Legislative Audit Committee
August 19, 2022
Womack All right, we’re going to call this meeting to order. Our first order of business as the adoption of minutes of the June 3, 2022, meeting. Is there any question or comment on those minutes? With no objection, we’re going to consider those adopted. Thank you. Next up is the adoption of reports of executive and standing committees. The executive committee will be up first, and I will read that report. The Executive Committee met Thursday, August 18, 2022. Staff reported to the committee the Audit Special Investigative and Shortage Report scheduled to be presented to the Standing Committees and to the full Legislative Joint Auditing Committee this month. In new business, there were no objections to a request for staff to conduct the financial audit of the city of Osceola. In other business, the committee approved a request for staff to conduct the final financial audits of the city of Lake Village. With no additional business to discuss, the meeting was adjourned. The next meeting of the committee is scheduled for Thursday, September 8, 2022. And I move for adoption of this report. May I have a second? We have a second. Any question or comment before we vote? All right, all those in favor of adopting that report, say aye. All opposed no. Thank you. That’ll stand adopted. Next up is the report on the standing committee on counties and municipalities. Senator Garner, you’re recognized.
Garner There we go. The committee adopted the minutes of the June 2, 2022, meeting. The committee discussed the City of Cotton Plant and their noncompliance with municipal accounting law. The city was first notified of their records were in substantive noncompliance with the municipal accounting law in January of 2022. Per Arkansas Code Annotated 14-59-17d-1, if the city remains in noncompliance after 120 days, the Legislative Joint Auditing Committee may modify– notify the city that the State Treasurer will continue noncompliance. Per Arkansas Code Annotated 14-59-17D-2, upon this notification, the Treasurer of the State shall withhold all turn back until Arkansas Legislative Audit has determined that the records are in substantial compliance with the municipal accounting law. The Standing Committee on Counties and Municipalities recommended to the Legislative Joint Auditing Committee that the provisions of the Arkansas Code Section 14-59-117 continue for the City of Cotton Plant, and that the Standing Committee also recommended the State Treasurer be notified of the town status regarding the municipal accounting law. The committee reviewed 9 reports deferred from June 2, 2022, meeting. An official from one entity was present to address the repeated findings from this report. Three previously deferred reports were filed and six were deferred to the September 8, 2022 meeting. The committee reviewed 194 current reports. Of these reports, one investigation report and one other report were certified to the government bond– governmental bond, and nine others were referred to the prosecuting attorneys. Officials from five entities were present to address the repeat findings in their current report. Committee filed 189 current reports and deferred file so that officials could attend the September 8, 2022, meeting to address repeat findings and to answer questions. Mr. Chairman, I move for adoption of this report.
Womack Thank you, Senator. May I have a second on that motion? We have a second. Is there any question or comment before we vote? All right. Seeing none, all those in favor of adoption, say aye. All opposed, no. Thank you. That will stand adopted. Next will be the report from the Standing Committee on Educational Institutions. Representative Berry.
S Berry Thank you, Mr. Chairman. The Standing Committee on Education Institutions met yesterday, August 18, 2022. The committee reviewed a total of 35 audit reports which consist of 24 school district reports, four educational cooperative reports, six higher education reports, and one enrollment charter school report for the year ended June 30, 2021. Representatives from National Park College were present and answered questions from the committee. The audit report for National Park College was referred to the applicable prosecuting attorney. The community filed 35 current reports that were brought before it. And at this time, Mr. Chairman, I move for adoption of this report.
Womack Thank you, Representative. May I have a second? We have a second. Is there any question or comment on that report? All right. Seeing none, all those in favor of adoption, say aye. All opposed, no. Thank you. That’ll stand adopted. Next will be the report from the Standing Committee on State Agencies. Senator Pitsch, you’re recognized.
Pitsch Thank you, Mr. Chairman. Standing Committee on State Agencies Report. Six reports were on the committee’s agenda yesterday. One current report, which is for the Department of Education, contained a finding related to old equipment. Various agency staff members were present to report on how the agency intends to address the audit finding and to answer committee questions. During the meeting, the committee adopted a motion to file the six current reports. Move to adopt this report.
Womack Thank you, Senator. May I have a second on that motion? I have a second. Is there any question or comment on that report? All right, seeing none, all those in favor of adoption say aye. All opposed, no. Thank you. That will stand adopted. Up next on our agenda will be a special report follow up for the review of implementation of a 2% salary increase for state employees for the period February 6, 2022, through June 30, 2022. Mr. Cover, you’re recognized for this report.
