AMERICAN LEGISLATIVE EXCHANGE COUNCIL
JOINT BOARD OF DIRECTORS MEETING MINUTES
THURSDAY, MAY 30, 1996 - 8 :00 A .M.
OMNI NETHERLAND PLAZA HOTEL, CINCINNATI, OHIO CONTINENTAL ROOM
The meeting was called to order at 8 :30 a .m . on Thursday, May 30, 1996 by ALEC National
Chairman Dale Van Vyven . In attendance :
Legislative Members
Representative Dale Van Vyven, Chairman, Ohio
Senator Brad Gorham, First Vice Chairman, Rhode Island
Representative Bonnie Sue Cooper, Second Vice Chairman, Missouri
Representative Bobby Hogue, Treasurer, Arkansas
Representative Carolyn Oakley, Secretary, Oregon
Senator Ray Powers, Immediate Past Chairman, Colorado
Senator Brenda Bums, Arizona
Senator Emilio Cantu, Washington
Senator George "Doc" Gunther, Connecticut
Representative Roger Halvorson, Iowa
Senator Ray Haynes, California
Senator Owen Johnson, New York
Senator Steve Martin, Virginia
Representative Steve McDaniel, Tennessee
Senator Dean Rhoads, Nevada
Representative Tom Uher, Texas
Private Enterprise Members
Mr. Allan Auger, Chairman, Coors Brewing Company
Mr. Ed Failor, Secretary, Iowans for Tax Relief
Mr. Ron Scheberle, Immediate Past Chairman, GTE
Ms . Jane Cahill, Cahill, Wolfgram & Associates
Ms . Monita Fontaine, Distilled Spirits Council of the U .S .
Mr. Les Goldberg, American Express
Mr. David Halbrook, New Hope Foundation
Mr . Michael Morgan, Koch Industries, Inc .
Mr . Gerald Mossinghoff, Pharmaceutical Research & Manufacturers of America
Mr. Roger Mozingo, R.J . Reynolds Tobacco Company
Mr. Pete Poynter, BellSouth Telecommunications, Inc .
Mr. J . Patrick Rooney, Golden Rule Insurance Co .
Mr . Jerry Watson, National Association of Bail Insurance Companies
Mr. Harry Winters, United Parcel Service
Staff
Mr. Dan Denning, Executive Director
Mr. Duane Parde, Chief of Staff
Ms . Lane Dolly, Director of Administration
Mrs . Beverlee Anderson Lee, Director of Finance
Mr . Brad Boutilier, Director of Membership & Conferences
Mr . Tim Beauchemin, Director of Legislation and Policy
Mrs. Lora Miller, Legislative Aide to the National Chairman
ues s
Mr . Andrew Lang, Lang & Associates
Mr . Bryan Steigerwald, Lang & Associates

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PAGE TWO - BOARD MIN . - 5/30/96

REVIEW AND APPROVAL OF JANUARY 21, 1996 MINUTES
Chairman Van Vyven asked for any additions or corrections to the minutes of the January 21, 1996
Board meeting and hearing none, the minutes were approved as submitted .
NATIONAL CHAIRMAN'S REPORT
Chairman Van Vyven stated that he is extremely pleased with how things are going now that Mr .
Denning is on board and with how the staff has been performing . He added that there are a few
new Board members, Senator Emilio Cantu from Washington state and Representative Steve
McDaniel from Tennessee, and he welcomed them . He then asked Mr. Auger to introduce the new
Private Enterprise Board members .

1

PRIVATE ENTERPRISE BOARD CHAIRMAN'S REPORT
Mr. Auger introduced Mr . Harry Winters of United Parcel Service and Mr . Pat Rooney of Golden
Rule Insurance and welcomed them to the PE Board . Chairman Van Vyven then asked all Board
members to introduce themselves . He then announced that the meeting was being taped and that
everyone should speak into the microphones, first stating his or her name .
EXECUTIVE DIRECTOR'S REPORT
NLS Update - Mr . Denning stated that there are 253 registrants to the NLS, not including staff,
with 106 legislators and 130 private sector participants . He announced that the meeting is
operating in the black and that the level of support has been very gratifying . He added that he feels
that everyone will be very pleased with the program sessions .
Progress Report - He stated that on the financial side, they have developed weekly and annual
cash analysis templates, budget spreadsheets for program budgeting, revenue reconciliation sheets
and have established bank accounts that for the first time segregate scholarship accounts from
general operating accounts . He added that the software has been upgraded to enhance reporting
capabilities . He said that they have also retained Feddeman & Co ., an accounting services
company, to help Mrs . Lee with the financial accounting activities and reporting requirements . He
stated that the audit was completed in record time and at the lowest cost in recent history. He said
that the Board will hear the results in the afternoon . He added that through the work of Mrs . Lee,
they have resolved the outstanding grant situation with the FTA and the check for approximately
$21,000 will soon be received . He stated that they have about 20 new companies as members and
that Mr. Watson has circulated an update on the Failor Challenge .
Mission Statement - Mr . Denning said that a mission statement draft is in the packets that has
been created by staff and approved by the Executive Committee for consideration by the full
Board . He asked the members to review the draft . Representative Oakley moved the acceptance of
the mission statement with Mr . Halvorson giving the appropriate second and it was approved
without objection . Ms. Cahill stated that she has already been using the mission statement and that
it is an excellent tool for fundraising .
US English - Mr . Denning stated that the matter with US English has been resolved with a
mutual consent and release effective April 10, 1996 . US English has agreed to join ALEC at the
Madison Club level, that they are participating in the NLS and the Annual Meeting and that the
matter is now closed . Senator Powers questioned whether complimentary registrations and booth
space are part of the agreement and Mr . Denning responded that they are not. Senator Powers
added that he is very pleased with the end result and that this negotiation is a great accomplishment
as it started out as a very hostile situation .
Legislative Clean Air Policy Committee (LCAPC) - Mr . Denning said that this issue was
raised by Senator Johnson at the Richmond Board meeting and deferred to Senator Johnson for an
update. Senator Johnson stated that the administrator of the Ozone Transport Commission (OTC)
has approached the Council of State Governments with a proposal to allow the CSG
representatives from the various NE regions to be the legislative body which gives legal sanction to
the rump operations of the OTC in Washington, D .C. He said that they are trying to derail the
LCAPC, which has filed a lawsuit backing up the actions of the state of Virginia in declaring the
OTC rump group illegal and not a body capable of legislating for 13 states . He added that a
meeting will take place with CSG on Saturday and he will be there to make sure the federal

