Minutes: Prepaid Funeral Guaranty Fund Advisory Council - May 14, 2014, 1:30 p.m.

May 14, 2014
1:30 p.m.
Texas Department of Banking
2601 North Lamar Boulevard
Third Floor
Austin, Texas 78705

The Prepaid Funeral Guaranty Fund Advisory Council (GFAC) met on Wednesday, May 14, 2014, in the Conference Room of the Finance Commission Building at 2601 N. Lamar Boulevard, Austin, Texas.

Members in Attendance:
Sandy Booth, Consumer Representative
Tom Elam, Insurance Representative
Dick Owens, Industry Representative
Stephanie Newberg, Investment Officer and Deputy Commissioner, Texas Department of Banking for Charles G. Cooper, Chair and Banking Commissioner, Texas Department of Banking

Others in Attendance:
Russell Reese, Director, Special Audits Division, Texas Department of Banking
Debby Loomis, Deputy Assistant General Counsel, Texas Department of Banking
Dan Wood, Assistant General Counsel, Texas Department of Banking
Jesse Saucillo, Review Examiner, Texas Department of Banking


With a quorum present, Deputy Commissioner Stephanie Newberg convened the meeting of the Prepaid Guaranty Fund Advisory Council at 1:32 p.m.

Discussion of and Possible Vote to Approve Minutes of the May 14, 2014 Prepaid Funeral Guaranty Fund Advisory Council Meeting

Dick Owens made a motion to approve the minutes of the May 16, 2013 Prepaid Guaranty Fund Advisory Council meeting as presented.  Sandy Booth seconded and the motion passed unanimously.

Discussion of and Possible Vote to Approve the Activity of the Funds and the Investment Officer Reports for the Period March 1, 2013 to February 28, 2014

Review Examiner Jesse Saucillo outlined the activity of the Insurance-Funded Guaranty Fund for the period March 1, 2013 through February 28, 2014.  Deposits totaling $97,731.00 were placed in the fund for assessments collected and $62.51 for interest earned; no claims were paid for this period.  The balance for the Insurance-Funded Guaranty Fund as of February 28, 2014 is $242,102.86.

Review Examiner Saucillo also outlined the activity of the Trust-Funded Guaranty Fund for the period of March 1, 2013 through February 28, 2014.  There were no claims paid for this period.  Interest earned was $7,370.72.  Restitution totaling $2,770.96 was received from Turner Bros Undertakers, and Roselawn Funeral Home.  The balance for the Trust-Funded Guaranty Fund as of February 28, 2014 is $1,289,452.99.

Dick Owens made a motion to approve the report of the Guaranty Funds’ activities and the Investment Officer Reports for the period March 1, 2013 to February 28, 2014 as presented by Jesus “Jesse” Saucillo, Review Examiner.  Tom Elam seconded and the motion passed unanimously.

Discussion of and Possible Vote to Approve A Claim Related to Washington Memorial Funeral Home, Dallas, Texas

Director Russell Reese reported on a claim related to three contracts totaling $7,102.00 for Washington Memorial Funeral Home, Dallas, Texas.  The Major Funeral Home (Major) is the successor funeral home that has agreed to honor the three outstanding prepaid funeral contracts for Washington Memorial Funeral Home.  They agreed to honor and provide contracted goods and services if additional funds were awarded.  Major provided a reconciliation detailing the price difference between current pricing and preneed pricing but has agreed to accept a reduced amount.  Major requested that 67% of the difference between its current prices and the prices on the prepaid contracts be awarded.  The Department verified that the prepaid funeral contract prices reflected on its reconciliation matches Major’s current price list.  Based on this information, the Department verified that the claim amount of $7,102.00 is accurate for the three contracts.  These three claims are being presented to the Guaranty Fund Advisory Council for review and possible approval.
Tom Elam made a motion to approve this claim totaling $7,102.00 for Washington Memorial Funeral Home, Dallas, Texas, as presented by Russell Reese, Director of Special Audits.  Sandy Booth seconded and the motion passed unanimously.
Discussion of and Possible Vote to Approve Claims Related to Tom G. Walker Funeral Home, Coleman, Texas

Director Russell Reese reported on three claims totaling $11,196.75, related to Tom G. Walker Funeral Home, Coleman, Texas (Walker).  The first claim is for $2,202.00.  The Department received correspondence from a consumer indicating that a prepaid funeral contact purportedly sold by Walker was not properly funded.  The consumer notified the Department that limited documentation was available.  As a result, the Department’s Legal Division reviewed the prepaid funeral contract and related documentation and determined that the consumer had sufficient information to reasonably conclude that Walker received payment in full.  The second claim is for $2,812.75 and the third claim is for $6,182.00.  The purported contract dates are during the time that Walker had an active permit from the Department.  Our research revealed that both of these contracts were not shown in the records transferred to North Texas.  Both of these prepaid funeral contracts are signed by both parties and reflect that $2,812.75 and $6,182.00 were both paid-in-full by the purchasers to Walker.  These three claims are being presented to the Guaranty Fund Advisory Council for review and possible approval.

Dick Owens made a motion to approve the three claims totaling $11,196.75, for Tom G. Walker Funeral Home, Coleman, Texas, as presented by Russell Reese, Director of Special Audits.  Sandy Booth seconded and the motion passed unanimously.

Discussion of and Possible Vote to Approve Revised Administrative Memorandum 2016

Review Examiner Saucillo reported that we are required to review Administrative Memorandum 2016 which is the Investment Policy for Funds Under the Oversight of the Guaranty Fund Advisory Council, annually.  The last review was completed in May 2013.   Although the Guaranty Funds are not subject to the Public Funds Investment Act, our policy is emulated to the guidelines stipulated under the Act to the extent it affects current policy.  The primary amendments to Administrative Memorandum 2016 were minor in nature and changed to emulate the Public Funds Investment Act updates.

Tom Elam suggested that the Investment Officer verbiage be changed to state that the Investment Officer may not have a personal business relationship with a business organization offering to engage in an investment transaction with the Council.  This statement and related statements were amended to make this change and delete unnecessary language that was no longer needed.
Tom Elam made a motion to approve the amended, revised Administrative Memorandum 2016 as presented by Jesus “Jesse” Saucillo, Review Examiner.  Sandy Booth seconded and the motion passed unanimously.

Discussion of Collection Efforts

Director Russell Reese outlined the collection efforts and summary of restitution paid for the period of March 1, 2013 to February 28, 2014.  The Department tracks monthly payments received to ensure everybody is current, and sends out letters demanding payment for those who are non-compliant. 

Discussion of Future Meeting Dates

The next meeting of the Guaranty Fund Advisory Council will be determined at a later date.

The meeting of the GFAC was adjourned at 2:36 p.m.

/s/ Charles G. Cooper                          
Charles G. Cooper
Chair of the Guaranty Fund Advisory Council and Banking Commissioner

/s/ Brenda J. Medina                                     
Brenda J. Medina
Executive Assistant to the Guaranty Fund Advisory Council