Cover Thank you, Mr. Chairman. This report is issued as an update to the special report reviewing implementation of a 2% salary increase for state employees, which Audit presented to this committee on May 13 of this year. In response to an announcement by the governor, a 2% salary increase was added to the base hourly rate for over 22,000 employees of agencies subject to the Uniform Classification and Compensation Act, while over 1,200 employees at or near maximum pay for their grade received a one-time lump-sum payment. Because the initial timing of the lump-sum payments conflicted with Arkansas Code, the Office of Personnel Management reversed the payments in ASIS and recouped them. The lump-sum payments were scheduled to be paid during the last pay period of the fiscal year in compliance with Arkansas Code. Additionally, over 1,300 employees of 10 agencies not subject to the Compensation Act received the 2% increase to their base hourly rate, while 90 received a lump-sum payment. 8 agencies were scheduled to disperse a one-time lump-sum payment during the last pay period of the fiscal year. The attorney general’s office made lump-sum payments to 35 employees in February 2022 rather than in the last pay period of the fiscal year. As a result, the May report noted that these 35 employees would exceed their line item salary appropriation as of June 30, 2022, in conflict with Arkansas Constitution. In the May report, Audit questioned whether the salary increases paid as a lump sum should be calculated as 2% of an individual’s total annual compensation. Based upon the governor’s authorization date of February 6, it appeared lump-sum payments should be pro-rated. Subsequent to the, to the release of the May report, the governor issued a letter to the co-chairs of this committee stating his intention that employees who would receive a lump-sum payment in the last pay period of the fiscal year receive 2% of their total annual compensation. The governor’s letter is provided in Appendix A. The result of Audit’s follow up review of the recommendations made in May in the May report are discussed on the slides that follow. The first recommendation was that all employees subject to the 2% salary adjustment receive the correct amount and that one-time lump-sum payments be a proportionate amount based upon the effective date authorized by the governor and dispersed on the last pay period of the fiscal year. After the governor issued the letter just discussed, staff compared amounts originally paid and subsequently recouped to amounts dispersed in the last pay period of the fiscal year. All original amounts were paid, with the following exceptions noted on this slide. Staff noted no issues with these payments. Audit’s second recommendation was that Arkansas Game and Fish Commission review applicable Arkansas Code and ensure the lump-sum payments made to two employees are based on a proportion of each employee’s annual salary from February 6 through the end of the fiscal year. In its management response to the May report, Game and Fish said it would develop policies and procedures for processing lump-sum payments in the future. On its third recommendation was that the AG’s office ensure employees are not paid above appropriated line item maximum salary amounts and only award salary increases according to Arkansas Code. As of fiscal year end, the lump-sum payments to 35 employees of the AG’s office, which were calculated as a full 2% of their annual salary remained unchanged. Therefore, these 35 employees exceeded their line item salary appropriation as of June 30, 2022. It should be noted that, as a result of this review, staff will conduct additional procedures comparing line item appropriations to actual pay during the, during the departmental audits of the AG’s office for the fiscal year 2021 and 2022. Mr. Chair, this concludes my presentation. Representatives from OPM and the AG’s office are present to answer committee questions.
Womack Thank you, Mr. Cover. Committee, do we have any– yeah. Yeah. Looks like we have questions. Senator Garner, is there somebody in particular–
Garner I imagine would be the AG’s office, maybe staff. So–
Womack Go ahead.
Garner Yes, sir.
Womack Could those representatives from the AG’s office– okay. We don’t have anybody from the AG’s office here today. So go ahead with your question for staff.
Garner [00:14:50]Sure. It’s on the recommendation 3. It appears to me that we set a line item on what a salary can be, and that according to Legislative Audit, this lump-sum of 2% exceeded the authority that the legislator allowed for these designated positions out of compliance with Arkansas law and our authority as a legislator. Is, is that kind of a good summation of what is going on? And as of this report, the attorney general office has not changed or recouped that money in excess of our line item budget. Do I have a good understanding of that? [40.2s]
Cover [00:15:31]Yes, sir, I think that’s correct. [0.9s]
Garner [00:15:34]I’m just interested to note that this is a delegated power to the legislative body, and our own audits are saying that they’re out of compliance with that. And there has been no change and appears to be nobody to discuss this issue with us today. Just wanted to put that on the record. [16.8s]
Womack Thank you, Senator. Representative Meeks.
Meeks Thank you Mr. Chair. Just follow on that. What is the way to go about getting that corrected? Is that something where the AG needs to come before us and request appropriation authority? Can it even be corrected because of the, the fiscal year has ended? Or is that something where to come into compliance the AG’s office is going to have to recoup that money from those employees? [00:16:27]So what, what’s, what’s the fix here other than the AG’s office is breaking the law? [4.7s]
Audit staff Well, sir, there– [00:16:39]it appeared to us under this that we provided the AG a chance to provide us a description of their rationale for that. And they said they’re a constitutional office. But we could not see legal authority for them to exceed these line items maximum that the General Assembly has appropriated for these specific positions. [26.5s] We are in the, in the– we’re conducting an audit on the department right now for the office of the AG. There will be additional opportunities, I think, to address this at a, at a future date, because I think that there will be some additional issues there. But recouping the money, Mr. Bowen was here at the– when this first meeting happened. I believe that was in May and addressed some of those issues. [00:17:38]But the bottom line– I don’t want to speak for the AG’s office– that they thought they could because they were a constitutional office. And so, I mean, there could be a illegal exaction suit or something like that. I’m not for sure, other than some sort of, of legal type action, I’m not sure there’s a way to recoup that money. [21.1s]
Meeks All right. Thank you. Thank you, Mr. Chair.
Womack Senator Hammer, you’re recognized.
Hammer Thank you, Mr. Chair. Would you just qualify that– or clarify that the amount we’re talking about is $37,546 or is that the right number to be looking at on the subject?
Audit staff I’m sorry. Could you repeat that?
Hammer Is the total amount of money that we’re talking about for the AG issue $37,546?
Audit staff Yes, sir.
Hammer Okay. And I’m just curious, as far as paying for it without it actually being appropriated, did you look at, at where they got the money from or what line item they got it from in the budget that it would have put them over or how much they had to play with?
Audit staff Again, they were not over. I think that’s, that’s the whole point here. They had the amount appropriated in total. That’s not the question. [00:18:59]The question is the individual pay for the individual positions. The legislature, under Article 16, Section 4, sets those positions and they set the amount. They paid more than what the General Assembly had set. [14.7s]
Hammer [00:19:16]All right. And that is the issue. They went– they exceeded their authority to give– [3.8s]
Audit staff [00:19:20]They paid certain individuals more money than the General Assembly said that they were due. [4.2s]
Hammer All right. Thank you.
Audit staff It’s my understanding– I was just informed that apparently the AG office had the wrong date for the meeting. Of course, it was changed. And that they were on their way, if you don’t want to delay some of these questions. And they should be here shortly.
