Notice2023-22058
HISA Proposed Budget
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 4, 2023
Issuing agencies
Federal Trade Commission
Abstract
The Federal Trade Commission ("FTC" or "Commission") publishes the 2023 proposed budget of the Horseracing Integrity and Safety Authority and seeks public comment on whether the Commission should approve, disapprove, or modify the proposed budget.
Full Text
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<title>Federal Register, Volume 88 Issue 191 (Wednesday, October 4, 2023)</title>
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[Federal Register Volume 88, Number 191 (Wednesday, October 4, 2023)]
[Notices]
[Pages 68610-68615]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-22058]
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FEDERAL TRADE COMMISSION
[File No. P222100]
HISA Proposed Budget
AGENCY: Federal Trade Commission.
ACTION: Notice of publication of Horseracing Integrity and Safety
Authority 2023 proposed budget; request for public comment.
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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'')
publishes the 2023 proposed budget of the Horseracing Integrity and
Safety Authority and seeks public comment on whether the Commission
should approve, disapprove, or modify the proposed budget.
DATES: Comments must be filed on or before October 18, 2023.
ADDRESSES: Interested parties may file a comment online or on paper by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section. Write ``HISA 2023 Budget, Matter No.
P222100'' on your comment and file it online at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by following the instructions on the web-based
form. If you prefer to file your comment on paper, mail your comment to
the following address: Federal Trade Commission, Office of the
Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex H),
Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: John H. Seesel (202-326-2702),
Associate General Counsel, Office of the General Counsel, Federal Trade
Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION: The Horseracing Integrity and Safety Act,\1\
enacted on December 27, 2020,\2\ and amended on December 29, 2022,\3\
directs the Federal Trade Commission to oversee the activities of a
private, self-regulatory organization called the Horseracing Integrity
and Safety Authority (``HISA'' or the ``Authority''). In March 2023,
the Commission issued rules setting forth the procedure whereby the
Commission approves, disapproves, or modifies the Authority's proposed
annual budget.\4\ Under these rules, the Authority must first publish a
proposed budget on its own website and invite public comments. See FTC
Rule 1.150(b). Thereafter, the Authority must forward the budget to the
Commission, along with any public comments received and an assessment
of those comments. Id. The Authority's submission must include (a) a
statement of the vote by the Authority's Board of Directors approving
the proposed budget; (b) information about revenues, including how fees
are calculated and apportioned; (c) information about expenditures,
broken down by program area, e.g., the racetrack safety program, the
anti-doping and medication control program, etc.; (d) sufficient
information about individual line items for the Authority's Board of
Directors to exercise their fiduciary duty of care; and (e) information
comparing actual revenues and expenses against the approved budget and
explaining variances of greater than 10 percent. Rule 1.150(c).
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\1\ Codified at 15 U.S.C. 3051 through 3060.
\2\ Public Law 116-260, 134 Stat. 1182, 3252 (Dec. 27, 2020).
\3\ Public Law 117-328, 136 Stat. 4459, 5231 (Dec. 29, 2022).
\4\ 88 FR 18034 (Mar. 23, 2023); see 16 CFR 1.150 through 1.152.
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After the Authority submits its proposed budget and supporting
materials to the Commission, the Commission must determine whether
``the proposed budget contains sufficient information for the members
of the Board of Directors of the Authority to exercise their fiduciary
duty of care,'' Rule 1.150(d), and whether the submission otherwise
comports with the submission requirements of the Commission's rules.
Id.; see Rule 1.143. Once the Commission makes that determination, it
publishes the Authority's proposed budget in the Federal Register and
invites public comment for a period of 14 days. Id. After taking into
consideration the comments submitted, the Commission either approves or
disapproves the budget. Rule 1.151(a). The Commission will approve the
proposed budget if ``the Commission determines that, on balance, the
proposed budget serves the goals of the Horseracing Integrity and
Safety Act in a prudent and cost-effective manner, utilizing
commercially reasonable terms with all outside vendors, and that its
anticipated revenues are sufficient to meet its anticipated
expenditures.'' Rule 1.151(c). The Commission may also modify the
amount of any line item. Rule 1.151(d).
