Highlights from Arkansas Legislative Council

July 21, 2022


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Budget Overview

Anderson [00:03:52] When you compare fiscal year 2022 with general revenue collections to fiscal year 2021, you’ll see gross general revenue collections end of year increased $652 million or 8% above the 8 billion last year. Net general revenues– those are revenues available for distribution– increased 38.4 million or 5.2% from the $740.6 million available for distribution in June of 2021.[00:04:50]And after all of the deductions, we have a $1.3 billion surplus.


Hendren [00:05:56]I know we’re going to talk later about some one-time money from the federal dollars that came down for COVID relief and so on. That’s not, any of that, reflected in here. All of this is potentially recurring dollars, correct? 


Anderson [00:06:07]Yes, sir. Notwithstanding any changes to our income tax collections that are being discussed for the special session. Yes, they are recurring dollars. 


Meeks [00:07:11]The record surpluses that we’ve been having month over month, are those surpluses expected to continue or– as long as inflation does? Or will we start to see the these huge surpluses begin to wane and level back off closer to what our budget expectations are? 


Anderson [00:07:33]Well. One thing that will affect it is if we do make changes during a special session to the income tax collections. Obviously, that’s a given. 


Meeks [00:07:39]Sure. 


Anderson [00:07:41]Most of the experts that I read are saying, they’re talking about a recession within two years. And that would obviously affect this. 


Meeks [00:07:49]So if that recession does come to fruition, as everyone expects, what will that do to the surpluses that we’re seeing now? Will that get us closer back to budget or will we start actually being below forecast?


Anderson [00:08:13]If you have a 4% growth to 5% growth in revenue stabilization, and we have a, we have a big hit from recession, you know, we have that $1.6 billion wiggle room in there. Yes, sir. And that’s, that’s part of the reason I think a lot of people feel like we can absorb moving forward with these income tax reductions.


Mark Johnson potential conflict of interest

Gray [00:13:14]The Peer subcommittee met on Tuesday, July 19. The subcommittee received reports, reviewed items and approved requests for appropriation increases and fund transfers. Three items in the report are held by the subcommittee: 


Lowery [00:15:07]Okay. Well, I do that. I make a motion that those three– 


Wardlaw [00:15:10]Is that substitute motion to her motion? 


Lowery [00:15:12] I guess it’d be a substitute motion that we adopt the, the held items as well. 


Hendren [00:16:24]Yeah, I guess like a lot of members, I don’t quite know why these items were held. And so we’re being asked to vote whether to overrule the recommendation of the committee or not. And so I’d ask for a little clarification from the chairs about why they were held and what the disclosure is that you’re referring to so that we can make a vote based on knowing what’s going on. 


Dismang [00:16:54]It was brought to the chairs’ attention, or at least mine, that we have a member that’s spouse actually lobbied for these entities. And there was, at the time, wanted some additional information about what that relationship looked like. 


Dismang [00:19:13]And just for clarification, I don’t think I mentioned a name, but Senator Johnson did ask that I clarify that his wife is not a lobbyist. I think the registered– she is a registered fundraiser counsel– fundraising counsel, not a lobbyist. 


Dotson [00:21:15]I was in Peer the other day and these items were not presented. They were– they were held, I guess, or skipped over. So I think before we move forward with with considering any of them– we’re talking about $6 million here that we haven’t had any presentation on at all to know what they are. [19.4s] [00:21:50]But I think it would probably be beneficial to at least have an idea of what we’re voting on before we approve $6 million. 


Rapert [00:22:55]I just want to get a clarification as to why these were held in the first place. I want a clarification on that. 


Dismang [00:23:09]They were held awaiting additional information about any relationship that may have existed between these organizations and the spouse of a senator. That’s why they were held. That relationship was not disclosed until this morning while we were walking into this committee, despite the fact that there was work being done well prior to today. So that’s why it was held. I believe that it is this body’s– it’s important that this body understand what we are voting on and it’s important for the public that there be transparency. And that, that’s the simple reason why. 


Dismang [00:23:45]I want to speak to another question that was asked just a minute ago, which is, I mean, can we vote on this now? Well, I mean, we did not have any debate on any of these items or discussion of what they do in Peer, the proper place to have that discussion. [00:24:19]And then I would expect that we would also have folks here from the Sultana Museum so they can discuss exactly how they plan to use those funds and give us some testimony today about that. However, they were not notified to be here today, and they also did not provide that testimony in the Peer committee. I mean, I think that we need to have that type of discussion unrelated even to any relationship that may exist between a spouse and a– and those organizations.