Womack This is, I guess, a little out of the norm. But, members, if it’s okay, I guess, without objection, we’ll move on to the next report. That way we can discuss this with somebody, a representative from the AG’s office. Any objections to making that move? Okay, then we’re going to just kind of delay this one and move on to the special report.
Audit staff If I could have a point of privilege, Mr. Cover here, this is his last meeting with us. He’s retiring. In fact, he came back just for this meeting. And so, I just want to publicly say how thankful we are for him and his service to not only Audit, but in the General Assembly, but the state of Arkansas. Thank you, sir.
Womack So we’re going to move on to the review of the special report on the Arkansas Fire Safety update of 2003 report for the period of January 1, 2020, through December 31, 2021. And this one is going to be over Zoom, I think. Kevin White will be presenting for us. Kevin, if you’re hooked up, you’re recognized.
White Thank you, Mr. Chair. This report is issued in response to a request from this committee that Legislative Audit update a special report issued in June 2003 concerning the state’s fire safety preparedness in the areas of personnel, training and equipment. This report also discusses the services provided by and the needs of fire departments in the state. Directives of this review were to update the information regarding fire department funding presented in the 2003 report, determine the status of the various recommendations contained in the 2003 report, compile information concerning personnel training and equipment preparedness for rural and municipal fire departments, provide the organization of fire services in Arkansas, and provide the current and 2003 ISO rating for all Arkansas fire departments. Arkansas fire departments provide fire response services in three distinct areas: structure fires, wildland fires, and automobile fires. Many departments also provide other services, including emergency medical response services, building inspections or compliance with fire codes and hazmat responses to spills or contaminations. Fire departments are categorized as either rural or municipal, and departments can be further characterized by whether their staff are paid or serve on a volunteer basis. It should be noted that some departments have paid and volunteer staff. The organization of fire services in Arkansas is divided among eight distinct boards, offices and divisions, which are illustrated in Exhibit 4 on page 14 and listed on this slide. Each entity serves a different function and provides oversight for a different area of fire services, as discussed on pages 14 through 20 in the report. These services include acquiring and maintaining Act 833 funding, managing grant programs and equipment assistance programs, administering loans, and providing training to firefighters. Fire departments generally receive their funding from five sources. During interviews with legislative bodies staff, personnel at 13 of the 15 fire departments provided the types and approximate amount of funding received annually as shown in Exhibit 2 on page 3. The first type of funding is Act 833 funding. In calendar year 2021, just under $16 million in Act 833 funds were distributed to counties and municipalities in the state. Schedule 1 on pages 23 and 24 shows the amounts distributed by DFA to each county in 2021, along with the amounts allocated to the counties in 2001, which is the 20 year perspective. Act 833 funds disbursed in 2021 are provided by fire departments in Schedule 2 on pages 25 through 46. To be eligible for Act 833 funds, a fire department must be certified annually by the Office of Fire Protection Services. A list of the 905 departments certified for 2019 and eligible for Act 833 funds in 2020 is provided by County in Appendix A. Also included in Appendix A is the number of active firefighting personnel associated with each department. Act 833 funds may only be used for authorized purchases, some of which are presented in exhibit 3 on page 5. Legislative changes affecting Act 833 funds since the release of the 2003 report are described on page 4. The second type of funding, referred to as local funding, is generally a large portion of the department’s budget if the department receives this funding at all, as not all departments receive local funding. The source of local funding varies from community to community but can consist of proceeds from a special sales tax, fees collected with property taxes for a designated portion of municipalities’ or counties’ general budget. Grants composed the third type of funding available. These can be federal, state or private. And more details for state grants are discussed on pages 16 through 18 of the report. The fourth type of funding is membership fees or dues. This income source is unreliable because of the inability of the department to enforce the payment of the fees, although some departments can include this in the property tax collection process. The final type of funding involves fundraising and donations. Fundraising can be time consuming for firefighters and because financial proceeds vary, it is difficult to include fundraisers in annual department budgets. The next seven slides discuss the status of recommendations contained in the 2003 report. The same information begins on page 7 of the report. First, Legislative Audit recommended that at the state level, more systems be provided to departments for grant writing and a single contact to be established for obtaining information related to federal, state and private grants. Although a single contact has not been established for obtaining information regarding grants, we identified various instances of state entities assisting fire departments in acquiring the grant funding that the agency offers. When asked about grant funding, fire department personnel identified several obstacles, including one, not being aware of grant opportunities, and two, being discouraged from applying for grants due to past failures to receive them. Second, Legislative Audit noted in the 2003 report that the Office of Fire Protection Services is charged by law with creating the Arkansas Fire Protection Services Resources Plan, but it had yet to do so. In this follow up report, we issued the following finding: while the Office of Fire Protection Services and other state agencies provide various fire services that align with the requirements of the aforementioned plan, there is no formal documented plan available for review or distribution to the fire departments throughout the State of Arkansas to assist with orderly coordination, cooperation and development of fire protection services. As such, it does not appear that the Arkansas Fire Protection Services Resources Plan has been developed as envisioned by the enabling legislation. Management response to this finding is provided on page 8 of the report. Third, Legislative Audit noted in the 2003 report that the equipment most needed by departments was defibrillators or AED’s. The majority of departments providing information for the current report indicated that they had a sufficient number of AED’s and few to no problems obtaining them. However, department personnel did indicate other equipment needs, including self-contained breathing apparatus and personal protective equipment, such as turnouts and boots. In addition, sufficient communications equipment and the lack of access to high speed Internet were identified as a challenge for many departments. In terms of large equipment, all departments