LOTTERY

GI TAX MATCHING CONTRIBUTION

GATE ADMISSIONS
CONCERT TICKETS
COMMERCIAL SPACE RENTAL
CONCESSION COMMISSIONS
SPONSORSHIPS
ENTRY FEES
ALCOHOL SALES
CARNIVAL COMMISSIONS
“Other”

REVENUES
EXPENSES
ADMINISTRATIVE
PAYROLL
DEBT, INTEREST, & DEPRECIATION EXPENSES
CASH PREMIUMS & AWARDS
ADVERTISING & PROMOTION
CAPITAL EXPENSES
HOTELS/LODGING
ENTERTAINMENT & PRODUCTION
FONNER PARK AGREEMENT
PROFESSIONAL SERVICES
“Other”
To: NEBRASKA STATE FAIR BOARD OF DIRECTORS
From: Jeremy Jensen – Governor Appointed Board Member - Finance Committee & Vendor Analysis Group
Date: June 10, 2020

On Friday, February 14th, 2020 in Lincoln, I publicly stated that it had become clear the Nebraska State Fair was a victim
of financial leakage in the form of theft, mismanagement, lack of oversight, or all the above. My quote that day: “The
days of people taking advantage of the NSF are over.” Following the meeting I provided the framework to Lori Cox and
her team of what information needed to be examined. Less than two weeks later, on February 24th Lori Cox and her
team discovered what appeared to be unlawful actions, and she then reported the findings to our legal counsel. What
had started as an exercise to gain additional knowledge of the “Vendors” of the Nebraska State Fair had quickly
expanded to all areas of our expenses.

Through these exercises, it is clear this organization has lacked proper financial oversight. There has been no clear
procurement policy utilized by the staff, there are multiple areas of concern with regards to nepotism, and cost control
measures have largely been ignored. I offered a sample procurement policy to NSF staff and board on May 11, which is
included under EXHIBIT C at the end of this document.

The following is an overview of some findings of the work over the past 6 months:

FULL TIME EMPLOYEE PAYROLL

The first drastic measure taken to get back to profitability resulted in a reduction of Full Time Employees; bringing the
fair in line with industry staffing ratios (based on annual attendance figures). The reduction of Payroll was necessary to
cut unsustainable monthly expenses during the “non-fair” months of operation. Given the current economic climate
and uncertainty of the 2020 fair, we are even more fortunate that these decisions were made.

SEASONAL PAYROLL ANALYSIS

While the NSF made necessary changes to FTE staff, one area that had not been analyzed until recently were the
seasonal/part-time employees. Through this analysis more areas of concern have been identified.

In 2019, seasonal employees were paid in excess of $600,000.

After review, the NSF paid nearly 100 people at least 10 hours of overtime during the fair (1.5x regular wage), and of
those, over 50 of them worked 20+ hours of overtime. (Exhibit B shows examples – without names – of payroll records
for some seasonal employees in 2019)

From an operational and scheduling standpoint, this was a colossal failure. Some individuals made more money in OT
wages than regular wages. Understanding that the fair is an 11-day event, and if someone worked every day during the
fair, employees should max out at 88 hours (8 hours per day for regular pay). In some situations, people will work with
pre-fair set up, and perhaps post-fair clean up - so working more than 11 total days is possible. However, there was no
consideration given to cost control by department managers. Rather than having one person work 16-hour days, there
should have been two people, each working 8-hour shifts. The fair paid a massive amount of OT pay, simply due to poor
staffing and scheduling. Seasonal employees should be capped at 8 hours per day, except for emergency situations.

There were also 46 employees with SEASONAL CONTRACTS of $1,000 or more, which had a cumulative total of nearly
$200,000. Of those, 30 have contracts valued at $2,000 or more; and of that group – 10 have contracts worth $5,000
or more (which does not include hotels and mileage also paid for by the NSF).
Nepotism is also widely prevalent in this analysis. While families working together is common within the fair business, it
is unsettling to see both current and past NSF employee family members being paid more per hour than “other
employees” who are doing the same work. For one example, a former employee’s child is compensated $14,000 to
oversee a certain area of seasonal operations. Then, working under that person is their own child, who earns $15 per
hour, and $22.50 per hour in OT rates; while others doing the same work are paid considerably less.

