JOINT HOUSE & SENATE HEALTH, EDUCATION & SOCIAL SERVICES COMMITTE April 10, 1995 9:10 a.m. SENATE MEMBERS PRESENT Senator Lyda Green, Chairman Senator Loren Leman, Vice-Chairman Senator Mike Miller Senator Johnny Ellis Senator Judy Salo SENATE MEMBERS ABSENT All members present. HOUSE MEMBERS PRESENT Representative Con Bunde, Co-Chair Representative Cynthia Toohey, Co-Chair Representative Caren Robinson HOUSES MEMBERS ABSENT Representative Al Vezey Representative Gary Davis Representative Norman Rokeberg Representative Tom Brice COMMITTEE CALENDAR Presentation by Rebecca Rufner, Arizona State Coordinator, National Committee for the Prevention of Child Abuse. SENATE BILL NO. 103 "An Act providing an income tax credit for certain taxpayers who provide child care for their employee's minor children; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 103 - No previous action to record. WITNESS REGISTER Senator Salo State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Prime sponsor of SB 103. Bob Bartholomew, Deputy Director Income and Excise Tax Division Department of Revenue PO Box 110420 Juneau, AK 99811-0420 POSITION STATEMENT: Discussed various aspects of SB 103, specifically the possibility of double dipping. ACTION NARRATIVE TAPE 95-29, SIDE A CHAIRMAN GREEN called the Joint House & Senate Health, Education and Social Services (HESS) Committee to order at 9:10 a.m. She invited Rebecca Rufner to come forward and give her presentation. Number 028 REBECCA RUFNER, Arizona State Coordinator of the National Committee for the Prevention of Child Abuse, informed the committee that she would be speaking about her experience in Arizona and the national progress of the Healthy Families Program. She commented that today social problems threaten the future of our country, families and communities. She explained that she is a National Site Visitor for Healthy Families which is a neo-natal home visitation program aimed at child health and development, family functioning, and prevention of child abuse and neglect. Child abuse is believed to be the root of many of the social problems facing us today. She informed the committee that persons in maximum security prisons have all been severely abused and neglected as young children. This common link of severe abuse and neglect of young children can also be found in juvenile delinquents, the mentally ill, high school dropouts, teen runaways, pregnant teens, and alcohol and drug abusers as well as long-term welfare dependents. Ms. Rufner stated that child abuse is costing the State of Alaska millions of dollars a year in child welfare investigations and treatment, foster care, special education, and residential care. She noted that in Arizona the cost of opening an investigation of a child abuse case totals approximately $10,000 not to mention the hundreds of thousands spent in treatment. The long-term can barely be estimated. She informed the committee that approximately 80 percent of severe abuse affects children under the age of five. Forty-three percent of the children who die from abuse and neglect have not reached their first birthday. She expressed the need to solve the social problems facing the country in order to decrease the costs of social programs while increasing their effectiveness and outcome. She pointed out that Human Services is under much scrutiny and pressure to become more accountable, more outcome based and more cost effective with all of its programs. There is a tremendous amount of fragmentation in their service delivery systems. Number 117 Healthy Families Alaska is under way and has much interest across the state. Ms. Rufner noted that currently, there are three programs that are funded and operating. All fifty states are in various stages of planning, implementing and securing state funding for this program on a pilot basis. Arizona has $4.7 million in state funds which funds approximately 16 sites. She informed the committee of the goals of the Healthy Families Program: child health and development, the enhancement of family functioning and the prevention of child abuse and neglect. Those people who are most likely to have poor parenting outcomes in the first few years face great burdens during the birth of their children. The burdens of those people can be identified as poverty, substance abuse, criminal history, domestic violence and a history of abuse or neglect as a child themselves. The Healthy Families program provides home visitation to those families soon after they return from the hospital. Ms. Rufner pointed out that in Arizona, there has been a 95 percent acceptance rate of the families with major stressors. The family can refuse services at any time. The home visitor helps the family identify their goals as parents, their family aspirations as well as assisting the family in moving forward in those issues. Ms. Rufner looked forward to positive outcomes in the programs in Alaska. The states who have done outcome evaluations of this program, have seen a 95 percent immunization rate in children in the program and all program children receiving preventive and primary health care. She explained that preventive and primary health care is very important in order to avoid the treatment of basic health problems in emergency rooms and acute care settings where the costs are higher. Ms. Rufner stated that there is good outcome information