In October 2022--prior to the effective date of the budget rule--
the Authority forwarded to the Commission a summary of the Authority's
2023 budget. In December 2022, the Authority forwarded to the
Commission a revised summary 2023 budget. In June 2023, after the
budget rule became effective, the Authority submitted to the FTC a
``Supplemental Notice of Filing of HISA Budget,'' which included all
the information the Authority must provide to the Commission under Rule
1.150(c). The Supplemental Notice of Filing of HISA Budget is
reproduced below. The appendices to which it refers have been collected
and reproduced as a supporting document on the docket for this
publication at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Based upon these submissions and additional information the
Authority has provided to the Commission, the Commission concludes the
Authority's proposed 2023 budget ``contains sufficient information for
the members of the Board of Directors of the Authority to exercise
their fiduciary duty of care.'' Rule 1.150(d). The Authority's
submission also complies with the filing procedures set forth in Rule
1.143. The Commission therefore issues this document and invites
comments from the public on the Authority's 2023 budget. Comments
should address the decisional criteria set forth in Rule 1.151(c) and
whether any line items should be modified. See Rule 1.151(e).
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before October 18,
2023. Write ``HISA 2023 Budget, Matter No. P222100'' on your comment.
Your comment--including your name and your state--will be placed on the
public record of this proceeding, including the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we strongly encourage you
to submit your comments online. To make sure the Commission considers
your online comment, you must file it at <a href="https://www.regulations.gov">https://www.regulations.gov</a>,
by
[[Page 68611]]
following the instructions on the web-based form.
If you file your comment on paper, write ``HISA 2023 Budget, Matter
No. P222100'' on your comment and on the envelope, and mail your
comment to the following address: Federal Trade Commission, Office of
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex H),
Washington, DC 20580. If possible, please submit your paper comment to
the Commission by overnight service.
Because your comment will be placed on the publicly accessible
website at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include any
sensitive personal information, such as your or anyone else's Social
Security number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include any
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``any trade secret or any commercial or
financial information . . . which is privileged or confidential.'' 15
U.S.C. 46(f); see FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In
particular, your comment should not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c), 16 CFR 4.9(c).
In particular, the written request for confidential treatment that
accompanies the comment must include the factual and legal basis for
the request and must identify the specific portions of the comment to
be withheld from the public record. See FTC Rule 4.9(c), 16 CFR 4.9(c).
Your comment will be kept confidential only if the General Counsel
grants your request in accordance with the law and the public interest.
Once your comment has been posted publicly at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, as legally required by FTC Rule 4.9(b), 16 CFR
4.9(b), we cannot redact or remove your comment, unless you submit a
confidentiality request that meets the requirements for such treatment
under FTC Rule 4.9(c), 16 CFR 4.9(c), and the General Counsel grants
that request.
Visit the FTC website to read this publication. The FTC Act and
other laws that the Commission administers permit the collection of
public comments to consider and use in this proceeding as appropriate.
The Commission will consider all timely and responsive public comments
it receives on or before October 18, 2023. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see <a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
The text that follows is the Supplemental Notice of Filing of HISA
Budget which the Authority submitted to the Commission. The appendices
to which it refers have been collected and reproduced as a supporting
document on the docket for this publication at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Supplemental Notice of Filing of HISA Budget
Pursuant to the Horseracing Integrity and Safety Act of 2020 \5\
(the ``Act''), notice was given that on December 27, 2022, the
Horseracing Integrity and Safety Authority (``HISA'' or the
``Authority'') filed with the Federal Trade Commission (the
``Commission'') the revised 2023 budget.\6\ The budget was developed,
approved by the Authority and submitted to the Commission prior to the
Commission's issuance of the Procedures for Oversight of the
Horseracing Integrity and Safety Authority's Annual Budget.\7\ This
Supplemental Notice of Filing of HISA Budget (the ``Supplemental
Notice'') provides the contents of the submission as set forth in 16
CFR part 1 Subpart U and notice is hereby given that on June 12, 2023
the Authority has filed with the Commission the 2023 budget (Appendix
1) and this Supplemental Notice.