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 PAGE THREE - BOARD MIN . - 5/30/96
representatives get the message that we don't consider some appointed bureaucrat in D .C . to be the
right person to designate who shall make laws for various states . He said that the whole thing is
so outrageous that it doesn't even bear discussion . He said that we have been working with Harris
McDowell and his lawyers from Delaware with the hope that ALEC will be the sponsor of the
LCAPC, which would include members of that committee being ALEC members . He added that it
was also understood that any revenues being contributed to the lawsuit would be contributed by
those who are or will become ALEC members and that this is all he knows at this time . Mr.
Denning said that Senator Bums' Federalism Committee is going to consider this matter when they
meet and make a recommendation . He added that they have viewed this as a matter of the
federal/state relationship as opposed to an environmental issue . Senator Johnson stated that this is
exactly how he views it as ALEC is not opposed to environmental issues but to bureaucrats making
laws or regulations without any constitutional or legal authority . Mr. Denning concurred and
stated that the litigation in question is Virginia vs . EPA which argues that there was an
unconstitutional delegation under the Clean Air Act Amendments of 1992 . He said that Congress
unconstitutionally required states to set up the Ozone Transport Commission, giving them too
much authority to set standards for the ozone in certain states, primarily from Virginia north to
New York . He added that Virginia sued and that the briefing orders will be in order fairly shortly,
possibly within the next month . The LCAPC was formed by a number of legislators in those NE
states . He said that an amicus brief was filed on Virginia's side of this litigation last year . He
mentioned that Senator Johnson had suggested that ALEC assist the effort by acting as the agent
for the LCAPC, accepting donations to support the litigation and pay the bills of the law firm . He
said that the proposal was taken up in detail by himself and the law firm that is handling the case .
He added that after consultation with ALEC's attorneys, he proposed that as a matter of policy and
principle, ALEC would like to assist the LCAPC in this matter and that we believe that Virginia's
arguments have merit, however, due to legal advice they felt that most if not all of the members of
the LCAPC need to be members of ALEC . He added that also those companies contributing need
to be members of ALEC . He said that the Committee felt in response that .this is not possible and
that donors could not be required to become members of ALEC as a condition of participating . He
stated that the staff opinion is that this places ALEC in a very uncomfortable position in that the
LCAPC would be directing litigation to a law firm with ALEC being required to pay the bill and if
a disagreement occurred between the two parties that ALEC would be in the middle . He said that
he is not comfortable going any further with this without Board sanction one way or another . He
added that the issue could be deferred until Senator Burns' Committee has a chance to review it and
make a recommendation .
New Members - Mr . Denning reviewed a handout of new ALEC members contained in the
Board packets . He pointed out a few who are former members who rejoined and thanked the
Board members who have helped bring these new and former members on board .
Council of World Regions (CWR) - Mr . Denning stated that this issue had been brought up
at the January meeting where the CWR was seeking a cooperative relationship with ALEC in
advancing our mutual agendas . He added that we are continuing to develop the concept, however,
what will be entailed in that cooperation remains to be determined . He said that he has
communicated to Mr . Gardner that ALEC remains anxious to find ways to help the Council move
forward and they will be having conversations about what the specifics of that will be . He said
that he will report to the Board when he has some more concrete information to share . Ms. Cahill
questioned the purpose of the CWR . Mr. Denning responded that their operating premise is that
economic trade relationships in the future are going to evolve primarily between regions of the
United States and regions of the world . He said that the Council's aim is to help facilitate and
develop those relationships between groups of states and particular areas of the world . He said
there are natural cinergies in trade patterns and trade relationships that are developing and the
Council's mission is to try to engender and develop those patterns and relationships . He added
that the Council saw a natural alliance with ALEC to help move that agenda forward . He said that
Senator Powers has attended some of the Council's meetings . He mentioned that this strikes him
as an idea worth exploring, however, until we can get some better definition about what exactly
that cooperation will entail both in terms of resources and policy, he did not want to move forward
without approval of the Board .