expressed a general need or desire to have newer engines, brush trucks and other larger equipment. See pages 12 and 13 of the report for further discussion of the department’s equipment needs. Fourth, in the 2003 report, Legislative Audit recommended that the Arkansas Fire Training Academy pursue grants and other funding to construct additional training sites around the state, in particular, burn buildings or structure fire training. We recommended this because access to training was a challenge for departments. More burn buildings have been constructed by local municipalities since 2003, but department personnel stated that access remains a barrier to training. Specific challenges include the time and distance needed to travel to the burn buildings, the difficulty in maintaining coverage in the department service area while attending a training event, and finding available dates that all personnel can attend. More details and information on burn building locations is available on pages 19 and 20 of the report. Legislative Audit recommended in the 2003 report that a state agency help smaller departments obtain used equipment from larger departments and coordinate the distribution of this equipment. This recommendation was specific to small equipment, such as turnouts, hoses and shovels. Generally, department personnel interviewed this round stated that they either utilize new smaller equipment and donate all the older equipment to a neighboring fire department or received used equipment from larger and more funded fire departments. The department personnel interviewed noted no difficulty in finding another department to which they could donate the equipment. However, liability is a factor, causing some equipment, including turnouts, to be disposed of instead of being donated to smaller departments. Additionally, municipalities may be prohibited by law from donating equipment directly to surrounding nonprofit departments. Finally, the Insurance Services Office or ISO evaluates and assigns fire insurance classifications for fire protection services and facilities in a community, which is commonly referred to as an ISO rating. The rating is used by insurance companies to establish property and casualty insurance rates for buildings. [00:31:07]To update the 2003 report and as requested by this committee, Legislative Audit sought to acquire the ISO ratings for all Arkansas fire departments for the most recent period available for comparison to the ratings presented in the 2003 report. However, when this information was requested from various state agencies, no source of complete information was identified. As such, when Legislative Audit sought to acquire this information directly from ISO, the request was denied and the company stated that a compilation of ISO ratings for Arkansas fire departments was a trade secret not available for publication in this report, as shown in Appendix C. There [43.4s] you can read the response. As discussed on pages 21 and following, the time that has passed since the interview department’s last ISO rating range from two years to 36 years, and the average age of the ISO rating for these select Arkansas fire departments was 8.6 years. Department personnel identified several hindrances to seeking an ISO rating review, including the time consuming nature of the process, the insufficient water supply levels in the communities to improve ratings, and the ISO requirement to keep on hand certain items that the departments rarely use. To gain a broader understanding of the personnel, training and equipment needs of local fire departments, Legislative Audit spoke with representatives from 15 departments of varying sizes and categories located throughout the state. Personnel challenges included recruiting enough volunteer staff, especially among younger individuals, and the lack of available workers compensation benefits in certain situations. Department personnel mentioned junior firefighting programs, live-in programs and incentives for volunteers as possible ways to increase personnel and volunteers. These methods are further discussed on page 11 of the report. In terms of training, fire department personnel noted the need for more local training, difficulty getting volunteers to attend training and a need to increase training requirements. Additionally, to receive Act 833 funding, the Department must have a certified training officer to provide regular training to the firefighters. Several departments mentioned problems retaining a training officer and noted the certification process is time consuming and fulfilling the duties of the position can be difficult. In addition to the previously mentioned equipment concerns, department personnel mentioned use of out-of-date or expired personal protective equipment as a challenge. Additionally, the reporting of fire incidents to a national database is generally an eligibility requirement for federal grants, and the lack of high speed Internet hampers the ability of some departments to report such incidents. Mr. Chair, this concludes my presentation on the update of Legislative Audit’s fire safety report issued in 2003. Representatives from the Division of Emergency Management, as well as the Arkansas Fire Training Academy, are present to help answer committee questions. Thank you, Mr. Chair.
Womack All right. Thank you, sir. Committee, are there any questions or comments on this report? Senator Hammer, you’re recognized for a question.
Hammer Thank you. Do you think you could get the guests that were mentioned to the table, please, Mr. Chair?
Womack Absolutely. Would our guests come to the table, please? And it’s our– you will be placed under oath before you testify. So when you come, just flip your microphone on and remain standing, please. That last microphone. Okay. Thank you. If you all would please state your name, employer and position. You can just kind of go in order.
Geary Sure. AJ Geary, I’m the Cabinet secretary of Department of Public Safety and Director of Arkansas Division of Emergency Management.
Womack Thank you, sir.
Owens Tina Owens, I am the Executive Deputy Director for the Division of Emergency Management.
Womack Thank you.
Hickenthall Lewis Hickenthall. I’m the fire service coordinator with the Arkansas Division of Emergency Management.
Womack Thank you.
Wooden I’m Andy Wooden. I’m the director of the Arkansas Fire Training Academy.
Womack All right. Thank you, sir. If you would, please raise your right hands. Do you solemnly swear or affirm that the testimony you’re about to give will be the truth, the whole truth, and nothing but the truth, so help you God? All right. Thank you. You may be seated there. Senator Hammer.
Hammer Thank you, Mr. Chair. And first of all, thank you all for what you do for the fire services of the state of Arkansas. Appreciate your service. And do you all have a copy of the report? And if so, page 8 is where I wanted to ask a question. The question on page 8 is in management response, and this would be from the Fire Protection– Office of Fire Protection Services. So I don’t know who wants to answer that question.
Geary We may all three if it’s alright if that’s okay. Let’s make sure you get a complete answer.
Hammer Sure. So about three-fourths of the way down through the paragraph, it says, In addition, fire districts maintain mutual aid agreements with all neighboring districts. And then somewhere down in that statement, it talks about the resource database, where it is and who has the resource database that is supposed to be developed. Who is it that’s maintaining that resource database?
