July 19: Peer Subcommittee transcript (ALC)

Peer Subcommittee, Arkansas Legislative Council (ALC)

July 19, 2022

 

Gray [00:03:33] Chair sees a quorum. The first item on the agenda is to suspend the rules so that we can hear the supplemental agenda. Got a motion and a second. All those in favor aye. Opposed nay. Motion carries. 

 

BLR Staff [00:03:50] Thank you, Madam Chair. We’re in the first section of the agenda. This is section B. These are the various temporary appropriation increase requests. The first item is a letter from the Secretary of State. It’s for $1,083,000 in appropriation. This is to contract with a vendor to produce an online and searchable campaign filing reporting system in accordance with Act 1029 of 2021. It’s supported by the State Central Services Fund. The next item is a letter from North Arkansas College. It’s for $3 million in appropriation, and it’s to construct a center for robotics and manufacturing innovation facility. This is supported by a transfer from the Reserve Fund last year. That was in June of 2021. Next item is Arkansas School for the Deaf. This is at the Department of Education. It’s for $950,000 in appropriation. And this has just been carried forward funds on special maintenance, construction, renovations and repairs. Next item is a letter from DHS Division of Aging. It’s for $3 million in spending authority. It’s to cover operational costs of senior citizens centers. The letter explains the hardship the public health emergency has put on revenue for these centers. And this is supported by restricted reserve fund transfer requests that will be later in the agenda. That’s item H4. The next item is from the Department of Public Safety. It’s for the Division of Arkansas State Police. It’s for $1,053,000 in appropriation. And this is utilized bond revenues for construction projects. Madam Chair, those are all various temporary appropriation requests. 

 

Gray [00:05:15] Alright. Thank you. Alright. Do I have any questions on item B1? Item B2, North Arkansas College? B3? Alright. Hit your button.

 

Fite [00:05:34] Thank you, Madam Chair. My question is about the Department of Human Services, Division of Aging, Adult and Behavioral Health. 

 

Gray [00:05:43] Alright. You want me to get them to the table? 

 

Fite [00:05:45] Yes, please. 

 

Gray [00:05:46] If I could have someone from the DHS please come to the table. If you will, please state your names for the record. And then Representative Fite you’re recognized to ask your question.  

 

Hill [00:06:16] Jay Hill with the Department of Aging, Adult and Behavioral Services. 

 

Eubanks [00:06:20] Misty Eubanks, CFO for the Agency. 

 

Fite [00:06:25] Thank you so much. I’m very much in favor of this. In fact, this was my proposal. I just want to be sure that the triple A’s are being used as a passthrough only and that this money will be going directly to our senior centers that so desperately need it and money will not be taken out of this for administration. 

 

Hill [00:06:46] Representative, you are correct. This will be– all the funding will go directly to the, to the senior centers. We have used the triple A’s in the past when there were special funding, special funds granted to the senior centers. We have those mechanisms already in place. It is a much quicker process for us to be able to channel the funding out to the senior centers, but the funding in its entirety will be directed to each of the state senior centers. 

 

Fite [00:07:11] Thank you for that clarification. 

 

Gray [00:07:14] And I’ve got a question. Are we using the same formula that we use to distribute the funds, or how are we doing that? 

 

Hill [00:07:20] We will be using the federal funding formula that is currently in place to distribute funding to the centers. 

 

Gray [00:07:25] Okay. 

 

Hill [00:07:26] Yes, ma’am. 

 

Gray [00:07:26] Thank you. Are there any other questions while we have them at the table? Hold on. Representative Fite has one more question. 

 

Fite [00:07:34] Yes, just a follow up. What is the timeline on this? 

 

Hill [00:07:37] We will begin doing that as soon as the funding is released. We are, we’re prepared to begin distributing funding out to the triple A’s. 

 

Fite [00:07:44] Do you have any idea of exactly when? 

 

Hill [00:07:46] I don’t. I can get that for you, Representative. 

 

Fite [00:07:48] Thank you. 

 

Gray [00:07:51] Alright. Senator Irvin, you are recognized. 

 

Irvin [00:07:54] Thank you. I’d like to request that you send, you know, the specific amount and then copy us in the legislature. Because a lot of times we hear that they do not, did not receive funding or they need more fund– whatever. And I just want to make sure we have clear communication between your department, the senior centers, and then I need you to copy legislative council on that so that there’s no questions after this funding has been released. 

 

Hill [00:08:27] I’d be happy to. 

 

Irvin [00:08:28] Thank you. 

 

Gray [00:08:29] Alright. Thank you. Seat 75, you’re recognized. 

 

Wardlaw [00:08:35] That’s me. 

 

Gray [00:08:36] Representative Wardlaw, you’re recognized. 

 

Wardlaw [00:08:38] Thank you, Madam Chair. I just want to echo Senator Irvin’s request. We need to know when the funding is going to be present as Representative Fite asked. We need to know all that by Thursday. So if you can have all that ready to distribute to council by Thursday, that would be great. Thank you, Madam Chair. 

 

Hill [00:08:55] May I clarify? Is that the amounts to the senior centers or the timeline for release of the funding? Both? 

 

Gray [00:09:09] Yeah, if you can get that to us Thursday so we’ll have it for ALC on Thursday. That’d be great. 

 

Hill [00:09:14] Yes, ma’am. 

 

Gray [00:09:15] Alright. Are there any other questions? Alright. Thank you. Are there any questions on item B5, Department of Public Safety? Alright. Seeing none, I’d entertain a motion to adopt Items B1-5. Got a motion and a second. Any discussion? All in favor aye. Opposed nay. Motion carries. Move on to item C. 

 

BLR Staff [00:09:45] Thank you, Madam Chair. We’re in section C of the agenda. These are the CARES appropriation requests. There’s only one item on the agenda. It’s for Arkansas PBS. This is for $465,000 in spending authority. This is to complete expansion of their broadcast footprint to reach 99.5% of available homes. 

 

Gray [00:10:04] Alright. Are there any questions on item C? Alright. Seeing none, I’d entertain a motion to approve this item. Got a motion and a second. Any discussion? All in favor aye. Opposed nay. Motion carries. Item D. 

 

BLR Staff [00:10:24] Thank you, Madam Chair. We’re in Section D. These are the American Rescue Plan appropriation requests. The first item is for Arkansas Northeastern College. It’s for $109,000 in appropriation. This is to distribute the remaining student portion of emergency financial aid grants and to provide technology and service HVAC systems. The next item is D2 for Southeast Arkansas College. It’s $377,000, and it’s to continue appropriation into fiscal year 2023 for technology related expenses approved in fiscal year 2022. The next item is Southeast Arkansas College. This is, again, SEArk. This is for– this is a request to reallocate previously awarded appropriation. This will correct their budget and place appropriation in the proper line item to make computer purchases. And D4 is the Department of Commerce, Arkansas Economic Development Commission. It’s for– this is an ARP Steering Committee award, and it’s for $41.7 million. This is to continue the rural broadband program by providing payment of the remaining broadband grants, and that’s through a reimbursement process. And it’s to fund the CTEH contract. Madam chair, those are all the ARP requests. 

 

Gray [00:11:32] Alright. Thank you. Representative Dotson, you’re recognized. 

 

Dotson [00:11:37] Thank you, Madam Chair. And staff may be able to answer this. Is this additional award on the broadband grants for a new release of funds or is this something we’ve already approved in the past and it’s just a continuation after the fiscal year? 

 

BLR Staff [00:11:59]  I would need to defer that to the agency to get an answer. 

 

Gray [00:12:04] Alright, we’ll just kind of go out of order here. If I could have someone come up from Department of Commerce? If you could, just please state your name for the record. And then Representative Dotson, you’re recognized. 

 

Hudson [00:12:18] Good morning. Jim Hudson, Chief of Staff, Department of Commerce. Heard the question, Representative Dotson. It’s continuation only. It’s not a new award. There’s no new money coming in. These are mainly the monies for projects that were approved by this body last year. We just haven’t paid the money out yet, so the fiscal year’s reauthorization. 

 

Dotson [00:12:37] Do you have any idea when the next tranche of funding is going to be released and considered for additional projects? 

 

Hudson [00:12:46] Well, we’re hoping to do one more round this calendar year. We’ll be talking in executive subcommittee tomorrow about some proposed emergency rules that would lay out the process for that. But it would be our hope to be able to come back to ALC in the November timeframe with projects identified and requesting appropriation at that point. 

 

Dotson [00:13:09] And those would be largely ARP funds–. 

 

Hudson [00:13:12] Correct. 

 

Dotson [00:13:12] –or would they be part of the infrastructure? Do we have any idea what that’s going to look like yet? 

 

Hudson [00:13:21] That’s the $1 billion question. It will all be ARPA for this year. 

 

Dotson [00:13:26] Okay. 

 

Hudson [00:13:26] You know, I think the, the infrastructure money, we’re not going to see that until probably Q2 of 2023. And the amount’s still undetermined, minimum of 100 million. Estimates have gone as high as $1 billion. 

 

Dotson [00:13:41] Wow. Thank you. 

 

Hudson [00:13:42] Yes, sir. 

 

Dotson [00:13:43] Thank you, Madam Chair. 

 

Gray [00:13:46] Alright. Does anyone else have any questions while we’ve got them at the table. Senator Irvin, is your question for them? 

 

Irvin [00:13:53] Yes. 

 

Gray [00:13:55] Okay, you’re recognized. 

 

Irvin [00:13:57] So just building on what Representative Dotson was talking about, can you be– are these grants that were in the pipeline under both programs? 

 

Hudson [00:14:07] So that– yeah, for this continuation appropriation, this would have been for projects that you approved last year, 2021, that– you know, using ARPA funds and using the program as it was designed at the point that you approved the appropriation. 

 

Irvin [00:14:23] Okay. 

 

Hudson [00:14:23] So there’s two different categories at that point. Some were– actually, probably all this money would be reimbursement money. So it’d be the money from November. 

 

Irvin [00:14:31] Okay, so it’s the reimbursable. Okay, thank you. And I’d like to visit with you sometime today or tomorrow. Thank you. 

 

Hudson [00:14:37] Happy to. 

 

Gray [00:14:39] Do I have any other questions while we’ve got him at the table? Alright. Thank you. 

 

Hudson [00:14:43] Thank you, ma’am. 

 

Gray [00:14:44] Alright. Are there any questions on D1, Arkansas Northeastern College? Item D2? Or Item D3? Alright, seeing none, I’d entertain a motion to approve items D1-4. Got a motion and a second. Any discussion? All in favor aye. Opposed nay. Motion carries. Item E. 

 

BLR Staff [00:15:17] Thank you, Madam Chair. We’re in Section E. This is the Infrastructure Investment Jobs Act appropriation request. This is for the division of Environmental Quality Weatherization Assistance Program. This item was  re-referred back to Peer last month from ALC for more discussion. The first page is a letter explaining the agency, they could move forward with the notice of intent that was due on July 1, and then if the appropriation is not granted, not move forward with the application. The next page is the request for $32.8 million in appropriation. And the last four pages are more information on the weatherization assistance program and map showing the distribution of funds. 