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\5\ 15 U.S.C. 3051 through 3060.
\6\ The original 2023 budget was filed with the Commission on
October 3, 2022.
\7\ 16 CFR part 1, subpart U.
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I. Information Concerning Rule 1.150(b). The Authority's original
2023 budget was posted on the HISA website (<a href="http://hisaus.org">hisaus.org</a>) on October 19,
2022. The Authority's revised HISA budget was posted on the HISA
website on January 14, 2023. The Authority did not receive any formal
comments regarding the original or revised budget. However, the
Authority did receive phone calls from persons who asked technical
questions about the 2023 assessments. These questions were answered by
Authority staff.
II. Information Concerning Rule 1.150(b)(1). The revised 2023
budget was approved by the Authority's Board of Directors by a vote of
9 to 0 and therefore satisfies the requirements of 15 U.S.C.
3052(f)(1)(C)(iii).
III. Information Concerning Rule 1.150(b)(2). Using the Assessment
Methodology Rule approved by the Commission, the Authority calculated
and distributed the following:
<bullet> 2023 Assessments by State (Appendix 2).
<bullet> 2023 Assessments by Track (Appendix 3).
Appendix 2 and Appendix 3 display the estimated amount required
from each state racing commission as calculated under the Assessment
Methodology Rule. The 2023 revised budget (Appendix 1), 2023
Assessments by State (Appendix 2), and 2023 Assessments by Track
(Appendix 3) were sent to the following stakeholders in December 2022:
<bullet> Arizona--Arizona Department of Gaming--Racing Division,
Arizona Downs, Rillito Park, and Turf Paradise (noting that the
materials should be forwarded to the local horsemen's group).
<bullet> Arkansas--Arkansas State Racing Commission and Oaklawn
Park (noting that the materials should be forwarded to the local
horsemen's group).
<bullet> California--California Horse Racing Board (noting that the
materials should be forwarded to the local horsemen's group).
<bullet> Colorado--Colorado Division of Gaming Events (noting that
the materials should be forwarded to the local horsemen's group).
<bullet> Delaware--Delaware Thoroughbred Racing Commission and
Delaware Park (noting that the materials should be forwarded to the
local horsemen's group).
<bullet> Florida--Florida Department of Pari-Mutuel Wagering,
Gulfstream Park, and Tampa Bay Downs (noting that the materials should
be forwarded to the local horsemen's group).
<bullet> Illinois--Illinois Racing Board, Fairmount Park, and
Hawthorne Park (noting that the materials should be forwarded to the
local horsemen's group).
<bullet> Indiana--Indiana Horse Racing Commission and Horseshoe
Indianapolis (noting that the materials should be forwarded to the
local horsemen's group).
<bullet> Iowa--Iowa Racing & Gaming Commission and Prairie Meadows
(noting that the materials should be forwarded to the local horsemen's
group).
[[Page 68612]]
<bullet> Kentucky--Kentucky Horse Racing Commission, Churchill
Downs, Ellis Park, Keeneland, Kentucky Downs, and Turfway Park (noting
that the materials should be forwarded to the local horsemen's group).
<bullet> Louisiana--Louisiana State Racing Commission.
<bullet> Maryland--Maryland Racing Commission, Laurel Park, and
Pimlico (noting that the materials should be forwarded to the local
horsemen's group).
<bullet> Minnesota--Minnesota Racing Commission (noting that the
materials should be forwarded to the local horsemen's group).
<bullet> Nebraska--Nebraska Racing and Gaming Commission (noting
that the materials should be forwarded to the local horsemen's group).
<bullet> New Jersey--New Jersey Racing Commission, Meadowlands, and
Monmouth Park (noting that the materials should be forwarded to the
local horsemen's group).