There is another instance where a $15,000 seasonal contract employee and their spouse both work for the fair, with the
hourly spouse being paid $17.50/hour with $26.25/hour as an OT rate. The spouse, being paid hourly, logged 117 hours
of OT and 252 hours of regular pay.

In yet another instance, an NSF employee’s spouse was paid a $4,200 contract to assist with livestock trailer check-in.
That’s nearly $400 per day.

Finally, a situation where the son of an employee is paid $14 per hour, and $21 in OT rates; while two others in the same
category are paid $12 per hour and $18 OT respectively. And those three young adults were collectively paid for
approximately 300 hours of OT.

There are also numerous part-time staff members who have been hired to do remedial tasks for a specific NSF employee
- such as data entry. One such part-time employee works from home and logged nearly 54 hours of OT pay at $21/hour,
and over 200 hours of regular pay at $14/hour. The same NSF FTE also hired at least two other part-time staff members
who were paid $7,000 and $5,000 respectfully for miscellaneous duties, and not approved by the Executive Director.
How many other NSF employees have 3 or more assistants? And when discussing staffing during budget, why were
none of these employee arrangements disclosed to the finance committee or the NSF board?

Another situation exists where a part-time employee, who assists with the creation of signs, was paid for 470 hours of
pay at $12/hour, and 202 hours of OT pay at $18/hour. Did we really do nearly 700 hours of sign making? What other
roles does this person have? This person made over $9,000 in 2019; yet I had never heard their name during budget
discussions with regards to our Personnel costs. How in the world did this person accrue 202 hours of OT?

PROFESSIONAL SERVICES

One of the first major relationships we examined was a review of the contract and invoice of our security provider. The
average annual amount paid to this firm was approaching $300,000. After thorough review of the invoicing, as well as
comparison to other fairs our size around the country, the NSF board approved an amended budgeted amount for
security services of $150,000 for 2020. That amount is still significantly higher than similar fairs across the country. It is
also important to understand that unlike many other fairs, the Nebraska State Patrol coordinates our security – at no
cost to the NSF.

Additionally, due to the board decision to relieve Lori Cox of her duties, the NSF has experienced substantial legal fees –
of which were not planned for in the 2020 budget. We held a small retainer with the law firm but exhausted that
amount and beyond substantially this Spring – with no end in sight. Per the approved 2020 NSF BUDGET, the allocated
amount for Legal and Lobbying Fees is $59,000. We have exhausted this amount and beyond – already spending
$103,266. For months I have been asking what processes there are to allow spending that exceeds budget authority,
and as of today, I have been presented with nothing – even though I have provided procedural suggestions.

With regards to lobbying, we pay $36,000/year in lobbyist fees. Outside of the constitutional amendment that provided
Lottery Funding for the fair, it is unclear what legislation would impact our operation. It is my belief that we would be
better off paying for a lobbyist when needed or in session only, instead of at a rate of $3,000 per month indefinitely?
What is our plan going forward to pay this monthly invoice, given we have already spent 175% of the approved budget
category through May?
FONNER PARK

A very important fact that most fairgoers do not realize is that the complex where the NSF is located is on land owned by
Fonner Park. This includes nearly all buildings and structures on the grounds.

While the relationship was strained in the past, things have begun to improve after a meeting with board
representatives of each organization on July 11, 2019. Shortly after this meeting, Fonner CEO Bruce Swihart retired and
the relationship (as well as communication) has continued to progress with the assistance of Chris Kotulak. With all of
this, NSF pays Fonner Park hundreds of thousands of dollars each year for usage of the facilities, and there needs to be
additional conversation with Fonner Park before any new major capital expenses are incurred (such as construction of
any new buildings, etc.). There also needs to be much clearer understanding of what maintenance and upkeep the NSF
is responsible for, and what is Fonner’s responsibility.

ENTERTAINMENT & PRODUCTION

While headline concerts create a buzz with the media, they are incredibly difficult to make money on. With the concert
series moving inside a facility with less than 5,000 seating capacity, it limits the gross dollars that the NSF can afford to
pay its entertainers. Understand that at $30/ticket, any act which costs more than $150,000 jeopardizes the financial
standing of the NSF (assuming a sold-out show). With that, many headliners cost $750,000+ per show, so those types of
acts just aren’t going to be prudent in the future without an alternative venue that will hold at least 10,000+ people, and
an increase in per ticket admissions.