 

Gray [00:15:58] Alright. Thank you. Are there any questions on item E1? Senator Hickey, you’re recognized. Do we need to get someone to the table? 

 

Hickey [00:16:09] Yes, probably so. 

 

Gray [00:16:32] Alright. If y’all will, please state your names for the record. 

 

Bengal [00:16:38] Lawrence Bengal, Chief Administrator for Energy Programs at E&E. 

 

Joiner [00:16:43] Kay Joiner, Senior Programs Manager for the Arkansas Energy Office. 

 

Simpson [00:16:48] Mitchell Simpson, Director of the Arkansas Energy Office at E&E. 

 

Gray [00:16:52] Alright. You’re recognized, Senator Hickey. 

 

Hickey [00:16:54] Thank you. And I’m up here. There may be other questions. But the one that I had asked before, we had discussed, like, the insurance that, I guess, not only that the, what I’m going to refer to as the subcontractor or the contractor, I think as you all call them, that they’re, that they’re carrying on these things. But then also, as I understand– it was our understanding from the last meeting that the, that the one that was administering the program– are those called CAC’s? Is that right? 

 

Simpson [00:17:26] Community Action Agency, CAA. 

 

Hickey [00:17:28] CAA. My apology. That’s why I asked. The CAA’s, that they actually had a representative that was going out to make sure that the work had been performed correctly. In the way that I see it, they’re actually taking on, you know, some liability by doing that. Because if something is not performed correctly and then they don’t catch it, then at some point, if, if a home or something of that nature gets in bad shape, which I’ve had some experience with this and know that that can happen and does happen, you know, where does the consumer, how, how are they going to be made whole in that event? So if you could expand on the thing and tell me what type of limits on the liability that you all are requiring from both the CAA and also the contractor? 

 

Simpson [00:18:21] Yes, sir. Happy to talk about that. So after our last discussion, we went back and checked with all of the community action agencies and got confirmation that both the CAA’s or the providers, as we call them, and the contractors all carry general liability insurance. Those, those limits are– those premiums or those limits range from $100,000 to $1 million per occurrence, with the majority being half a million dollars or more. 

 

Hickey [00:18:53] Okay. So who, who is verifying? I mean, I think we need to have a set amount on that. If it’s $100,000 per house, somebody is going to have to be making sure that, that, that all of those insurance is always up to date. Who’s doing that? 

 

Simpson [00:19:13] So our Department of Energy and Environment monitors, monitors that and makes certain that each of the providers and their contractors retain their required insurance levels. So just like when we recently did, we, we poll them to make sure they provide their information to us and we keep those on file, that information on file. 

 

Hickey [00:19:34] Okay. I heard you say $100,000 to $1 million. Does your department plan on trying to develop some consistency with that? 

 

Simpson [00:19:44] Yes, sir. We’ll, we’ll be in discussion about what the appropriate limits are. We know the $100,000 occurrence that we heard, that was from one of the participating contractors. All of the providers have policies, as I mentioned, from half a million to 1 million per occurrence. But we will work with them to make certain that the contractors have higher liability ranges, if you will. 

 

Hickey [00:20:11] And before we vote to pass this, at least from my standpoint, what are you, what are you all going to require before these funds are disbursed? I mean, you’re saying you’re going to work with them. I need, I want to know the amount sitting here at the table while you’re on record.  

 

Simpson [00:20:33] We’ll be pushing all of the providers and the contractors to to get about $1 million in liability insurance. 

 

Hickey [00:20:44] Per occurrence? 

 

Simpson [00:20:45] Per occurrence. Yes, sir. 

 

Hickey [00:20:46] Alright. So each, each home that they’re going to go into, they’re going to have $1 million worth of coverage. So if they do 10, 10 homes, you’re telling me that they’re going to be carrying, they’re going to be carrying $10 million on those? They do 20, 20 million? 50, 50 million? 

 

Simpson [00:21:06] Yes, sir. That’s correct. 

 

Hickey [00:21:08] Okay. And whenever you say both of them, are you telling me that that the CAA is going to carry– are you talking about the cumulative total or each one of them is going to be, going to be doing that? 

 

Simpson [00:21:21] Each will be required to carry those, those liability ranges. 

 

Hickey [00:21:26] Okay. Alright. So in other words, there’s going to be a limit of $2 million on one home, $1 million from the contractor and $1 million from the CAA? 

 

Simpson [00:21:41] Yes, sir. 

 

Hickey [00:21:45] Do you think that’s going to– you know, I’m sitting here asking for this. And, you know, I don’t know if that’s cost effective or not. Did we ever– did we check– did we check before we’ve done that? I mean, I thought that’s what we were doing while, while we were in this off time. You know, we referred this, this back to this committee. We referred this back to this committee and then we come in here and say about a million. I mean, I don’t guess I understand what we did during the off time. Did we just sit and wait to get back here? 

 

Simpson [00:22:14] No, sir. The only reason I said about a million is because we have one provider that has a half a million dollars per occurrence. All of our other providers have 1 million per occurrence. We have two contractors that participate in the program that have about $100,000 per occurrence. The rest have 1 million. So we just have about 2 to 3 entities that we have to work with in order to raise their policy limits. But the majority of the participants in the program are already operating at a $1 million per occurrence. 

 

Hickey [00:22:46] Okay. And you’re not– and so you’re not going to disperse funds until, until those limits are in place. Is that correct? 

 

Simpson [00:22:51] That is correct, sir. 

 

Hickey [00:22:52] Thank you, sir. 

 

Gray [00:22:57] Senator Irvin, you’re recognized. 

 

Irvin [00:22:59] Thank you. I’m just trying to go through the information you provided here. When I totaled up what you listed on these pages, it comes to a little over $2 million. So can you explain where the other $30 million will go? 

 

Simpson [00:23:21] The particular report that you have before you, Senator, is in relation to our annual weatherization program. So this is the program that operates every single year. As I understand it, when, when we were first before you, the request was information on how the current program operates. So that’s what you have before you. And on average, annually, we receive about $2-2.5 million for our annual weatherization program. 

 

Irvin [00:23:50] Okay. But this is $32,895,998 in the Infrastructure in Investment and Jobs Act funds allocated for the expansion of the Arkansas Weatherization Assistance Program. And so I’m going off this front letter where it talks about this is not on– this is new. This is new money from my understanding. 

 

Simpson [00:24:15] It is. I’m sorry. I misunderstood what you were referring to. 

 

Irvin [00:24:18] Yeah, I’m referring to this. Okay, so here we have $32 million. 

 

Simpson [00:24:23] Yes, ma’am. 

 

Irvin [00:24:23] And then here we have this sheet. 

 

Simpson [00:24:27] Yes, ma’am. 

 

Irvin [00:24:28] And then when I look at the further explanation as it’s broken down by amounts with the different community CAA’s– 

 

Simpson [00:24:41] Yes, ma’am. 

 

Irvin [00:24:42] And I, I total these amounts that only comes to $2,121,503. So, I mean, I’m happy for any of you to answer the question. 

 

Gray [00:24:58] And I think, Senator, Senator Irvin, I think the– what you’re looking at right there is what they already spent in funds that they normally get. And you guys correct me if I’m wrong. If you look at the very back page, there’s a map on there that shows, I believe that’s the funds that we’re looking at, this five year money, of how they will actually distribute it per county in the future. Is that a fair statement? 

 

Simpson [00:25:19] So this very first sheet that shows the breakdown that you were initially referring to, that’s our annual– that’s referencing our annual weatherization allocation, which is roughly $2-2.5 million per year. And so this was provided as an illustration of how the program normally operates, how funds are distributed. And then you’ll have, I think, in your packet, you’ll have this, this map that shows the $32 million in IIJA funds and how we anticipate those dollars will be allocated to the territories and the counties. 

 

Irvin [00:25:55] Okay. 

 

Simpson [00:25:55] So we have with the IIJA funds.. 

 

Irvin [00:25:59] That’s very confusing. 

 

Simpson [00:26:01] The IIJA funds, you can think of it as a plus up, if you will, to the regular weatherization program. It will operate essentially, aside from some of the changes that we’ve discussed here today, it will operate just like the weatherization program has been operating in Arkansas since the late ’70’s. And so it’ll continue to provide those same services. We just have 10 or 12 times more funds to do weatherization and weatherize more homes. 

 

Irvin [00:26:29] Okay. So this is going to be taking place in 2021 and 2022? 

 

Simpson [00:26:34] This will begin this fall should we receive funding. 

 

Irvin [00:26:38] So. I mean, because it says 2021, 2022. So why would that be 2021 then? 

 

Gray [00:26:47] There’s one more map. 

 

Simpson [00:26:52] This is current program year. So it should read Weatherization Assistance Program 2022 to 2027. 

 

Irvin [00:27:04] Okay. That could have given us a little more explanation. Thank you. 

 

Gray [00:27:13] Alright. And I do– I want to follow up on Senator Irvin’s question there because I was just totaling everything up. And it looks like when I look at that last map for the 2022-2027 years, it totals like $24 million. But the appropriation I’ve got here is the grants in aid is like $31 million. Can explain the discrepancy there? 

 

Simpson [00:27:37] Yes, ma’am. The remaining 15% of those funds go to administrative costs and training and technical assistance. What you see on the map refers strictly to benefits that actually go out into Arkansas communities. What’s not illustrated there on that map is the 15% for administrative and training and technical assistance. 

 

Gray [00:28:00] Okay. About how much of that do we actually keep for administrative costs? Do you know? 

 

Simpson [00:28:06] So there’s 15% of the fund is for administrative. The department shares that administrative cost with the community action agencies. So the department retains 2-3% of that 15%. The remaining 12-13% goes out to the community action agencies for their operations. 

 

Gray [00:28:28] Okay. Thank you. My board’s lighting up now. Hold on. Senator, and I’ll come right back to you. I’ve got seat 92. 

 

Hammer [00:28:39] Senator Hammer. 

 

Gray [00:28:39] Alright. You’re recognized, Senator Hammer. 

 

Hammer [00:28:41] Thank you. Could you– over here to your far left, over here. Good morning. Could you tell me how many contractors you have that are approved to do the work? 

 

Joiner [00:28:56] We have– each of the six weatherization providers have at least one contractor, one general contractor, and then they all have specialty contractors when needed, such as HVAC, electrical, and plumbing. That’s the current program. 

 

Hammer [00:29:18] And I’m reading over the notes as far as the selection of contractors. So the selection of contractors is just one who subs out to everyone underneath them or are those contractors considered also as part– the subs are considered as part of the total contractors you have?

 

Joiner [00:29:39] Well, the different providers have procured in different ways. And so sometimes they have a general contractor that subs out all the specialties. Sometimes they procure their own specialty contractors, as I mentioned, electrical, plumbing and heat and air. So it depends on how they procure. You know, they have to do it in an open and competitive way with sealed bids. 

 

Hammer [00:30:07] Okay. Thank you. 

 

Gray [00:30:12] Representative Dotson, you’re recognized. 

 

Dotson [00:30:14] Thank you, Madam Chair. Over to your right. So last month, this was a matter of great urgency to get done before the end of the fiscal year, June 30 or before July 1. And reading through your, your information here, you just needed to have a notice of intent by July 1, which I’m assuming you put in and did. When is this actually due to– I mean, when, when do we have to have the approval for this in order to qualify for the funds? And once we get that approval, does this qualify us for the entire– what is it– four or five years of the program? 

