Op Ed Opinion – George Brunt

The legislature has got HB 139 completely right.

Demo Permits:  Idaho is the only state that requires a demo permit to practice cosmetology outside of a licensed establishment.  HB 139 does away with that antiquated requirement and trusts licensed professionals to properly practice their profession where ever they do work.  This allows them to visit convalescent centers, dramatic production sets etc., like cosmetologists in all of the other 49 states.

Hour Requirement:  46 states require less than 2000 hours to obtain a cosmetology license.  40 states are 1600 hours or less.  It cost the student about $4,000 to $8000 more to complete in a 2000 hour state and the majority of school owners in the state believe that the 2000 hour requirement is excessive and that a full and complete cosmetology education should take place in 1600 hours or less.  This is true even though many schools make much of their profit from the students being at the school and working on clients for the school on the clinic floor.  1600 hours is simply better for the student.  I guarantee that my students from Oklahoma or Arkansas (1500 hour states) are completely equivalent to my students in Idaho.  HB 139 lowers the hour requirement to 1600 like Utah, Washington and Montana.

Freelance Makeup Artists:  Idaho is the only state that does not allow freelance makeup artists to practice their profession.  The Future Professionals Make Up Academy (www.futureprofessionalsmakeupacademy.com) fully prepares and certifies makeup professionals.  HB139 allows makeup professionals to work weddings, photo shoots, movies and to practice their art.

HB 139 is a good bill and well thought through.  Our Paul Mitchell schools educate around 300 of the 1000 cosmetology students in Idaho each year.  We urge the Idaho Congress to pass this bill which favors small business, freelance artists and the economy.  It reduces regulation and modernizes Idaho law.

(note:  a minority of schools are opposed to this bill who are members of the association)

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Gainful Employment Update

Gainful Employment Impact


The new gainful employment regulations promulgated by the Department of Education under the direction of the current administration is projected to wipe out the majority of cosmetology schools in the United States. Cosmetology school graduates work in the Salon and Spa industry, a $21 Billion industry with over 900,000 establishments in the United States. It is one of the few growing and flourishing industries in the country and has outperformed the overall economy in job growth in 9 of the past 11 years.   Thirty Percent of the individuals working in the salon and spa industry are self-employed. They are educated in beauty schools.


The Accrediting agency NACCAS currently has 1402 accredited cosmetology schools. If each accredited school graduates an average of 80 students per year that equals 112,160 graduates per year.


The average tuition for all cosmetology schools is $13,750. More than half of the accredited beauty schools in the United States will probably lose their NACCAS accreditation under the new Gainful Employment regulations. For the most part it will be the higher end schools that devote a greater number of educational resources to their programs. Sub-standard schools that minimize their educational investment should meet the new standard.  It is hard to predict the status of the rest of the schools that are just providing a good education.


What government in its right mind would pass a regulation that would undermine a flourishing industry that contributes so much to the economy, to single mothers, and to small business owners? As with health care, one of the biggest problems is that few understand this regulation and its impact. Many in congress are shocked to find out the impact of this regulation.


Here is an example of how the regulation works. If your school graduates 100 students, you would look at student number 50 and see how much money that student took out in federal loans. Many students qualify for a PELL grant so that covers $5,500 of their tuition. Most students then have to borrow most of the rest of their tuition. If the average school charges $13,750, the average student would have to borrow $8,250 in government loans. At 6.75% interest, amortized over 10 years the payment on those loans would be $95 a month or $1,140 a year. Two years later student number 50 would have to report 12.5 times $1,140 ($14,250) on their federal income tax return for their personal separate income. If they do not report this income, the school does not pass and is on the path to lose its accreditation.


The brand name schools, which invest far more in their educational content and facilities, all charge more than the average of $13,750. If the tuition is $16,500 the student would have to borrow $11,000 in federal loans. Using the same calculation, student number 50 would have to report $18,946.50 on their federal income tax return in order to pass the new federal standard for the school to maintain accreditation. Accreditation is not easy to achieve and is critical for the success of any cosmetology school.


One of the criticisms of this new regulation is that it is based on the performance of the median student. As with most anything in life, human performance is often based on a grading curve. In most schools of any kind about 20% of the students get an A grade. Performance after school is no different.