<bullet> New Mexico--New Mexico Racing Commission (noting that the
materials should be forwarded to the local horsemen's group).
<bullet> New York--New York State Gaming Commission, Finger Lakes,
and New York Racing Association (noting that the materials should be
forwarded to the local horsemen's group).
<bullet> Ohio--Ohio State Racing Commission, Belterra Park, Jack
Thistledown, and Mahoning Valley (noting that the materials should be
forwarded to the local horsemen's group).
<bullet> Oklahoma--Oklahoma Horse Racing Commission, Fair Meadows,
and Remington Park (noting that the materials should be forwarded to
the local horsemen's group).
<bullet> Pennsylvania--Pennsylvania State Horse Racing Commission,
Parx Racing, Penn National, and Presque Isle Downs (noting that the
materials should be forwarded to the local horsemen's group).
<bullet> Virginia--Virginia Racing Commission (noting that the
materials should be forwarded to the local horsemen's group).
<bullet> Washington--Washington Horse Racing Commission and Emerald
Downs (noting that the materials should be forwarded to the local
horsemen's group).
<bullet> West Virginia--West Virginia Racing Commission, Charles
Town, and Mountaineer Park (noting that the materials should be
forwarded to the local horsemen's group).
The Authority also calculated the 2022 True-Up by State (Appendix
4) and the 2022 True-Up by Track (Appendix 5). These documents reflect
the following:
<bullet> Actual 2022 starts and purses paid for each track (the
2022 assessments had been calculated using 2021 starts and purses paid
as a proxy for 2022).
<bullet> HISA spent $1,381,452 less than budgeted in 2022, so this
sum was returned to the industry as part of the true-up process.
<bullet> HISA collected $545,402 less in assessment payments from
states/tracks (due to Nebraska, Oregon, Wyoming, & Texas not running
Covered Horseraces), and therefore this sum was required to be
recovered from the industry.
The net amount of the above two sums comes to $836,050, which is
the amount that HISA returned to the industry through credits to the
2023 assessments. The True-Up totals for the relevant state were
provided to the state racing commissions and applicable racetracks.
IV. Information Concerning Rule 1.150(b)(3) & (b)(4). The Act
recognizes that the establishment of a national set of uniform
standards for racetrack safety and anti-doping and medication control
will enhance the safety and integrity of horseracing. The 2023 budget
allows the Authority to implement the horseracing anti-doping and
medication control program and the racetrack safety program for Covered
Horses, Covered Persons, and Covered Horseraces. Pursuant to the
Authority's Conflict of Interest Policy (Appendix 11), ``HISA
Representatives involved in procurement have a special responsibility
to adhere to principles of fair competition in the purchase of products
and services by selecting vendors based exclusively on standard
commercial considerations, such as quality, cost, availability, service
and reputation, and not on the receipt of special favors.'' In
addition, the Conflict of Interest Policy requires:
<bullet> Transactions to be supported by appropriate documentation;
<bullet> No entry be made in our books and records that
intentionally hides or disguises the nature of any transaction or of
any of our liabilities, or misclassifies any transactions as to
accounts or accounting periods;
<bullet> HISA Representatives comply with our system of internal
controls; and
<bullet> No cash or other assets be maintained for any purpose in
any unrecorded or ``off-the-books'' fund.
In addition, the Conflict of Interest Policy requires that:
<bullet> No HISA Representative may take or authorize any action
that would cause our financial records or financial disclosures to fail
to comply with generally accepted accounting principles or other
applicable laws, rules, and regulations; and
<bullet> All HISA Representatives must cooperate fully with our
finance staff, as well as our independent public accountants and legal
counsel, and respond to their questions with candor and provide them
with complete and accurate information to help ensure that our records
are accurate and complete.
Any HISA Representative who becomes aware of any departure from
these standards has a responsibility to report his or her knowledge
promptly to the CEO or Chair of the Board.