 

Joiner [00:30:56] Yes. It will qualify for the entire five years through 2027. The complete application is due to the department, the U.S. Department of Energy by October 1. We did submit our intent July 1, which, when approved, would allow us to draw down 15% of the $32 million. And that would be for planning purposes and to begin to ramp up with our staff and contractors to get ready for the very much increased production of weatherized homes. 

 

Dotson [00:31:35] So how was that a few months’ difference missed in the application– or the, the testimony before this committee and the full body that we went back and forth for quite a while last month on? Why did we not know that the application wasn’t actually due until October at that time? 

 

Simpson [00:32:01] I think we just didn’t get to, honestly, that point of the discussion. At the conclusion of the last meeting, the question was asked if there were any repercussions if we didn’t– if the body had not approved our request at that time, what could happen? And I think at the time we mentioned that the pre-application was due July 1 and we would just have to determine whether or not what the outcome of that would be. And honestly, sir, I just think that conversation just didn’t progress to the actual discussion of the deadline of the application, the full application. 

 

Dotson [00:32:37] Alright. Thank you. 

 

Gray [00:32:42] Senator Irvin, you’re recognized. 

 

Irvin [00:32:44] Thank you. And I just want to say thank you to the three of you for being here. I would just make a suggestion. When, especially, if an item like this is held, you know, and it’s coming back to us for further discussion, I think it would have been super helpful for you all to have come in and said, let me go through this with you and explain what you have in front of you, let me explain the program, let me explain and answer the questions from last month’s inquiries. That’s what we’re here for. We’re here for deliberation. And we’re here for thoughtful dialog and for discussion. And so, you know, it would be nice to hear from all of you coming to the table to provide us with the information that we’ve asked for in a thoughtful, deliberative way. Does that make sense? Because there’s lots of information here that’s missing, in my opinion, like the 15% administration, how that’s broken down. We’re– thank you for providing the background and the funding for how you’ve allocated these funds in the past. However, we’re looking at $32 million coming into the state and we’re concerned at the way that’s going to be allocated and managed and then held accountable on the back end. Does that make sense? That’s what we’re here to try to do. So just, just as a tip, perhaps, that’s what we’re here to engage in. You know, we appreciate, I appreciate the maps. I appreciate all that. We’re just really concerned about the accountability portion of this because of the huge amount of money and we don’t want to see it wasted. We don’t want to see it misused. We don’t want to see, you know, checks– boxes not checked and things not marked off. So come to us prepared to be able to go through everything and show us in detail so that we’re not having to hunt and peck and find, because then we’re sitting here going, you’re trying to hide something. And I know that you’re not. I mean, I’ve talked to Shane about this in length, and I understand. But we have to have these kinds of conversations and concerns and bring them to light. But it would be super helpful if this was a two-way street here. Does that make sense? Thank you. 

 

Gray [00:35:13] Alright. Looks like Representative Cavenaugh, you’re recognized. 

 

Cavenaugh [00:35:16] Thank you, Madam Chair. I’m over here to your right. So here– my question is just for clarification. There’s 15% that goes to administration fee, which is approximately a million a year. You keep 500. And then the other part goes to the actual community development centers that are actually taking care of– councils and stuff that are taking care of the implementation of the program. Is that correct? 

 

Simpson [00:35:42] Yes, ma’am. 

 

Cavenaugh [00:35:43] Okay. And then on your approximation of the funds that they’re going to get of this 30 million approximately dollars, how did you arrive at how much was going to go to each one of the districts? Was that based on prior utilization of the program? Population? What was it based on? 

 

Joiner [00:36:03] Yes, we have an allocation formula that we use every year with the weatherization funds, and it’s set up to include three variables. The primary one is the low income population in each county. Then we also have a small portion that considers the number of homes that were built prior to 1990. And the third variable that is a small amount is– I’m drawing a blank. Sorry, I’m drawing a blank on the third variable. I’m sorry. I can, I can certainly provide that at a later time. 

 

Cavenaugh [00:36:56] Follow up, Madam Chair? 

 

Gray [00:36:57] Yep, you’re recognized. 

 

Cavenaugh [00:36:58] So if, like, in my area, BRAD– or part of my area– BRAD and CRDC they do, they do the program. In BRAD, you have 2.3 million allocated of this money is going to go to this. It’s a very high poverty district, very high poverty. But it’s not getting– it’s getting the least amount. And I just happen to know how much of a poverty district that is really doing. So I guess that’s my concern is if a district which is extremely high poverty needs more money for this, but then you’ve got 7.2 million, which is down in the southern part, which is very high poverty also, but then you’ve got 6.2 in Sebastian, Crawford, in that area, which is a little higher income– if they don’t use all their money in one district, I guess, is it able to go to another one that has a need? 

 

Joiner [00:37:59] Yes, we do reallocate funds that are not used in one area and provide them to, to another area. In fact, we’re doing that right now with CRDC that needed a relatively small amount of money to finish out the current year. 

 

Cavenaugh [00:38:17] Okay, so it doesn’t just sit there not utilized is my concern? Okay. Thank you. 

 

Gray [00:38:25] Alright, Senator Hickey, you are recognized. 

 

Hickey [00:38:28] Just, just one more thing. Back, back to the insurance. If, if you don’t mind, you know, based on what you said, it sounds like to me that that you were trying to say there was going to be like 2 million per house no matter what. I want to make sure that’s realistic. I want there to be sufficient insurance. But if you don’t mind, I would appreciate it if you would go back and study that and make sure that that’s going to be right before the Friday meeting. Because I don’t, what I don’t want to happen is for you to sit down here and said what you said and then somebody say, well, there’s limits or there’s caps on it or things to that nature. So I think, and I assume that’s what we were going to be doing between now and this meeting, but if you don’t mind, I’d like to know exactly what the specifics are with that insurance whenever you come back Friday. Because I don’t want us to pass this out and then you all get to looking and say, that’s different than what we said in here, if you don’t mind. 

 

Gray [00:39:21] Yeah. And just, just to clarify, we will need that by Thursday, not Friday this week. 

 

Hickey [00:39:26] Thank you. Yeah, it is Thursday, isn’t it? Sorry. 

 

Gray [00:39:29] You’re good. Thank you. Senator Hammer, you’re recognized for a question. 

 

Hammer [00:39:34] Thank you. To far left. I want to tag on to what Senator Hickey is talking about and just clarify something based on the answer you gave me a while ago. The liability insurance, is that going to be for that one primary contractor or is that going to be required of each one of the subs that’s doing the work under the primary contractor? Because if I understood you right a while ago, you said you had like one and then you got the multiple underneath, the HVAC, plumbing and everything. Could you clarify what that will include or who that will be applied to? 

 

Joiner [00:40:08] Well, we do require that every contractor that steps onto a house that’s being weatherized has liability insurance. I can’t speak to the liability limits of all the subs at the current time, but we can certainly get that information. 

 

Hammer [00:40:26] Okay. So if a, a contractor has multiple things going on with the house, maybe putting windows in, they’re putting plumbing, HVAC, each one of those subs is going to be required to have that liability insurance? And I mean, that could spread out over multiple houses. Have you done a– in your– in the information you’re going to bring back, I’d be curious to know what the financial hit is going to be and how that would affect how much work could be done to a house. Not that I disagree that they ought to have coverage, but I wonder if you’ve run the estimated cost or if you could see is that going to change your administration cost? Is that going to change the training cost? Because that money’s going to have to come from somewhere. So could you, could you chase that down in your, you know, in your research too please? 

 

Joiner [00:41:14] Yes, sir. We can do that. 

 

Hammer [00:41:15] Thank you, ma’am. Thank you. 

 

Gray [00:41:18] Alright. Are there any other questions while we have them at the table? Alright. Seeing none, I will entertain a motion to approve item E1. Do I have a motion? I have a motion and a second. Is there any discussion on the Item? All in favor– discussion. Representative Vaught, you’re recognized. 

 

Vaught [00:41:42] I mean, I make that motion and with them bringing that information to us on Thursday.  

 

Gray [00:41:49] Okay. Thank you for the clarity. Alright. All in favor aye. All opposed nay. Motion carries. Thank you. 

 

BLR Staff [00:42:01] Thank you, Madam Chair. We’re in Section F now. Section F is the ARDOT appropriation quest for Infrastructure, Investment and Jobs Act funding. A majority of the department’s federal funding comes from the Infrastructure Act. The request on today’s agenda is for $215 million. And this is an appropriation to spend the federal funds for the next quarter. That would be for October through December. 

 

Gray [00:42:27] Thank you. Are there any questions on item F? No questions. I’ve got a motion to approve and a second. Any discussion on the motion? All in favor aye. Opposed nay. Motion carries. 

 

BLR Staff [00:42:44] Thank you, Madam Chair. We’re in Section G. These are the rainy day fund transfer requests. The first item, G1, is for Arkansas Rehabilitation Services. As I understand, the direction from the chair is this item is going to be held. We’ll move on to the next item. This is G2. It’s a letter from the governor for the, for a $200,000 transfer to the state drug crime enforcement prosecution grant fund. This is at DFA, and this is to support the Drug Task Force operations. Madam Chair, those are all the rainy day fund transfer requests on the agenda. 

 

Gray [00:43:14] Alright. Thank you. Are there any questions on item G2 for DFA? Alright. Seeing none, I will entertain a motion to approve item G2 only. I’ve got a motion and a second. Any discussion? All in favor aye. Nay? The ayes have it. Motion is approved. 

 

BLR Staff [00:43:37] Thank you, Madam Chair. We’re in the next section. This is section H. This is for the restricted reserve fund transfers. The first two are from the majority vote various improvements and projects set aside. This is a set aside that was established after the last 2022 fiscal session, and it has an original balance of $150 million. The first item is for the Veterans Affairs. It is a $50 million transfer. And this is to replace the Fayetteville Veterans Home with new construction on property in Benton County that was donated to the state. The $50 million will be matched by the U.S. Department of Veterans Affairs at 65%. That’s almost $30 million. And this is for a total projected cost of $42.9 million. The next item is from the Department of Public Safety. This is again from the majority vote various improvements and projects set aside. It’s a $10 million transfer, and it’s to make grants to law enforcement through the Public Safety Equipment Grant program. The next items, the next four items are from the majority vote set aside account. This is a set aside that was established in the 2021 regular session and has a current balance of $17.8 million out of the original $33.3 million allocation. The first item is for DFA disbursing officer. It’s a $1 million transfer. It’s to establish an endowment with Hope Cancer Resource Center in Northwest Arkansas with cancer support services. The appropriation for this transfer will be requested later in the agenda as I1 is a cash fund increase request. The next item, H4, is DHS Division of Aging, Adult,and Behavior Health. It’s for $3 million. It’s to cover operational costs of senior citizen centers. And the appropriation for this was requested earlier in the agenda at the various temporary appropriation requests. The next item is H5. This is Economic Development Commission. It’s a $1 million transfer. It’s to make a grant to the Arkansas Alliance for Boys and Girls Clubs for organizational projects. The next item, H6, is Economic Development Commission. This is a $1.5 million transfer, and it’s to make a grant to the Museum of Discovery for renovations after the 2021 flooding. [00:45:39]The next item is for the National Guard. It’s on the supplemental agenda, but we have direction from the chair that this item will be held. [6.8s]

 

Gray [00:45:49] Alright. Thank you. Representative Dotson, you’re recognized. 