Hickenthall That would be through the Act 833 portal. When we get the 833 applications in, every year there’s a different report. One year, there’ll be a capability study and one year there will be a resource study. Those are all entered into the fire portal, which it tabulates, and at the end of the year, I can go in and pull the reports and get numbers and–
Hammer Okay. And, and I’m just curious– I want to give you– may I Mr. Chair?
Hammer Thanks. Thank you. So I’m just curious. I want to get the verbal response, because based on the audit and, you know, there’s a conflict of opinion, what, what you all feel and what Leg Audit felt based on the information that they received from their, from their survey of the departments. I’d just like to open up the mic and give you a chance to respond and talk about it, please.
Geary I’ll be glad to kind of start on that. First of all, you know, I appreciate the work that Kevin White did on this audit. He brought some things to our attention that we were not aware of. One of the things in looking at the response, agency response from 2003, I believe, it was, the response at that time regarding the same, same issue was that the, the Office of Fire Services was basically, you know, no funding for it. The only funding that we have is for actually Lewis’s salary, which actually comes out of EMPG– I’m sorry, emergency management performance grant funding, which is part of the whole emergency management organization. So at that time, the response was that there was no, no funding or resources to, to do the plan. While that, sir, is still true today, I think– I thought it was important that we point out those things that, that not only the office, but in coordination with the Fire Academy, the Fire Services Board have done during that period of time. So I wouldn’t say there’s really a conflict other than, you know, what is described as a plan. Is it a written plan or can it be a plan of how these resources are going out? We also have a Arkansas statewide mutual aid plan, which assists on getting additional resources to those different agencies. As far as a resource list, we feel that the database list would be a more efficient way of getting that information out than a written resource list that very possibly could be outdated by the time that that written resource list was completed because equipment is continuously changing.
Geary Hope that answers your question.
Hammer If, if you wanted to point to one person, because there’s a lot of moving parts when it comes to the fire department world, if you wanted to point to one person, one location, who would be the go to person as far as developing or coordinating any kind of the plans related to volunteer fire departments? Who would that person be? Would that be Lewis or who would it be?
Geary Yeah, I would, I would think so. Yeah, I think, I mean, that’s the only– Lewis is the only resource that we have. Then he works with the Fire Services Board. And they meet Lewis quarterly to discuss those issues, training issues. I know the Fire Training Academy is also part of that board, so they’re going over training and things of that nature.
Hammer Okay. Last question is, 2003 we were able to get the ISO scores. This time we’re not. Do any of you know why we were able to do it in 2003 but now we’re not? Because it seems to me like that’d be a critical benchmark to determine any movement of the needle for all the resources, all the efforts that are being put into the volunteer fire department and more that need to be put into it. I mean, to me that would be an indicator. But if you don’t have access to the information, then what are we supposed to do and how are we supposed to really know?
Hickenthall To me, that’s a good question because I can’t even get access
Hammer Lewis, could you move to the mic a little closer? Thank you.
Hickenthall Yeah, you know, that’s a good question because, you know, I don’t know what happened between 2003 and now, but getting ISO information for all the departments in the state, they don’t give it out unless you want to pay for their publications.
Hammer Are you able to buy it? Is the– are any of the agencies able to buy it? Or is it something that has to be bought just from the insurance companies.
Hickenthall That, I’m not aware of. I don’t know that answer.
Hammer All right. Thank you, Mr. Chair. Thank you all.
Womack Members, do we have any further question or comment? Representative Mayberry, you’re recognized.
Mayberry Thank you, Mr. Chair. Can you help me understand, and forgive me because I don’t know the specifics of Act 833 and the only reference in here says that it– among 75 counties using percentages established by Act 833 and then distributed to cities and counties by DFA upon, based upon quorum court resolutions on file. There’s a big difference in what some fire departments get versus others. Can you just help me understand what that’s based on? Forgive me for not already knowing.
Hickenthall The Act 833 funding is a 0.5% tax on insurance from the insurance board. The way it is divided up– I’m trying to see if I can make this where everybody understands– it’s divided up into the counties. Each county receives a certain percentage of this fund depending on population from the census. Well, within that county, each department, city and all of that through their quorum court reach out and they decide how much of that funding that that county gets, goes to each department. They can either do it by their own resolution with the needs of the departments. Or if they can’t come to an agreement, they do it by population of the different entities in the county.
Mayberry Okay. That, that kind of helps me some because I was seeing a wide range. Because I thought, well, maybe it’s divided evenly among the fire departments. But then, I was seeing some fire departments got more, then I was thinking, well, maybe it’s by population, but then I saw that there’s some counties that it is truly equal among. You know, I know the small– my own county, I know some fire departments have really small bases and are getting the same amount that perhaps Benton and Bryant are getting, which obviously are larger. So I was just trying to understand. Each county quorum court is the one that decides how that’s dispersed within the county?
Mayberry Okay. Further question– is that okay? Okay. And then can you also help me out– so on page 6, this makes reference to, under membership fees and dues, it says, some departments are able to include dues in the property tax collection process. I’m interested in the term ‘some departments.’ So some counties allow it to go through property taxes and some don’t? And why is that?
Hickenthall That, I can’t answer to the question of why. That’s just the way some of the counties work. Some counties do it on the county’s personal property taxes. Some do it by a fee on water bills. That’s county level government, how they want to award that or try to collect the dues.
Mayberry Would it help if it was the same in every county or is that–
Hickenthall It would. It actually help the the smaller rural departments if it could be put in on some type of property tax or, you know, utility bill, something like that. That way they’re guaranteed to receive it. A lot of the departments in the state, you know, pretty much all the departments have dues. It’s hard to collect them, you know, by the departments when it’s basically voluntary.