The 2020 NSF budget for concerts has been reduced to $850,000 and is now being facilitated by a professional agency
that has incredible access to entertainment.

Also, there is major expense in setting up the stages, sound, lights, production, etc. that needs to be accounted for. The
NSF pays over $35,000/year to an individual to coordinate these handful of events, and that person is responsible for
hiring stagehands, etc. to ensure the concerts are a success.

The fair Vendor Analysis committee had a virtual meeting with this person to discuss details about the operation. Part
of this discussion centered around an invoice where the NSF paid for contracted union labor where the NSF paid not
only for the billable hours, but also a 32% surcharge to the union itself. That total invoice was in excess of $95,000.

When totaled, the NSF pays over $300,000 in concert production costs alone (lights, sound, video, stage).

Finally, the 2020 budget allocates $325,000 for Grounds Entertainment.

CAPITAL EXPENSES & PLANNING

As of now, there are no major capital improvements included in the 2020 budget. The relationship with the 1868
FOUNDATION is not strong, and it would benefit the 1868 FOUNDATION greatly to be presented with a major project to
focus their attention on. Given current IRS filings, the foundation currently uses approximately 70% of their income for
operating expenses. When presented with a major capital project, we hope to see this ratio improve for our donors and
substantially benefit the fair experience.

While the foundation has its own board of directors, it is very important for the Nebraska State Fair to be conscious of
foundation matters. At the end of the day, the 1868 Foundation’s purpose is to serve the Nebraska State Fair, no
different than a school’s foundation is the fundraising arm of that school.
DEBT, INTEREST, & DEPRECIATION

On January 23, 2020 members of the NSF Board met with representatives of all banking partners at FIVE POINTS BANK
to discuss the business plan for the upcoming year. At this meeting, there was discussion of the debt level the NSF
carried, as well as the usage of a short-term LOC to provide cash flow assistance of the coming months. It was
communicated to the bankers that the LOC would be repaid in early 2020 (which is now paid off) and the budget
changes that were going to be made to insure sustainability of the NSF. The banking partners were pleased with the
changes that were being made by Lori Cox and her team.

In conclusion, this organization suffered from too many operationally loose processes and procedures. This “looseness”
has invited people to take advantage of billing the fair and is the poster child for “the good ol’ boys club”. Even at the
smallest levels, it made it easy to accept because no one was ever asked questions about the financial details.

Below (Exhibit A) you will see figures taken from a document I produced that identifies $6,356,762 of expenses.

As the NSF moves forward, it is necessary that this board, staff, and the new Executive Director vow to eliminate waste
in order to maximize the fair’s future. Business as usual isn’t good enough anymore. Too many people have taken
advantage of the fair’s wonderful brand, and it can’t be tolerated any longer.

I vehemently request this information be released to the public, as well as the posting of our budget to the website.

For 6 months, I have been working on this analysis. Our former CFO frequently provided cryptic financial reports that
drew questions but were often dismissed. When he resigned and made comments of bankruptcy, I was asked to step in
and assist our Executive Director in reviewing our financial processes by our bankers.

4 months ago, I provided guidance to Lori Cox and her team with what information I wanted examined, and within 2
weeks she and her group uncovered what they felt were unlawful practices. She then notified our legal team of the
findings. While we understandably must allow the legal processes to play out, we have been silent as a board about
these operational findings. The only action item taken by a new board majority was a decision to terminate our
relationship with Ms. Cox; albeit without knowing all of the facts of what had been uncovered. This decision was
untimely because of the additional costs incurred, the uncertainty of the 2020 fair, and if the new majority wanted to
end its relationship with our Executive Director, we could have just simply not renewed her annual contract this fall.

With all that said, for the past 2+ months, I have requested (and been denied) that this information – along with budget
financial information – be released to the public. The lack of transparency creates poor trust from our patrons.