 

Dotson [00:45:52] Thank you, Madam Chair. I’ve got a couple of questions, but first one is probably for staff. Just, do we know where we’re at with the restricted reserve funds as far as total balance and where this takes us down to? I’m assuming all of these come out of this current fiscal year? 

 

BLR Staff [00:46:11] Yes, sir. We do have a report at the end of the, in the report section for the restricted reserve fund. But I’ll go ahead and tell you that. So we have those different set asides within the restricted reserve funds accounts. So the A set aside– you’ll see that in the report– that’s the majority vote set aside that we’ve been pulling money from over the last year. It’ll be down to $11.3 million. That’s after $6.5 million in transfers from today’s agenda, except for the one that was held. And then in set aside G, that’s the majority vote various improvement set aside that was just established. That will be down to $120 million after $30 million in transfers on today’s agenda. So the overall balance of the restricted reserve fund would be $181.3 million. 

 

Dotson [00:46:53] And you just said $6.5 million. Does that include the, what is it, the $5 million from the National Guard that was held? 

 

BLR Staff [00:47:03] That, I believe, comes out of the various improvement set aside. So I’d have to back that out, so that would be $25 million. So the set aside for the various improvements– I’m sorry, the various improvements set aside will be $125 million balance. That’d be G. So that’d be $125 million now. 

 

Dotson [00:47:19] Okay. And then I also had a question for– I’m not sure what the number is here, but the Economic Development Commission– the, you know, Museum of Discovery. 

 

Gray [00:47:35] Alright. We can go ahead and take number 6. If I could get someone to come to the table. You were already waiting. If you will just introduce yourself for the record again. And then, Representative Dotson, you’re recognized to ask your question. 

 

Dotson [00:47:50] Thank you, madam Chair. 

 

Hudson [00:47:53] Jim Hudson, chief of staff, Department of Commerce. 

 

Dotson [00:47:56] Alright. So I understand this is a– it is an asset that benefits everybody in the state, but primarily it’s for folks that live in central Arkansas. And so I’m just curious, what, what is the– have– before we go after state funds for this, has the Museum of Discovery looked at local resources, the city, the county, the counties that surround the Little Rock area here? 

 

Hudson [00:48:27] Yes, sir. I do believe they’re doing a capital raise, but let me have Mr. Bass come to the table from Museum of Discovery if that’s okay. He can brief the committee on what their plans are for that. 

 

Gray [00:48:36] Yeah, absolutely. If you could please state your name for the record. 

 

Bass [00:48:59] I’m Kelly Bass. I’m the CEO of the Museum of Discovery. Yes, we have had conversations with Mayor Scott. We’ve had, I’ve had a conversation with two of the city directors. And we’re hopeful for funding from the city in one of the tranches of money that they’re going to have available to them. Because revenue replacement is a, is a legitimate use of federal COVID funds. And we lost $900,000 in revenue in the 27 weeks we were closed for our flood last year. We’ve also had conversations with Pulaski County Judge Barry Hyde. He seems optimistic there will be some money from the county to help us. And then we’re also embarking on, on private fundraising as well. 

 

Dotson [00:49:47] Have you had any discussions with some of the surrounding counties that have– are your biggest utilization, like Faulkner, Saline, Logan? 

 

Bass [00:49:55] You know, we have not yet. We certainly will. We have a great relationship. Our largest attendance beyond Pulaski County is Faulkner. We’ve done a lot of work that’s been supported by the Conway Chamber of Commerce, including being active at their Toad Suck days events and putting some of our exhibits on display in storefronts along the streets there. So we will be having those conversations. And just, in 2018-19, which other than this year are going to be the last two normal years, we had attendance from all 75 counties in Arkansas. And we also had school field trip groups from 60 of the 75 counties in Arkansas. Not to mention with our location at the corner of I-30 and I-40, we had visitors from 20– school field trips from nine other states. And as of April 30 this year, we had already had public visitation from all 50 states. So, you know, we’re certainly located in Little Rock, Arkansas, but our impact is much greater than central Arkansas. 

 

Dotson [00:50:57] Thank you. 

 

Gray [00:51:00] Alright. Thank you, Senator Irvin. 

 

Irvin [00:51:03] I had– right here. I was just curious, have y’all ever teamed up with PBS? 

 

Bass [00:51:08] We have quite a bit. In fact, we had an area of the museum pre-flood that featured a lot of PBS items and decor. And then we’ve, we’ve teamed up in spring breaks with PBS in years past to have popular PBS characters. I mean, I can’t tell you the number of people who showed up for Curious George and the man in the yellow hat. So, yeah, we have. And Courtney Pledger is someone that we know quite well. 

 

Irvin [00:51:37] I was just curious if they had done any type of ongoing series, though, that highlights the Museum of Discovery for y’all to provide content for, you know, like a monthly or weekly. They– education. I just think it would be nice connecting that and y’all providing the content for that or, you know, because you have a lot to offer. So I thought might be an opportunity. 

 

Bass [00:52:09] I agree 100%. Yeah, that is. And they certainly have the distribution network, particularly now that they’re over the air, going to be covering basically the whole state plus all their online resources. That’s a great idea. Thank you. 

 

Irvin [00:52:18] I would develop some content for a, a periodic, periodic series with the Museum of Discovery with PBS so that we can get you more connected to the rest of the state. 

 

Bass [00:52:31] Thank you. That’s a great suggestion. 

 

Gray [00:52:34]  I have a question, too. You’re asking for 1.5, but I’m just going to go out on a limb and say that’s not going to cover the cost of the entire project. What’s the expected cost of the project? 

 

Bass [00:52:45] Well, we’re, we’re going to– have launched and we’re in the quiet phase of a larger campaign that would cover the, the redoing of two galleries that were not damaged by the flood. The cost to do, to redo the two galleries that were damaged by the flood is $4.6 million. We have $3.5 millin in insurance. The costs have gone up. These were 10-year old exhibits that were destroyed. And then again, we lost 950 in revenue. So the 1.5 would get us– we’re about to 2 million to the, to the bad on those two galleries alone. But then we have other projects. When the museum was renovated in 2011, thanks to a large grant from the Donald W. Reynolds Foundation, it only redid three of the five galleries. And so two of them have never been up to the level of, that the three were until two of them flooded. So we’re on overall a $10.5 million capital campaign. But the actual part for the flood is really going to be about 2 million to get us back where we were. And this 1.5 would, would, would go a long way toward that. 

 

Gray [00:53:48] Okay. Thank you. Are there any other questions for them while I’ve got them at the table? Alright. Thank you. 

 

Bass [00:53:56] Thank you, committee. 

 

Gray [00:53:57] Alright. Do I have any questions on H1, Department of Veterans Affairs? Item H2? Item H3? Item H4? Or item H5 with the Boys and Girls Clubs? Alright, seeing no more questions, I’d entertain a motion to approve items H1-6. Got a motion and a second. Is there any discussion? All in favor aye. Opposed, nay. Motion carries. 

 

BLR Staff [00:54:35] Thank you, Madam Chair. We’re in Section I. These are the cash appropriation increase requests. The first item is from DFA disbursing officer. It’s $1million in appropriation. This is to disperse funds from the restricted reserve fund transfer to Hope Cancer Resources. I2 is Department of Parks Heritage and Tourism. This is the Old City House Museum. It’s $101,500 in appropriation. And this is to pay for events, exhibits and educational programming that were previously paid out of unappropriated cash. I3 is Department of Parks, Heritage, and Tourism, the tourism division. It’s for $11,500 in appropriation. This is to shift spending authority from a resale line item to maintenance and operations. The appropriation is no longer needed in resale due to a closure of the tourism division’s retail gift shop. The next item is on the supplemental agenda. This is for the Sultana Museum, and I have direction from the chair this item will be held. 

 

Gray [00:55:35] Alright. Thank you. Do I have any questions on item I1? Item I2? or item I3? Alright. Seeing none, those items I1-3 are marked as reviewed. 

 

BLR Staff [00:55:55] Thank you, Madam Chair. We’re in the miscellaneous federal grant request. This is section J of the agenda. The first four items are for the Department of Commerce Insurance Department. And the total for the first four is $457,000. All four grants are for providing assistance to those eligible for low income subsidy programs, and they are 100% federally funded. So if you’ll move to number 5. Number 5 is a request from DHS Division of Aging. It’s for $82,000 in appropriation and to establish one position. This is, this is to prevent the onset and reduce the progression of substance abuse through the Partnership for Success Program. It’s 100% federally funded. Next item, number 6, is Department of Parks, Heritage and Tourism, Arkansas Arts Council. It’s for $78,000 in appropriation, and this is to fund arts and education residency programs in schools and local arts organizations. It is also 100% federally funded. 

 

Gray [00:56:56] Alright, thank you. Senator Rice, you’re recognized. 

 

Rice [00:56:58] I have a question on number 6. 

 

Gray [00:57:00] Alright. I could get someone to the table from Department of Parks, Heritage and Tourism. Alright. If you’ll both state your name for the record. And then Senator Rice is recognized to ask this question. 

 

Dunlap [00:57:32] Hi, I’m Cynthia Dunlap, the CFO for Department of Parks, Heritage and Tourism. 

 

Fisken [00:57:38] I’m Leslie Fisken, chief of legislative affairs for the department. 

 

Rice [00:57:43] Thank you all for being here today. I’m right here in front of you. This is only a $78,000 contract but the verbiage in it when it talks about residency programs for school and local arts organizations in school, after school, summer programs and curriculum development. Can you give us a short deal of what it entails. And let me tell you a little bit more. I know there’s maybe a limited amount of state money that goes into the Arts Council, but I believe I heard a figure with federal grants. Would something around 5 million last year surprise you? 

 

Dunlap [00:58:29] We did not– we don’t receive that much in federal grants. 

 

Rice [00:58:31] I didn’t know if you were familiar with the, with, with kind of what their budget was. 

 

Dunlap [00:58:36] No, sir. 

 

Rice [00:58:36] Okay. If we’re taking a small amount of money here and developing curriculum out of it, I just wonder if you’re familiar with what kind of curriculum is being used. 

 

Dunlap [00:58:50] And I don’t have the information about the curriculum, but the request here is not the entire amount of the grant. This request, the $78,000, is just so that we can shift some appropriation that we had allocated to M and O to put it to the grants. The entire grants program uses about– our entire grant program is about a million more. I’d have to get the figures for you, but the 78,000 is not the entire grant. 

 

Rice [00:59:13] I understand that, but about a million annually out of state. 

 

Dunlap [00:59:17] Out of our federal appropriation. 

 

Rice [00:59:19] Okay. How much state money last year went in? 

 

Dunlap [00:59:24] I don’t have an exact amount. I’d rather just get that and give it to you. 