Mayberry Okay. And then also– I’m sorry, another question? Okay. Is there a cap on that amount? Because what I’m looking at here, it looks like all of them are $40, $50. But I, I personally know that there are some larger than that. So can you help me understand what the ranges that we’re seeing in various areas, and is there a cap?
Hickenthall I cannot answer that. I do not know how they set their dues. I know some areas do it by landmass depending on how much property they have, especially in the rural areas. But I cannot answer to how they calculate their, their fire dues.
Mayberry And there is no uniformity anywhere in the state on, or guidance on what that should be or how a department should look at it or consider it, so it was a little bit more universal, I guess?
Hickenthall Not that I’m aware of. I cannot answer that.
Mayberry But there is no cap? Someone told me one time there was a $100 cap, and that’s, that’s not in state law anywhere?
Hickenthall I don’t know.
Mayberry Okay. Okay. Appreciate it. Thank you.
Womack All right. Senator Elliot, you’re recognized for a question.
Elliott Thank you, Mr. Chair. About the ISOs and not being able to get that report, is that an organization that the fire departments join to get some kind of rating?
Hickenthall No. The ISO rating, it was basically set up by the insurance companies to have a single entity to rate the fire departments, to put them on a level of their protection basis. And that’s how you get your homeowner’s insurance. It’s a private organization. The fire departments, if they think that they can lower their ISO rating, they can call the ISO office and they will come in and do an inspection. There’s a whole list of things that they have to have. But, no, the fire department does not have to pay anything to do their ratings.
Elliott So, do you know– I assume for it to be useful to the insurance departments or insurance companies, they get the result of the rating. But you don’t. Is that correct? But you can’t get it? I mean, the fire departments.
Hickenthall Right. I don’t, I don’t receive it. And they won’t let me have it. I don’t know how the, the insurance companies get it. I don’t know if they pay for the publication or not. I really don’t know.
Elliott But the reality is, though, the insurance companies can get it and they make some determination using that information. I’m assuming– otherwise, why get it? And that has some impact on how they insure, I suppose, the firefighters– what do they do?
Hickenthall The rating goes– for the insurance company, the rating goes on your homeowner’s insurance, on your fire rating.
Elliott Oh, that– for the people that you serve. Yeah. Yeah. Okay. I see. I see. So if, if you can’t get the information from them, have, you know, if anybody’s ever requested it from the insurance, from the insurance companies themselves, you know, if you can get it from them so that you would know about the ratings for the folks that you’re serving?
Hickenthall Could you repeat the question?
Elliott If you can’t get the ratings from the ISO, the insurance companies do have it. Do you know if anybody has ever requested that report from– and the ISO, say, for example, Jefferson County or whatever.
Hickenthall I don’t know.
Elliott You don’t know.
Hickenthall Cannot answer that. I don’t know.
Elliott Okay. Thank you. Thanks, Mr. Chair.
Womack Thank you. Senator Chesterfield, you’re recognized.
Chesterfield Thank you, Mr. Chair. I’m trying to get an understanding of exhibit 5 on page 19, where it says amounts received per county. Some say ‘none’ like Arkansas County, Jefferson County, Scott, St. Francis. Is it because they didn’t apply or because they were ineligible to get it? How does that work?
Hickenthall These grants right here come from the Forestry Division. I do not know their process or procedures for that. I’m sure if they did not get it– well, I can’t, I can’t answer, honestly. I don’t know.
Hickenthall I don’t do those grants. It all comes from Forestry.
Chesterfield Thank you, sir. May I ask staff, since they prepared this exhibit?
Womack Is Kevin still with us?
Hickenthall Kevin should be able to answer.
White Senator Chesterfield, can hear me?
Chesterfield Somewhat, Kevin.
White Okay. I’ll try to speak up a little for you. There’s a lot of different state agencies that provide grants to local fire departments or loans to local fire departments. Each one of them have their different application requirements and they’re discussed on some of the pages before and following this. The fire departments have to, they have to be eligible and they have to apply. Usually the larger fire departments are those that are ineligible for the grants, not the smaller ones. Usually, the smaller ones, they’re eligible. It’s the larger ones that aren’t. But it’s an application process specific to each type grant program and the type of services provided. Some of the departments do try to rotate the grants to the different counties based on who’s applied for those grants.
Chesterfield Okay. I’m looking at the map on the exhibit on page 19, and I’m seeing that Washington, Sevier, Little River, Calhoun, Phillips and Sharp, as well as Newton, Calhoun got between 75 to 100,000. Is that because they received a plethora of grants from various agencies that would allow them to have $75,000 to $100,000? And would Jefferson and Arkansas and St. Francis, etc., not have received anything or did not apply for a grant? Is that– would that be fair to say or do you know?
White That, that would be fair to say. As to if you wanted to know which, which agencies did receive that– did provide that grant money to the fire departments and under which programs they got their funding, if you look in the report starting on page 47– page 47 and 48, they provide the dollar per amounts.
Chesterfield Okay. Gotcha. I’m there. And that gives us more information as to the amounts given per county, etc., etc. All right. Thank you.
White Yes, ma’am.
Womack Thank you. Thank you, Kevin. Representative Rye, you’re recognized. Let’s try again. Can you make a request again? Try it now. Try it again, John. Try again. It doesn’t sound like it, but it’s saying it is.
unknown I’m not Representative Rye. I look a lot better.
Rye That’s got it. Thank you, Mr. Chairman. I just have a question for you. You know the fire plugs that, you know, are strung, you know, throughout the county and city and all that. I just wonder, are all the counties in good condition with all their fire plugs? And should, should we have more? And if we should, do we have a grant program for that?