 PAGE FOUR - BOARD MIN. - 5/30/96
COMMITTEE MEETIN
Chairman Van Vyven announced that the Board Committee meetings will begin at this time and
stated where each meeting will take place . He said that the full Board will reconvene at 11 :00 a .m .
He added that the new members who have not been assigned to committees should choose one to
attend and they will be permanently assigned to one in the near future . Mr. Poynter pointed out
that Representative Oakley should be on the Lobbying Regulation Committee . Chairman Van
Vyven stated that the minutes state that Representative Oakley and Ms . Walls should be added to
the Committee. Ms . Cahill brought up the image campaign that had previously been discussed and
had never received action . She said that a number of members have faced ALEC's former image
when out recruiting new members and she requested that the appropriate committee discuss some
low-cost ideas on how to gain some positive publicity . It was pointed out that that Committee is
not meeting today and Chairman Van Vyven said that if Senator Gorham wanted his committee to
meet they could . Senator Gorham said that a few of them could get together for a quick meeting
before going to the other committee meetings .
Mr. Denning introduced Mr. George Rasley who is joining the ALEC staff as the new Director of
Development. He said that Mr . Rasley has over 20 years of experience in development and
fundraising for not-for-profit organizations, campaign management and policy development . He
said that Mr . Rasley has raised over $26 million in grants and contributions over the years and has
a track record of consistently producing results and he will hold him to that record .
Chairman Van Vyven then recessed the Board meeting at 9 :05 a .m.
Chairman Van Vyven reconvened the meeting at 11 :00 a.m. He announced that they would deviate
from the schedule and move directly into the Financial Status Report .
FINANCIAL STATUS REPORT
Mrs . Lee pointed out the location of the Financial Status Report of ALEC as of May 15, 1996 in
the Board packets . She stated that before the issues in the packet are addressed, they should go
through the audit report so that the starting point is December 31, 1995 and then the information in
the Financial Status Report will be much more logical . She stated that the auditors, Andrew Lang
and Bryan Steigerwald, are here and suggested that it should be turned over to them . Chairman
Van Vyven agreed and asked Mr . Lang to start the presentation .
1995 Audit - Mr . Lang thanked everyone and introduced himself and stated that he will be
reporting on information that the Board members have already received . Mr. Lang said that from a
management perspective, there has been a wonderful turnaround in terms of how the operation is
being done . He pointed out that this year the field work from the audit was completed in three
weeks as opposed to the previous year when it took 2 1/2 months . He pointed out that this is
obviously a cost savings to ALEC but it also shows how management is managing--the records
were much cleaner . He asked the members to look at the document entitled "ALEC Internal
Control Structure ." He said that internal control structure has to do with serious and not-soserious weaknesses in how you manage your operation, that is to say good internal controls protect
the assets and improve the efficiency of the operation . He stated that there are two kinds of
comments that they can make about the internal controls--reportable conditions or advisory
comments . He said that reportable conditions are serious flaws that represent a situation where
assets could be lost and that advisory comments are things that they want to tell you about but are
not quite as serious . He said that he is delighted to show the Board a list of reportable conditions
from 1994 that were corrected in 1995 or early in 1996 and that it is astonishing to him that so
many things were corrected so quickly--it is an amazing turnaround . He then proceeded to go
through the 1994 reportable conditions that were corrected and when they were corrected, as well
as other comments and observations . He added that this is more than he has seen corrected in any
one organization in any one year in his experience of about 20 years . He then went on to the 1995
reportable conditions and expressed that they are very important problems to fix . He said that
these represent significant dangerous flaws and that the Board members should pay close attention .
Mr. Lang stated that it is delightful to be in a situation where they make known a reportable
condition and management fixes it as fast as they can . He said that this is the way a non-profit is
supposed to work and ALEC is doing this . He then went on to discuss the other reportable
conditions and advisory comments and observations . He concluded by saying that ALEC has

 .

PAGE FIVE - BOARD MIN . - 5/30/96
done a fantastic job of turning things around and that the organization is managing itself much
better. He thanked Mr . Denning, Mr. Parde and Mrs. Lee for their help in completing the audit .
He then went on to the report entitled "ALEC Financial Statements and Independent Auditor's
Report," which he referred each member to in the packets . He said that the Independent Auditor's
Report is an opinion regarding the accuracy of the financial statements . He said that ALEC has a
clean opinion, meaning that the auditors feel that the financial statements are accurate and fairly
represent what has gone on for the year and the position that the organization is in . He stated that
the new name for the balance sheet is the "Statement of Financial Position ." He also added that
"Net Assets" has replaced the term "Fund Balance ." He then reviewed ALEC's "Statement of
Financial Position : " He pointed out that ALEC lost about a half million dollars in income in 1995 .
He then went on to review the "Statement of Activities," formerly called the "Income Statement ."
He stated that income overall increased over $300,000 in 1995, however, the problem is that total
expenses increased about $600,000 . This on top of the prior year's loss of $200,0001eft ALEC
with a $511,000 loss for the current year . He also pointed out how ALEC is still losing money on
conferences and that he is very saddened that general support and dues, a key source of revenue
for ALEC, went down $400,000 . He said that on the expense side, Publications is of great
concern to him . He said that overall, ALEC's loss went from [$215,434] to [$511,675], which is
definitely not sustainable by the organization . Mr . Lang then referred the Board to page 12, Note 6
entitled "Going Concern : " Mr . Poynter asked if it would be appropriate to interject questions and
Chairman Van Vyven indicated that it was indeed appropriate to raise questions where they fit in .
Mr . Poynter then asked to return to the "Statement of Financial Activities" and questioned how
expenses for a task force can be greater than the revenue that is generated . Mr. Parde responded
that the task forces did indeed lose money in 1995, a situation similar to the state scholarship
accounts . He added that trips were taken and reimbursements were made without money in the
accounts to cover them . Mr . Poynter stated that he wishes to see the Board address this issue so
that this never happens again . Mr. Parde responded that he agrees and that this practice is no
longer occurring. Mr. Scheberle added that it is important to note that Mr . Lang pointed out that
new management is addressing these concerns and that the aforementioned problem occurred under
the old management . He added that he does not think the Board should have to micromanage the
staff. Mr. Lang concurred that things have been managed much more effectively, however, Board
members should raise their concerns as they have a fiduciary responsibility to the organization . He
added that Mr . Steigerwald pointed out to him that there is a very large number in overhead that has
been charged to the task forces that would not necessarily be accounted for in their budgets . He
said that under the rules, this must be allocated out . Chairman Van Vyven mentioned that ALEC
now has a budget that they are operating under that goes from month to month . Mrs . Lee added
that the budget the Board voted on in December of 1995 is an overall budget and staff has line
itemed everything . She said they also have weekly meetings where costs are brought to the table
and requests are approved or denied based on whether they have raised the necessary funds . Ms.
Cahill stated that one of the problems with task forces is helping the task forces to budget better
and also the issue of the private sector making commitments and not following through with them .
Senator Burns asked whether the scholarship account is a separate account or whether the money is
simply accounted for on a separate sheet in the same account . Mr . Parde responded that this is
now a separate bank account totally . Senator Bums questioned why scholarships are shown as
both revenue and expenses and the amount is the same . Chairman Van Vyven responded that this
is now a separate account and can no longer be used as cash flow . Senator Bums confirmed that
this is an in-and-out thing and that money goes into the general account from the scholarship
account when it is needed . Chairman Van Vyven confirmed that it is a totally separate account .
Mr . Poynter asked if the account would start showing more revenue than expense beginning this
year . Mrs . Lee responded that the scholarship account is a liability until such time that it is used .
She said that once a state uses it, the revenue is recognized and is an equal portion of the expense-a dollar of revenue equals a dollar of expense . She said that this shows the activity in ALEC, but
on the "Statement of Activities" there is a line item called °Scholarships' that gives ALEC the
liability of all the states . She added that this is a liability because it is a restricted fund where the
money is owed to the states .__ Senator Burns questioned the appropriate time to discuss
scholarships and Chairman Van Vyven said there is a separate sheet on them that will be discussed .