 

Rice [00:59:27] Okay. [00:59:29]Let me go a little bit more and ask you, do you have any input when you’re, when you’re granting money into seeing that it is utilized efficiently and fairly, if it’s favoring certain minorities? [17.3s] Or is there some type of criteria that you use there. 

 

Dunlap [00:59:57] I’ll let Patrick Ralston address that. He is the director of the Arts Council. 

 

Rice [01:00:03] Morning, Patrick. 

 

Ralston [01:00:08] Good morning, Senator. We give these grants to organizations, local arts organizations, sometimes schools. And what they do is they develop curriculum, usually around a visiting artist. And more likely than not, they’re they’re focused on things like arts integration with science, a lot of STEM/STEAM ideas. And so that’s– you know, usually, it’s a short term thing. A program like if you’re studying science, you know, like the development of the steam engine, and they will bring in an artist who does programs around that kind of that kind of thing, you know, the history of the steam engine. 

 

Rice [01:01:09] Okay. And I won’t spend anymore of the committee’s time. I would like to visit with you offline and get a little more information. 

 

Ralston [01:01:17] Yes, sir. 

 

Rice [01:01:18] Thank you all for being here tonight. Thank you, Madam Chair. 

 

Gray [01:01:22] Alright. Thank you. Representative Cavenaugh, is this– are you on this same topic? Okay. Alright. Do I have any other questions for them while they’re at the table? Alright. Thank you very much. Alright, Representative Cavenaugh, you want– would you like me to get someone from Department of Commerce to the table? 

 

Cavenaugh [01:01:43] Yes, Madam Chair. 

 

Gray [01:01:46] If I could have someone from the Department of Commerce to the table. He’s coming back in. Alright, I’ll have you all state your names for the records one more time. And then you’re recognized, Representative Cavenaugh. 

 

Hudson [01:02:19] Jim Hudson, Chief of Staff, Department of Commerce. 

 

Davis [01:02:22] Mary Davis, CFO for the Insurance Department. 

 

Carter [01:02:26] Lisa Carter, Insurance Department. 

 

Cavenaugh [01:02:29] Thank you, Madam Chair. My question is on all of these. I think it’s one through four, and they said it’s about 450,000. Is that actually going to benefits to individuals or is it just to cover administration cost? 

 

Davis [01:02:46] It’s to cover administrative costs and the contracts with our different providers, so the triple A’s and then the other ones. And then the MIPA priority three is for outreach and education purposes. 

 

Cavenaugh [01:02:59] Okay. So we’re not actually getting any benefits to any other individuals with this money. We’re just paying administration costs. 

 

Davis [01:03:08] Yeah, that’s correct. 

 

Cavenaugh [01:03:10] And we haven’t already paid these administration costs? They’re getting more above what we’ve already paid them to do the job they’re already supposed to be doing? 

 

Davis [01:03:17] Most of it’s contracts. And they do work every month, and then they submit the invoices to us and we pay them as they provide the services. 

 

Cavenaugh [01:03:27] And we didn’t allocate enough for those? I mean, are they doing more work than what they originally had intended to do? 

 

Davis [01:03:37] No. These ones were actually continuations that were submitted to budget in May, but they were missed getting submitted. So these are just to get them back towards our appropriation now. We just missed the month of July. I guess they just missed turning them in. These are continuation grants, so they’re ongoing contracts. We’ve had them for a couple of years now. 

 

Cavenaugh [01:04:03] Okay. Thank you. 

 

Gray [01:04:06] Alright. Do I have any other questions for the Department of Commerce while they’re at the table? Alright. Thank you very much. Are there any other questions on Item J1-6? Alright. Seeing none, those items will be marked as reviewed. Move on to the reports. 

 

BLR Staff [01:04:25] Thank you, Madam Chair. The first report is section K. This is the Emergency Action Report. ALC provided emergency review in June to DFA to make budget adjustments that would become apparent when closing books on the end of the fiscal year. On page three are the pay plan appropriation transfers. There were 11 agencies received $154,000 in appropriation. And on the next page is a $500 cash appropriation increase for the Board of Hearing Instrument Dispensers at the Department of Health to pay for an unemployment compensation expense that was not traditionally part of their budget. 

 

Gray [01:05:01] Alright. Are there any questions on any of these? Alright. Seeing none, we’ll move on to the next item. 

 

BLR Staff [01:05:09] Thank you, Madam Chair. Section L is the University of Arkansas Medical Sciences NCI Fund Report, Act 181 of 2019 for the UAMS National Cancer Institute Designation Trust Fund to pursue a national designation for the Winthrop Rockefeller Cancer Institute. The Act also requires semiannual reporting on the fund. Page 5 shows the trust fund balance. So on page 5, the beginning balance for the reporting period that was December 1 was 37.9 million. If you look at special revenue tax, cigarette paper tax, they brought in $882,000. This is in the table at the bottom of the page, the first table. And then if you look at the bottom table for expenses, they had 8 million in expenses for the period plus another million that was, that occurred in November but had not been reported to Asis as of yet. And that will leave at period end May 31 a $29 million balance.  

 

Gray [01:06:05] Thank you. Are there any questions on item L? Seeing none, we’ll move on to Item M. 

 

BLR Staff [01:06:15] Thank you, Madam Chair. Section M are the monthly reports. The first one is the Surplus Income and Distribution report. And this shows the sources of unobligated funds. And then the distributions for the rainy day, restricted reserve and long term reserve funds as of the end of June. The Rainy Day Fund shows 10.2 million in distributions and a balance of 6.3 million. The restricted reserve fund shows 153 million in distributions and an overall balance of 217.8 million. The total catastrophic reserve fund balance is 1.2 billion. The next item is M2. It’s the Budget Stabilization Trust Fund report, and it shows the loans throughout the fiscal year. As of the end of June, there are 12 million in outstanding loans and a cash balance of 185 million. M3 is the tobacco settlement report, and this gives a summary of income, fund balances, investments, actual payments to the state. And on the second page are all expenses by fiscal year. M4 is the State Central Services Fund report. And it shows the fund balance and disbursements as well as expenditures of each agency supported by the fund. And M5 is the American Rescue Plan Report. The first three pages of the report show requests that were approved by the ARP steering committee that the state has discretion in awarding. On the fourth page begins Attachment A, and this is a report of ARP funds that were sent directly to the state agencies from the various federal entities. On the ninth page begins Attachment B. That’s a report of the ARP funds that were sent directly to institutions of higher education. And per our members’ request, the last seven pages are a memo from the Secretary of Education of the US Department of Education on strategies to spend the American Rescue Plan funds. 

 

Gray [01:08:00] Alright. Thank you. Go ahead– going to go ahead and recognize Senator Dismang. 

 

Dismang [01:08:05] Thank you, Madam Chair. Members, I think it was the last time that we met we approved a half a billion dollar appropriation for, I think– was it the second round or third round of ESSER funds? Second? Second round of ESSER funds that during that presentation kind of briefly was stated that it could be used for bonuses. I can’t remember the exact wording used by staff, but could be used for bonuses. We asked for clarification on what that meant since we were in the middle of talking about teacher bonuses. Kind of had some communication later where, I mean, I would just say that I felt like from that conversation that maybe that wasn’t something that could be done, that we would not be able to utilize those funds for bonuses or retention. Since then, I did a little bit of research with some constituents, actually, back home and came across this memo of guidance dated December 16, 2021, in regards to how the federal government, the DOE, would like these ESSER funds to be utilized. They specifically state in the very beginning of this letter that it should be used for retention and recruitment and bonuses for teachers or staff and mental health for staff. And so I just wanted to make sure there was not any confusion. Because in talking to some of my admin folks back home in school districts, they were led to believe or felt as though that it could only be used for capital-type projects when in fact DOE said first and foremost, it should be used for retention and recruitment and bonuses. So I wanted to make sure that you had that memo available. I think it’s important to note. And one thing, just a question, and I don’t know if we have anyone here left, we did approve that half a billion dollar appropriation last month. I’m just curious about how much we received in total ESSER funds and then how much of those funds are remaining or unspent at this time. So I don’t know if we have anybody here from maybe the Department of Finance or Department of Education that can answer that question. Secretary Key, I know that you were outside when we were kind of going through this, but kind of, you know, we’d had some discussion about if these ESSER funds could be utilized for bonuses and retention and recruitment in some prior conversations, both in this committee and then outside this committee, with a little bit of uncertainty at that point on what they could be utilized for. I think this memo states it fairly clearly. My question would be, you know, how much has the state received in total ESSER funds at this point? How much is remaining? And then, I know there’s a website. I tried to look at it to understand, and I cannot figure out how much any district has spent on bonuses, retention or recruitment at this point. Do you have any of that information, Secretary? 

 

Key [01:11:07] Greg is looking up on the dashboard the total amount that we received– excuse me, Johnny Key, Department of Education– the total amount that we received as a state. I think it’s in the neighborhood of 1.2 billion. 

 

Dismang [01:11:18] 1.2 billion. 

 

Key [01:11:19] The total. That was, you know, that was three– there was ESSER from the first round and there was ESSER two and then ARP ESSER. And all those three are in this category that you’re talking about. We have had districts that have used these funds for additional pay due to extra duties for COVID. They’ve used them as recruitment and retention bonuses. They’ve used them as incentives for vaccinations, for instance. And we have– 

 

Dismang [01:11:53] And I’m aware that other states through the department encouraged districts to use it for retention and recruitment programs in their state. Did we do that through your department? 

 

Key [01:12:03] Yes, we have. And we’ve actually reviewed plans that districts have sent to us. The total for all three was 1.7 billion. 

 

Dismang [01:12:12] $1.7 billion. How much is the annual GR– or contribution to the education line item right now? I’d have to look that back up. But how much does that total? 

 

Key [01:12:25] Around 2. 

 

Dismang [01:12:26] 2 billion. So almost equal to what we spend on an annual basis for education, we received in extra money from the federal government? 

 

Key [01:12:34] Yes. 

 

Dismang [01:12:35] Thank you for that. And so, again, and so y’all have some materials and that sort of thing in that you utilize to promote and make sure that they are utilizing this for retention and for recruitment. 

 

Key [01:12:47] We, we are– 

 

Dismang [01:12:50] It’s a coordinated effort, I’m assuming.

 

Key [01:12:51] Well, it’s been very clear from U.S. Department of Education the states cannot tell them how to use it. Districts have a lot of flexibility. We have encouraged them to use it. This, this body allowed, once we found out that districts could use ESSER funds to replace lost revenue, this body did not move forward with increasing the amount of money for declining enrollment, for example. Because a number of districts lost enrollment during COVID and they were able to use ESSER funds to prop up their normal budgets. But there was also the, the situation where these funds were distributed under the Title 1 formula, which means there are a number of districts that did not receive a proportional share as some of their fellow districts because of their Title 1 numbers. Elkins, for example, is a good example of a smaller district that did not have a high number of Title 1 in their distribution. So they didn’t get a lot. And so it really is dependent district by district in how they do it. 

 

Dismang [01:13:59] And as far as total bonuses that have been paid out to date then, I mean, we’re able to look at it by school district, and I couldn’t find the specific line item. What would that be under? 

 

Key [01:14:08] Yeah, well, it’s probably not under that specific on the dashboard because we grouped the expenditures on the dashboard. 