about child development scores. Children with developmental delay risks have been identified early and placed them in services addressing that problem. Again this early intervention would decrease costs of special education and later intervention programs. There have been positive scores in family functioning. Ms. Rufner pointed out that the home visitors in Arizona are from the community and they share the culture and values of the community. There has been a 95 percent success rate in the prevention of abuse and neglect in this high risk parent group. She expressed pleasure in Arizona's outcomes and predicted that Alaska could expect the same. The cost effectiveness of this program is very exciting. She estimated the cost to be $3,000 per year per family as compared to the $10,000 cost in merely opening a case for an investigation of child abuse in Arizona. In conclusion, Ms. Rufner stated that the Healthy Families Program is an exciting and promising approach with regards to long-term solutions to these costly problems. Number 217 REPRESENTATIVE TOOHEY asked Ms. Rufner if she thought the cost in Alaska would be $3,000 or would it be a little higher. REBECCA RUFNER said that there may be a percentage higher cost per family in Alaska which would also mean that investigation and treatment costs would also be higher. The average cost in Arizona is approximately $3,000 in the first year while the cost dropped to approximately $2,250 in the second year. Visits after the first year are less frequent and the family becomes more self-sufficient in the second year. In response to Representative Toohey, REBECCA RUFNER clarified that the family needs assessment person works in the hospital directly with OB and pediatrician and hospital staff. The family needs assessment person has a BA or above; that person needs good skills with face to face interviews as well as the ability to discuss problems with new mothers. Ms. Rufner explained that the home visitor in Arizona is a non degreed woman. Program supervisors should be Masters level people. REPRESENTATIVE CON BUNDE inquired as to what a home visit would consist. REBECCA RUFNER explained that the early focus of the home visit is building a trusting relationship with the parent. Often overburdened families lack trust in traditional services. As the parent and home visitor build trust the focus of the visit turns to the needs of the infant. Child health is another important focus of the visit. The visit also focuses on personal issues of the family. Ms. Rufner specified that the issues addressed in the home visits are issues that have been identified by the family as their needs and wants. The family is in control. After a few months in the program, family stress levels decline which affords the family more opportunity to focus on the children. Number 277 REPRESENTATIVE CON BUNDE stated that this program seemed to provide a state supported conscious for these people which supports the notion that it takes a village to raise a child as opposed to the past years of encouragement of privacy. Representative Con Bunde felt that Ms. Rufner's use of the word "burden" indicated that the families plight was imposed on them. He preferred to say that the families were making poor choices. SENATOR ELLIS asked the House members what had happened with the governor's funding proposal for this program. Senator Ellis asked if Ms. Rufner could then give an estimate as to the level of program possible with regards to the funding. REPRESENTATIVE TOOHEY hoped that it was the same, but was unsure. REPRESENTATIVE C. ROBINSON specified that funding had been requested for three programs while only the program in Juneau received funding. Number 308 SHERRI GOLL, Alaska Women's Lobby, clarified that the House passed a budget that included $200,000 more for one additional project than existed last year. The governor had requested $600,000 additional money, beyond last year's appropriations in order to open new sites for Healthy Start. The House included $200,000 more for one additional site; which would be in addition to the Juneau program that was funded last year. CHAIRMAN GREEN inquired as to the net funding. SHERRI GOLL explained that last year was the first year of the program which had an appropriation of $200,000. Now there is a total of $400,000 appropriated for Healthy Start. REBECCA RUFNER believed that the best way to build these programs on a state level is team by team, community by community. The three sites in Juneau, Kenai, and Anchorage are a good start. Ms. Rufner informed the committee that there are more than 11,000 births a year; approximately a quarter of the population that is high risk would be served. SENATOR SALO noted that overcoming substance abuse even with help is difficult, however, Ms. Rufner had presented overwhelmingly positive and successful statistics. Senator Salo asked if there was any particular manner in which substance abuse problems are treated. REBECCA RUFNER said that there are no particular ways in which to deal with substance abuse families. Perhaps the most positive aspect of this program is that when home visitors recognize substance abuse in families with new babies, someone is watching out for the health and safety of the infant. A good percentage of the program's new mothers have entered substance recovery programs. She explained that