 PAGE SIX - BOARD MIN . - 5/30/96
Mr . Watson asked for confirmation that historically, certain expenses of ALEC generally have been
allocated to various task forces but those task forces have historically not budgeted for them and
that from now on each task force will assume some proportionate share of ALEC's general
expenses and be responsible for raising that money along with its other specific task force
expenses . Mr. Denning said that under previous management, ALEC's operating accounts were
treated as one big pot of money and funds were shifted around . He said that they have endeavored
to segregate scholarship accounts and task force operating accounts and to account for them
seperately . He added that the overhead of ALEC has to be loaded against each of the operating
activities, task force accounts being one of them, so you will see an overhead load applied to each
operating account. He said that when each task force comes up with its program for the year, there
will be a percentage applied against the total of the operating budget to come up with a grand total
which is then allocated out to task force members . Senator Gorham questioned net assets released
from restrictions . Mr. Lang responded that this is a term that came in with SFAS 117 which
means we have a certain amount of money which is located in the temporarily restricted fund
balance which was restricted in some fashion according to time . He said the time ran out and the
money was transfered on the statement over to the unrestricted and spent from the unrestricted . He
added that the ruling from the SFAS 117 says that you can't spend any money out of the
temporarily restricted or the permanently restricted funds and that it is cockamamey .
Capital Campaign - Mr . Lang then again asked everyone to turn to Note 6 on page 12 and asked
everyone to focus on it as it is a very, very, very serious footnote called a "Going Concern ." He
said it basically says whether the business can stay in business or not . He then went over Note 6,
saying that it is uncertain whether ALEC can continue to operate . He said that a "Going Concern"
footnote is very serious . He went on to the next footnote entitled "Subsequent Event" concerning a
former consultant who filed a lawsuit against ALEC. He then presented a graphics presentation
about ALEC's financial status, which is not in the Board packets . He summarized his presentation
by saying that ALEC is changing the way it does business, however, non-profits change the way
they do business much as ocean liners tum--it takes a long time . He added that most of ALEC's
problems are inherited and not the fault of current management . He said that current management
just fixed a lot of things, which is an unusual turnaround . He added that nevertheless, the problem
still remains that ALEC's liabilities are well in excess of current assets . Ms. Cahill questioned
whether ALEC still needs to raise $1 .5 million in order to get ahead of the game and Mr . Lang
responded yes . He stated that ALEC needs $500,000 just to break to even . He said that in order
for ALEC to grow, it will take $1 .5 million and that ALEC will go under if there is not a significant
influx of money in a short period of time . Senator Johnson questioned whether the changes made
in the first quarter of the year are helping and is ALEC now on the right track . Mr. Lang said that
auditors generally look at the past so it is difficult for him to say anything about going forward .
He did say ALEC will not get out of its current troubles by adding individual members ; ALEC
needs sizable chunks of cash. He added that he is concerned that the fundraising efforts are
business-as-usual and that even though the Failor Challenge has been somewhat successful, the
sums raised don't even put a dent in the deficit ALEC faces . He said that there is too much in flux
and the cash situation is perilous . He added that ALEC needs six to seven figures, with $500,000
needed immediately . Once ALEC receives this infusion of money, business-as-usual will allow
the organization to grow . Senator Johnson questioned if new corporate sponsors won't help, what
will help . Mr . Lang responded that sizable contributions from corporate sponsors will help, not
simply membership dues from corporations . Mr. Watson questioned whether it could be possible
for Mr . Lang to assist management in the development of a business plan based upon which future
earnings could relatively accurately be projected and he could substantiate those projections to
enhance the ability of the organization to borrow money . Mr . Lang responded that no one can
project the future with any accuracy. He stated that there are a number of assumptions you have to
make, and his company does not accept responsibility for these assumptions . He added that what
he can say is how ALEC got to where it was, how ALEC is not there any more and what
management has done to improve the situation and the Finance Committee has asked him to do
this . He added that in the current situation, it is very difficult to do this . Mr. Watson questioned
how ALEC can approach a lending institution without such a business plan and future projections .
Mr. Lang responded that no lending institution is going to look on ALEC favorably in its current