Another criticism is that the gainful employment regulations apply mainly to private “for profit” schools and not to the public school sector. Major public universities can continue to charge enormous tuitions, dwarfing that of cosmetology school tuitions issuing degrees in social sciences or antiquated arts and racking up federal borrowing, without any consequences.


Another criticism is that the school cannot control the work ethic or ethics of the student after they have left the school. The school cannot even know what the student reported on their federal income tax return, which is where the department of education gets its information to make the gainful employment calculation. For this reason no school actually knows whether it is meeting the standard or not until the government releases its numbers based on what the student actually reported.


The United States has grown into its greatness by providing opportunity for success. No average student until this current administration has been guaranteed a certain level of gainful employment stemming from his or her education. Schools have been judged by their performance in providing an opportunity for success. It is ridiculous to assert that the school can have control over the level of energy, the work ethic or the life circumstances of a student two years after leaving the school.


Many in the cosmetology industry are calling upon Congress to carve out an exception from the Gainful Employment regulation for this major industry that has outperformed the economy, is growing jobs and income for an entrepreneurial class of workers consisting mostly of women who are trying to provide for their families. If this carve our does not occur tens of thousands will not receive the high quality education and career base that the cosmetology schools are now providing.

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Gainful Employment Will Put Many Schools Out of Business – Know Your Odds

The new Gainful Employment Regulation will put about 1/3 of private for profit schools out of business,  including cosmetology schools.  The regulation has passed and is in the books.  Each school has supplied data for their graduates who have borrowed loans (federal and private) to finance their education from 2008 – 2013.  The data from 2013-2014 education year will be due Oct 4, 2015.

In summary, the federal government will take a look at the 2014 actual earning, as reported on your student’s income tax returns, for students who attended your school from 2010-2011 and 2011-2012 school years.  The median annual loan repayment cannot be more than 8% of the median gross earnings reported to the IRS by your students.  If so, you fail to meet the gainful employment regulations.

If you want to project whether or not your school will pass follow the guidance given at this link:


One of the most important things we can do is lower our required hours to reduce the cost of our programs to the students according to Thompson Coburn

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1600 Bill Tabled

The proposed legislation to lower the hours required to become a cosmetologist in Idaho has been withdrawn to give more time for parties to study the issue.

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Senate Bill 1064

Senate Bill 1064 has been scheduled for hearing before the Senate Commerce
Committee on March 5 at 1:30 p.m.

The Senate bill reducing the hours required for a cosmetology license in the State of Idaho to 
1600 hours is scheduled for a hearing before the Senate Commerce Committee on March 5th at 1:30 PM.

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New Gainful Employment Regulation

Gainful Employment Metrics and What They Mean

The U.S. Department of Education (Department) developed the Gainful Employment (GE) regulations to address what they felt were too many students enrolling in programs at For-Profit schools that were either dropping before they completed their education or that they were graduating with high debt that they could not repay based on their reported wages.  As such, the Department developed the Gainful Employment regulations that evaluate a student’s debt to earnings and debt to discretionary spending.  Remember the metrics only apply to Title IV students, cash pay or private loan students are not a part of this process, nor are students who are funded by Parent Plus Loans.

The debt-to-earnings (D/E) rates measure will be used to determine whether a GE program remains eligible for Title IV funds. The D/E rates measure evaluates the amount of debt (tuition and fees and books, equipment, and supplies) students who completed a GE program incurred to attend that program in comparison to those same students’ discretionary and annual earnings upon graduation.

To pass the D/E rates measure, the GE program must have a discretionary income rate less than or equal to 20 percent or an annual earnings rate less than or equal to 8 percent. The regulations also established a zone for GE programs that have a discretionary income rate greater than 20 percent and less than or equal to 30 percent or an annual earnings rate greater than 8 percent and less than or equal to 12 percent. GE programs with a discretionary income rate over 30 percent and an annual earnings rate over 12 percent will fail the D/E rates measure. Under the regulations, a GE program becomes ineligible for Title IV, if it fails the D/E rates measure for two out of three consecutive years, or has a combination of D/E rates that are in the zone or failing for four consecutive years.