birth is a time of emotional focus for the parent. She pointed out that in Arizona there is a shortage of effective and available treatment programs. Child care becomes a problem for parents seeking residential treatment. She emphasized that the availability and awareness of help early on is important. She mentioned that approximately 60 to 70 percent of the child abuse referrals involve substance abuse. That would seem to be the case in Alaska or even higher. She indicated that a large number of infant and child fatalities could be involved in substance abuse. Ms. Rufner reiterated that the program has served very substance abusing high risk families with no fatalities and no severe abuse. Number 380 CHAIRMAN GREEN inquired as to the responsibility of these programs with regard to confidentiality. REBECCA RUFNER agreed that was difficult, but it is manageable with respect to the confidentiality aspect and the ethical perspective of the home visitor. Home visitors are mandated to report child abuse and neglect; that is a federal and state law. Ms. Rufner noted that the families are notified of this law, furthermore, the family signs an informed consent when they begin the program. The family can decide at any time to leave the program. There is no punitive follow up unless the child was in imminent harm of abuse or neglect in the opinion of the home visitor. Ms. Rufner informed the committee that public opinion polling by the National Committee to Prevent Child Abuse found that 86 percent of Americans polled feel that providing a home visitor to new parents is positive. All other industrialized countries provide public health home visitation to new parents. America did this in the past through public health nursing, but we switched over to clinic based services which was believed to be more cost effective. The preventive capacity has been lost when new parents are not supported when they leave the hospital. CHAIRMAN GREEN asked if any of the sites in Arizona were considered rural. REBECCA RUFNER replied yes and explained that the home visitors spend a lot of time in transit. Families are widely spaced from one another. The costs are about the same. REPRESENTATIVE TOOHEY inquired as to the number of single parents in these programs. REBECCA RUFNER explained that in Arizona the program serves a higher percentage of single parents than in Hawaii due to Arizona's higher divorce rate and teen birth rate. In the Tucson program, of the unemployed families enrolled in the program at the time the babies were born, 75 percent of those families had an employed parent within one year. That is strongly encouraged by the home visitor. REPRESENTATIVE C. ROBINSON understood that the home visitor helps the family set goals. Often young families do not have the skills. Representative C. Robinson asked if the family needed transportation to a health care facility, would the home visitor provide that. REBECCA RUFNER replied yes and explained that the home visitor attempts to help the family identify the needs of the family and the child. Then the home visitor helps the parent feel competent to solve their problems; the home visitor does not solve the family's problems. The solutions are generated as part of the relationship between the parent and the home visitor. Number 446 REPRESENTATIVE C. ROBINSON inquired as to how these programs were funded in Arizona. Representative C. Robinson also asked if Arizona had a Children's Trust Fund. REBECCA RUFNER pointed out that Arizona's Children's Trust Fund was the original funding source of the first two pilot sites. That trust fund is funded by marriage decrees and divorce dissolutions and $1 from death certificates. Last year the Healthy Families Program was expanded with a combination of funding from the Children's Trust Fund, state dollars as well as community foundations and dollars. REPRESENTATIVE C. ROBINSON asked if Ms. Rufner had found an average age level of those served. REBECCA RUFNER did not know the median age of the parents served, however, most of the parents served are under the age of 25. A number of parents in the program are having there third or fourth child. SENATOR SALO asked how long the family would be served after the birth of the baby. REBECCA RUFNER specified that the home visitor can visit up to five years. The goal of the program is to ensure that the children enter school safe, healthy, and ready to succeed in school. Ms. Rufner commented that a universal transition to Head Start for a child at age three is an exciting aspect of this program. A way to save money in the state's system is to develop a seamless transition from the home visitation program into Head Start at age three. There being no further questions, Chairman Green thanked Ms. Rufner for her presentation. Chairman Green called a brief at ease from 9:45 a.m. to 9:50 a.m. SB 103 TAX CREDIT FOR PROVIDING CHILD CARE  Number 494 CHAIRMAN GREEN called the Senate Health, Education & Social Services meeting to order and announced SB 103 as the only order of business before the committee. SENATOR SALO pointed out that the committee had a CS to SB 103. She explained that the Department of Revenue's analysis had discovered the problem with double dipping which lead to the changes in the CS. The major change in the CS is the allowance of 50 percent of the costs up to $100,000 for start up costs