 PAGE SEVEN - BOARD MIN . - 5/30/96
situation . He added that the current line of credit has already secured whatever liquidity ALEC has
left . Mr . Watson stated that preparing a business plan could encourage some co-signers . Mr.
Lang stated that he would be delighted to help, however, he cannot soften the blow that ALEC is in
a very tight situation . Mrs . Cahill added that a good business plan is a good idea, however, Mr .
Denning has just put some pieces in place to help ALEC out of its problems that will take the
organization farther faster than a business plan--the new fund development person . She added that
making projections is not going to change the situation, but if Mr . Denning and Mr. Rasley can put
together a fund development plan, along with some key Board members, this would probably help
the fastest . She stated that it would probably not be helpful to borrow the money, that it needs to
be raised. She added that ALEC not only needs to raise the $1 .5 million plus operating
expenditures, but we need to figure out how to institutionalize this type of fundraising in order to
do it consistently in the future . Mr . Denning stated that Mr . Von Kannon, Treasurer for the
Heritage Foundation, is now a consultant to ALEC for fundraising development and that Mr . Von
Kannon has prepared a business plan outline, meaning a fundraising development plan . He added
that Mr. Von Kannon and Mr . Rasley are going to be working closely to develop the plan even
further . He said that he is struck with the potential of ALEC, however, he needs some wind in his
sails to get there and right now . He added that there is an immediate hard-core need for $500,000
and another $1 million beyond that . He stated that they need to spend some money to fix some
things such as the database, the computer system and the phone system as these are the building
blocks of the organization . Mr . Watson said that in order for him to assist in raising this type of
money fast, he's going to need something such as a business plan in order to show potential
contributors that ALEC is going to make it and here is why . Mr. Denning responded that they will
come up with what the members need in 30 days or less as he has no other higher priority than
raising this money . Mr . Failor added that in order to sell this to people, we are going to have to
have a plan . Chairman Van Vyven stated that he wishes for Chairman Auger to gather the Private
Enterprise Board over lunch to discuss the issue in the Wine Room and report back to the full
Board after lunch at approximately 1 :45 p.m. Mr. Lang added that he has seen ALEC grow over
the years and it would be a tragedy to have ALEC cease to exist . He pleaded with the Board
members to find a way to keep the organization going and make it strong again . Chairman Van
Vyven stated that he doesn't know what the organization would have done without Mr . Lang's
assistance . Senator Gorham stated that he has a check from the state of Rhode Island in the
amount of $80,000 for ALEC .
Chairman Van Vyven recessed the meeting at approximately 1 :00 p .m.
Chairman Van Vyven reconvened the meeting at approximately 1 :45 p .m .
He announced that a special session of the Joint Board of Directors will be held Saturday, June 1,
1996 at the Hyatt in the Buckeye Room A & B beginning at 2 :00 p .m. to deal with three task force
resolutions that have been appealed to the Board . He stated that he will have to leave shortly and
that Senator Gorham will take over the meeting . He asked Mr. Auger to give a brief report of the
luncheon meeting of the Private Enterprise Board . Mr. Auger stated that the meeting was very
intense and that everyone had the opportunity to speak and ask questions . He said that one of the
basic questions that was posed was is ALEC worth saving . He said the answer was yes, that this
is an organization with a tremendous opportunity for the public sector and private sector to come
together to prepare strategies to put forward in all the states . He said that they explored a lot of the
hows about the finances of the operation and that the outcome of the meeting is to pull together a
solution team that will reformulate the notes from the meeting, go over the suggestions and come
back with some short term and long term solutions . He added the focus will initially be on the
immediate short term need and the nucleus of the team will be the Private Enterprise members of
the Finance Committee, including Mr . Watson and Mr . Morgan who were added. He said that any ~
others from the Private Enterprise Board who wish to participate are welcome and it will be up to N
the National Chairman to determine any others who he wishes to help participate on that team . ~
~,
Chairman Van Vyven asked Mrs . Lee to continue with the Financial Status Report .
.
She
said ~
Financial Status Report - Mrs . Lee stated that most everything has been covered
.
She
stated
that
the co
that ALEC's cash status has slightly changed since Apri130, but not by a lot
accounts payable that they started with in January is now down to a manageable level, however,
the cash flow still remains very tight . She added that they are reviewing all finances on a weekly

 PAGE EIGHT - BOARD MIN. - 5/30/96
basis, including accounts receivable and that the invoicing is done on a daily basis so that they can
continue to see where the projections are going . She stated that projections are now being done on
a weekly basis instead of a monthly basis . She concluded by saying that several states are still in
the negative on their scholarship accounts . Chairman Van Vyven said that 17 states are in the red
on their scholarship accounts, which is down from 19 . He asked for an update on those accounts
that are still in the red . Mr . Parde stated that many of these states have been quite active in
fundraising and that the state chairmen are aggressively raising money for the Annual Meeting and
to build up their scholarship accounts . Senator Powers questioned if the losses in several states
were written off, such as California . Mr . Denning stated that in the case of California, he met with
the private enterprise chairs and Senator Haynes and given the situation with ALEC's accounting
last year, we ended up writing off about $8,000 . Mrs . Lee clarified that this was done in North
Carolina, however, with California, the money that was initially deposited into general support is
now being recognized as scholarship funds, which puts their account into a positive situation . Mr.
Denning said that ALEC repaid the California scholarship account and then identified an additional
$10,000 that California thought had been sent to their scholarship account and had not . Senator
Powers stated that a policy should be adopted that says that states cannot continue to withdraw
scholarship funds from accounts with negative balances . Senator Gorham clarified that this had
already been adopted by ALEC as policy . Senator Gorham then took over the meeting in the
absence of Chairman Van Vyven .
COMMITTEE REPORTS
Awards - Senator Rhoads stated that there has been a lot of discussion over the past few years
that ALEC has been giving too many awards out and it is becoming less meaningful to get one . He
said that the Committee recommends that no more than 18 awards be given out, with a breakdown
as follows : Legislator of the Year, 5 ; Private Enterprise Leader of the Year, 3 ; Host Committee
awards, leave up to those making the nominations ; Volunteer Staff Members, 2 . He added that
nominations could be made by both chairs of each task force, one candidate for each award, the
chairman of the Board of Directors could nominate one legislator and the chairman of the Private
Enterprise Board could nominate one private enterprise member . He stated that the Awards
Committee would provide its recommendations for these awards to the Executive Committee of the
Board . He said that legislator and private enterprise awards would be limited to ALEC members
only and that non-ALEC members could be awarded certificates of appreciation for advancing an
ALEC issue . He added that no legislator or private enterprise member should receive an award
more than once . He said that the criteria for receipt of a legislator or private enterprise member
award should be work on a task force, work on behalf of the ALEC state delegation or work in
leadership positions . He added that the Board of Directors, on the recommendation of the Awards
Committee, may create other awards or forms of recognition for meritorious service to ALEC . He
said that in regards to the Thomas Jefferson Award, the new procedure would be that one
nomination would be solicited from each member of the Joint Board of Directors and the Awards
Committee would then create a slate of candidates, with names being added or deleted from the
slate, with the Board of Directors making the final and the alternate choices from the slate . He
added that if a final candidate could not accept the award in person at an annual meeting, the
alternate candidate would be selected . He stated that in very rare circumstances, the award could
be given in a video presentation, taped or via satellite . He said that the 1996 nominee based on the
survey of ALEC's leadership is Governor George Allen of Virginia, who will be in attendance at
the Annual Meeting . He stated that the Adam Smith Free Enterprise Award procedure is the same,
with the Awards Committee recommending Mr . Dave Thomas, founder and Chairman of
Wendy's . Mr. Poynter clarified that for the Thomas Jefferson Award, the Board would be polled
and that the polling information and any other outside recommendations would go to the Awards
Committee so that they could create a slate . He stated that the slate would be presented to the
Board so that each member could vote and the top three choices would be referred back to the
Awards Committee . He said that the Awards Committee would then make a recommendation back
to the Board on who should receive the award . Senator Rhoads moved that the awards structure
be adopted with the number of awards being reduced from 41 to 18, along with the criteria and
system of recommending nominees to the Board of Directors . Representative Oakley gave the