Frankly as the former mayor of the host city (who contributes nearly $400,000 per year of tax in lottery fund matching
dollars to the fair) I want Grand Island citizens to know that the NSF is not going to waste their money any longer. I
worked hard to lead the effort in voters approving a perpetual occupation tax to help fund this quarterly tax obligation
from Grand Island; I’m not happy to see how this money has recently been squandered, nor the recent decisions made
by this board that have cost us, by my estimation, $125,000+ of additional expenses over the past 4 months.

Respectfully,

Jeremy Jensen
Governor Appointed NSF BOARD MEMBER – Grand Island, NE
Finance Committee Member
EXHIBIT A: (Unaudited calendar year 2019 vendor expenses as provided by staff)
AMOUNT / VENDOR NAME / STAFF DESCRIPTION OF SERVICE PROVIDED

$11,250 Adventure Enterprises Shuttle.

$21,012 After Hours Graphix Car wraps.
$18,473 American Fence Co. Fence rental and install
$7,850 AMGL Payroll termination payouts
$27,060 Animal ID Aksarben DNA
$49,850 Arrow Stage Lines Bus
$58,075 Audio Visions Show Productions Sound, Stage, Lights
$39,422 BDA Productions Don Adams Concert Production
$25,989 Best Western Hotel rooms
$29,625 BKD CPAs Audit expense.
$2,831 Block and Company VEO Equipment
$140,085 Borders Inn and Suites Hotel rooms
$5,590 Bob Stahla Mobile Homes Check in trailers.
$41,198 Bosselman Enterprises Fuel.
$29,064 BRAINSELL Education package for SAGE
$8,710 The Brand Co. T-shirts
$95,325 Britten Printing Main gate, decals, etc.
$23,000 BRUNKS Parking
$34,691 Capital Business Systems Printer, office supplies.
$24,565 Carpenter Paper Company Cleaning supplies.
$178,885 Cardmember Services Credit Card usage.
$195,197 Computer Concepts Security cameras, IT, etc.
$10,405 Concrete Dream Rock band.
$25,934 Copy-Cat Printing Printing.
$17,911 Crowd Control Warehouse Bike Rak security around taverns.
$19,265 Douglas Bookkeeping Payroll services Jan thru Aug.
$289,377 Double Locked Security Security Services.
$13,296 Draft Wagon Beverages.
$42,100 Eberl Plumbing Drainage.
$18,267 Eclipse Inc. T-shirts.
$43,720 Emspace Public relations firm.
$26,242 EVENT PRO Software for Jaime Parr.
$18,500 Eventcorp Services Survey.
$51,669 Event Staging Systems Stages around the grounds.
$2,454 FARMTEK Landscape suppliers.
$717,215 Fonner Park

$2,500 Galaxy Digital Volunteer Program Software.