on a child care facility. She pointed out the possible problem with giving a tax credit to a facility that is totally open to the public; that lead to the change in the CS which specifies that the majority of the children in the facility must be of the employer or taxpayer. The CS also clarifies the start up costs which pose a major barrier. SENATOR SALO moved the 4/8/95 CS be adopted in lieu of the original bill. Hearing no objection, it was so ordered. She also noted the presence of the sponsor statement and pointed out that the first paragraph is not entirely accurate with regards to the CS. SENATOR MILLER asked if the credit referred to in the bill would only be for the first year the operation in which the facility is built; does it include the construction of the facility, the facilities maintenance? How long does the credit last for any given taxpayer? SENATOR SALO directed Senator Miller to page 2, lines 3-5 in which "start" is defined by what it does not mean. The credit would be given to the taxpayer during the tax year a new child care facility is started. SENATOR LEMAN indicated agreement with the changes in the CS. He noted that he had worked to create uniformity in tax credits. He recognized that a 50 percent credit, which is a large credit, does provide incentive. What is the credit offered in the other 17 states referenced in the backup? SENATOR SALO said she did have a state by state comparison and could have that information for him. SENATOR LEMAN felt that the 50 percent credit seemed consistent with other credits. Number 554 CHAIRMAN GREEN informed the committee of the Mat-Su Campus which has a wonderful child care facility and within a three or four mile radius from that are three wonderful child care centers. The concern arises regarding the subsidy which would compete with privately run child care centers. Where would this bill fall in the realm of unfair or subsidized competition? SENATOR SALO acknowledged that question as central to corporate sponsored or corporate subsidized child care. Alaska is lacking in good quality child care which would support the encouragement of more quality child care. In addition, corporate sponsored or subsidized child care seems to be a higher degree of quality; such a child care center's operation would probably mesh with the demands of the employer which sponsors it. Furthermore, the commitment from the employer to the importance of raising children. Senator Salo said that she did not want to negatively effect good privately owned child care. Privately owned child care centers could enter into a corporate sponsorship agreement. In conclusion, Senator Salo hoped that this bill would not pose barriers to private child care centers, however the benefit of corporate sponsored child care is worth the effort. SENATOR MILLER clarified that a corporately sponsored child care facility would be a private entity because the corporate sponsor is a private business. TAPE 95-29, SIDE B Number 582 SENATOR MILLER recognized that the corporately sponsored child care facility may be in competition with a child care facility in the area, but the corporately sponsored child care is a privately run business also. CHAIRMAN GREEN questioned if by giving a tax credit to the corporately sponsored child care facility, the small child care business was disadvantaged because it did not receive a comparable tax credit. SENATOR MILLER understood the concern of Chairman Green, however he agreed with Senator Salo regarding the shortage of child care in Alaska. Often only large businesses can achieve such measures; small businesses often do not have the resources. He pointed out that studies have shown that corporately sponsored child care facilities create more productive employees of the corporate sponsor as well as a better work environment. SENATOR LEMAN expressed interest in discovering how a little company could be given some advantage. In regards to the definition of "start", he asked what would be the problem with allowing "start" to apply to the substantial expansion of an existing facility. Would an expansion of a facility be that different from the construction of a new facility? He understood that the intent was probably to avoid claims for credit for new toys or other things that are not intended. Perhaps, there is a manner in which to clarify a substantial remodel. SENATOR SALO explained that the CS attempts to eliminate the tax credit for operational costs; the incentive is only intended for the development of the center. Although she did not intend for the bill to include expansion or remodeling, she felt that it would be acceptable. That could be addressed with a small change in wording. SENATOR LEMAN suggested using the language "capital expenditures that increased its capacity" which would allow for the enhancement of the facility in its capacity to receive more children. Perhaps, the bill drafters could address that issue. SENATOR SALO indicated that a better definition of "start" could be determined and she would be available to work on that. SENATOR LEMAN requested the information regarding the tax credit in other states in order to determine if Alaska is being reasonably consistent. Number 541 BOB BARTHOLOMEW, Deputy Director for the Income and Excise Tax Division at the Department of Revenue, informed the committee that tax credits shrink the state's