 PAGE NINE - BOARD MIN . - 5/30/96
appropriate second and the motion was approved without objection . Senator Martin moved to
approve the nomination of Governor George Allen as the 1996 Thomas Jefferson Freedom Award
recipient . Senator Rhoads gave the appropriate second and the motion was approved without
objection . Senator Rhoads moved to approve the nomination of Mr . Dave Thomas as the 1996
Adam Smith Free Enterprise Award recipient with Representative Oakley giving the appropriate
second . Mr . Scheberle questioned whether Mr . Thomas would be in attendance to receive the
award and Senator Rhoads responded that he had not yet been contacted . Senator Rhoads added
that if the recipient has a conflict with the annual meeting but agrees to show up at another ALEC
meeting, they can be given the award at that time ; if they do not agree, an alternate is selected . Vice
Chairman Gorham questioned whether an alternate had been selected and Senator Rhoads
responded no . Vice Chairman Gorham then said that the nomination could be accepted conditional
upon Mr . Thomas' attendance . Mr. Poynter clarified that his selection would be conditional upon
his attendance at one of the three upcoming ALEC meetings and if he could not attend the Annual
Meeting, his selection would be announced there and at what meeting he will be in attendance to
receive it. He stated that the reasoning behind this is that when we give awards to the caliber of
people we are choosing, their schedules are such that we can't expect them to attend one specific
meeting but we can expect them to attend one of them . Senator Johnson asked for clarification that
no one has yet approached Mr . Thomas or his company about the award and Senator Rhoads
responded no, that several others were being considered and they did not want to contact him until
a final determination had been made . Senator Johnson then questioned whether Wendy's is a
member of ALEC and Senator Rhoads replied no . Senator Johnson stated that this should be taken
into consideration when choosing candidates, and although he is not suggesting that the awards be
sold, however, successful businessmen such as this could be helpful in supporting ALEC and
assisting in ending our budget deficit should they be given this type of recognition by ALEC .
Senator Powers asked for clarification that the only two meetings that Mr . Thomas could attend
would be the Annual Meeting and the NOC and Vice Chairman Gorham concurred . Mr. Poynter
added that the '97 NLS would be included as well and Vice Chairman Gorham stated that a later
report will announce that the '97 NLS will probably not take place, therefore, Mr . Thomas would
have to appear at either the Annual Meeting or the NOC in order to receive the award .
Representative Cooper stated that she is concerned with allowing an Adam Smith Award recipient
to choose to attend a meeting other than the Annual Meeting as this is a major award as well and if
the nominee cannot attend, the award should be given to someone who can . Mr. Scheberle
questioned who the other candidates were that were in the running and Senator Rhoads responded
that the Committee preferred not to do so as some of the nominees are in the room . Mr . Scheberle
stated that he is curious how a non-ALEC member was nominated when there were ALEC
members in the running . Senator Rhoads responded that the nominees were chosen by the Board
and those who received the highest number of votes were the ones who were selected . Mr.
Goldberg stated that he would have no problem with Representative Cooper's concerns if the
process could be started six months earlier, however, determining an award recipient in June to
attend a meeting in July can be a definite scheduling problem for the recipient . He said that this
year the Board should go ahead with the Committee's recommendation that the recipient attend one
meeting this year and then begin the process much earlier next year if the recipient has to attend the
Annual Meeting . Representative Cooper responded that they are not being asked to attend the
whole conference, just to stop in to receive the award . She also added that nothing says that the
award has to be given this year and she feels that another precedent is being set . Senator Martin
stated that allowing the recipient to attend another meeting can be an additional draw to a meeting
that might otherwise not have a big attendance . He said that the importance of the Thomas
Jefferson Award gives you flexibility with the Adam Smith Award . Vice Chairman Gorham
restated that the motion is to present the Adam Smith Free Enterprise Award to Mr . Dave Thomas
contingent upon his attendance at the 1996 Annual Meeting or NOC . He then questioned what
would happen if Mr . Thomas could not make either meeting . Senator Rhoads responded that the
Awards Committee Would then reconsider at the Annual Meeting and the award would probably
have to just be skipped this year . Vice Chairman Gorham asked if there could be an interim
meeting held and Senator Rhoads responded that they have a conference call scheduled for late
June to choose all the other award recipients so they could discuss it at that time . Vice Chairman