Rapert [00:25:05]I guess I’m a little confused because for something that we didn’t know until today, I don’t understand it being an excuse for why it was held the other day. 


Dismang [00:25:15]There was general understanding, as I stated before, and unknown for certain, if there was a relationship between these organizations and the spouse of a senator. We did not know. You are correct. But with not knowing, it was decided that those would be held so that we could gather that information and honestly not do it in this fashion so we could be sure if it existed or not. Now we know today that it does. But also then, that circumvented our ability to have questions in discussion about these three items in the Peer committee. And I think voting on them now would be improper. I mean, we don’t have those organizations here to testify to even about what they’re doing, again, unrelated to any relationship. 


Rapert [00:26:11]I also know that, my goodness, I know that disclosure– and I don’t know whether Senator Johnson’s made a disclosure in the past on it or not, but many of us are aware of the fundraising activities of his spouse. 


Lowery [00:28:43]You know, I think that this discussion has been worthwhile, but I believe it would be proper to go ahead and pull down this motion. If other members that have expressed concern for the money being held up to different entities, if they want to make that substitute motion, that’s fine. But I’m going to pull mine down. 


M Johnson [00:31:15]And I hope to move this along by being open with my colleagues. Under Senate Rule 24, we are required to disclose a potential conflict of interest. [00:31:29]But in the past on several instances where I had a potential conflict because of having a family member that has a relationship with this, I will, even though I am recused, I will vote present or not vote on anything related to any of these entities. I think members of the Senate know that I have gone to the well of the Senate and done this before. [00:32:16]My wife is, is a fundraising counsel. She’s registered under the, the fundraiser law in Arkansas. [00:32:35]She only receives, you know, a flat monthly contractual fee. [00:32:56]so I’ve been very careful even though we’re not required to recuse, we are required to disclose. I choose to do both. [00:33:15]And as far as it only being done this morning, I’m not a member of Peer. I did not know what was coming out of there. And when I learned that these could potentially be brought up in ALC today, that’s when I prepared the letter of disclosure and presented it to the chair and to Ms. Garrity. 


Reversing approval of $500 million for school districts

Hickey So at this time, I’m going to make a motion and I’m going to move that the Legislative Council expunge the vote by which it approved Item B2(n) on June 17 of the 2022 Peer Report, which was a $500 million ARP appropriation request for the Department of Education; the Department of Education bring to the ALC Peer subcommittee its request for appropriation of those ESSER funds in the coming weeks, accompanied, accompanied by the detailed plans of the school districts to utilize the funds in accordance with the recommendations set forth above; and the Peer Subcommittee be given the authority to meet as needed, including outside the regular ALC week to hear these requests of the Arkansas Department of Education and that Peer be given final approval of these appropriation requests. That’s my motion. 

Hendren [00:43:49]And I guess what I want to know is have we checked with the districts to see how many dollars are encumbered? What are they going to do if in order to comply with the recommendations that follow in the motion, they don’t have enough dollars to cover it? 

Hendren [00:44:34]And so it started out as a recommendation, but then it followed up with a procedure that these districts will have to come back and present this with a detailed report about why they’ve not done that. And I guess where I’m confused, are we then saying that we are going to approve every one of these local school district’s plans? 


Hickey [00:45:43]If, if there’s a procedure for them to do that? 


Hendren [00:45:46]Yeah. Can we overrule the local school board’s decision to do that? 


Hickey [00:45:51]What we have in here that this is a recommendation and that if they decide not to do it, which we fully expect there, there may be some that do, then they’re going to bring that plan before us and we’re going to hear it in Peer. And I mean, now, if–


Hendren [00:46:05]And what if we disapprove it? 


Hickey [00:46:06]Sir? 


Hendren [00:46:07]And what if we disapprove it? 


Hickey [00:46:09]Well, if somebody out there was going to be buying some type of widget or something like that, then, I mean, I guess that that would be the authority of that committee to do that, which we passed in legislation that’s been voted on. 


Hendren [00:46:22]So again, to be clear, Peer now is going to usurp all of this authority on these spending decisions of these dollars from local school boards? 


Hendren [00:47:05]I guess, again, I don’t want to belabor this, but I still haven’t gotten an answer to the fundamental question, is this a reporting back to us or do we actually have approval authority now if we don’t like what they’re doing? 