 

Dismang [01:14:16] That’s what it looks like to me. It’s kind of hard, muddy. 

 

Key [01:14:19] But we can pull that out to, to get specific, because it depends on the code, their budget codes that they used. But we can get that. 

 

Dismang [01:14:28] And as far as the– I mean, has any of– has there been any draw– I mean, I look– it looks like we are– we still have roughly 565 million, so a little over half a billion dollars remaining available. How much– do we feel like that is all available at this time? And then what are we doing to push and make sure that the school districts are aware? Because I’ll tell you, some of them that I’ve talked to didn’t know that they were able to utilize these funds for retention and recruitment bonuses. 

 

Key [01:14:58] Well, if they didn’t, it’s not because they haven’t been told. Because we’ve been telling them. 

 

Dismang [01:15:02] Well, I mean, I would say, though, even in our own discussions, there was some lack of clarity or knowing whether or not that that would be accepted or an acceptable thing to do. 

 

Key [01:15:13] Well, my recollection of those conversations is that these plans have to be tied somewhat to COVID. You just can’t go out and grant bonuses. There has to be a plan. I mean, this letter describes–

 

Dismang [01:15:30] It almost describes exactly the situation we’re facing in the state of Arkansas. 

 

Key [01:15:33] And there’s another– 

 

Dismang [01:15:35] Almost to the T in every sentence does it describe what’s happening in the state of Arkansas. So I think we would fully be able to utilize these for retention and recruitment bonuses, you know, per the guidance from the DOE. I don’t think there’s any question. 

 

Key [01:15:49] No, there is no argument on that. And the other component, though, is that’s not the only thing that they were allowed to use funds for. 

 

Dismang [01:15:58] I understand that. 

 

Key [01:15:59] Part of the, part of the confusion, Senator, was at the outset, the DOE was not very clear on it and especially when it came to using funds for capital type expenditures. So we had a lot of, been a lot of confusion from that. But in addition to that memo from Secretary Cardona from December 16, we’ve also made sure that there’s a Q&A that the Department of Education had put out that covers that particular issue, along with all the other issues of how those funds could be spent. And we have been in communication with districts. 

 

Dismang [01:16:32] When did you all issue that Q&A? 

 

Key [01:16:34] Well, it wasn’t us. It was the US Department of Education, and we provided links ongoing. As soon as we get something from, from DC, we have been putting it out on a ESSER website so districts would have access to it and been updating superintendents on that as we go. 

 

Dismang [01:16:50] Alright. Thank you. 

 

Key [01:16:51] Yes, sir. 

 

Gray [01:16:54] Senator Hickey, you’re recognized. 

 

Hickey [01:16:57] Yes. And I have a question of Senator Dismang. You mentioned, based on that information– I know you’ve been working hard as some of the other members have on this– would now be the appropriate time to ask to expunge the vote by which that 500 million passed on the ESSER? Or should I wait and do that for Thursday? Because, well, I’m asking if this is the appropriate time. Because if it’s the appropriate time to come through the subcommittee, I would like to make that motion now. 

 

Gray [01:17:25] Alright. Give us just a minute to fish this out. It has to be done in full Council is what I’m told. 

 

Hickey [01:17:32] Thank you. 

 

Gray [01:17:33] Okay. Thank you. Alright. Seat number 92. I think that– okay, hold on. You stay, Senator Hammer, you just stay live for me for just a second. Representative Wardlaw, what chair number are you? Alright, you’re recognized. 

 

Wardlaw [01:17:50] Madam Chair, I understand that motion would have to be made in full Council, but could it not come with some sort of recommendation from this committee to Council in the report so that it could be adopted on Thursday? 

 

Gray [01:18:02] I don’t see why we couldn’t do that. Alright, Senator Hickey, hit your button again. 

 

Hickey [01:18:12] I will. And I think you all heard what I said. What I wish to do is, and based on what Representative Wardlaw said, that this committee actually within the report request that full council adopt this motion, that the motion is to expunge the vote by which the half– or the $500 million appropriation for the ESSER funds was passed. And I believe that was– was that last month? We may need to put a, put a date on it. Thank you. 

 

Gray [01:18:44] Thank you. Do I need– was it last month? Okay. Alright. I’ve got a motion on the table to expunge the vote by which the $520 million request passed. Do I– I’ve got a second on the motion. Is there any discussion on this motion? You have to raise your hand because my board’s lit up and I’m not sure who’s what. Alright. So no discussion on the motion. All in favor, say aye. Any opposed nay. The ayes have it. The motion carries. We’ll include that with the report. Alright. Thank you. Now, Senator Hammer, you’re recognized. 

 

Hammer [01:19:20] Thank you, Madam Chair. My question is to Secretary Key over here. When, when you referenced a while ago that you communicated what you feel is effectively to the districts about their ability to use the ESSER fund for that, was that just referring them to a link or were there other specific communications that went out to the district? 

 

Key [01:19:43] We have had– it’s a number, a number of different communications. We, we’ve had Zoom sessions with superintendents, with federal programs coordinators, finance folks. I mean, there have been a number of opportunities that we’ve used to get this information that they need regarding how they can use their ESSER funds. 

 

Hammer [01:20:05] And how soon did that begin after the December 16, 21st date when that memo came out? 

 

Key [01:20:14] It’s been ongoing since the passage of the first ESSER funds. I couldn’t give you a date on when that specific issue was addressed. 

 

Hammer [01:20:23] You think you could produce or somebody in your agency could produce a single document that would show when you first communicated to the districts that they knew they could use that money for the recruitment, bonuses, whatever term you want to use. Could you get something that would show the first time that you notified the school districts, please? 

 

Key [01:20:50] Yes. We will pull something together. 

 

Hammer [01:20:52] Alright. Thank you, sir. Thank you. 

 

Gray [01:20:55] Alright. Thank you. Got seat number 66. 

 

Ray [01:21:00] Thank you. Secretary Key. So following up on Senator Dismang’s line of questioning, is there a breakdown, does the department have a breakdown of how many districts have utilized ESSER funds for teacher retention bonuses versus how many have not utilized them for that purpose? 

 

Key [01:21:22] We can pull that together. That would be information we’d go in and pull by their expenditure codes. 

 

Ray [01:21:27] Okay. Yeah. I think that information would be very helpful as we continue this conversation and I’d like to see that breakdown. In terms of, not just how many districts have used it, but in terms of the overall funds, do you have an estimate of what percentage of the funds have been used for compensation versus for other purposes? 

 

Key [01:21:53] The only percentage that we know for sure is that districts have to set aside 20% of their funds for recovering lost learning, so the time that was spent either closed or out due to the various COVID quarantines and that sort of thing. So that’s the only percentage we know that was a requirement. We could look to see what the percentage is for those expenditures. I mean, that that would be information that we could get once we pull all the expenditure codes. 

 

Ray [01:22:21] Okay. And to follow up on Senator Hammer’s line of questioning, if these funds are available for retention bonuses, it sounds like you are going to provide a list of communications that have been sent to the districts notifying them of this? 

 

Key [01:22:42] Well, I’m not sure. I think Senator Hammer talked about the first communication,. But, you know, there will be a list of communication. It probably happened before December of 2021, I would say, because we were, we were in the middle of the school year at that point. And there were districts that already had plans submitted where they were using ESSER funds for bonuses or extra duty pay or those types of things. That’s been going on for some time. So, I mean, we’ll do our best to pull together what, what we have that shows when we’ve had meetings, Zoom meetings, reports on conferences and those types of things. 

 

Ray [01:23:22] Yeah, it seems like, you know, there’s been a lot of mention in media stories highlighting the issue of teacher compensation and teacher pay. I don’t remember seeing any mention of these funds in any of that coverage. It seems like the department would want to make that widely known to everyone, to school districts and to the general public that that’s a potential use of those funds. You mentioned that the funds would have to have a Covid impact to be used for that purpose. And wouldn’t you agree that COVID has certainly had an impact on teacher retention? 

 

Key [01:24:07] Absolutely. 

 

Ray [01:24:08] So it’s if, if districts wanted to use the funds for this purpose, surely the department would work with districts to craft their requests in a way that made sure it addressed that Covid requirement stipulation, right?

 

Key [01:24:23] And we have been doing that. Yes, sir. 

 

Ray [01:24:24] Okay. Alright. That’s good. All good information. Thank you. 

 

Key [01:24:28] Thank you. 

 

Gray [01:24:29] Alright. Seat number 34, I believe, is Representative Beatty. 

 

Beatty [01:24:33] Yes. Thank you, Madam Chair. I just want to follow up on what Senator Hammer and Representative Ray brought forward and be specific with what I asked for instead of just the first instance. I want all correspondence and communications to school districts where you, where you’ve communicated that these ESSER funds were available for raises. So take a little time and go back. If it’s a lot of conversations, get that material. And I’d like to see that Thursday. Also was– when– how did the plan for teacher raises– how did that, how did that develop? And was– is– did you make the governor aware of this memo that the ESSER funds that this body had approved were available for teacher raises and retention and recruitment? 

 

Key [01:25:27] So on your first question, let me make sure I understand. You’re talking about raises? I mean, there– the, the issue of raises, when you’re talking about a school district, they would not have increased their base pay based on this. This is something they would have done for extra duty pay, for bonuses, retention bonuses and that sort of thing. So let me make sure that’s the information you’re asking for. Okay. As far as for the governor, you know, when the governor asked me, is there something we could do for teacher salaries, we looked at– which was a request from the governor’s office. He asked to put together a plan. We looked at what other states were doing. We looked at the surrounding states because he asked specifically, what do the surrounding states look like? We learned that many of our surrounding states had just recently approved increases to their base pay, and we put together a plan and submitted it to the governor. The governor has been, and his staff have been, kept apprised all along through ESSER, through Covid, the ESSER funds and what they could be used for. And so, you know, specifically about this letter from Secretary Cardona, I don’t know that that came into play at all. 

 

Beatty [01:26:44] Quick follow up?

 

Gray [01:26:46] You’re recognized. 

 

Beatty [01:26:47] Again, I want to be clear on the request for information. Specifically, what I’m looking for is any written correspondence on your letterhead speaking about ESSER funds to these school districts and what they could be utilized for, not forwarding an email from the federal government or putting it on a web page, a written correspondence and communication. Okay. I think that’s important. 

 

Key [01:27:12] We’ll look at that. I mean, I can say there’s probably not something that is on my letterhead that looks similar to this letter that you have, because that’s not how we were communicating with the districts. There were so many issues dealing with COVID, as you can imagine, we had a website established and that was– there was a page for parent information and a page for district information, a schedule of Zoom meetings, conference calls and that sort of thing. And we’ll get all that together for you. 

 

Beatty [01:27:44] Good. Thank you. Look forward to it. 

 

Gray [01:27:47] Senator Irvin, you’re recognized. 

 

Irvin [01:27:49] Thank you. Just in addition to the schools that have given out these bonuses, that was a local choice? Is that what you’re reiterating? I just want to make sure we’re real clear that this was a decision made by the school districts themselves. Is that correct?

 

Key [01:28:02] Yes. That’s correct.