Hickenthall To answer the, to answer the first part. I don’t know. I’m sure in the rural areas there could always be more because most of the rural departments, the water supplies, you know, are basically brought in on their tankers. So, yeah, there could always be more fire hydrants. But whether there’s a grant program, I’m not aware of one.
Rye Follow up, please. Yes, sir. Well, I was just looking through here and you had Mississippi, Poinsett, Cross and St. Francis, and they have nothing out there whatsoever receiving from any kind of grants, I don’t guess. It looks like we have four counties right next to one another.
Hickenthall Where are you looking?
Rye Page 19.
Hickenthall Page 19?
Rye Yes, sir.
Hickenthall Yeah, like– I, I can’t answer honestly to any of those because those programs, those grant programs all come from Forestry. I don’t know why there was none received in those areas.
Rye But, follow up, one more time?
Womack Yeah. Carry on.
Rye Well, if they did, could that not affect the insurance cost for the people in that area if they had more fireplugs?
Hickenthall Oh, absolutely. Because that’s one of the requirements of ISO.
Rye Yes, sir. Thank you. Thank you, Mr. Chairman.
Womack Representative McClure, are you trying to answer a question or am I still messed up? All right, you’re recognized, I think. Well, just a second. All right, try it now.
McClure Thank you, Chairman. Let’s go back to the ISO. Because I think most of us in this room have a lot of volunteer fire departments. I want to make sure I’m understanding correctly. The insurance company sets the ISO rate but they’re not releasing that information to you. So when we have rural fire departments that are saying that they are ISO 4 or an ISO 5, where are they getting that information and how do we validate that?
Hickenthall The insurance company does not set the ISO rating. That’s the ISO office, the insurance service office. They’re the ones that go in, they have their set guidelines that have to be met in order to get a different ISO rating. The more requirements you meet, the lower your ISO score.
McClure Right. But you can’t get that information. Is there a public place that we can go to get that information?
Hickenthall Not that I’m aware of.
McClure Then how do the– I’m sorry, Mr. Chair.
Womack Carry on.
McClure Okay. So how are the fire departments able to say we are an ISO rating? Do they have a certificate on the wall from their last inspection?
Hickenthall Yes, they do.They will have a certificate or however– they will have documentation showing from their last inspection what rating they received.
Hickenthall Okay. Thank you.
Womack Looks like Representative Mayberry, you’re back up.
Mayberry Yes, thank you, Mr. Chair. I’m sorry, but it just popped in my head. I had a recent conversation with a constituent and thought I’d just ask this out loud. He had called his insurance company and asked if a lower ISO rating would give him more money in his pocket. And his insurance company said that they don’t pay attention to ISO ratings anymore, that they only look at where a fire hydrant is located and things like that. Can you give me your feedback? I haven’t asked any other questions from anyone else on that issue.
Hickenthall The only feedback I can give on that is that I do know that, and this is from personal experience, some insurance companies do not recognize ISO ratings. How many do and how many don’t, I cannot answer that.
Mayberry Okay. Thank you. I just wanted to ask more follow up on that. Thank you.
Womack Thank you. Would you guys at the table mind turning the two outside microphones off real quick? I think that will help us up here. Thank you. Senator Hammer, you’re recognized.
Hammer Thank you. Very quick on that point about ISO. The– correct me if I’m wrong, but the fact of the matter is, ISO considers that information is proprietary. So the only ones that they’re going to give it to is the volunteer fire department who is required not to share that information. If they do or if they don’t, that’s between them and, you know, an ISO. But that is, that is the scope of limitation that it cannot go any further than to that volunteer fire department. Is that y’all’s understanding?
Hickenthall That’s my understanding.
Hammer Okay. Then I want to go back to my original question. As agencies that are involved in the fire department world, what systems are in place, what measurables are in place, and who controls that or oversees it so that if we do another audit 10 years down the road, we look back and say, you know, 2003 to 2022, here’s the good, here’s the bad. If we don’t have a measuring stick to hold up and say, we’re improving, how do we ever know that there are improvements that have been made other than what’s in place now, which is the ISO rating, which we don’t have access to?
Hickenthall Good question. I wish I had an answer.
Hammer That’s, that–
Womack All right. Thank you. Any further questions, members? All right. Thank you. Thank you, guys, for being here today and providing all the answers. We appreciate your time. And we will consider this report adopted or reviewed, I guess. Has Mr. Bowen made it over from the attorney general’s office.
Audit staff I do not know.
Womack Is there anybody in the room from the Attorney General’s office? I know there was a mix up on dates is what he had texted me and so he was trying to run over. Senator Hammer.
Hammer Mr. Chair, I’d make a motion to hold this over until next meeting and have the AG here to answer questions.
Womack Okay. Can I get a second to that motion? We have a second. All those in favor, say aye. Opposed, no. All right. Thank you. We will do that, and like I said, I don’t think they intentionally ignored us. I think it was just a mix up on dates so I appreciate that motion and we’ll take it up at our next meeting. The next meeting of Legislative Joint Auditing Committee will be held on September 8-9, 2022. Is there any new– well, hold on. Hold on. Can we undo that? Mr. Bowen, come on up to the table. We were just fixing to skip out on you. So, members, we’re going to, we’re going to circle back and pick up the review of the first report. Mr. Bowen, if you wouldn’t mind standing and state your name, employer and position.
Bowen Yes,sir. My name is Brian Bowen. I’m the chief of staff for the attorney general’s office.
Womack All right. Thank you, sir. And please raise your right hand. Do you solemnly swear or affirm the testimony you’re about to give will be the truth, the whole truth, and nothing but the truth, so help you God?
Bowen Yes, sir.
Womack All right. Thank you, sir. We have– thank you for running over. I’m sorry we had the mix up.
