund. After discussion, the Council directed Mr. Eriksen to do some financial modeling and put together some exhibits for discussion on the topic at a future meeting. In addition, he should make some inquiries to determine the legislative realities of implementing a two (2) tiered benefit system.
	APPROVAL OF PROGRAM BILLINGS
	Mr. Eriksen noted that the following bills were before the Council for their review and approval.
	1.	Williams & Company Consulting, Inc	$107,573.00
		Standard flat fee billing for January 2007, licensing, underwriting, site investigations and claims processings.
	2.	John J. McCarthy	$1,670.00
		Professional legal services to the Council for the period of January 10, 2007 through February 12, 2007.
	On a motion by Mr. Lewicki and a second by Mr. Kwon, the Council approved the bills by a vote of 5-0.
	REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS
	Mr. Eriksen reviewed the monthly activity report as of January 31, 2007 noting 722 drycleaning facilities have renewed their license and currently 720 are insured with the Fund. As of February 19, 2007, 877 drycleaners had completed their license renewal process versus 981 for the same time in the previous year. To date, 1,017 license renewal applications have been received versus 1,090 for the same period in 2006. He noted there are currently 571 open remedial claims receiving benefits from the Fund. The January 31, 2007 financial statements reflect a Fund balance of $4,786,346.
	OTHER ISSUES AS PRESENTED
	Mr. Eriksen has talked to Representative Mike Smith and that a draft of the Council's proposed legislation to increase the Illinois Department of Revenue's ability to assist in enforcement against unlicensed drycleaners and solvent distributors who sell to unlicensed drycleaners should be introduced in the near future. The Council discussed the next meeting which had tentatively been established as April 4, 2007. Due to conflicts, the Council moved the tentative date to Wednesday, April 11, 2007.
	PUBLIC COMMENT PERIOD
	Mr. Henry Parker, of S&ECC, addressed the Council noting he is aware of at least four (4) drycleaners who are objecting to the Council's new policy whereby they remove their drycleaning equipment within 30 days of becoming a drop store or inactive facility. These drycleaners may appeal to the Council for additional time to remove their machine(s). Mr. Eriksen replied he has received several telephone calls from drycleaners stating they need additional time in order to sell the equipment and/or dismantle it and he would bring those requests to the Council at their next meeting.
	AUDIT OF COMPLIANCE PROGRAMS
	The Council members and the Administrator's staff broke into working groups. The following compliance programs were represented at the audit: 1. Asian-American Small Business Association 2. Illinois Drycleaner Star Recognition Compliance Program 3. Korean/American Drycleaner/Enviro-clean Compliance Program 4. National Drycleaners Institute 5. S&ECC Compliance Program The audit of the compliance programs was completed at 12:55 p.m. There being no further business, the Council meeting adjourned at 12:55 p.m.
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