Steve Monroe: We are here today with David Schless, president of the American Seniors Housing Association. David, your Seniors Housing PAC had a balance of more than $480,000 as of the end of July, or almost double the amount from a year ago. How is this going to help the seniors housing industry?

David Schless: Well, having a strong government affairs program really necessitates having a strong political action committee. And we’ve really made a very concerted effort over the past several years to strengthen our PAC as a part of our overall plan and efforts to strengthen our voice in Washington, DC. And so we really have the ability, with these resources, to develop ongoing, sustainable relationships on a bipartisan basis with members of Congress involved in issues that are really central to the seniors housing business.

Steve Monroe: Do you know how you’re going to allocate most of those funds in the next 12 to 18 months or so?

David Schless: Typically what we do is evaluate, and certainly we will following the November elections, the key committees that we focus on, which would be the Senate Aging Committee, the Senate Finance Committee, House Ways and Means Committee, as well as other committees that have primary jurisdiction over our industry, and using a steering committee comprised of several members of American Seniors Housing Association, we really identify a strategy that really guides us in terms of the individuals that we see as being champions of our issues and allocate the resources, really, according to that strategy.

Steve Monroe: With the significant jump in funds that you’ve raised in the last year or two, is that being noticed up on the Hill, and are the key legislators listening more to the concerns of the industry and doing something about it?

David Schless: Well, I think really what we have been able to do over the past few years is begin the process of establishing ongoing relationships and really providing good education to members of Congress who are involved in legislative activity that affects our industry that haven’t historically understood where our business was, who we served. And so I think we have really made some tremendous strides in that whole educational process. And, again, I view this really as a marathon as opposed to a sprint. And so for us it’s important to have the presence on a long-term basis. And so some of it for us is really more of a defensive strategy in terms of really having a consistent presence over many, many years. And that’s really where we are.

Steve Monroe: What would you say were your key legislative victories in the past 12 to 18 months?

David Schless: Without question, this year was a tremendous year for the industry on an issue that has really been problematic for close to 20 years, with respect to the tax treatment of CCRC entrance fees and other deposits. And this past year, through a very concerted effort with American Seniors Housing Association, several of our members that are very involved in continuing care, American Association of Homes for the Aging, we were able to really fix what had been a very unusual, arcane piece of the tax code, in essence, where we were penalizing individuals who were paying privately for their long-term care by treating their entrance fee as a below-market loan. And that victory for us was the result of really many years’ effort and came in the budget and tax bill that was signed by the president in May under very difficult circumstances. So that was really, I think, a tremendous legislative victory for the industry that we feel very pleased about. We do need to try and continue working to make that tax change permanent, and so that—

Steve Monroe: Oh, it’s temporary?

David Schless: All of the tax measures today now have a ten-year sunset. And so that is something for us that we are already working on, trying to find an opportunity to make that permanent change to the tax code.

Steve Monroe: What else do you have teed up for next year?

David Schless: 2007 for us will certainly be a year where we’ll continue to focus on key areas of interest for us, certainly looking for the permanent status of the tax legislation that I discussed previously related to entrance fees and deposits. We certainly have been very involved over the past year in immigration reform, and, again, looking at this as an industry that certainly has interest with respect to how the whole verification process could impact our business. So that’s an issue we see being potentially very active in 2007. And we certainly expect to continue working, as we have for many years, on tax-related incentives, encouraging individuals to plan and pay privately for long-term care. And that is—long-term care insurance is definitely something that we see continuing to be a very active issue for us.

Steve Monroe: Okay. Is there anything going on legislatively now at the state level that you see your association getting involved with?

David Schless: Really, over the years, ASHA has been involved in a limited number of state issues. Typically, for us, our involvement would be limited to issues that we see as having national prominence for senior housing providers. So, for example, we do look at legal reform or tort reform as something that we’re willing to contribute our resources to where we see efforts in particular states that really appear to offer our industry some benefits. And so that’s an area that we certainly look at.

Steve Monroe: Like in Texas a year or two ago?

David Schless: Texas would be a great example, Florida previous to that, where we are willing to make financial contributions. And typically there are coalitions that are developed at the state level. So that’s definitely an area. Over the years it’s been selective for us, because really our orientation is on the federal side.

