II        Approval of Consent Agenda:

· I want to know if the calendar, which is stated in the M-4 calendar, is the one that we are operating by? Have we made any changes? Request to remove the previous month's board minutes from consent.

Motion 10-2006 (#1) Motion to adopt the consent agenda items as written including: Approval of October Board agenda, approval of committee meeting minutes, approval of new ORC members, approval of Board Retreat minutes and approval of GM report. Mark / Colin Approved 8-0-0

III        Approval of Minutes:

· After review of the revised M-4 with the new calendar for the L statements:
Motion 10-2006 (#3) Motion to accept the September minutes. Colin / Toni Approved 8-0-0

Motion 10-2006 (#2) Motion to approve the Policy Governance Committee Charter. M/S Toni / Colin
Discussion:
· The responsibilities and duties are there, what is missing, are the goals. What is missing from our structure right now that this committee would answer?
· It would expedite a lot of tedious work on phrasing. It would free up the board's time.
· I thought that this was the committee that would fix anything in the L-Statements that we decided needed fixing. I understood that it would work on irregularities and poor phrasing,
· One option is to give the committee the task of articulating their duties. The second option would be to simply say that this committee exists to advise the board on policy governance. Also, you could say this committee exists to help the board articulate its policies for governance.
· Will this committee meet-as-needed or monthly?
· I like the idea that this committee would help get troublesome items off our back.
· What I seem to be hearing is that you are really suggesting a newbie take on this committee. If this is not the case, then we need to figure out staffing.
· If our problem is that we cannot come up with a good way of saying what we all already agree on, then we do not need a committee to do this. I get the feeling that what we need is a group that really understands policy governance. Then if we hit a tricky issue, the group of experts can advise us. I feel that if we cannot come up with an accurately stated policy then we have no business handing it over to a committee. In altering language the committee will completely change the meaning of policy. I think we need to consider all these things.
· I keep hearing word-smithing, which may be a minimizing word. I think that this committee would be to articulate what the board has already clearly decided.
· I feel that this is the inertia that keeps us here. I think that we have missed the point. The committee would never be creating policy. Anything they created would be at our direction and then would be brought back to us for a vote.
· The duties clearly state the group will 'create' policy.
· If we say this is an ad-hoc then nothing can be done without the board's approval.
· You are neglecting the last sentence. It says that the committee will present statements for the Board's discussion or approval.
· Perhaps eliminating the word 'create' would eliminate any confusion about the committee's responsibilities and powers.
· I would agree that the word that is used, 'create', does seem too strong. Also, I have the feeling that within this group we never reach the point in our thinking where we clearly establish options. I feel that a small group of people would be able to accomplish this.
· I did not support this initially, but now I see two reasons for this committee to exist: the policy work that got farmed out last month to an individual board member, as well as the need for reviewing and revising our L-statements to make them more proscriptive.
· Where will we get the people for this committee? At what point am I capable of handling policy issues on an expert level? I just don't see where these people would come from. Perhaps it could just be a place to bounce ideas off each other.
· There are ten board members here. We could easily move people from one of the existing committees. From the owners, we should really look at getting people who are good at doing this kind of work, not just volunteers.

Motion 10-2006 (#2) Motion to approve the Policy Governance Committee Charter, including the change 'for' in place of 'of' and the sentence, 'decisions be made by consensus,' is removed. M/S Toni / Colin Approved 7-1-0

· The first task for this committee would be to pare down the end statements. Keep this in mind when choosing members.
· Do we want staff to come up with nominations from the owner pool?
o We would need to know how many.
o We had discussed only one owner serve on the committee.
· I (Todd) would like to volunteer for this committee because of the focus on writing. In the ends, language must be used precisely.
· I (Liz) would also like to volunteer.
· I would like to know about the expert part. Who qualifies as an expert in policy governance? I think that these people, whomever they are, should probably be better than the rest of us at it. We are all pretty new at this.
o We should really try to find our expert in an owner.
· I would not underestimate our abilities in this. The only way to get better is to just do it.
· I would like to have a discussion about possible training for board members. We should definitely spend some time talking about training.
· I am confident that I am at a good starting point for where this committee needs to be heading.
· Part of the problem from the last committee is that you always become attached to your words. Keep in mind that when the board shreds a draft, it isn't personal.
· Claire Pate would be a great choice. She is a great writer and has experience from being on the first policy governance committee. The fact that this is ad-hoc might entice her to be involved.
· We will wait to meet until we get our fourth person.
· Does this mean that Todd and Liz will no longer be on their current committees?
o I think that it would be okay to be on both.
o If this is an ad-hoc committee I am willing to stay on another committee for now.