 PAGE TEN - BOARD MIN . - 5/30/96
Gorham stated that the motion should be amended to state that if Mr . Thomas cannot meet the
contingencies of the award, then the Awards Committee would choose another recipient who could
attend the Annual Meeting . Senator Rhoads moved to so amend the original motion with
Representative Cooper giving the appropriate second and the amendment to the motion was
approved without objection . Hearing no objection, the amended motion was approved without
objection .
Federalism - Senator Burns stated that the Committee has prepared several handouts which have
been distributed to the Board . She asked to begin with the one entitled "Resolution Requesting
Congress - Draft", which the Committee adopted, which urges Congress to support bills that
would require them to identify from where in the Constitution they receive the authority to enact the
legislation they are proposing to enact, as well as ensuring such things as agency rules and
regulations do not go beyond the expressed statutory authority . She then moved for adoption of
the resolution with Representative Oakley giving the appropriate second . The motion was adopted
without objection . Senator Bums then went on to state that the responses to the presidential
questionnaire that had been mailed to candidates did not get circulated as originally anticipated due
to their late receipt, however, it was an educational experience and anyone wishing to obtain copies
of the responses can let Mr. Beauchemin know . She said that they are still interested in escalating
the discussion on Federalism into the presidential debate and therefore, they proposed to the
Steering Committee that they work together on a presidential debate in conjunction with the League
of Women Voters . She added that the Steering Committee felt that they should do their own
presidential debate among the member groups . She said that the Federalism Committee voted
today to work with the Steering Committee on that endeavor, however, they are pessimistic as to
whether it can be done . She said that in the meantime, it is very important to work with the League
of Women Voters to have them include this issue in their debate . Senator Bums moved for
approval of the recommendation with Representative Oakley giving the appropriate second .
Senator Powers mentioned that he was at the Steering Committee meeting and the organizations
had instructed their executive directors to pursue sponsoring the debate and he questioned whether
any of the directors had gotten back to us . Mr. Denning responded no, that Sherry Hendrickson of
CSG was supposed to coordinate amongst the four organizations and he has heard nothing from
her . Senator Burns stated that this is why the Federalism Committee feels it is important to
proceed with questions for submission to the League of Women Voters and the Steering
Committee can participate in this as well if they wish . She added that they hope the presidential
debate becomes a reality, however, if we wait to see if it will come to fruition, we may miss the
opportunity to get into the debate at all with the League of Women Voters . Senator Powers asked
Senator Bums to contact Mr . Sprague at CSG during the meeting to find out if there has been any
movement on the presidential debate idea and she agreed that she would . Vice Chairman Gorham
stated that there are already five debates scheduled and it is highly unlikely that they would accept
another one on the topic of federalism, so our best chance is to get specific questions posed in the
debate sponsored by the League of Women Voters . Hearing no objections, the motion was
approved . Senator Burns stated that the Committee is restructuring the presidential questionnaire
for congressional candidates for distribution to the state chairmen for use in their states . She added
that the Committee is interested in the possibility that the political parties might consider adding
something to their party platform regarding federalism . She stated that they are proposing to work
with the other Steering Committee members to have numbers two and three from the States
Federalism Summit Statement incorporated into party platforms . She said that with the support of
ALEC and the other four organizations we might be able to get this on the party platforms . She
then moved the proposal with Senator Martin giving the appropriate second and the motion was
approved without objection .
Meetings and Conventions - Senator Powers deferred to Mr . Boutilier for explanation of the
Committee report . Mr. Boutilier stated that the Committee proposes to hold the 1996 NOC at the
Capitol Hilton and the 1997, 1998 and 1999 NOCs being held at the Renaissance . He added that
the dates are set through the year 2000 . They also recommend that ALEC eliminate the National
Leadership Summit and replace it with two things : 1) a springtime Board meeting ; and 2) increase
the number of focus/task force meetings around the states in the early part of the year and in the late
winter . He stated that it is very difficult to get legislators to attend the NLS and to raise money and

 PAGE ELEVEN - BOARD MIN . - 5/30/96
it ends up detracting from the Annual Meeting . He added that the Annual Meeting for 1997 has
been booked in New Orleans for the third week in August with only two hotels, the Sheraton and
the Hyatt, that will handle well over 1,800 rooms . Senator Powers stated that since the Committee
meeting that it has been brought to his attention that the rates at the Capitol Hilton are $20 higher
per night than the Renaissance and that the food is higher as well and Mr . Boutilier confirmed that.
He then stated that he was hesitant to recommend the Hilton since the Renaissance is cheaper and
available. Mr. Scheberle questioned the status of the obligation to the Ritz Carlton . Mr. Boutilier
stated that it is being bought down with task force meetings there and Washington meetings, with
the next meeting to be held there being the fall Board meeting, which has been expanded to a
leaders' meeting . He stated that this expenditure, with one caveat being worked out through the
attorneys, should end ALEC's obligation . Senator Johnson questioned whether there are two
choices for the NOC, the Hilton and the Renaissance, and Mr . Boutilier stated that yes, there are .
Senator Johnson then asked why that choice could not be made at this time as opposed to a
conference call and Mr . Boutilier responded that it can be done today . Senator Johnson stated that
at an NOC, ALEC pays the costs and with the Hilton being $20 higher per room as well as higher
meals this could add up to seriously higher costs . Mr. Boutilier stated that he had recommended
that we go with the Renaissance who offered a multi-year fixed rate, which is about 20% less than
the Hilton and the Hilton opted out of the multi-year package saying we were getting too big for
their facility . He said that with the projected numbers for 1996 and the fact that they competitively
bid the meeting, the Hilton was still considered but they opted out of the bidding for the out years,
however, they are 20% higher . Senator Johnson asked how much more that would be in dollars
and Mr . Boutilier responded that it would be about $60,000 more with 100% of the cost being
borne by ALEC . Vice Chairman Gorham asked for a show of hands of those who wanted to go to
the Capitol Hilton and three raised their hands . He then asked for a show of hands for the
Renaissance and it became apparent that the majority preferred to go to the Renaissance . Senator
Powers then moved that ALEC not hold an NLS in 1997 and in lieu of that, a Board meeting and
other leadership meetings be held . Representative Oakley gave the appropriate second and the
motion was approved without objection . Vice Chairman Gorham stated that the Committee has
recommended Chicago for the 1998 Annual Meeting as it will be the 25th anniversary meeting .
Mr. Boutilier stated that the Capitol Hilton and Towers and the Palmer House have been chosen as
the hotels for the third week in August . Senator Powers moved the recommendation with
Representative Oakley giving the appropriate second . Mr. Poynter questioned whether these dates
conflict with the meetings of other organizations . Mr. Boutilier stated that this date is not in
conflict with any other meetings and dates will no longer be presented to the Board when they are
in conflict with the meetings of other groups . The motion was approved without objection . Mr.
Boutilier then said that the Committee recommends that a letter be sent to all Board members and
state chairmen soliciting recommendations for locations for meetings in the years 1999, 2000 and
2001 and in the meantime he will be looking into locations at Nashville, Arizona, San Francisco
and Seattle as possibilities . He added that as recommendations come in, they will be added to the
list and presentations will be made to the sub-committee and then to the full Board . At the request
of Vice Chairman Gorham, Senator Powers moved, with Representative Oakley giving the
appropriate second, to give Mr . Denning the authority to negotiate for venues for fundraising
dinners or affairs throughout the rest of the year . The motion was approved without objection .
Ms . Cahill questioned whether plans for fundraising for the 1997 and 1998 annual meetings have
been started as there doesn't seem to be a very active Illinois delegation . Mr. Boutilier stated that
there has already been one meeting in Louisiana and the Host Committee is being put together and
they are aware of the fundraising obligation . He added that now that the Board has given approval
for the Chicago meeting, they can begin to plan for it as well .
By-Laws - Senator Johnson stated that there doesn't appear to be any need to make changes in
the by-laws at this time to allow the position of Chairman Emeritus to be created, however, there
could be the possibility of future revisions at which time the Board will be notified well in advance .
Membership - Speaker Hogue deferred to Mr . Watson for the presentation of the Committee
Report . Mr. Watson referred to the brief two-page report from the Committee that shows that over
$350,000 has been committed as a result of of the membership drive . He added that staff advised
him that this has been the most successful Board fundraising effort in the history of ALEC . He