How are the rates calculated?

For each award year, the Department will calculate D/E rates as follows:

(1)  Discretionary income rate = annual loan payment / (the higher of the mean or median annual earnings – (1.5 x Poverty Guideline)).  The Poverty Guideline amount is for the calendar year immediately following the calendar year for which annual earnings are obtained.

(2)  Annual earnings rate = annual loan payment / the higher of the mean or median annual earnings.

(3)  Annual loan payment = the annual loan payment for a GE program is determined by the median loan debt of the students who completed the program during the cohort period, based on the lesser of the loan debt incurred by each student and the total amount for tuition and fees and books, equipment, and supplies for each student.

(4)  Amortizing the median loan debt is done over a 10-year repayment period for certificate programs using an annual interest rate that is the average of the annual interest rates on Federal Direct Unsubsidized Loans that were in effect during the three-year period prior to the end of the cohort period.

Key Definitions

In order to help understand the calculations we have provided some important definitions:

Annual earnings – The Department obtains from the Social Security Administration the most currently available mean and median annual earnings of the students who completed the GE program during the cohort period.

Annual Earnings Rate – The percentage of a GE program’s annual loan payment compared to the annual earnings of the students who completed the program.

Cohort Period  – The two-year cohort period or the four-year cohort period, as applicable, during which those students who complete a program are identified in order to assess their loan debt and earnings.  The Secretary uses the two-year cohort period when the number of students completing the program is 30 or more.  The Secretary uses the four-year cohort period when the number of students completing the program is less than 30, but when adding up the students in that four year period is 30 or more.

Discretionary Income Rate – The percentage of a GE program’s annual loan payment compared to the discretionary income of the students who completed the program.

Four-Year Cohort Period – The cohort period covering four consecutive award years that are–

(1)  The third, fourth, fifth, and sixth award years prior to the award year for which the D/E rates are calculated.  For example, if D/E rates are calculated for award year 2014-2015, the four-year cohort period is award years 2008-2009, 2009-2010, 2010-2011, and 2011-2012;

Poverty Guideline – The Poverty Guideline for a single person in the United States as published by the U.S. Department of Health and Human Services.

Two-year cohort period – The cohort period covering two consecutive award years that are–

(1)  The third and fourth award years prior to the award year for which the D/E rates are calculated.  For example, if D/E rates are calculated for award year 2014-2015, the two-year cohort period is award years 2010-2011 and 2011-2012.

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New Gainful Employment Regulation Worse than Proposed

From Tom Netting AACS Lobbyist:

Initial Assessment of theInformal Gainful Employment Final Regulatory TextPosted 7AM, October 30, 2014
It Is Worse Than Expected
Upon completion of only the first full read of only the new Gainful Employment FinalRegulatory Text (Final Rule), posted by the U.S. Department of Education early this morning onthe “Negotiated Rulemaking 2013-2014 — Gainful Employment” subsection of the Informationfor Financial Aid Professionals (IFAP) website, the final rule is worse, dare I say much worse,than the March 25, 2014 Official Notice of Proposed Rulemaking (NPRM).While there are some revisions that appear to be based upon portions of AACS’ recommendations and our pursuit of our primary concerns regarding the lack of complete and comprehensive data, which we are pleased to see incorporated into the final rule, the final rule isnot largely similar to the NPRM as the Administration and the Department have asserted in their messaging documents and the press have repeated based upon the initial stories published today.Here is just a sample of some of the significant modifications, revisions, and additions, notmentioned in the Administration’s press release and accompanying GE Fact Sheet, or mediaaccounts of the final rule.
GE Debt to Earnings Measures  OK, So They Maintained the Three-tiered
Approach, But Everything Else is the Same Right?
Wrong, very wrong!  Yes, as presented in the GE Fact sheet, the Administration and theDepartment maintained the GE framework, the three-tiered approach to determine a program’seligibility status, and the timelines used to determine when a program becomes ineligible asreproduced here.Metric: To maintain title IV eligibility, gainful employment programs will be required to meet minimum standards for the debt vs earnings of their graduates. 
Pass  Programs whose graduates have annual loan payments less than 8% of total earnings OR less than 20% of discretionary earnings. 
Zone  Programs whose graduates have annual loan payments between 8% and 12% of total earnings OR between 20% and 30% of discretionary earnings. 
Fail  Programs whose graduates have annual loan payments greater than 12% of total
earnings AND greater than 30% of discretionary earnings. 
Ineligible  Programs that fail in 2 out of any 3 consecutive years OR are in the zone for 4 consecutive years.
What the Administration and the Department didn’t present in their press release or theGE Fact Sheet, and the media has yet to learn or report, is that the final rule SIGNIFICANTLY REVISED the way in which the D/E rates are to be calculated.
The Key Differences: Loan Debt and Assessed Charges  The Department chose to add assessed charges to the calculation of loan debt thereby changing the way in which median loan debt is determined.Amortization of Median Loan Debt  While the Department maintained the application ofdifferent repayment periods (10, 15, and 20 years) to be used for the determination differenttypes of programs outcomes when determining the D/E rates, the NPRM applied the sameinterest rate based upon:
“the annual interest rate that is the average of the statutorily determined annualinterest rate on Federal Direct Unsubsidized Loans made during the six-yearperiod prior to the end of the applicable cohort period…”
However, the final rule is different.  Instead of using a single interest rate and applying it to all ofthe individualized repayment periods and programs, the final rule adds yet another change basedupon type of program.Under the final rule the interest rate for some programs (undergraduate certificate programs,associate degree programs, post-baccalaureate certificate programs) is now based upon a three-year, not six-year period, while others (bachelor’s degree) still use the original six-year window.Annual Loan Repayment  Ultimately the changes above are then factored into the calculationused to determine the annual loan repayment for each GE program.  Which has been changed aswell.The new calculation of median loan debt, as it was before, is based upon the lesser of the newLoan Debt and Assessed Charges output and the new Amortization of Median Loan Debt basedupon the total amount for tuition, fees and books, equipment, and supplies.Given the fact that both of the two key factors used to determine the calculation have changed,questions abound…
 Why wasn’t this possible alternative included in the Department’s “Methodology for2012 GE Informational Rates Data File Calculations”  which would have given the effected parties the ability to comment?
 What is the Department’s rationale for applying different interest rates for differenttypes of programs?  
 What effect does this have on the calculation of the different institutional programscompliance with the final rule given the fact that both of the factors used todetermine annual loan repayment have changed? As a result of these changes to the two criterion used to establish annual loan debt, isn’t all of the prior Informational Rate data obsolete? Did/Does the Department have and will it release new data showing the impact?
Programmatic Cohort Default Rates (pCDR)  Gone, But Not Forgotten.
While it is accurate that the Administration and the Department have chosen not to use pCDRs asa metric for purposes of determining eligibility, the Secretary will still be responsible forcalculating institution’s pCDRs and require their inclusion as one of the many GE disclosures.Also maintained, for better or for worse, is the entirely new Subpart R which: Establishes the purpose for maintaining this new disclosure; Explains how pCDRs are to be calculated by the Secretary, as well as how they will beapplied to institutions (including how they will be applied when an institution undergoes a change in status and the potential inclusion of loan debt from other institutions in a calculation if the institutions are under common ownership or control); Provides policies and procedures for institutions’ right to challenge and appeal the rates;and Details the forms of appeals rights available and process for appealing pCDRs.
This makes the second time the Department has either made the decision themselves toremove a metric from the criteria used to define GE or been directed to do so by the courts and yet both of them repealed metrics are now incorporated into the disclosures.  Why?
Disclosures  Which Ones, For What Timeframe, With What New Additions?
Speaking of the disclosures, the final regulation reverses field from the NPRM, which seemed toeliminate an institution’s responsibility to present the disclosures contained in GE 1.0 underSection 668.6(b) and the current disclosure template, replacing them with a new set ofdisclosures under Section 668.412 and a new disclosure template provided by the Secretary in afuture Federal Register following the development and consumer testing of the template in orderto make it as meaningful as possible.  The final regulations make it clear that institutions will be transitioning from one set ofdisclosures to another, maintaining institutions’ responsibility to comply with the GE 1.0disclosure requirements  including such disclosures as “on-time completion rates”  until theysunset on December 31, 2016.  While not made entirely clear, it appears that the GE 2.0 list of 16 new, and modifieddisclosures, plus any student warnings for each program that has received a notice from theSecretary that the program could become ineligible based on its final D/E rates for the nextaward year, will become effective January 1, 2017.Under the new disclosures, as it is with the current disclosure requirements, the final rule makesit clear that, in accordance with procedures and timelines established by the Secretary, theinstitution must update at least annually the information contained in the disclosure templatewith the most recent data available for each of its GE programs.