The 2023 HISA Summary budget (Appendix 1) is a compilation of the
following departmental budgets: Racetrack Safety (Appendix 6); Anti-
Doping and Medication Control (``ADMC'') (Appendix 7); Technology
(Appendix 8); and Administration (Appendix 9). A summary of these
departmental budgets is set forth below:
1. The 2023 Racetrack Safety budget funds the implementation of the
Racetrack Safety Program as set forth in Rule Series 2000 and as
approved by order of the Commission dated March 3, 2022. The budget
consists of the following items:
a. Salaries/Payroll Taxes/Employee Benefits. The salaries provide
for staffing to support and monitor the Racetrack Safety program,
including those persons necessary to oversee the following components
of the program:
i. Administration
ii. Data Analysis
iii. Track Accreditation Services
iv. Research
v. Stewards' Liaison
vi. Jockey Health & Welfare
vii. Investigations
Salary levels for each position are based on market rates, while
Employee Benefits consist primarily of a HISA contribution to cover a
portion of employee health insurance and a 401(k) match that is
consistent with market practice. The salaries budget provides for eight
racetrack safety employees. As of June 1, 2023, the Racetrack Safety
Program has four employees.
b. Meetings. This includes the travel, meals, and materials to
support the following annual meetings:
i. Equine Safety Directors
ii. Medical Directors
iii. Racetrack Safety Committee
These meetings are necessary to promote safety for both horses and
riders.
c. Travel. This category covers the business travel and meal
expenses for the employees listed in Salaries (section a) (excluding
the travel and meal expenses for the Meetings described in
[[Page 68613]]
section b and the Track Accreditation Services travel set forth in
section f). Travel to Covered Racetracks by Authority employees is
often necessary to ensure that Covered Horseraces are run as safely as
possible. The Authority plans to develop and implement a formal travel
policy this year.
d. Supplies. This primarily consists of materials to be used in
various Continuing Education programs provided and overseen by HISA.
These programs ensure that trainers, jockeys, veterinarians, and
stewards are educated in methods and procedures that promote the health
and safety of horses and riders.
e. Professional Services. Several independent contractors will
partner with HISA on a part-time basis to provide and/or augment
services in the following areas:
i. Data Analysis
ii. Research
iii. Statistical Analysis
iv. Continuing Education
v. Establishment of a National Medical Director position
Pay rates are based on market rates for similar positions. All of
these independent contractor relationships will increase the knowledge
base and/or education level of participants in Covered Horseraces.
f. Track Accreditation Services. The Racetrack Safety rules require
that tracks be accredited, and the rules mandate site visits to
determine the extent of compliance with the rules. This category
includes the costs of compensating teams of independent contractors to
perform these site visits, and the costs of covering the travel and
meal expenses for this team. It is expected that the accreditation site
visits will be conducted by teams of three to four individuals. The
costs included in this category were estimated based on the historical
costs of site inspections performed by the National Thoroughbred Racing
Association's Safety & Integrity Alliance. On-site track visits will
ensure that track facilities meet the safety requirements set forth in
the Racetrack Safety rules.
g. Track Surface Testing. This category includes the cost of pre-
meet track surface testing of tracks that run Covered Horseraces.
Testing is performed to ensure that track surfaces are safe for horses/
jockeys to run on. This testing is performed by the Racing Surfaces
Testing Laboratory.
2. The 2023 Anti-Doping and Medication Control budget supports the
implementation of the ADMC Protocol. The budget consists of the
following items:
a. Travel. This line item covers the business travel and meal
expenses that are expected to be incurred by HISA personnel to support
and achieve the goals of the ADMC Program. The Horseracing Integrity
and Welfare Unit's travel policy is Appendix 12.\8\
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\8\ This policy has been updated with new reimbursable mileage
rates, airport parking policies, tip percentage (now 20%). It is
anticipated that an updated policy will be developed this summer.