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PAGE TWELVE - BOARD MIN . - 5/30/96
said that only about half of this money is in and they will be working hard to get the rest of it in .
He sadly pointed out that only about half of the Board members have actively been involved in this
campaign, however, many members have indicated that they have been extremely busy and still
intend to get commitments . He asked Vice Chairman Gorham if the deadline for the Failor
Challenge can be extended to the first day of the Annual Meeting as momentum is picking up and
he feels that the additional time can help us reach our goal of $500,000 . Representative Oakley
moved to extend the deadline for the Failor Challenge until the Annual Meeting with Mr .
Halvorson giving the appropriate second . Mr . Poynter stated that although the Failor challenge has
been very successful, it is dangerous to give individuals credit for securing new members . He
added that it is better not to give credit and just worry about getting new members . Senator
Johnson said that he disagrees with Mr . Poynter as people need to be encouraged to get additional
memberships and giving recognition to those that do only encourages them to do more and
motivates those that have not assisted . He also complimented Mr . Watson and his committee on
their great work on the project . Mr . Watson apologized for failing to mention that Senator Martin
also informed him of a commitment from Virginia Power, Commonwealth Gas and Norfolk
Southern for at least $6,000 total . He added that if anyone is having trouble getting hold of him,
please feel free to talk to Tammy in his office or call him at home on the weekend . Ms. Cahill
questioned what kind of net gain we have this year in members . Mr. Parde stated that it is in the
cover memo from the monthly financial statements . Ms. Cahill then asked if this $350,000 counts
toward the $1 .5 million we need or is she understanding correctly that this doesn't relate to the
$500,000 we need by July . Mr. Denning responded that the latter is correct and to raise the kind
of money we need we would need to bring in 100 members at the $5,0001evel . Senator Cantu
stated that he has been told by the ethics board in his state that he cannot solicit money for any nonprofit organization, except for one mailing to encourage people to join ALEC and he asked for
advice from the Board members . He said that he was told by someone in his state that if it is so
important, maybe the state should pay for it . Vice Chairman Gorham stated that states have made
appropriations to ALEC from time to time and maybe he should attempt to get a solicitation from
his state . With no objections, the motion to extend the Failor Challenge deadline was approved .
Task Forces - Mr . Poynter stated that his Committee is trying to clarify the language in the Task
Force Operating Procedures and they hope to have a proposal before the Board at the Saturday
meeting.
Vice Chairman Gorham reminded everyone that there is a Board meeting Saturday afternoon . Mr.
Parde stated that the meeting begins at 2 :00 p .m. at the Hyatt in Buckeye Room A & B on the third
floor .
FUTURE MEETINGS
Vice Chairman Gorham stated that the issue of future meetings has already been covered, however,
he gave a brief overview of the Annual Meeting in Newport . He said that the meeting starts on the
evening of July 30 with the Leadership Dinner ; Wednesday, July 31 is golf, tennis, skeet shoot
and beach party with the opening reception at Eisenhower House at Fort Adams that evening ;
Thursday morning is the opening breakfast, plenary sessions, luncheon, and state night that
evening ; Friday morning breakfast, plenary sessions, luncheon, task force meetings and
Summerfest at the yachting center that evening ; Saturday morning breakfast, plenary sessions,
luncheon, task force meetings and the annual awards banquet at Marble House with the dessert and
dancing sponsored by Philip Morris immediately following ; Sunday morning program at Trinity
Church, Board meeting and an informal awards program that evening for the Board being arranged
by Mr . Goldberg . He added that the Board members should plan on staying through Sunday for
the Board meeting and the informal awards banquet . Ms . Cahill said that if anyone from your state
has not made arrangements for state night, they should do it now and not wait until the week
before . Vice Chairman Gorham stated that there are still rooms available in Newport and if anyone
needs assistance getting a room, please let him know as soon as possible . Mr. Auger questioned
whether rooms were being held at the host hotels for the Board members and Mr . Parde stated that
this is correct and everyone should have received confirmation letters . Representative Oakley
questioned who to contact to set up dinner reservations and Vice Chairman Gorham said to contact
Mr . Boutilier, however, if they have problems, contact him personally .

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PAGE THIRTEEN - BOARD MIN . - 5/30/96
Vice Chairman Gorham asked Mr . Denning to wrap up the meeting . Mr. Denning asked Mr .
Rasley to say a few words to the Board . Mr . Rasley stressed three points : 1) the challenge before
ALEC is about message, not about money - it is about continuing the work that ALEC has been
doing ; 2) we need to be creative and to think beyond the old-fashioned ways that people raise
money, identifying some new profit centers for ALEC ; and 3) we need to recognize that
fundraising involves everyone--when the organization succeeds, everyone benefits . He thanked
everyone in advance for their participation in this effort .
There being no further business, Vice Chairman Gorham adjourned the meeting at 3 :45 p.m .
Respectfully submitted,

Representative Carolyn Oakley
National Secretary