Student Warnings  Signed, Sealed, and Delivered.
A number of modifications were made in this area too  starting with the inclusion of languagethat extends the provision to students, prospective students, or “a third-party acting on theirbehalf.”
There is new language on exactly what the warning must say  which is an improvement, thesame regulations as in the NPRM which lay out in explicit detail how an institution potentially atrisk of losing eligibility must provide warnings to students and prospective students, oh yeah andthose all too familiar third-parties acting on their behalf.  All kidding aside, the final rule also retains the proposals in the NPRM related to the specialwarning criteria which prohibit enrollment of a student into an at-risk program for three businessdays, and must repeat this process if thirty days or more have passed between the time when theinformation was first provided, the three day cooling off period must be repeated.Moreover, the final rule includes enhanced requirements on how and what must be done if theinstitution seeks to provide the information via email and the acknowledgements which must bereceived for them to count.  It makes it clear that the student warning must be included in thedisclosures related to any program at risk, and must be added to the disclosure template within30 days.  
Unfortunately, the Administration and the Department did not provide any revisions inthis area based upon our concern that an institution could be forced to provide warnings toexisting students who would not be at risk of losing eligibility before completing theirprogram.
Definitions  Come On, At Least They Kept The Definitions the Same.
Wrong again.  The Department’s final rule removes the more finite categories of undergraduatecertificate and diploma programs (less than one year programs, one year or longer, but less thantwo year programs, two year and longer programs) previously contained under the definition ofCredential level.On its face this change seems rather benign, but it may result in unintended consequences both interms of the ability for the Department and/or the higher education community to assessproblems specific to one or more of the program length subsets if the Informational Rates do notmaintain the more finite categories and instead simply classify all certificate and diplomaprograms with a single qualifier.Moreover, this shift seems counter-intuitive given the final rules new policy related to thetransition period which we will explore next.
Transition Period  How Long Do We Have to Make Changes With Some
Protection?  It’s All Determined By the Length of the Program!
That’s right.  The number of years in which an institution that has a program either in the zone orfailing will be given the ability to have their D/E rates determined based upon the moreadvantageous of their draft D/E rates or transitional D/E rates based upon the most recent awardyear will determined by the length of program.A program that is one year or less in length = five award years of duel rate calculations;A program this is between one and two years = six award years of duel rate calculations; and A program that is more than two years = seven award years of duel rate calculations.And if that weren’t intriguing, yet perplexing enough for you given the previous summary,consider that, once again, the final rule changes the way in which the transitional D/E rates aredetermined as well.How/Why  because it is based upon the determination of median loan debt of the students whocompleted the program during the most recently completed award year  which is once againbased upon new calculation methodology.
Again you are left to wonder how the calculation revisions will impact the outcome?  But it is a clear statement of fact institutions with longer program lengths will have alonger time horizon to make changes in both the near- and long-term based upon onnothing more than the state prescribed length of program within our industry.  And ponder this one, how does this make rationale sense for an institution that has thesame or identical programs in states with different state required hours?It is not only conceivable   but probable  that some institutions could have the sameprogram receiving five, six, or even the full seven years of duel calculations for the sameprogram.
Outcomes of the D/E Rates  Believe It Or Not, At Least To Some Degree, WeThink The Administration and the Department Responded Favorably to OurLack of Complete and Comprehensive Data Concerns.
A new addition to the list of potential outcomes and their impact on an institution’s programeligibility has been added which is pretty interesting.  It says:“If the Secretary does not calculate or issue D/E rates for a program for an awardyear, the program receives no result under the D/E rates measure for that awardyear and remains in the same status under the D/E rates measure as the previousaward year; provided that if the Secretary does not calculate D/E rates for theprogram for four or more consecutive award years, the Secretary disregards the
program’s D/E rates for any award year prior to the four-year period indetermining the program’s eligibility.”
It sure seems to me, at least upon initial assessment, that this may be the Administrationand the Department’s way of dealing with all of those holes in the data we have been talking about!
It sure seems to at least address some portion of that type of concern, and makes it clear that the institution’s program eligibility is not put at risk based upon the unknown, but is determined based upon the last information available  with relief if the period of no results extends for four years.
There is a great deal more in the way of minutia and less stark revisions to the final rule that wehave not attempted to present in this summary of what is now a 12-hour old publication.  We did however want to make you aware of the fact that the final rule is not as limited in thescope of its changes as presented in the Administration and the Department.And we wanted to assure you that your GRC is now, and will be between now and the AnnualConvention and Expo, undertaking a complete and comprehensive review of the entire final rule,including the Preamble and supporting information published in the Federal Register, willdevelop summaries based upon our review to be provided between now and the Convention andExpo, and will be preparing presentations and reports for lively discussion in Phoenix in just afew short weeks.