Hickey [00:47:17]We actually do. We actually do vote with an approval during that committee. 


Hendren [00:47:21]So again, we have yanked from all of the schools in Arkansas the authority on how they spend these dollars, even though we approved a plan that, that they presented to us. 


Hickey [00:47:32]That is not correct. 


Hendren [00:47:40]I think it’s important we be crystal clear. This does nothing, nothing to the salary-based schedule for local school districts. [00:48:01]This is one-time dollars. This is a one-time bonus. It does not affect the salary schedule or what schools can broadcast to other states about our salary schedule at all. Correct? 


Hickey [00:48:14]So if you’re asking me if this particular motion, if it passes, is it just a one-time bonus? The answer to that would be yes, sir. 


Godfrey [00:50:52]One more quick follow up is if ALC now has approval authority of these funds, does that not put either the department or the districts in conflict with the requirement that these ESSER funds be flexible, that districts must have flexibility in the way they spend the funds? [00:51:17]That is the provision of how these funds must be spent and used and planned for is that districts must have flexibility in the way they use them. Does this new approval authority put us in conflict with that requirement for the funds? 


Hickey [00:51:42]All American Rescue funds, whether it’s this or coming from any other agency, what it does is it comes before Peer with a detailed report as to what those funds are going to be used for. That is actually already within our code within, within the state. 


Ballinger [00:56:33]There is not– none of this money has actually been, been applied. I spoke with several of my superintendents and some of them didn’t even, weren’t even aware about this $500 million that’s coming out. So is that, is that the case that we’re not talking about pulling anything back that’s ever made it to the district? We’re talking about holding on to this stuff, correct? 


Hickey [00:56:58]That is actually what Senator Hendren was kind of referring to. There’s like $42,000,487 that was supposedly out of this block, which I have a letter from DFA for us to do that appropriation immediately following this. 


Ingram [00:58:20]I have, for instance, a school district that has for six months shopped, gotten bids, architectures for $2.5 worth of exterior doors that need replaced. Now they’re ready to sign a contract. And to answer Senator Ballinger’s question about no, no money– the money is all reimbursed. The school districts spend it and it’s reimbursed. Is there the possibility of this $500 million that we are going to hang out these local school districts that are– that have worked for months to get this thing to go to bid and now they’re ready to sign the contract and there’s no money for it. Is that, is that a possibility?


Hickey [00:59:38]We know that there’s $42 million. Of course, if there is specific contracts that have already been inked before the Peer meeting, it is my understanding and he can correct me if I’m wrong, that Secretary Key had sent out and told the educational community that this was being looked at and considered before the legislature. Of course, that could be in the detailed plan that’s brought before them and that is something that would be considered. So yes, sir, it would be considered in Peer. 


Ingram [01:00:07]So that would be something that would come back that we would have to approve all of these in Peer? All of this money, every school district would come back to us in Peer? 


Ingram [01:01:00]We want to get our teachers all of the money that they can. But I don’t want this to take the place. And we’re, it seems to be, we’re working hard just not to face up to raising the salaries when we can and making it work through this ESSER. And other states have raised their salaries for their teachers and utilized ESSER money for bonuses. So I don’t want to forget that. 


Dismang [01:01:39]It will be the Department of Education that will be bringing the appropriations to the Peer committee, not the individual districts. Now, the individual districts will each have a plan and they will be stipulating, you know, what they plan on utilizing the funds for, at least the remaining funds for, but it will be the Department of Education that will be bringing those actual plans to the Peer committee. Just a clarification. 


Murdock [01:02:33]I’m still not clear on that because the process that Senator Ingram outlined of how projects are done– many times there is progressive dollars paid for preliminary work as it leads to a project. 


Murdock [01:05:43]Now, the real issue– and I’ll go to point number two– becomes local control. When we, with what I understand your motion to say, it’s going to put us, the 135 of us, in the position of being school board members for all of these districts, because we are going to then make decisions and we’re going to take away, in effect, the duly elected local school board authority, in effect, as it relates to this, this, this issue. We’re going to take that away per your motion, and we’re going to make the decision down here on whether we think it’s what it should be. I think that that’s out of line. 


Murdock [01:07:12]So you’re willing to do this, and then we’ll talk, continue to have a discussion, hopefully, about really the big point that we do something to supplement the salary schedules of our teachers that  deserve it. So thank you so much for bringing this forward because you’re really saying something by doing this today. 