VIII       End Statements: Where to go from here?

· End statements will go to the Policy Governance Committee to put together into an Ends policy.

IX        ORC Proposed Growth Education Plan

ORC submitted the draft copy of the proposed growth education plan to go to the owners for board comment.
· On page 45, where it says data to support possible store sites, does that mean that the sites mentioned by Pete Davis and Marty Schulz should be part of the education?
o Since this is all the empirical data we have at this point, it should be our starting point.
· I can tell you that at ORC, the new owner members are great. In doing an education we need to address, 'what is in it for me as an owner?' 'Why should I give up my dividend to support growth?'
· When are the anticipated releases and in what form?
o A flyer would be bulk mailed. We would also place an insert in the Thymes. There is the possibility that this will come across as too hard, that we have already made the decision. It should try to let owner's know that their opinions on growth are considered. December was the goal but that is no longer a possibility for the Thymes since our next meeting is the 28th of November.
o We could possibly send the flyer earlier and augment this with some of the other ideas we have had: board members in the store, phone calls, etc.
· Between my submitted draft document to ORC and this edited version there are some differences. I tried to be really true to what the committee had discussed. This version doesn't necessarily reflect that.
· It is my understanding that we are making this growth decision as a board and then explaining what led us to that decision.
· That was also my understanding. The whole purpose was that if an opportunity comes up, then the membership is aware it is a need, that we are prepared to take advantage of it and can survive it. We want people to be aware of the need so they won't be surprised by our actions.
· My comment is two things. I think that this is really important. It will create a lot of reverberation in the owner base. The board as well as the staff should be prepared to deal with owner feedback.
· The flyer will come back to the board before it goes out to the ownership.
· I would like to get a copy of the Pete Davis study.
o It is huge with many extra large pieces of paper. We can bring it to the meeting and then everyone can read it or check it out from Michele.
· I would like comments or edits to be sent to ORC so that I can compile them before the next meeting.
o Please get these back to us soon.
· Looking back on the retreat minutes, one way to help frame this is to respond to the concerns and questions on the owner survey.
· I would feel comfortable meeting with people in the store, particularly the south store. I think that the people here in the south store will have the response that we think they will have. I think it would be great if we could personally speak to the owners.
o This is something that ORC will hammer out.
ORC said that a motion is not necessary, as this draft is not ready for approval yet.