Bowen Thank you for your patience, and I appreciate it.
Womack Yeah. We have a question from Senator Garner.
Garner Thank you, Mr. Chairman. Thank you for coming over. I’m sorry. I’m talking over Mr. Hammer there. So, Arkansas Constitution, Article 16, Section 4 says the General Assembly shall fix the salaries and fees of all officers of the state, and no greater value or salary or fee than fixed by law shall be paid any officer, employer or other person. Does your office acknowledge that the General Assembly has its constitutional authority to set line item salaries for positions?
Bowen Senator, I think we– excuse me. I’m sorry. I think we acknowledge that you all have the authority to set salaries and you, frankly, all control the purse strings.
Garner Okay. Do you agree that a constitutional office does not have the authority or power to overcome that constitutional power vested in the General Assembly?
Bowen If I’m understanding your, your question correctly, do we think that once budgets are set that constitutional offices can exceed their budget?
Garner Correct. Can a constitutional office by proxy of being a constitutional office overcome that ability of the General Assembly to set line item salaries for positions?
Bowen I think with constitutional offices as with any other state agency, if there is a danger of running out, many of them will come back to you all for an increase in budget. So to answer your question shortly, the authority is with the legislative body to set budgets.
Garner Okay. We’ll go back to appropriation for specific line item salaries. You said in your initial statement that we have that authority. I’m asking if a constitutional office has the ability to overcome that authority for specific line item salary positions.
Bowen Again, I will reiterate if it is an issue for any constitutional or state state agency on what is given, there are mechanisms for us to come. So in short, my answer is that authority lies with the legislative body.
Garner Good. So my question– thank you for the precursor– is, in this instance, we have Legislative Audit saying that you all exceeded the amount that we as a legislative body set in law for these salaried positions. And it is their contention in this body’s contention through them that you have exceeded that authority, and the answer we heard from our staff is that you as a constitutional office do not have to follow that guidance. So my question is, can you speak specifically on why you feel that you can overcome that line item budget and pay in excess of what this General Assembly has set in law?
Bowen So to, to clarify, sir, I think we have said that, as a constitutional office, we are not part of the Uniform Class and Compensation Act. And in addition to that, we have taken the position after reviewing the statute that we have followed the statute accordingly. And it is a disagreement with the auditors that, that we stand by. We stand by our statement.
Garner So you’re arguing that other parts of the law, in this specific instance, allows you to overcome what the audit body set by this legislature says is something we have set in stone that should be a specific number.
Bowen [01:05:54]I don’t– [0.5s]
Garner [01:05:56]You’re saying this uniform code, whatever– [1.3s]
Bowen [01:05:58]We are exempt from the Uniform Class and Compensation Act explicitly. Yes, sir. [4.4s]
Garner [01:06:03]Okay. Mr. Chairman, that’s all I have. [1.8s]
Womack Thank you. Any, any other questions from committee? I think we’ve been right here back in May. Representative Meeks, you’re up.
Meeks [01:06:21]So I guess my question is to staff. So this isn’t a dispute over whether they’re part of the uniform classification system. Is that correct or no? Because the finding you have is not related to that, correct?[14.5s]
Cover [01:06:38]We agree that they are exempt from the Uniform Classification and Compensation Act. We do agree on that. Our point is there is only one way that we see in law that they could have exceeded their line item salaries. Our understanding was that they were claiming not to have acted under that one way. Yet there is no other authority out there in law that we see for them to have done what they did. If they did act under that one way, they did it incorrectly. They paid salaries in February when the law says they should have waited until June. That’s our, that’s our dispute, as I understand it. [36.4s]
Meeks [01:07:15]Okay. So my, so my question for the witness then is we’re evidently in agreement here with you that the uniform classification system doesn’t apply in this case. However, it does appear under different authority where we’ve set a line item maximum that that was exceeded. So totally different situation than what you were talking with Senator Garner about. So where are we at with the complaint that they have, that you’ve exceeded your authority and didn’t go about the right way to? And I don’t think there’s any dispute here among the legislators that you paid your employees. It’s that you exceeded your authority. [37.5s]
Bowen So, again. [01:07:56]The statute that we’re talking about that Mr. Harry has referred to is a subsection of the Uniform Class and Compensation Act. Just so we’re all clear on that. We think that we have acted properly with the authority under our statute, even on that issue. One of the other things that– and I’m sorry, Representative, I can’t recall if you were here or not. We and OPM in May came and testified on this and said there needs to be some clarity in the statute. After review of the statute, in discussion with myself, our chief deputy and four other attorneys in our office, we feel like we have followed the statute. We did increase salaries. We also paid bonuses. Bonuses and salaries are not legally the same thing. Again, we will follow the law. Of all offices, we certainly follow the law. We see area– we see an area and we are coming to you all saying this is a gray area. We will work with you on fixing it. However, we feel like we have complied with the statute. [73.2s]
Meeks Well, I’d say at the very least, it sounds like there is a gray area here and I would request that you would, maybe– session is coming up here pretty quickly– that you all would help offer a solution so that we don’t find ourselves here again in the future. Thank you. Thank you, Mr. Chairman.
Womack Thank you. Any other questions from committee? All right. Seeing none, thank you, Mr. Bowen, for running over.
Bowen Thank you, Mr. Chair. Appreciate it.
Womack Yeah. And members, one more quick thing. We need to expunge that motion that we had just passed to see Mr. Bowen again next next month since he made it in the door before we left. So I have that motion to expunge, and we have a second. All those in favor say aye. All opposed no. All right. Thank you. I’ve already announced the next meeting. Is there any new business that needs to come before this committee? All right. Seeing none, this is adjourned. Thank you for being here.