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Minutes of Meeting June 1, 2014

Meeting Minutes

Idaho Association of Cosmetology Schools / 6-1-14 Meeting


Open Meeting



Action Items from Previous Meeting


Due Date





Agenda Topic



Minutes of Previous Meeting Approval/ Financial Report

Motion to approve by Phil 2nd by Rick Motion carried


Update from Larry Benton/ Kris Ellis – HB 363

Tony addressed association:
– Contiguos license, board looking at making it easier for salons. Major changes will be a more refined piece of legislation. Whoever is at that station during an inspection is in charge of the sanitation guidelines and responsible for it.
– Demo permits may be going away
– Representative Monks is still wanting an exemption in the law for unlicensed practice as long as there is no money exchanging money.

Larry addressed association:
– 2014 Primary Election Recap See Attachment
– Summer is a great time to invite your legislature into your school and take them to lunch or dinner. – HB 363: Eliminated that a board member could not be associated with a cosmetology school


Transfer Students from Online Courses

– Rick was approached by a student from Washington who had 500 online hours and wanted to transfer those hours to Idaho. The board needs to be addressed to be made aware of this and get something in place to make this not a possible thing. Need to ask the board for a ruling. Law 54-805C


Wage and Hour Litigation Threatening Cosmetology Schools

– George addressed the association reading from an article stating the class action lawsuit that has come up stating students are doing work and not getting paid.


New Gainful Employment Regulations – State Required Hours

– George Summarized new Gainful Employment regulations
– Phil made a motion to send out a ballot to all paid members of the association to change the hours from 2,000 hours to 1,600 hours Wren Shaw seconded motion carried


Items to be Presented to State Board of Cosmetology


Miscellaneous Discussion – Dues for 2014

Dues are due on July 1, 2014


Action Items


Due Date


Post wage and hour litigation article on association website

George Brunt



Ty mail ballots to all paid schools

Ty Walker

Mail out by July 7th


Circulate new Gainful Employment Regulations

Ty Walker












Close Meeting

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Idaho Cosmetology Schools – Post Secondary

The legislature did act in time to allow Idaho Cosmetology Schools to maintain their title IV funding by identifying Cosmetology schools as post-secondary institutions.  Many thanks to our legislators!

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Semi Annual Meeting June 2, 2013

The semi annual meeting of the Idaho State Cosmetology School Association will take place June 2nd at 7:00 p.m. at the Owyhee Plaza Hotel in Boise.   We will celebrate the change in the law recognizing cosmetology schools as post-secondary institutions in Idaho.  We will also have the opportunity to discuss several other issues and opportunities facing our industry.  At the last meeting the paying members were split 7 to 6 in favor of seeking a statutory change reducing the required hours in Idaho for a full cosmetology license to 1800.   We decided that we did not have a strong enough mandate with a bare majority to pursue a law change as an organization and so we took no action.  The association wants to focus on the things that matter overwhelmingly to most of its members.

Since the last meeting, Utah has reduced its hours to 1600, matching Washington State and California.

Please take the poll in advance of the meeting.

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