X        2007 Budget Assumptions

The Finance Committee Chair, Toni Hoyman and the Finance Manager, Dana Allen presented the 2007 Budget Assumptions for board approval.
Questions:
· One of the things we talked about at finance committee was the process of coming up with a budget. The growth rate was the thing most discussed at Finance. I meet with all the buyers, everyone responsible for each sub-department. I feel that they know more about each particular area than I do and can help me come up with the correct growth figures. They know that they are held to the figures that we budget for. We look at historic trends and come up with ways to make things happen. They challenge themselves to come up with a strong number, but not too strong.
o Does a buyer's predictions increase in accuracy the longer they are here?
§ Yes. A lot of it has to do with experience but there are also some with just an intuitive grasp of their department. I know that Marty has done some presentations that have been helpful for the buyers
o I just wonder what kind of outside information you look at? Home sales, population growth, etc.
§ We look at both national trends of sales in the various projections as well as specific local concerns, such as HP. One of the things that we have told the buyers is that the hits from HP have already been experienced. It is very unlikely it will happen again. The budget that we came up with has 9+ percent growth. The industry overall is experiencing 11% growth. We don't know exactly how much Wal-Mart and other factors will affect the market but we are taking measures to protect ourselves against any possible hits to the market. Our sales per square foot at the south store are still not mature. We feel that there is still room for growth. This budget deals with what we know today about our sales environment.
o Increasing efficiency within a department is something that should be considered.
§ We do consider this. We try to make the most out of what labor we have. We have managers that are on the floor and can find where the inefficiencies are.
· I want the board to understand that this is our best estimate of what will happen next year based upon what we know today. If we don't hit our targets, we will know why and adjust accordingly. Just like we experienced this year with HP and the bridge. We have been able to achieve excellent financial results despite being nearly $500,000 under our budgeted sales. Right now we have more money on the bottom line than what we budgeted even though we are short of sales.
o I wanted to ask you about the gross margin and how it compares to the cooperative grocer benchmark.
§ I don't have it front of me, but I believe you can find it in your budget packet from last year. 37% as a target is right about in the middle. We don't know if we can reach this, but we are looking at lots of different strategies to help us. This is where management wants to take us.
o Is there a danger in underestimating the growth?
§ If you are too conservative, you can create a self-fulfilling prophecy. If you don't challenge yourself, then you wont have enough money to cover the outreach and payroll that you want. Instead you have to start finding places to cut back.
· Payroll expense has gone down because janitorial has been moved to operating expense where most co-ops account for it so we're comparable with co-op that outsource their janitorial instead of doing it in-house.
· The commissary model also reduces payroll, as those manufacturing expenses will go into a transfer account that will then be passed out into the COGS in the various retail departments.
· The other thing I want to note is that non-ops expenses are being budgeted to increase quite a bit over last year. This is primarily because of the owner appreciation day discounts for twelve owner sales days rather than six. This will be balanced, though, by an increase in sales.

Motion 10-2006 (#4) Motion to approve the major 2007 Budget Assumptions. M/S Colin / Dave
Discussion:
· Can you explain the commissary model as it relates to labor?
o The commissary should be a break-even manufacturing operation where all of their costs, including labor, are met in cost of goods. They will "invoice" the retail departments for their transfer price just like any other vendor. Because we don't cut them a check we call it a transfer. The Deli will then operate just like any other retail department.
o We will be able to monitor the Commissary's performance based on how close they are to a zero balance in their transfer account.
· I have been frustrated that we haven't been able to do a year-end dividend in one chunk. We really need to communicate how much we are giving back on these owner sale days.
Motion Approved 8-0-0
· Where should we have the discussion about communicating to the owners the dollar amount of their savings from these owner appreciation days?
o This might be resolved in an ends statement.
o We just need to get some numbers and put them out there.
o Could finance get these numbers together?
§ I just want to know where the issue of patronage dividends gets discussed?
o When do we get to decide on whether to issue a patronage dividend?
§ A preliminary recommendation goes to Finance in Feb and the Board then votes on it in March. The timing has to do with when we have to do our tax filing, as any refund has to be included on the taxes.
o Michele, could you please send out the history of patronage dividends that you wrote to Dave Chiller.

XI       L-9 Asset Protection Monitoring Report

Questions / Comments:
· On number six, investment instruments, I'm assuming those aren't bank accounts. Do we invest in socially responsible investments?
o We currently have no idle funds that are invested in anything other than operations. If we get to the point where we have funds to invest, there is a policy developed by the finance committee that outlines what we can invest in.
Motion 10-2006 (#5) Motion to accept L-9 report. M/S Mark / Fred
Discussion:
· I was just curious if shoplifting is still a problem.
o Unfortunately it is.
Motion is accepted. 8-0-0.

XII        Review L-9

· Number three looks like it needs some work.
· Are we going to start passing things to things to the policy governance committee now or are we going to wait until they are more trained?
o Perhaps we could keep a running list of the policy items we have identified as needing work.

XIII        Preview L-5 Financial Condition

· Words like materially and industry standard I'm assuming you will define.
o Yes.