revenue base at a time when revenue short fall should be reversed. Therefore, there is hesitancy in backing tax credit bills. With regard to SB 103, the initial fiscal note did not anticipate any increased costs to the department. However, the fiscal note does not necessarily reflect a zero fiscal note. The asterisks in the fiscal note indicated that the department could not anticipate or calculate the loss to revenue; there would be a fiscal impact, but it is unknown at this time. Mr. Bartholomew pointed out that the change in the tax credit to 50 percent of the expenditures would decrease the impact to the treasury. He reiterated Senator Leman's concern regarding keeping tax credits similar, or as the department calls it "double dipping". The CS does not specifically address that problem. The corporation can deduct the entire expenditure from their income. If the corporation spends $100,000 to construct a child care facility, the entire $100,000 would be deducted from income to calculate taxable income which would determine the tax liability. Then 50 percent of the same $100,000 that the corporation deducted would also reduce their taxes by $50,000. SENATOR SALO asked if the corporation deducts the $100,000 from their income in order to determine their taxable income; dependent on their tax rate, what does that mean in money terms? BOB BARTHOLOMEW explained that with the highest state corporate income tax rate, 9.4 percent, a $100,000 deduction would reduce their tax liability by 10 percent. SENATOR SALO thought she had solved that issue by changing to the 50 percent tax credit. SENATOR LEMAN said that there is still a problem with double dipping. In this case, $50,000 plus $9,400 which totals $59,400. There is a way to only get the $50,000 which is 50 percent of... BOB BARTHOLOMEW clarified that, as with other credits, if the corporation has an expenditure that is eligible for a tax credit that expenditure would not be deductible from gross income in calculating the corporation's tax liability. A credit is calculated and deducted from the tax liability. He explained that any expenditure eligible for a credit comes out of the equation of the calculation of taxable income and the credit returns after the tax liability has been determined. SENATOR MILLER pointed out that this construction would depreciate over the years. The corporation would not write off the entire amount all at once in one year. BOB BARTHOLOMEW said that would be correct with capital expenditures under the rules of the Internal Revenue Service which would determine the write off over a specified number of years. Mr. Bartholomew recommended that if a capital expenditure is made eligible for a tax credit, then do not place that expenditure into your fixed asset records to be depreciated; that expenditure would not depreciate. This bill would allow the corporation to receive the full benefit of those expenditures up to the percentage in the first year. Number 469 SENATOR MILLER said that would be tough on the taxpayer. The taxpayer would have to pay federal taxes which should be depreciated. This would add more bookkeeping requirements because it could not be done at the state level while it would be allowed at the federal level. Senator Miller did not believe this issue to be as great a problem as Mr. Bartholomew has described. BOB BARTHOLOMEW stated that he merely wanted to point out that there is double dipping. If the intention is to allow a $59,400 tax credit, then leave the bill and there would be a difference between how some credits are applied versus this credit. He stated that the same dollar comes away twice. SENATOR MILLER specified that the $9,400 would be spread over 27 and a half years due to the federal rules. BOB BARTHOLOMEW predicted that the corporations would take on the double bookkeeping themselves and take the entire credit in the first year. The corporations would take a credit for their expenditures against the Alaska tax in the first year to the maximum. SENATOR MILLER pointed out that the corporations could not do the double bookkeeping because the other $9,400 would be depreciated out; that tax would come off their taxes in the next 27 and a half years. BOB BARTHOLOMEW clarified that the double dipping would occur over the life of the asset if the corporation capitalized the building of the new facility. The intent of the bill is to focus on capital construction. SENATOR SALO said yes. CHAIRMAN GREEN stated that the tax credit would be immediate versus being spread. BOB BARTHOLOMEW noted that this bill would give the corporations the immediate credit for a major portion. SENATOR SALO disagreed with the term double dipping. If the 100 percent tax credit had been allowed and the corporation could also deduct that amount, then double dipping would be the appropriate term. The CS only allows a tax credit for half of what was spent and only up to $100,000, therefore, the additional tax credit would fall in the other half of the costs which may be a benefit and a half not double dipping. BOB BARTHOLOMEW explained that if a corporation spent $250,000 on a new facility, then they would receive $109,000. The method that the credit is worked on allows double dipping. SENATOR LEMAN said that the corporation would get 9.4 percent of the excess which is more than the $9,400 if $250,000 is spent. BOB BARTHOLOMEW emphasized