Elliott [01:17:52]That’s one of the reasons. I would like us to think through whether or not we think giving folks a bonus is going to help Helena-West Helena hire certified teachers when they can go someplace else. And Mr. Chair, I would really like– I recognize where we are with parliamentary procedure, but there are just questions here I have that we need to hear from the Secretary to explain some of the things to us what has gone on. Is that just out of the question for you or may we have him up here to explain some things to us? I have questions. 


Wardlaw [01:18:37]I understand your questions. It is out of the question at the moment. We typically don’t hear from witnesses during a motion, and this is considered discussion on a motion that Senator Hickey has made. So I would rule right now that we would not hear from anyone from the table. 


Elliott [01:18:54]Might we do so before we vote? Are you saying that is out of the question before we vote? 


Wardlaw [01:19:04]We’re, we’re still in the motion and we’re going to be in the motion until we vote. So the answer is no. 


Elliott [01:19:10]All right, then, Senator Hickey, and I know there have been some things said about adequacy. All of us understand that our surrounding states have surpassed us. We’ve seen the proposal from the governor. It was a proposal that was funded. Do you insist that that proposal does not have ongoing funding in it, the one from the governor? 


Wardlaw [01:19:48]Senator, again, I’m going to rule that that’s not part of this subject matter. And since I’ve made that ruling earlier, I’m going to be consistent. 


Elliott [01:19:55]Well, I don’t know, Mr. Chair, how– I don’t know how to be well informed to vote because this– if this is presented to us as our only option and we can’t even look at the possibility that something else was already funded and that we had to be here. 


Elliott [01:24:57]There’s no surrounding state that pays $36,000. That, that’s for a starting salary. I’m not saying we didn’t make progress, but that’s not my question. [01:25:27]Are you saying this committee is committed to teachers getting raises, at least at what the governor had put out there and even pulled back on to make us competitive with, at least with surrounding states?


Elliott [01:26:16]So I don’t know how we vote for something where we don’t know exactly what’s going to happen. We don’t know how many school boards out there have encumbered money. We don’t know if they say they have and they come talk to us and say, we’d like to give a bonus, but we can’t. We don’t know if we’re going to be able to do that. We can’t get answers from the commissioner [01:26:45]We’re going to give somebody a bonus, and that’s not the issue that we need to address in the state. And we’re going to act as if, because we’re still in adequacy, that we cannot give people a raise.[01:27:09]Now, I don’t want us to go out of here saying we have given a bonus and adequacy is going to do something that the chair herself said we’re going– we are fully committed. Committed to what is the question, Mr. Chair? And I’m not going to get an answer to it. 


Ladyman [01:28:12]There’s been a lot of things brought up that we need to address. And I agree that we need to look at teacher salaries and we need to help them wherever we can. But what I’m fully committed to right now is to give you all $5,000. That’s the debate right now. These other things that we’re talking about, we need to debate this. We have time to do that. But again, the teachers that have talked to me said that they need help right now, and some of the discussion here does not even talk about the $5,000 that we want to give to you now. And I think that’s what we need to vote on right now. So I want to make a motion for immediate consideration. 


Wardlaw [01:35:37]With a vote– a threshold of two-thirds vote, the motion has passed.


Hendren [01:38:28]So to be clear, this is the first $42 million of the $500 [million] that every school district is going to have to come up here and say, ‘Mother, may I’ on? Is that correct? 


Hickey [01:38:40]No. 


Hendren [01:38:40]How is that not correct? 


Hickey [01:38:42]Mother, may I? I don’t think any school district’s going to come and say Mother, may I. 


Hendren [01:38:47]But they cannot spend any of that $500 million without us bringing it now before us to approve. Is that correct?


Wardlaw [01:38:53]That is correct. What this is, is the $42 million that was already spent from June 17 to this day. 


Hendren [01:39:00]And again, my point on that is there’s another $460 [million] or so that we just unapproved and said now has to come back for this process for every dime, correct?


Wardlaw [01:39:10]That is correct. 


Wooten [01:40:28]Colleagues, I hope we’ve learned what we have, what we have here we refer to up in White County as a mess. A mess. Forty-two years ago, I chaired the first finance– School Finance Commission. We had the same discussion that we’ve had here today. And I hope, for the teacher’s sake, that we’ll do something about it and make sure it’s done right. The teachers heard two things from the governor. The governor said, I’m going to include in the call $300 million. They heard two things. Special session, pay raises.