Steve Monroe: Okay. Now, let’s switch the subject for just a second. There has been a lot of talk about the Republicans losing maybe one or both houses of Congress in November. Maybe now with interest rates softening and gas prices coming down that won’t happen. But if that happens, will the change in committee heads have any impact on the seniors housing industry, and will it have any impact on your PAC?

David Schless: You know, I think there’s no question. The party that is in the majority really has influence over the agenda. And certainly, for example, the Senate Aging Committee, which has been chaired by Republican Gordon Smith, from Oregon, has really been very focused on issues related to long-term care financing and things of that nature, less focused than others have been on issues related directly to assisted living quality. So there’s no question that the majority power will dictate the agenda.

And I think certainly with respect to many of our issues related to the tax code and tax policy, a change in leadership there would most certainly have an impact over our issues and our ability to make changes within the tax code. And, again, really, we constantly examine our PAC priorities and our strategies in terms of who we’re supporting. Again, as I mentioned earlier, having the resources that we have in the seniors housing PAC now does really give us the ability to support, on a bipartisan basis, members of both parties, which really is a tremendously beneficial thing for us.

Steve Monroe: Okay. It’s been discussed a lot in the last year that the industry is probably in the best financial shape it’s been in a decade, if not two decades. What do you see as one of the—one or two of the biggest challenges over the next several years for the industry?

David Schless: You know, I think the industry is certainly in tremendous shape today, and I think the important thing really is to make sure that people stay focused on continuously trying to improve what they do, stay focused on the operations. And I think we’re really at a very exciting period in time where new technologies and other types of opportunities to mold the product and the services in a more efficient and enhanced fashion are out there. And I think it’s a real important thing for the industry to remain focused on continually trying to improve your product and your services. And I think that’s something that, over the next several years, hopefully the owners and operators will continue to look at.

Steve Monroe: You know, your association gets a lot done on a small staff. Other industry associations have a much larger staff, much larger budgets. Yet your membership, if I’m correct, has probably doubled or more than doubled in the past five years. Your PAC funds have quadrupled. But your staff is still three to four people. How do you do it?

David Schless: Well, you know, I think there’re a few things. Certainly we have been very blessed with a very strong group of leaders. Over the years, I think we’ve had just tremendous leadership in the organization, both at the executive committee, which is the more day-to-day leadership structure, as well as our full executive board. We’ve also had a great deal of stability in terms of not just the staff, but also the membership. And I think that has proven to be very helpful to us. We have not bounced around. Our focus and our purpose have really been very clear, and we’ve been very methodical about trying to stay focused on core issues. I think that’s been very helpful to us.

I think we’ve really, over the years, partnered very well with professionals in various areas that we have relationships with that really have allowed us to stay lean and mean, if you will, and that’s certainly proved helpful. And I think really just the sense of being good stewards of our membership, and we really focus on that all the time. And we spend our members’ resources like it’s our own money. And so we’ve just really always done that. And that’s one of the primary responsibilities I feel I’ve always had with the organization.

Steve Monroe: Just watching over those funds and making sure they’re spent carefully.

David Schless: Yes.

Steve Monroe: Well, the last question, as head of a growing industry association, other than your young kids, what—is there anything that keeps you up at night?

David Schless: Well, you know, I think for being—we always look for things that we can do better, ways in which we can really maximize the value of being a member of the association. And that’s the stuff that I think really I find myself thinking about sometimes in the middle of the night. And I think we’ve done many things well, but I think really everything we do can be done better. And, for me, those are the things that really continue to be things that I think about.

And there’s an evolution of probably every product that we do, where you look at it and you critique it and you say, “Okay, this is good, maybe it’s very good, but if we did X, Y or Z, we can make that even better.” And I think also, for me, keeping our dues structure really so that people feel that it’s a great value, that they really get a lot out of their membership dues. Those are probably the things that really gnaw at me more than anything else.

Steve Monroe: Well, from all I hear, I hear you’re doing a great job, and just want to thank you for spending some time with us today.

David Schless: It’s a pleasure. Thank you so much.

Steve Monroe: Okay.

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