$7,968 Gist Silversmiths Belt Buckles for Equine.
$9,679 Gladstone SHOWORKS.
$47,195 GI Independent Visitors Guide and Advertising.
$42,640 GI FIRE Ambulance services.
$83,275 Granstan Services Streaming video services.
$7,833 Happy Brush Grounds Decoration
$48,351 Heartland Events Center Ticket convenience fees.
$13,186 Henn Signs I-80 Billboards.
$94,510 Holiday Express Bus.
$50,290 Hooker Brothers Arena dirt, rock at livestock barns.
$56,665 HYVEE Catering services, bands, etc.
$97,997 IATSE Union labor for stagehands.
$15,973 Ike Sankey Team Lead – Equine.
$13,970 Infuze Marketing alternative.
$6,704 Island Supply Welding Purchased a welder.
$30,750 J&M Displays Pipe and Drape for trade show.
$10,000 Jerry's Sheet Metal HVAC project.
$14,443 Johnson Brothers Tavern inventory.
$16,014 Jorgenson Farms Aksarben Calf Challenge steers.
$26,844 Kayl Heating and Air HVAC service.
$2,005 K Bar J Enterprises Leather awards for exhibitors.
$27,875 KC Golf Cart On grounds transportation.
$4,028 Kelly Plucker Legal/Liquor License.
$17,888 D Kennedy Construction Cattle barn cleaning.
$1,095 Kriewald Cookie Creations Board room cookies, Grand Marshall events, etc.
$6,400 Leach Camper Sales Campers for IATSE.
$51,701 Lincoln Tent Tent coverings for the grounds.
$25,463 Marquee Event Rentals Spier Tent.
$54,191 MH Equipment Forklifts, scissor lifts, equipment rental.
$103,608 Middleton Electric Temporary electrical distribution.
$60,347 Midwest Tent and Events Tent coverings.
$32,609 Midland Ag Services Luebbe Lot rental.
$41,128 Mid NE Feeds Shavings/Straw/hay.
$10,450 Mid Plains Equipment Trailer.
$41,586 Susan Milford ***UNKNOWN BY STAFF***
$24,000 Monochroma Selfie Mural.
$2,947 Merch Traffic Concert Merchandise Sales.
$4,900 Nanonation Kiosks.
$29,010 Navitas Credit Corp Lease pmt for bleachers purchase.
$22,139 Nebraskaland Distributors Tavern inventory.
$9,700 Nebraska Pedal Pullers Entertainment.
$35,000 Nebraska Bush Pullers Entertainment.
$68,614 New Wave Concrete Sidewalk.
$163,487 NMC Equipment Rental.
$12,443 Office Net Office supplies.
$26,000 On Target Challenge Fire Fighter Combat Challenge.
$135,404 O’Neill Wood Resources Cleaning, refuse hauling, etc.
$497,514 ONE TIME VENDOR Unclassified Expenses.
$8,168 Petty Cash
$7,225 Phillips Rodeo Co High School rodeo.
 $18,295 Platte Valley Comm. Radio rentals.
$3,789 Production Creek Specialty Director Chair Awards.
$4,923 Quench Fine Wines Tavern inventory.
$30,164 Radcliffe & Associates Lobbyist in Lincoln.
$1,400 Regal Printing Read and Win prize packet prints.
$2,326 Rent and Drive Campground concert van rental.
$8,164 Republic National Dist Tavern inventory.
$10,500 Reserve Account Prepaid postage meter.
$7,573 Rixstine Recognition Awards, trophies, plaques, etc.

$45,000 Romeo Entertainment Concerts/Talent agent.

$8,280 S&S Bleachers Bleacher rent.
$68,257 Sankey Pro Rodeo Roughstock Rodeo.
$18,481 SCS Engineers Fuel tank at old fair site in Lincoln.
$33,617 SOS Portable Toilets Porta potties.
$25,003 Spectrum Specialty Insurance Rain insurance.
$29,246 Sunbelt Rentals Misc equipment.
$740,647 SWANSON RUSSELL Ad buys, marketing.
$9,520 Teskeys Saddles.
$3,504 Theatrical Media Services Infrastructure set-up.
$4,925 The Jodel Group Phone charging stations.
$10,685 Time Management Services Time clock.
$22,100 Tina's Cleaning Service Nebraska Bldg cleaning.
$67,420 TMS Production Integration Stage/Sound/Lights.
$5,360 Total Music Services Instrument rental for bands.
$66,000 Trams R Us Tram service on grounds.
$26,285 Trust Trust Operations Employee Benefit.
$17,315 T-Shirt Engineers T-shirts.
$34,997 University of NE LINCOLN 4H bill.

$234,646 United Health Care Employee Health Insurance.

$11,000 Vision Productions Galaxy of Stars.
$26,725 Wade Shows Carnival.
$7,186 West Point Design Cattle Shade Structures.
$16,200 Windstar Lines Bus.
$6,356,762

EXHIBIT B: (Examples of Seasonal Payroll Records)

Employee 1
469.86 Hours @ $12
202.313 Hours @ $18 (OT)
$9,279.96 TOTAL
Employee 2
253.75 Hours @ $17.50
117.75 Hours @ $26.25 (OT)
$7,531.57