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b. Supplies. This line item sets forth the cost of materials
utilized by the Authority to support and achieve the goals of the ADMC
Program, including services such as continuing education.
c. Professional Services. Several independent contractors will
partner with HISA on a part-time basis to provide and/or augment
services in the following areas:
i. Arbitration--this covers the fees to be paid to arbitrators who
preside over appeals of positive anti-doping tests.
ii. Independent Adjudication Panel (IAP)--this covers the fees paid
to members of the IAP, who hear appeals of positive tests for
controlled medication.
iii. Furosemide Study--this covers the fees to be paid in 2023 for
the furosemide study that is required by the Act.
d. Horseracing Integrity and Welfare Unit (HIWU). The Act requires
that HISA contract with an independent enforcement agency to oversee
the components of the ADMC Program. HIWU, a division of Drug Free Sport
International (``DFS''), has been retained by the Authority as the
independent enforcement agency. The HIWU line items in the ADMC budget
consist of the following:
i. Salaries/Payroll Taxes/Employee Benefits. The salaries for a
staff (expected to total 42 full-time individuals) that will carry out
all of the responsibilities of the enforcement agency, including those
persons necessary to oversee and complete the following components of
the program:
1. Testing Operations
2. Testing Strategy
3. Compliance & Policy
4. Training & Certification
5. Lab Accreditation
6. Equine Medical Resources
7. Intelligence and Strategy
8. Investigative Operations
9. Education
10. Communications & Outreach
11. Legal
12. Information Technology
13. Human Resources
14. Finance
HIWU shares staff with DFS in the areas of Information Technology,
Finance and Human Resources. This arrangement produces cost savings,
obviating the need for HIWU to retain full-time employees to provide
these services.
ii. Rent. HIWU has procured 3,000 sq. ft. of office space for its
employees. HIWU is paying $30/sq.ft., which is consistent with market
rates in the Kansas City area. The cost of office equipment is also
included in this category.
iii. Office Expense. This consists of common office expenses such
as utilities and maintenance costs and is based on historical costs for
similar businesses.
iv. Telecommunications. This consists of the cost of office phones,
as well as mobile phone service at $65/month/employee (a commercially
reasonable rate).
v. Travel. This is the travel expense necessary for full-time
employees to perform functions such as meetings with State Racing
Commissions, training sessions with sample collection personnel,
laboratory visits, meetings with HISA personnel, and participation in
conventions. Travel expenses include airfare, hotel rooms, rental cars,
fuel costs, mileage for personal vehicles used for business purposes,
parking, and meals. The amounts for each expense component were based
on estimated market average costs.
vi. Supplies. This consists of drug testing supplies needed for
training and backup testing.
vii. Professional Services. This consists largely of consulting
fees paid to experts in the areas of:
1. Results Management
2. Investigations and State Racing Commission Relations
3. Laboratory Accreditation
4. Equine Science
The guidance provided by these subject matter experts will result
in a safer sport run on a more level playing field.
viii. Technology. This consists of the cost of all software,
hardware, and licenses needed to perform HIWU's work.
ix. Insurance. The expense consists of the cost of all of HIWU's
insurance policies, including liability insurance with an Umbrella
policy, cyber-risk insurance, property insurance, and workers'
compensation insurance.
x. Resources and Education. This includes Training and Continuing
Education, registration fees for industry conferences, accounting fees
for state tax filings, and dues and subscriptions to industry
publications. All of these are necessary for HIWU to properly conduct
its business.
[[Page 68614]]
xi. Taxes--Other. Estimated taxes based on the historical
experience of HIWU's sister companies. These taxes are minimal in
amount and are commercially reasonable.
xii. ADMC Collection Costs. This includes wages paid to sample
collection personnel in all states that conduct Covered Horseraces. The
wage amounts were based on rates paid to sample collection personnel in
each state prior to HIWU assuming these sample collection functions.