that the original break is intended. If a corporation spends $250,000, the corporation would still receive a tax deduction for expenditures incurred to run their business. Those same expenditures would be applied to a credit. SENATOR LEMAN asked if the same phenomena occurred with other credits. BOB BARTHOLOMEW explained that the Department of Revenue and the IRS attempts to utilize the investment tax credit. Property expenditures are not placed in a schedule for depreciation if an investment tax credit is used. Alaska has a mixed bag. Mr. Bartholomew noted that the department has proposed amendments to other legislation such as Public Broadcasting. The department would propose an amendment to this bill that would limit the total benefit to the set percentage. SENATOR MILLER pointed out that the amendment would be easier to accomplish with Public Broadcasting than with this bill which would involve depreciation schedules. As someone who owns a business, the more forms added the worse it becomes. Number 395 BOB BARTHOLOMEW informed the committee that there was a resolution that was sent to Congress which had requested a flat tax in order to simplify matters on the other hand, there are lots of tax credit legislation. He agreed with Senator Miller that it would complicate matters. The investment tax credit is already being utilized at the federal level; the distinction is already being made, assets are not included. SENATOR MILLER emphasized the need to develop a fiscal note before the bill reaches the floor. BOB BARTHOLOMEW indicated that he could talk with the sponsor. CHAIRMAN GREEN asked if the corporation is given a tax credit when they provide a health plan, an insurance plan, a vacation leave plan or other items that are perceived as perks. BOB BARTHOLOMEW explained that if the corporation incurs a dollar of expense to provide a benefit to its employees, that becomes a business expense deduction from their sales which would be similar to salaries. That would not be considered a credit or a special benefit. There are no specific tax credits for Alaska. CHAIRMAN GREEN inquired as to what would prevent a small corporation from setting up a child care facility. SENATOR SALO said money. SENATOR MILLER specified that the bill would not prevent a small business from providing a child care facility. CHAIRMAN GREEN asked if an office of seven people of which three have children and they decide to allow child care... SENATOR SALO replied that they could. SENATOR MILLER reiterated that nothing would prevent small businesses from doing this, but large taxpayers would probably take advantage of this option because small taxpayers usually cannot afford to provide such services. Number 347 BOB BARTHOLOMEW restated Senator Salo's earlier clarification that a majority of those in child care must be from the employer in order to receive this benefit. That would seem to allow smaller employers the ability to take advantage of this. He indicated the need to review the CS more closely in order to ensure that the legislation is very specific which would avoid the need for regulations. In other words, the need for the majority of those in child care to be from the employer made need to specified in the bill as 51 percent. Mr. Bartholomew explained that such a clarification would alleviate the problem in differences in regulation and legislative intent. CHAIRMAN GREEN asked if a fee for the service, if the employees paid for their children to be in the employer's child care, would impact any aspect of this. SENATOR SALO replied no, that has nothing to do with the revenue. A corporate sponsored child care center would cost the parents about the same as if their children were in a private child care setting. Senator Salo stated that the quality of the child care in a corporate sponsorship situation is probably higher which results from the money the sponsor puts into the child care. Corporate sponsored child care usually has better equipment, less children per caregiver than in private child care. Senator Salo clarified that any extra money given to the child care facility is left to the corporation's discretion and would not impact this tax credit. Number 315 CHAIRMAN GREEN stated that the bill could be held until Monday in order to receive the requested information. SENATOR SALO expressed her desire to make this bill workable. She agreed that holding the bill to clarify some of the remaining questions would be for the best. SENATOR LEMAN asked Mr. Bartholomew if state regulations require that the expenditure be reasonable and necessary, as the tax code specifies. Is there a provision for a test of reasonableness? BOB BARTHOLOMEW explained that the test for taxes which should apply to credits specifies that one is eligible if they meet the expenditure definition for tax deduction. The definition for tax deduction is ordinary and reasonable business expenditure. Mr. Bartholomew said that he would check to make sure that a corporation could be eligible for credit which could not be used as an ordinary and reasonable everyday business expense. It would seem that the two are tied together and the test would have to be meet. CHAIRMAN GREEN asked if there was anyone else present who wanted to testify on this bill. No one came forth. There being no further business before the committee, the meeting adjourned at 10:24 a.m.