Employee 3
111.2 Hours @ $12
103.65 Hours @ $18 (OT)
$3,200.10

Employee 4
122.1 Hours @ $12
116.35 Hours @ $18 (OT)
$3,559.50

Employee 5
110.61 Hours @ $14
80.5 Hours @ $21 (OT)
$3,239.04

Employee 6
117.54 Hours @ $12
106.28 Hours @ $18 (OT)
$3,323.52

Employee 7
204.663 Hours @ $14
53.933 Hours @ $21 (OT)
$3,997.88

Employee 8
SEASONAL HELP
1 x $5,000
4 x $5,000
$25,000

Employee 9
232.257 Hours @ $15
59.32 Hours @ $22.50 (OT)
$4,818.55

Employee 10
112.35 Hours @ $13.50
97.91 Hours @ $20.25 (OT)
$3,499.41

Employee 11
91 Hours @ $13
63.67 Hours @ $19.50 (OT)
$2,424.57

Employee 12
222.497 Hours @ $12
64.713 Hours @ $18 (OT)
$3,834.80
Employee 13
6 x $2,000
1 x $2,000
$14,000

Employee 14
1 x $1,000
1 x $9,000
$10,000

Employee 15
Seasonal Contract
$15,000

EXHIBIT C: (SAMPLE PROCUREMENT POLICY)

Sample - NEBRASKA STATE FAIR PROCUREMENT

POLICY

Any purchase up to $500 is done at the discretion of the Department Head (provided it does not
exceed the annualized budget authority for the line item it will be categorized under).

Any purchase from $501 to $9,999 must have documented and written approval from the Executive
Director (provided it does not exceed the annualized budget authority for the line item it will be
categorized under). This approval record is to be kept for no less than 5 years by image or paper file,
which are easily accessible by staff and auditors.

Any purchase that is estimated to exceed $10,000 shall be posted to the appropriate area on the NSF
website in an area that is clearly identified (labeled NSF-RFPs ???) for businesses to view who would
like an opportunity to provide products and/or services to the Nebraska State Fair for RFP. Under
normal circumstances within the RFP, the NSF will provide no less than 15 calendar days for submission
of bids (may be received in the form of paper or electronic submission), and all bidders will be notified
by phone or email of the bid decision. While the NSF needs to be cost conscious, the winning bid
should not be solely based upon cost. After bids have been reviewed, should the winning bid exceed
budget authority, the Executive Director will need to bring bid forward to the NSF board for approval
to exceed budgeted spending limits.

o In the case of a time sensitive emergency, the NSF staff should make reasonable
accommodations to seek multiple bids for the service or purchase. In the case of emergency
and exceeding budget authority where purchase needs to be made before it can be presented
to the entire board for approval, it must be communicated to and seek approval from the
Executive Committee prior to purchase, with an email explanation provided to the entire board
after of the situation details.
o It is very important to create a standardized RFP format yet one that will still allow for details to
be listed for specifications of RFPs.

o There should be a database kept of all RFPs we receive, so in the future, they are notified again
when appropriate opportunities arise.

Example: If we ask for an RFP of concrete work, and we receive 6 bids, we should keep
a record of all 6 so when we send another request for concrete work all 6 are primary
contacts; in addition to the generic RFP posting to our website for anyone to view.

o All RFPs should clearly define when bids are due, and all respondents should be provided
communication after the bid decision is made, and within 24 hours after bid closing.

o All bid-winning details should be reported monthly to the NSF Board. From time to time, board
members may be asked by a vendor why they didn’t get a bid, or who won a bid. It is important
for board members to at least have basic knowledge of these large purchases; but once again it
shouldn’t be necessary for the board to approve any of the bids UNLESS THEY EXCEED BUDGET.

o All respondents of RFPs should be asked to declare if they (or any of their immediate family)
have any family relationship to current or past NSF Staff, or Board of Directors. While this
relationship should not disqualify any bidder, it needs to be at least declared for disclosure
purposes. False declarations should be subject to automatic bid disqualification.

o No “verbal quotes” should ever be accepted in response to RFP.

o All RFPs should consider “Sponsorship Trades” in lieu of payment, or in lieu of partial payment
of, RFP’d products or services.

Example: Company XYZ submits a bid for $15,000 for a service. If XYZ submits a bid for
$5,000 cash payment and the other $10,000 be done in a form of a sponsorship, then
the NSF is only going to have to spend $5,000 of cash for that particular service. All
RFP’s should provide the vendor the opportunity to “donate” said service, or
partially/fully provide the product or service in the form of sponsorship. ***this would
require clear communication with Laura Hurley***