Additionally, to cover travel expenses specifically related to sample
collection, this cost amount includes airfare, hotel rooms, rental
cars, fuel costs, mileage for personal vehicles used for business
purposes, parking, and meals. The amounts for each expense component
were based on estimated market average costs.
xiii. Management Fees. This is the profit amount to HIWU for
administering the program. It is a negotiated amount of 7% of the total
expenses incurred for services they provide directly and 4% for
everything else.
e. Lab Testing. Once the samples to be tested have been collected
by HIWU personnel, they are shipped to one of six accredited
laboratories located in the United States. All of the laboratories have
many years of experience in the testing of blood, urine, and hair
samples taken from thoroughbred racehorses. HIWU has conducted
extensive negotiations with each of these laboratories in order to
ensure that competent testing is performed at the lowest price
possible. One way HIWU has successfully reduced costs is by utilizing
only six laboratories to perform testing, instead of the nine
laboratories previously used by various state racing commissions across
the country. This allows the six laboratories to spread their fixed
costs (salaried employees, testing equipment, etc.) over a larger
number of samples, resulting in a lower charge per test.
It is important to note that the ADMC Collection Costs and Lab
Testing line items represent 56.1% of the total budget of the
Authority.
3. The 2023 Technology budget supports the building of all IT
systems needed to properly and efficiently manage the Racetrack Safety
and ADMC programs. The budget consists of the following items:
a. Salaries/Payroll Taxes/Employee Benefits. This contemplates nine
HISA full-time employees in areas including programming, field support,
internal support, external support, project administration, and third-
party developer coordination. Salary levels for each position are based
on market rates, while Employee Benefits consist primarily of a HISA
contribution to cover a portion of employee health insurance and a
401(k) match that is consistent with market practice. As of June 1,
2023, the Technology department has five employees.
b. Travel. This includes the costs of travel by IT employees to
racetracks to meet with customers/users, to Lexington, Kentucky for
HISA meetings, and to training seminars and technology summit meetings
such as AWS Reinvent 2023. Participation by IT employees in these
meetings and seminars will result in a more efficient program that
better meets the needs of the constituents.
c. Supplies. This includes the purchase of laptops for all HISA
employees, the provision of workstations for those employees located in
the Lexington office, and the hardware/software/3rd-party services
needed for image processing. These items are necessary for HISA to
efficiently perform its duties under the Act.
d. Technology. This item includes the costs of cloud computing and
other specialized applications that together form the foundation of
HISA's technology system. For example (and most significantly), this
category includes the cost of Amazon Web Services, as well as
relationships with other vendors relating to the HISA website and
technology systems. In order to be as cost-effective as possible, HISA
has chosen not to invest in centralized computing assets. This keeps
costs low and increases flexibility as HISA is engaged in expanding its
staff and infrastructure.
e. Professional Services. This item budgets for outsourced
technology delivery provided by third-party system integrators and
software factories. Given the need for cost-effective, round-the-clock
services, the necessary software and technology systems were procured
internationally from development resources in the US, Europe, and Asia;
this allowed for the implementation of a 24-hour code and test
development cycle. This is the most cost-effective method of building
and maintaining technology systems/portals to facilitate program
reporting to and monitoring by HISA.
4. The 2023 Administration budget consists of the general and
administrative staff and expenditures that are needed to conduct HISA's
business. This budget consists of:
a. Salaries/Payroll Taxes/Employee Benefits. This includes
executive-level personnel (the CEO and CFO), plus employees in Legal,
Communications, Stewarding, Veterinary Services, and Administrative
Services. Salary levels for each position are based on market rates,
while Employee Benefits consist primarily of a HISA contribution to
cover a portion of employee health insurance and a 401(k) match that is
consistent with market practice. As of June 1, 2023, seven employees
make up the Administration Department. The Administration Department
has not filled all of its budgeted positions.
b. Board/Committee Compensation. This consists of travel, hotel,
and meal expenses for the one annual board meeting that is held with
in-person attendance by the board members.
c. Rent. This includes 3,000 sq.ft. of office space at HISA's
Lexington, KY headquarters at a rate of $20 sq.ft. (which is consistent
with office space rates in the downtown Lexington area). This also
includes the cost of building out the office space and the costs of
office furniture and garage parking. These rates are consistent with
commercial office space in downtown Lexington.
