Pride Mtg. Min 7-06

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PRIDE Enterprises Board Meeting Minutes July 27, 2006 DRAFT NOT APPROVED BY BOARD Page 2 of 6

• Two Resolutions regarding Bid Signing Authority were approved.

• The Resolution regarding Banking Transactions was approved.

• The Resolution regarding Check Signing Authority was tabled.

• 2007 Budget Compensation variables for the Annual Market Adjustments, SalaryMarket Survey Adjustments and Team Based Incentives were approved.

• The proposed Food Service / Culinary Arts training program and the need for DCcooperation were discussed.

• Secretary McDonough outlined his plan to expand the vocational training withinDC, of which PRIDE is an integral part.

• The audit of the PIE program was discussed in response to concerns posed byRobert Sloan.

• The Code of Ethics was deferred to the HR Committee for review.

• Mission programs were reviewed.

• The Strategic Plan development was discussed and a Strategic Plan Committeewas formed.

Notes:

Bill Dresser made opening remarks reminding all of the Sunshine Law and that visitorswould have an opportunity to speak. He complimented the staff on the 2005 Annual

Report.

Mike Hill motioned for approval of the Meeting Minutes from April 27, 2006 with all infavor.

Rebecca Smith joined the meeting at 8:22 a.m.

Finance Committee Chairman, Mike Hill, delivered the Finance Committee report statingthat the Social Mission Goals were good with the exception of inmate work stationswhich had an aggressive goal and had lost some positions due to loss of contracts.Financial statements through the 2nd quarter were reviewed with sales at $40.07 millionvs. a goal of $39.19 million. Although PRIDE is currently doing well financially, there is ashortfall in sales which will impact the annual budget. This shortfall is due to thecancellation of the DC Medical Scanning Project which had budgeted monthly sales of$200,000 or approximately $2.2 million for the year, the overstatement of projectedrevenues for the DC Work Release Laundry Contract, and the reduction in sales(primarily to DC). All key ratios were favorable and the $5 million line of credit usagewas at $0 for the end of the period.

Mike Hill reviewed the Capital Truck Purchase and a handout was provided. The totalpurchase of 4 Sterling OTR tractors and 2 Sterling 24 foot straight trucks was $392,000

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PRIDE Enterprises Board Meeting Minutes July 27, 2006 DRAFT NOT APPROVED BY BOARD Page 3 of 6

($43,000 under original budgeted amount). Special thanks to Tomas Jimenez for hisassistance.

The South Florida Graphics Expansion was reviewed by Jack Edgemon. After a tour ofDC Region 4, the Glades CI location was chosen for building availability and proximity tothe Miami-Dade market. This market currently comprises 27.5% of the print business in

Florida. Four sales people will be hired to focus on the education and governmentmarket segments. Renovation of the building could be $1million or more; a newestimate will be compiled for review. Equipment will cost $2.88 million over five years. Itis estimated annual revenues will approximate $5 million within 5 years and createapproximately 162 inmate workstations. Jim Reeves motioned for approval of theproject in principle with a final business plan to be distributed to whole board andauthority given to the Executive Committee for final approval. A vote was taken with allin favor.

Jack Edgemon reviewed the DC Medical Records Scanning Project. He explained thatPRIDE took on the project at the prompting of former DC Secretary Crosby. PRIDEinvested in set up costs and overhead of approximately $70,000 with anticipated

budgeted monthly sales of $200,000, or approximately $2.2 million for the year. Theproject was cancelled by DC in the second month of operation. A subcontractor lostapproximately $87,000 in set up costs. The primary concern is the loss of 35 inmate

 jobs and revenue as it impacts the budget. Secretary McDonough stated that DC is notconsidering a renewal of the project in the future.

The four Resolutions were addressed. There was some discussion; Jim Reevesmotioned to pass the two resolutions for bid signature authority with all in favor.Discussion ensued regarding the resolutions for Banking Transactions and CheckSigning. Rick Hanas motioned for approval of the Banking Transactions Resolution withthe amended wording to include “any two of the following to act” with all in favor.Rebecca Smith motioned to deny check signature authority to the CFO and direct

reports. After discussion, a vote was taken to show Rebecca Smith, Tomas Jimenez,Secretary James McDonough and Bill Dresser in favor and Jim Reeves, Ed Jones, MikeHill, Rick Hanas and Rave’ Mehta against; the motion failed 5 to 4. Jim Reevesmotioned to table the resolution regarding check signing authority for review at a laterdate with all in favor.

There was a break between 10:04 a.m. and 10:15 a.m.

Rave’ Mehta provided the HR Committee report stating that both the HR Committee andthe Finance Committee reviewed the2007 Budget Compensation variables. Ed Jonesmotioned for approval of the Annual Market Adjustments, Salary Market SurveyAdjustments and Team Based Incentives. A vote was taken with all in favor except

Rebecca Smith and Jim Reeves to pass the motion.

Jim Reeves lead the Governance Committee report summarizing the changes to theArticles and Bylaws which were approved by the Board and submitted to the Departmentof State and then sent to the Governor.

Secretary McDonough took the floor. He applauded PRIDE’s mission and stressed theneed to reduce inmate idleness through vocational training programs which help reducerecidivism. The Secretary is creating a plan to increase vocational training and would

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PRIDE Enterprises Board Meeting Minutes July 27, 2006 DRAFT NOT APPROVED BY BOARD Page 4 of 6

like to work with PRIDE to this end. Some of the ideas included training for theconstruction industry, building trusses for Habitat for Humanity, adopting greyhounds,growing wild flowers for DOT, picking citrus, equipment repair for the military, repair ofsporting goods for children’s organizations, building wooden toys, and other innovativeways to keep inmates active. He feels that PRIDE can assist with employment withinthe system and would like to see PRIDE work in the order of 25% of the inmate

population. It was stressed by the Board that PRIDE training programs are fundedthrough the sale of its products and that mandates for State agencies to purchase fromPRIDE should be addressed.