 

Irvin [01:28:03] So with that local decision that’s made by the school districts and their school boards on whether they gave teachers bonuses for retention or recruitment or what have you, I’d also like a list of the local decisions that were made with those ESSER funds and what they chose to use that money for that they’ve already spent. If it was not for bonuses, I’d like to know exactly what it was per school district so that we can send that information out to the teachers so that they can go to their local school districts with that information and question why they chose to use ESSER monies for this versus bonuses for them. Thank you. 

 

Key [01:28:45] We’ll get that for you. 

 

Gray [01:28:46] And I think what we’ve already– several people have already asked for essentially is a breakdown by expenditure by code. We’re going to need that for every single school, that breakdown by every single–

 

Key [01:28:59] Yeah. Madam Chair, that will be a big list, but–

 

Gray [01:29:04] We–

 

Key [01:29:04] We’ll get it for you. 

 

Gray [01:29:06] I think that it doesn’t matter how big it is at this point. The more data you can give us, the better on this. 

 

Key [01:29:11] Happy to. 

 

Gray [01:29:13] Senator Dismang, you’re recognized. 

 

Dismang [01:29:15] And I think you already have that vehicle. There is a website for members to go on. The problem is it’s very high level. And so, for instance, if you wanted to see how much was going to bonuses, you could not in any way figure out what was going to bonuses, I mean, you know, or capital costs for that matter. It’s, it’s very high level fitting into the various components that were outlined by the federal government in broad buckets. And so hopefully there’s a way to break that down so that it’s in a searchable format and we can figure out, kind of, what’s, what’s been spent where and just– and I will say and I think it’s something we need to– I think what the members are asking is how engaged were we in advising or relaying possible, you know, the possibilities of these funds to the school districts? Because I’ll say and you mentioned earlier, so I’ll bring it up now. I’ve talked to some of the districts– or other states– and for instance, Tennessee utilized, you know, the best I understand, they wanted to focus on five goals with utilization of their ESSER funds. They coordinated with their superintendents to get those five goals accomplished, retention and recruitment being one of those five, plus learning loss being one of those five, where they focused in on projects that weren’t just– on a school district level, it was something that was replicated throughout the state. And they’ve had huge successes both in recruiting– you know, and it doesn’t have to do with just the salary. But they utilized it to really close any holes that they had and actually really effective with their learning loss from everything I’ve read. But again, I think that’s what we’re asking for. What was the coordinated effort like by the department to help, you know, these schools understand what they could do? And was it coordinated? Or is it more of what we just talked about earlier, which is it was really up to them? That may at the core be true, but I am well aware of other states that were very engaged on the utilization of those funds across their state. 

 

Gray [01:31:18] Alright. While we’re here and then I’ll– I’ve got lots more on the board. We’ve talked about you’ve had these requests for, for expenses and everyone wants to know what’s been spent where. Exactly what can you get us? So go through how the expenses are reported. Right now, they’re high level. Explain to me what kind of detail you can give us. And just so everyone’s on the same page as to what data you’re going to be giving us. 

 

Key [01:31:45] Okay. So to start just to say that every district under the federal law was required to develop a local plan and post that plan on their website. That was a plan that really established how they were going to reopen their schools and the money that they received from federal government,  how to support that. Obviously, in Arkansas, we, we reopened our schools. We said we were going to be open. Much different than other states. So the flexibility that was granted for the districts was to really, not about how to reopen, but how to safely stay open. So that information is available. That should be on every district’s website. The– we, we can get you very detailed information according to the budget categories. And what, what might be and what will take a while is to get detailed descriptions within each of those. Because then that money gets spent, and, you know, if you’re wanting invoices and receipts and that sort of thing, that, that’s going to take a while. But I mean, that’s information that they have to maintain for audit purposes. So we can– probably what would be best for us to do is when we take this back to the team and let, let the team give you a summary, prepare a summary for you of what you will expect to see in that report and then how, you know, each component links to the other. And we’ll get that to you before we actually get you the report so you can see, you know, what, what’s coming. And then that will help us think through, you know, the best way to get you the details you need. 

 

Gray [01:33:29] Alright. These details are being requested by noon tomorrow. 

 

Key [01:33:35] Madam Chair, respectfully, there is no way. 

 

Gray [01:33:38] Alright. 

 

Key [01:33:38]  We can get you as much detail as we can. But the level of detail that I’m hearing is– it would take some time to compile. 

 

Gray [01:33:47] Okay, so everybody here may get bored with my line of questioning, but I’m an accountant by, by my schooling. And so and I’ve not seen this dashboard they’re talking about. But this dashboard has– I don’t even know. Are we still using ASIS? Is it the ASIS codes that are reported? No. Senator Dismang’s telling me no. 

 

Unidentified speaker from Department [01:34:06] So school districts use Appscan and the Appscan have expenditures code. And I can get as detailed down as you want it. I mean, that’s, I guess, if that’s what you want to get down to that detailed level, we can, we can go down that far. The transparency website shows the, the buckets that were allowable, the continuity of operations, school safety, the different things that the high level things that districts can use those funds for. Underneath those program codes, we have object codes and we have expenditure codes. So I can keep going down to get to that expenditure code. But that will be a huge report. But it’ll, it’ll be detailed down to show you if it was spent on salaries, if it was spent on paper, pens, whatever, whatever it was spent on at that school district level, how they inputted that detail in there. We can pull that out. That, that report would be big when we get to all 200 school districts. But I can start working on that if that’s what you’re asking us to do.

 

Key [01:35:07] How long–

 

Gray [01:35:07] Yes. 

 

Key [01:35:08] How long would it take? 

 

Unidentified speaker from Department [01:35:10] But do you– how many years you might do you want? Since 2020? 

 

Gray [01:35:14] What would you like? Since the start of the ESSER funds.

 

Unidentified speaker from Department [01:35:18] Okay. That’s three years’ worth of data. For each, now, that’s, that’s going to take– I’m scared to say how long it will take because I don’t know if I’ve ever pulled out that much data at one time. So I need a couple of days at least to try to, to see what I can pull out of it.  

 

Gray [01:35:36] Okay. Thank you. Senator Hammer, are you seat number 92? Is that correct? Alright, you’re recognized. 

 

Hammer [01:35:46] Thank you. Would you just give me the numbers real quick? Besides the potential 500 million that we may void the vote on, what, what are the balance– or what, what’s the balance of ESSER funds available? Or are there any left? Would you hit that again, please, real quick? 

 

Unidentified speaker from Department [01:36:04]  There’s– I’d have to go back and look at the exact round. But what I remembered last time was of the total allocations, there’s a little over 800 million left of the total 1.7 billion. 

 

Hammer [01:36:20] Okay. And that doesn’t include if we do what we do Thursday? The 500 would go back in on top of that, is that correct? 

 

Unidentified speaker from Department [01:36:27] I don’t know if we’ve spent any of that 500 yet. So that would include– so we would not be able to spend– I think it’s a little over 800 million, but I’d have to get, get for sure how much that is. But I don’t know right now. 

 

Hammer [01:36:39] Alright. I’ve got one more question, Madam Chair, if I may, for them. But can I, can I direct a question to you or if Secretary Key wants to ask it? It’s– if we void the vote, if we vote, void the vote, would we not need to know how much of that 500 million they’ve already spent? Or shouldn’t that information be available to us Thursday before we take action? Because how are we going to handle that? 

 

Dismang [01:37:06] And to just– I guess this can be this– I think this is how this works. The school districts were each allotted a certain amount of money that can– that is– that makes up that half a billion dollars, correct? And so each school district is allowed to draw down their share of that half a billion. And these are rough numbers now. And some of them have funds remaining from the other half billion and the half billion before that. Some of them, I don’t think, have spent some of their first rounds, at least it was not too long ago that some had not drawn hardly anything at all. And so it’s a little bit more complicated than probably what, what we’re saying. But there is– have any of the schools drawn out of this new tranche of a half billion dollars that we just appropriated? I mean, that would probably be fairly easy to know. It’s only been less than 30 days at this point. 

 

Unidentified speaker from Department [01:37:54] I just got a text, and we’ve spent 1.8 million of that 500 to date right now. 

 

Dismang [01:37:59] There you go. And again, what we would be expunging would be an appropriation at this point. 

 

Unidentified speaker from Department [01:38:06] And if I may, Senator, I had it backwards. We’ve spent 858 million. There’s 914 million left of the 1.7 billion. 

 

Hammer [01:38:15] Okay. Alright. Can I ask one more question, Madam Chair? 

 

Gray [01:38:17] Yep. 

 

Hammer [01:38:18] Thank you. So, so this goes back to Secretary Key’s comment. You said they were restricted based on– what did you say– Title 1 formula? Or is that what you said a while ago? 

 

Key [01:38:30] The funds were distributed to districts or allocated to districts based on the Title 1 formula. Yes. 

 

Hammer [01:38:35] Alright. So if some of the schools wanted to, say, give a $4,000 raise, some might be– it might be greater difficulty for some than others based on how much they would have received using that formula. Is that an inaccurate or accurate statement? 

 

Key [01:38:51] No, that, that is accurate. And then you also have to factor in the 20% requirement from the feds that they had to set aside, too, for learning loss. 

 

Hammer [01:38:59] Alright. But let’s say that the school wanted to use some of that money for other purposes, like the Senator mentioned, the five distinct purposes. Maybe they, maybe they got the money to put a new chiller in or other improvements, and that was already budgeted money in their local budget. That would have created the ability for them to redirect that money in order to give raises not having to spend that money on an item that maybe ESSER funds totally allowed them for. Is that, is that a pathway or is that not a pathway in budgeting procedures? 

 

Key [01:39:33] I think, yeah, that could be a pathway that if they were, if they were using operating– unrestricted operating funds and had planned to use that for an HVAC project, and they instead used ESSER funds, then that would free up whatever portion of that unrestricted revenue or unrestricted fund that they could use for other things. 

 

Hammer [01:40:01] So that would have pushed it back to the local level to look at their finances, to see if they could have gotten some of that ESSER money to use for something that maybe they already had built in the budget. But now all of the sudden, manna from heaven fell down and they were able to use that money for something else. They could have redirected what they saved using the ESSER Fund in order to create the ability to give their teachers and other employees raises. Is that– am I right or wrong? 

 

Key [01:40:26] I think there are some capital cost issues that some districts were able to use ESSER Funds for that, you know– HVAC, anything dealing with air quality was an approved use. Spacing, if they needed to add room for social distancing. I mean, that’s– all those things would have been eligible uses. So, yes, that would have relieved some pressure on their operating budget or their capital budget. 

 

Hammer [01:40:53] Alright. So finally, when we get that list from you as to how the schools spent their money, we will have some idea how much was used for capital expenses when we get that comprehensive list from you. Is that correct? 

 

Key [01:41:03] Yes. Okay. And just– Senator, just also a reminder that for capital expenses, anything dealing with construction, HVAC, they had to submit a detailed plan to the department. That is the only thing that we, under the federal law, had responsibility to review and approve before they could actually expend the dollars. 

 

Hammer [01:41:26] Thank you. Thank you, Madam Chair. 

 

Gray [01:41:29] Alright. Seat number 75. Speaker Shepherd, you’re recognized. 