d. Phones. This is the cost of an office phone system in HISA's
corporate office, necessary for HISA to conduct its business.
e. Meetings. This is the cost of miscellaneous meetings of HISA's
corporate staff as are necessary for HISA to conduct its business.
f. Travel. This includes airfare, car rental, mileage, and meals
for HISA's corporate staff in the course of traveling to Covered
Racetracks, industry meetings, HISA meetings (strategic planning
summits, board meetings, etc.), and meetings with industry
stakeholders. Travel to these events allows HISA's corporate staff to
conduct its business more efficiently and to perform its duties under
the Act.
g. Bank Fees. This includes the cost of bank fees and credit card
fees. These fees are minimal and are necessary to efficiently and
effectively conduct business.
h. Supplies. This includes the cost of all office supplies,
including printer/copier paper, printer/copier ink and toner, postage,
shipping, and other miscellaneous office supplies.
i. Accounting Services. This consists of the cost of a contract
bookkeeping service that will book accounting entries, produce
financial statements, manage and process Accounts Receivable, manage
and process Accounts Payable, and draft/file HISA's annual IRS Form
990. Contracting this work out to a company with expertise in these
areas is much more cost-effective than if HISA were to hire staff to
perform these functions in-house.
[[Page 68615]]
j. Public Relations Services. This is the cost of a contract public
relations service to manage HISA's website, issue press releases,
assist with the production and distribution of information to industry
stakeholders, and provide continuing education information for industry
stakeholders. The public relations firm that HISA is working with has
many years of expertise in P/R for thoroughbred racing enterprises. The
firm can perform the aforementioned tasks more efficiently and
effectively than if HISA were to hire staff to perform these tasks in-
house.
k. Legal. This includes the cost of outside legal counsel for the
creation, management, and updating of Racetrack Safety and ADMC rules
as well as the cost of outside counsel that is working on the various
lawsuits in which HISA is a party. Doing all of these tasks requires a
decentralized group of lawyers with varied skill sets. At present, it
is much more efficient and effective to utilize outside counsel than
for HISA to hire a large in-house legal team to handle these issues.
l. Insurance. This includes the following insurance policies for
HISA:
i. Directors & Officers insurance.
ii. Workers' Compensation insurance.
iii. Liability insurance.
All these policies were competitively shopped by a broker to get
the lowest rate possible.
m. Payroll Services. This includes all costs of HISA's relationship
with Resource Management, Inc. (RMI), a Professional Employer
Organization (PEO). RMI provides Human Resources administration
(handbook and policy management resources, new employee onboarding,
labor law assistance, etc.), benefits management, compliance services
(workers' compensation claims management and annual reporting,
unemployment claims management, etc.) and payroll administration
(payroll processing, W2 management, vacation tracking, etc.). The
relationship with RMI allows these functions to be performed in a more
cost-effective manner than if HISA hired employees to perform those
functions.
n. Professional Services. This account consists of:
i. Search fees to help HISA fill open positions with the most
qualified candidates.
ii. Consulting fees to assist HISA with board and executive
functions.
iii. $300,000 contingency fund set aside for unexpected expenses.
These items will ensure that HISA has high quality employees who
are well-trained to properly serve its constituents. Please note that
the 2023 HISA budget contemplated no repayment of loans, nor did it
assume that any funding shortfall would be incurred.
V. Information Concerning Rule 1.150(b)(5). Appendix 10 is a
comparison of the approved HISA 2022 Budget to actual revenues and
expenditures. A variance has been calculated for each line item, and a
narrative explanation has been provided for all variances >10% and at
least $100,000.
Conclusion
The budget furthers the purpose of the Act in that it allocates the
funding necessary for the successful implementation by HISA of the
requirements of the Act. The budget has been carefully analyzed and is
narrowly tailored to the various regulatory activities of HISA as
contemplated by the Act.
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2023-22058 Filed 10-3-23; 8:45 am]
BILLING CODE 6750-01-P
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</html>Indexed from Federal Register on October 4, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.