Jim Reeves, in reference to the proposed culinary arts programs, asked how SecretaryMcDonough can assist PRIDE in working with ARAMARK. The contract states that DCcan insist on ARAMARK purchasing PRIDE products. Secretary McDonough stated thathe is willing to work with PRIDE in regaining ARAMARK sales in order to develop thefood service training program. The Secretary also stressed using inmates to grow avariety of vegetables to sell to ARAMARK for use within the prison system food service(DC is currently selling some produce to ARAMARK). Jack Edgemon inquired about thisissue since PRIDE use to grow and sell products for use within the prison system.

PRIDE lost a considerable amount of business when privatization took place.ARAMARK should be buying sanitary maintenance supplies from PRIDE becausepricing and quality is competitive (they currently buy from Ecolab). SecretaryMcDonough clearly stated he is willing to work with PRIDE on this issue. Mike Hillsuggested taking up details of business expansion in the development of the strategicplan.

Mary Hinkle reported on behalf of the Audit Committee regarding PIE wageadministration in answer to questions previously posed by Robert Sloan. Ms. Hinklereviewed the PIE program (Prison Industry Enhancement Certification Program). Sheexplained that the program covers products sold outside of the State with the exceptionof work viewed as a service. For PIE work, inmates are paid at the Florida minimum

wage (currently higher than Federal minimum wage). Her audit concluded that theindustries are complying and that inmates are informed of the program and informationis available. Robert Sloan was invited to comment and shared his experience andreiterated his complaints stating that the PIE wages were not properly administered.Ms. Hinkle said that accounting for every time an inmate touches some aspect of a PIE

 job can be difficult. One example of resolve is the Dental Lab where they split the PIEwages between all inmate workers since everyone touches the piece during theassembly process. Other industries have separate PIE areas. She concluded that thePIE program is fairly administered and an audit by the National Correctional IndustriesAssociation showed that PRIDE is in compliance.

There was a break between 11:49 a.m. and 12:40 p.m. Patti Dodgen joined the meeting

at 12:44 p.m.

Dee Kiminki discussed the proposed Code of Ethics. She stated that some changes hadbeen made since it had last been discussed with the Board and the most significantbeing that “no gift of any value” may be received. There was discussion regarding theramifications to Board members and their relationships with staff members. Jim Reevesmotioned to have the Code of Ethics reviewed by the HR Committee with all in favor.

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PRIDE Enterprises Board Meeting Minutes July 27, 2006 DRAFT NOT APPROVED BY BOARD Page 5 of 6

An update on Mission Programs was presented by Carol Tortarelli. She emphasizedthe Statutory Missions and showed that PRIDE has 363 OJT programs and 3502inmates received training certificates in 2005. Ms. Tortarelli went on to discuss thedetails of the proposed food service / culinary arts pilot OJT program. This is only atraining program and would be funded through the sale of food service related productsto ARAMARK (the current food service contractor for DC). The food service industry is

third highest for adding new jobs in the next 5 years. This would be an accreditedprogram through First Coast Technical with one instructor to rotate between severalinstitutions. After the first 30 hours, the inmate can receive a “Servsafe” certificate whichpotential employers would recognize. Costs include the instructor salary, overhead,administration fee, instructional materials and the like for approximately $80,000 peryear and would potentially provide certification to about 384 inmates per year (new workstations). The only way the OJT work program will be initiated is if ARAMARK agrees tobuy kitchen/sanitation products from PRIDE, which will fund the program. It willultimately contribute to PRIDE’s social goals, increase work stations and increase salesof related products She stated that while PRIDE is doing a good job with OJT andplacement (98% 30 day job retention rate), there is a need for new businessdevelopment and improved transition training for inmates.

There was a break from 1:38 p.m. to 1:46 p.m.

The development of a Strategic Plan was discussed and Bill Dresser introduced PattiDodgen from Transformations Consulting Group (TCG) who presented their scope ofservices. She proposed a plan of action including Board retreats with an overall timeframe of about 6 months. Ms. Dodgen left the meeting and discussion continued. It wasconcluded to have a Strategic Plan Committee consisting of Mike Hill (CommitteeChairman), Rave’ Mehta, Rebecca Smith, Rick Hanas and Secretary McDonough. Staffwill develop an initial plan and a committee meeting will be held on August 31st.Commitment to a consultant will be deferred to a later date.

Jack Edgemon delivered his President’s Report. Mr. Edgemon stated that the ITClawsuit was still in negotiation with hopes to be finalized soon and could not bediscussed on public record. A Nursery Work Program was under consideration as avocational work program; a meeting with the nursery association concluded there is agrowing need for trained people in this area. The Work Release Laundry Program,already discussed, was essentially making about 1/3 of its initial revenue projections andthe contract was being renegotiated. A portion of PRIDE’s State leased land used forgrowing sugarcane was released to the Palm Beach County Health Care District. Aftermuch negotiation, the health care district agreed to purchase products from PRIDE witha minimum net worth of $750,000 over 30 years. Regional meetings were held for allemployees in order to review company financials, the Team Based Incentive program,the Code of Ethics and the 401K program; there was much positive feedback from

employees about the direction of PRIDE. Bill Dresser proposed that the members of theBoard conduct industry visits every other month. The next meeting will be August 31st for the Strategic Plan Committee and the Executive Committee.

There being no further business, the meeting was adjourned at 3:14 p.m.

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PRIDE Enterprises Board Meeting Minutes July 27, 2006 DRAFT NOT APPROVED BY BOARD Page 6 of 6

William Dresser, Chairman