Government , Business

ON Gaming Commission declares budget shortfall; Executive Branch issues hiring freeze

Citing a budget shortfall, the Osage Nation Gaming Commission Board warned it could curtail its regulatory operations at the seven-Osage Casino gaming enterprise if the issue isn’t resolved – meaning possible commission employee furloughs and reduced gaming operations as worse case scenarios.

On March 8, the three-member Gaming Commission board voted unanimously to issue a resolution declaring a $308,117 shortfall in the 2017 fiscal year commission budget. The resolution then states: “Unless the budget issue is resolved prior to May 1, in order to meet this shortfall, ONGC will furlough one employee a week from each of the ONGC’s departments beginning on May 1. To maintain compliance with the Nation’s gaming laws and regulations, Federal law and the (National Indian Gaming Commission’s) regulations, the furloughs will require the closure of one of ONGE’s casinos and a reduction of 500 games.”    

Gaming Commission Chairwoman Marsha Harlan said the original Gaming Commission budget requested $2.8 million, which was filed with the ON Congress last fall when the Legislative Branch considered and set the 2017 fiscal year government budgets during the Tzi-Zho Session. The Gaming Commission board and employees are part of the ON government structure, including their budgets, separate from the Osage Casino operations.

As months went by, the commission’s budget decreased several times, and meetings with Executive Branch officials led to no shortfall resolution, Harlan said, adding “the board is left with no choice but to create a resolution.” Harlan and Commission board members Michael Kidder and Larraine Wilcox approved the amendment following an executive session at their March meeting.

The budget issue comes about seven months after the Executive Branch issued an executive order stating the casino surveillance employees should be under casino management and not the Gaming Commission, which was the prior arrangement under a now-repealed November 2007 executive order. Executive Branch officials said the move of surveillance functions to the casino would mean a savings of about $4 million for the government budgets. The surveillance employee transfer took effect Oct. 1 with the start of FY2017.

Per Osage law, the Gaming Commission is charged with regulatory duties of the Nation’s Gaming Enterprise including processing and issuing gaming licenses, collecting license fees, auditing enterprise financials and monitoring and enforcing compliance with tribal and federal gaming regulations. The law establishes a three-member Gaming Commission board, one commission director and staff.

Hiring freeze

In response to the shortfall, Principal Chief Geoffrey Standing Bear issued a March 9 executive memo stating there will be a hiring freeze on new ON government employees; a freeze on all non-essential employee travel; and a freeze on purchasing or leasing non-essential equipment or supplies.

“There will be no Gaming Commission layoffs or Casino closings,” Standing Bear said. “The shortfall occurred because of two factors. One is the overestimation of the income from licensing fees. Second, the funding of the accrued PTO (Paid Time Off) for 71 surveillance employees (transferred to the casino) was not fully funded by the Osage Congress appropriation in September. I assured Marsha Harlan we will find the money for the declared shortfall … by first placing a freeze on new hires and nonessential spending throughout the Executive Branch. I am exempting from this freeze the Wah-Zha-Zhi Health Center, Attorney General, Gaming Commission and other Boards and Commissions.”

“It was reported to me the accrued PTO for the 71 employees transferred from the Gaming Commission to the Osage Casinos amounted to $473,000,” Standing Bear said. “One of the problems is that the accounting for the shortfall has changed almost every other day during the past two weeks. At first, it was reported to be $445,000. At the next meeting, there was a change to approximately $300,000. Then, at a meeting with several Congress members present, it changed again to $760,000. Then, at the Gaming Commission meeting, it was $308,000. This last number is what appears in the Resolution of the Gaming Commission and this is the number I am relying on.”

Regarding the shortfall, Assistant Principal Chief Raymond Red Corn said: “The budgets submitted by the (executive) administration in September prior to the start of the (2016 Tzi-Zho) session contained correct amounts for PTO and adequate funding for the Gaming Commission. The Congress chose not to use those budgets, and used budgets submitted in July prior to the transfer of surveillance to the gaming operation. We haven't untangled all of the causes of the shortfall, but an overestimation of Gaming Commission revenues from fees and licenses contributed to the problem.”

Standing Bear said, “the overestimation occurred by use of previous years’ numbers which had higher income, but there were special circumstances in those prior years which should not have been considered repeatable.”  

Appropriations meeting

During a March 9 Congressional Appropriations Committee meeting, Treasurer Samuel Alexander discussed the shortfall stating the projected income estimate for collecting fees for licenses and background checks in the budget is too high at $475,000 from previous years. Alexander said a more realistic projected income figure for the Gaming Commission this year would run between $225,000 and $250,000.

Appropriations committee Chairman Ron Shaw questioned whether the submitted Gaming Commission budget was a stand-alone one or included in a division budget. Congresswoman Maria Whitehorn replied “division,” meaning the Gaming Commission budget is included in a government division budget with other departments and entities. 

For FY2017, the Gaming Commission budget is included in the Executive Administration Division budget set at $12.6 million. This division budget also contains separate budgets for the Nation’s Tax Commission, Election Office, Emergency Management Office, Archives, Communications, Information Technologies, Accounting, Human Resources and a separate HR budget for employee hams distributed during the holiday season.

Whitehorn said she doesn’t believe the Gaming Commission belongs in a division budget because “they have to know what their budget is … I think there is some talk of taking them out of the (division) budget just as we have done with the Attorney General because they’re an independent agency also.”

Accounting employee Leslie Young told the committee the timeline of budgets submitted is also “on the confusing side – there was one presented early, it had to go back and change, by the time we got appropriations, the Chief’s office and (former Accounting Controller Chad Cobb) worked together long hours to get the divisions all divvied up, we came up with a final but it was still too short for the Gaming Commission.”

Cobb resigned Jan. 8 and the Accounting Controller position remains open, according to the Nation’s job postings listed online.

Alexander told the committee “we’ll look for the money, they’re not going to short the Gaming Commission, they just can’t do that, you can’t just cut the regulators, you’ve got the National Indian Gaming Commission standards they must follow.”

“Regardless of the cause, we are working to remedy the problem, communicating with all departments involved,” Red Corn said. “Congress has been included in at least one key meeting, and will have an opportunity to address the issue in the upcoming session.”

The Fifth ON Congress will convene for the 2017 Hun-Kah Session starting March 27 for its 24-day duration.

With surveillance employees now working under Osage Casino management, Gaming Commission Director Elizabeth Hembree said the commission staff count stands at 29 with one position open. Of those 28 employees, 47 percent are Osage tribal members and the commission has five departments, she said.