 

Shepherd [01:41:33] Thank you, Madam chair. Appreciate you recognizing me. I’m not on the committee but do have a question. I just– number one, I’ve heard different numbers thrown around. And just to be clear, how much money, how much of the ESSER funds are still sitting at the department today? 

 

Unidentified speaker from Department [01:41:52] When you say sitting– I mean, because they’re, they’re federal funds. So we can only pull them down when we have an expenditure to pull them down for. But of the 1.7 billion, there’s still 900 million available for pull down. 

 

Shepherd [01:42:06] Okay. And then between now and Thursday, how many of– how much of that money is going to be spent? 

 

Unidentified speaker from Department [01:42:14] I don’t, I don’t know. I would have to see what– it depends on what the districts are out spending when I pull their report to see if they spend– we usually do it monthly. So I wouldn’t expect a whole lot. But that’s why I was able to get that we’ve spent 1.8 million last month of the 500 million so far. 

 

Shepherd [01:42:30] Okay. And then one final question. I’ve seen a memo from the secretary of education that was, that encouraged the use of the ESSER funds for, in part for retention. And the memo I saw really focused on retention of teachers. Is that a memo that, that the department received? 

 

Key [01:42:50] Yes. 

 

Shepherd [01:42:51] Okay. Thank you. 

 

Gray [01:42:55] Alright. And what we’re going to do here is I’m, I’m allowing latitude. Most of these on the board are not actual committee members. But this is an important topic. So we’re going to allow some latitude. Just kind of keep your quiet– your questions to a minimum. We’re at seat number 41. You’re recognized, Representative Rye. 

 

Rye [01:43:14] Thank you, Ms. Chair, Chairlady. You know, John, we’ve, we’ve heard all these things about raises and bonuses. Well, you know, if you’re talking about a bonus, you’re talking about one time money. If you’re talking a raise, you’re talking about something that if you started out with $36,000 and you went to $40,000 for the minimum, you know, that’s something that reoccurs every year. Now, with the money that we’ve spoken about this morning, about the school money that’s actually in place now, and then we have the money that’s actually here, the 1.6 that we’ve been hearing about, what do we plan on actually doing here? Are we going to look at a bonus of one time money or are we looking at raises that actually is going to reoccur each year? Because the federal money will only be one time money. 

 

Key [01:44:07] As, as related to the ESSER funds, I think the caution has been and even in the letter, the memo from Secretary Cardona talked about the concern about using expiring funds for increasing the salary scales. Alright? So I think what we’re talking about there is incentives and bonuses that would not be ongoing commitments from the district. 

 

Rye [01:44:37] Follow up, please? 

 

Gray [01:44:37] You’re recognized. 

 

Rye [01:44:38] John, what, what I can’t understand, though, is this. Let’s just say that– Lane and I spoke about this earlier today that, you know, about the most we’ve ever carried over is about $350 to $400 million. If you figured both of these together, this, this change in the minimum, and then you’re talking about a $4000 bonus, that’s, that’s a whole lot. And I just wonder how you can substantiate doing that if you can’t do it year by year. 

 

Key [01:45:10] Which one are we talking– Rep. Rye, are we talking about the, the governor’s proposal or are we talking about–

 

Rye [01:45:16] Mm hmm. 

 

Key [01:45:16] Well, in that proposal, it was adding $425 to the foundation funding. So that was an ongoing– that’s, that’s not the same as expiring funds. So there was going to be a proposed increase of $425 to the foundation funding that would not expire. 

 

Rye [01:45:35] Okay. 

 

Gray [01:45:35] I really, I don’t want to get into the discussion of the actual funding formula or the base salary. I don’t want to get into that discussion today in this committee. So. Alright. Thank you, Representative Rye. Senator Ingram, you’re recognized. 

 

Ingram [01:45:50] Thank you, Madam Chair. Arkansas is not the only state to get ESSER funds. I mean, these states that are raising the base salary around us like Mississippi. They’re getting ESSER funds as well, correct? 

 

Key [01:46:04] Yes, sir. 

 

Ingram [01:46:05] Thank you. 

 

Gray [01:46:08] Alright, seat number 45. 

 

Godfrey [01:46:10] Thank you, Madam Chair. Thank you for the latitude since I’m not a member of the committee. Secretary Key, it does sound like you have your work cut out for you in compiling this data, although I do think it’s important for the, the legislature to know how these funds are being spent by, by districts. I do appreciate how you have kind of highlighted the dashboard and ESSER funds to the Education Committee. This is not the first time I’m hearing of this, but it is important for the legislature at large to know what those funds are going toward. It sounds to me that the concern is that, you know, these funds have not been spent on teacher retention and recruitment bonuses, even though that was an allowable expense. But what I’m hearing you say is that because this list is so robust and comprehensive and long, that’s because schools have so many expenses and needs that they need to fund, not just teacher recruitment and retention bonuses. Would you agree with that? 

 

Key [01:47:14] Yeah, I would agree that the districts had a lot of varying types of expenses as well. And that’s why the federal law provided such latitude across a number of– well, how many buckets, the general buckets? There are five, I think, big buckets that we, that we had allowed. And within those buckets there were other very broad categories. So yes, I mean, it was pretty flexible across a wide range of expenses. 

 

Godfrey [01:47:44] And just a quick follow up. It sounds like, you know, if schools are able to use funds for these bonuses but also have chosen other projects, such as, like you mentioned, repairing broken HVAC systems or making, you know, repairs to their facilities or investing money in learning loss– you mentioned that 20% was required. But my guess is that schools are investing even more than 20% of their ESSER funds into recovering that learning loss for students and investing it in things like interventionists and instructional facilitators and tutoring and afterschool programs instead of upping their own salary or giving bonuses because schools are seeing the most immediate needs are things like facilities, things like taking care of their students, physical and educational needs. So what I’m hearing you say is, yes, while we could have spent ESSER funds on providing these bonuses, there are so many other vital needs that schools have that they are just now able to pursue and fund because of these federal funds. Am I hearing you correctly? 

 

Key [01:48:56] Yes. And I think that’s accurate. But it’s also important to note that each district under the law, under federal law, is required to bring in stakeholder feedback. They were– you know, not just their board– parents, others in the community to help develop and keep them apprised of those plans. So from district to district, it was just a wide range of things that they identified as priorities. 

 

Godfrey [01:49:18] Thank you. I just will never forget when we had an educator come in to the Education Committee in a conversation about these ESSER funds and say, this is the first time that we have been able to adequately fund and operate the initiatives that we need for our students because of these funds. And so it’s not that this is the, you know, the one thing that schools could have and should have done to provide bonuses. There are vastly varied needs that schools are utilizing these funds for. Thank you. 

 

Dismang [01:49:47] And if you don’t mind, I’ll piggyback off that, because I understand, I think where the representative was going. And, I mean, at the end of the day, it’s a matter of prioritization. Right? So the DOE said our– we prioritize recruitment, retention and the mental health of our teachers, faculties and staff at these schools. That’s what they said. Now, our districts may not have necessarily said the exact same thing. To her point, they may have a lot of other needs. Maybe they want to buy a bunch of air purifiers or whatever it may be or needed to update an HVAC system that was, probably already should have been updated. That may be. But I think what we’re saying is what we would like to see, and I think the reason you have the motion on the table is we would like to prioritize teachers, and we would like to know that our school districts are doing the same. And that’s what– I think that’s what we need to see, because we don’t know. We’re just all kind of guessing at this point. I would love to see that we prioritize learning loss in every district. I mean, because that would have been focusing on the students. To your point, I think that would have been wonderful. And we will see that when we get the information back. But the way that it is right now and the way that it– if you look at that website– pull it up on your phone. If you can tell what these things have been spent on, good for you. Because I cannot. So, again, I do look forward to better understanding how these funds were prioritized so far. And I also look forward to emphasizing the importance of utilizing these funds for retention, recruitment, and also just the mental health of our teachers. So with that, thank you. 

 

Gray [01:51:20] Thank you. Seat number 67, Representative Cavenaugh, you’re recognized. 

 

Cavenaugh [01:51:23] Thank you, Madam Chair. My question is just really pretty quick. On these funds, I’m assuming that there’s an audit on how the schools actually spent them to make sure that they go with the guidelines of what they were supposed to be used for. Is that correct? 

 

Key [01:51:39] Eventually, yes. It’s not on the same– I mean, we have Legislative Audit, obviously, and they would be subject to reviewing these funds as well. But they’re also subject to review by the Federal Office of the Inspector General, I think is the right agency. And that may not happen for some time. And the funds are– they expire in 2024. So there’s going to be a time lag before a lot of audit type activity would be occurring on this.

 

Cavenaugh [01:52:08] Okay. Well, once we do– they have an audit and it’s discovered that they might not have used it in the manner that these funds because they got handcuffs on them because they’re coming from the feds, what are the consequences to the schools if they are not used properly? 

 

Key [01:52:23] Potentially paying those funds back to the federal government? 

 

Cavenaugh [01:52:26] Okay. Thank you. 

 

Gray [01:52:28] Alright. So far, this is the last one in the queue. Senator Irvin, you’re recognized. 

 

Irvin [01:52:33] Thank you. Just to piggyback on what Representative Godfrey and Senator Dismang have highlighted, we’re talking about prioritizing spending, we’re talking about guessing all these things. Would you agree that we have an adequacy study that actually looks at all categories of expenditures for education funding? And that’s a process that this legislature takes on in a very thoughtful, deliberative manner so that we do look at all the expenses that Representative Godfrey just talked about, that it’s a thoughtful, deliberative process, that we look at every expenditure, and that we try to take the guessing out of things. We try to prioritize our spending for public school education per the Constitution, per our laws, and that we do that in a thoughtful, deliberative manner in partnership and collaboration with the Department of Education and the Arkansas legislature. Is that how you would characterize the adequacy study? 

 

Key [01:53:38] Yes. 

 

Irvin [01:53:39] Okay. So I would just highlight that we are in the middle of that. Would you agree with that? 

 

Key [01:53:47] Yes. 

 

Irvin [01:53:48] We are in the middle of an adequacy study. How long have we had the adequacy study? 

 

Key [01:53:54] Since 2004. 

 

Irvin [01:53:55] Okay. So it should be no surprise to anybody, correct, that we are in the middle of an adequacy study that looks at all of these questions that’s supposed to take the guessing out of everything, that’s supposed to launch us down a path of deliberative, thoughtful dialogue, collaboration and process to where we fund schools adequately and as equally as we can because of the Lakeview case, primarily. 

 

Key [01:54:29] Yes. 

 

Irvin [01:54:30] Okay. And we’re in the middle of that. And that results in November with recommendations to follow for the next general session. And we’ve done that since 2004. And I would just remind everybody that is the purpose of it. Being haphazard, guessing is not something that will result in thoughtful policy for the state of Arkansas. That’s reckless. Thank you for the latitude. 

 

Gray [01:55:06] Alright. Any other questions? Alright. Thank you. There are no other questions for you at this time. Does anyone have any questions on items 1-4, M1-4? Alright. Seeing none, we’ll consider item M reviewed. Alright. There’s no other business. And we will consider this meeting adjourned. Thank you.