WSR 15-19-025
[Filed September 8, 2015, 8:14 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 15-15-151.
Title of Rule and Other Identifying Information: Proposed amendatory section WAC 230-07-051 Accumulating excessive reserves.
Hearing Location(s): DoubleTree by Hilton Olympia, 415 Capitol Way North, Olympia, WA 98501, (360) 570-0555, on November 12 or 13, 2015, at 9:30 a.m. or 12:30 p.m.
NOTE: Meeting dates and times are tentative. Visit our web site at and select public meeting about ten days before the meeting to confirm meeting date/location/start time.
Date of Intended Adoption: November 12 or 13, 2015.
Submit Written Comments to: Susan Newer, P.O. Box 42400, Olympia, WA 98504-2400, e-mail, fax (360) 486-3625, by November 1, 2015.
Assistance for Persons with Disabilities: Contact Michelle Rancour by November 1, 2015, TTY (360) 486-3637 or (360) 486-3453.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: As part of our regulatory reform process, staff is proposing two changes that will save nonprofit licensees money and time by no longer requiring them to set up an endowment or a restricted trust fund when they want to accumulate excessive reserves to use for future capital projects or start new programs (such as a new HVAC system or soccer field). With the rule change:
Licensees could accumulate these funds with the approval of a majority of the organization's membership rather than setting up an endowment or restricted trust fund; and
The threshold amount was increased from $2 million to $4 million. As part of our stakeholder outreach, a licensee suggested increasing the threshold.
Each year staff verifies that the charitable and nonprofit licensees who have combined annual gross gambling receipts in excess of $3 million are not accumulating excessive reserves but spending the monies made from their gambling activities on their programs to further their stated purpose. All other restrictions on accumulating excessive reserves remain in effect, such as making sure the funds are saved according to a plan approved by the organization's officers or board of directors. The plan must include the amount to be reserved, the purpose for which the funds are being reserved, and the estimated time the reserves will be used. Commission staff approves the plan, which would exclude these restricted funds from the excessive reserves calculation.
Statutory Authority for Adoption: RCW 9.46.070 (1), (10), (16) and 9.46.0209 (1)(b)(iii).
Statute Being Implemented: Not applicable.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Washington state gambling commission, governmental.
Name of Agency Personnel Responsible for Drafting: Susan Newer, Lacey, (360) 486-3466; Implementation: David Trujillo, Director, Lacey, (360) 486-3512; and Enforcement: Mark Harris, Assistant Director, Lacey, (360) 486-3579.
No small business economic impact statement has been prepared under chapter 19.85 RCW. A small business economic impact statement was not prepared because the rule change would not impose additional costs on any licensees.
A cost-benefit analysis is not required under RCW 34.05.328. The Washington state gambling commission is not an agency that is statutorily required to prepare a cost-benefit analysis under RCW 34.05.328.
September 8, 2015
Susan Newer
Rules Coordinator
AMENDATORY SECTION (Amending WSR 08-03-062, filed 1/14/08, effective 2/14/08)
WAC 230-07-051 Accumulating excessive reserves.
A charitable or nonprofit organization must not accumulate excessive reserves. Organizations accumulating excessive reserves may be deemed as organized primarily for purposes of gambling. Reserves must be computed by using the financial data most recently filed with us. ((Funds transferred to an endowment or specifically restricted trust fund will not be treated)) We will not treat funds as excessive reserves if the following restrictions are met:
(1) ((The endowment or dedicated trust fund is either legally irrevocable or restricted in a manner that approval is required by a majority of the membership prior to use or transfer of the endowment or dedicated trust principal)) A majority of the organization's membership approves the accumulation of excessive reserves; and
(2) The funds are expressly dedicated for funding new programs, capital projects, or to endow service-providing activities; and
(3) The funds are saved according to a plan that includes the amount to be reserved, the purpose for which the funds are being reserved, and the estimated time the reserves will be used; and
(4) The organization's officers or board of director's approves the plan ((is approved by the organization's officers or board of directors and documentation for the endowment or trust fund is submitted to us for review and approval)); and
(5) The organization submits the plan to us for review and approval; and
(6) The total amount of ((net gambling income that is transferred to endowment or trust funds)) excessive reserves may exceed ((two)) four million dollars only if the organization petitions the director to exceed this limitation and the director approves the petition. The director may disapprove with written comments or approve a modified level based on facts presented. The director's decision may be appealed to the commission. Appeal of this decision will be heard at a regular public meeting of the commission. The commission's decision shall be final. Petitions for relief must include:
(a) The reason for the request, including whether the increased reserves are for charitable or nonprofit purposes and planned timelines for use; and
(b) The total amount of reserves requested; and
(c) The impact on programs if the petition is denied; and
(d) Alternative sources of funding available.