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Arkansas Legislative Council
August 26, 2022
Rice Members, if you’ll quieten a little bit, we will get started with Legislative Council. Representative Carlton Wing is going to lead us in prayer if you’ll stand.
Wing Our dear heavenly Father, we are grateful to thee for the blessings of this day, grateful for the opportunity we have to gather together and to do the work of the people of this great state. We pray for thy spirit to be upon us and bless us as we go about our proceedings that we will, that we will be wise, compassionate and kind. We ask thee to bless us with wisdom in our wor. And we pray for the people of this state that they will truly be blessed. We say this in the name of Jesus Christ. Amen.
Rice Thank you. Welcome, everyone. Today we will start with, hopefully you’ve had time to look at your minutes and I would take a motion to adopt the minutes. I’d take a motion from anyone to adopt the minutes. Thank you. Got a motion and a second. All in favor, aye. Opposed. Thank you for that. Next, we’ll have Mr. Kevin Anderson come up with to present the July revenue report. Thank you, gentlemen, today, and I think Kevin’s got an introduction for us. Welcome. Please identify yourself and you’re recognized.
Anderson Yes, sir. Thank you, Mr. Chairman. Kevin Anderson, Bureau of Legislative Research. I’m here to give the monthly revenue report for the last time, hopefully. Carlos is our new– I’m sorry, Dr. Silva– is our new legislative economist. And he, he just came on board with us. Hasn’t been here long enough to do this revenue report, so I’m, I’m carrying through this month. But I just– he’s your staff and he’s available. Before, he was in the fiscal division. So I just wanted to introduce him to all you guys, make sure you knew he was available for you.
Rice Dr. Silva, if you’ll hit your mic, you’re recognized. Anything you’d like to say?
Silva Thank you. I’m excited to be here and support the great state of Arkansas.
Rice Thank you.
Anderson Okay. Mr. Chairman, I will proceed with the revenue report.
Rice Yes, sir.
Anderson Okay. We’re on item D. And this is the monthly revenue report. And as you know, this provides details on general revenue collections. And this report deals with the first month of fiscal year 2023. So it’s July 2022. You’ll see on the report approximately– we collected approximately $615.9 million this month, which is an increase of $15.5 million above last fiscal year. For our net general revenues, the number at the bottom on the first page, for distribution– net available for distribution to state agencies and institutions, we have $541.9 million, which is an increase of $27.1 million from what was available last June– July, sorry. So the first page shows you in that column the gross general revenues collected at $617 million for the month. And then after you take out all your deductions, the amount that was distributed to agencies and institutions was $541.9 million. If you go to the second page, this page will show you the amount, the deviation from what was forecast to actual collections. So for the month of July, our forecast– our actual collections was $26.6 million above forecast. Now, that’s not money surplus. Those funds have been distributed to agencies because we’re still funding them through RSA, but [00:10:32]we are ahead of our projected revenue by $26.6 million for the first fiscal year– for the first month of the fiscal year. [6.0s] And then pages– the following pages are all your collections by category. And I’m happy to try to answer any questions. Mr. Chairman, that’s– I’m happy to answer any questions.
Rice Members, do we have any questions on the revenue report? Senator Hammer, you’re recognized.
Hammer Thank you, Mr. Chair. Kevin, I’m on page 4, and it deals with DFA fines, penalties and court costs. The percentage is significant from last year. Do you know why it is up as high as it is? Have they just been more successful in collecting the fines, the penalties, or do you know?
Anderson Yes, sir. And that’s one thing I do when we do this report, we look for those big percentage differences to see if we can identify it, just like you’ve done. And with fines and penalty collections, those– you’ll see that those vary greatly from month to month because it just depends on who actually received a fine and how much they collected. You’ll find they even out as the months ago. It is a relatively small amount, which does skew that percentage to make it look a lot bigger than, you know, the total dollars comparatively to other collections in this report.
Hammer All right. Thank you. Thank you, Mr. Chair.
Rice Representative Meeks, you’re recognized.
Meeks Thank you, Mr. Chair. Just a quick question. The income taxes that we recently passed, how soon will we expect to see those changes actually impacting the budget?
Anderson That– we won’t see that right away, of course. And this report won’t reflect that. We will expect to see them by the end of this fiscal year and certainly in the next fiscal year. But I will point out that our current forecast, which was done before we enacted those, had a not over a $900 million surplus projected. So I don’t foresee– there probably will be a forecast revision, I would assume, even though collections are higher. I would still say that it looks like RSA would still be 100% funded.
Meeks All right. Thank you. Thank you, Mr. Chair.
Rice Senator Hammer, back to you.
Hammer Thank you, Mr. Chair. Over here. Sir, I’d like to ask you– I know you are just on the job, but evidently you come with great expertise or you wouldn’t be in the position you’re in– to give us advice and to analyze the numbers. Last month, Kevin gave us his opinion of– with the recession upon us and apparently coming in greater form. Would you care to give us your professional opinion about what you think the future holds and what the experts are saying where we are sitting right now?
Silva I’d rather respond to that next month. We have a couple of things to look into and understand what the budgets are. General, there is some expected decline throughout 2023 and 2024 to have expected through the companies that we have data from, so IHS Market and Moody’s Analytics. But that’s kind of where they stand right now. I can talk to you and give a more detailed report next month.
Hammer All right. Thank you. Thank you, Mr. Chair.
Rice Thanks, Dr. Silva. Not seeing any more questions, thank you, gentlemen, for your report today. Next up, we have our report for the executive subcommittee, my co-chair, Representative Wardlaw. You’re recognized.
Wardlaw Thank you, Mr. Chair. The subcommittee met on Thursday, August 18, and heard from representatives of the Department of Education regarding a proposed emergency rule for provision, education or licensure. During the discussion by the subcommittee, the department was asked to withdraw the rule. No action was taken on that item. The subcommittee authorized BLR to enter into a contract with the Mitchell Williams law firm to represent the Bureau regarding subpoenas for documents. In addition to those items, subcommittee recommended approval of the full ALC of the addendum to the ALC rules incorporating responsibilities given to the ALC under the provisions of Act 3 of the special session related to the promulgation of rules and disbursement of funds for the School Safety Grant Program. Mr. Chair, I’ll have two motions. So I think I’ll make the motion to adopt the report first, and then we’ll go into the rules discussion.
Rice Okay, I’ve got some questions. First, Senator Chesterfield, you’re recognized.
Chesterfield Thank you, Mr. Chair. In reading the paper, I found that it said you approved a match for those individuals who provide Internet service throughout the state. Could you explain that to me? Because it gives me great angst in that there are some poor communities that are not going to be doing the match. Or is it the company itself that’s supposed to provide the match in order to get the infrastructure done in those particular areas?
Rice That wasn’t in this report. I’m gonna have to have a little more information.
Chesterfield Okay. Well, it’s to Mr. Wardlaw. It was my understanding that the Department of Commerce recommended that we have a match, that the state would provide so much, and that the entity that was to provide the infrastructure for Internet capability was to be able to provide so much money. And in one of those–
Wardlaw Madam Senator, that was not taken up in this executive committee.
Chesterfield Where was it taken up, sir?
Wardlaw I don’t, I don’t know. I’m kind of lost at what we’re talking about here. We haven’t heard that this week, and we didn’t hear it last week in executive committee.
Chesterfield They just make the paper on its own, I guess. All right. Thank you.
Wardlaw Guess so.
Rice Senator Elliott, you’re recognized.
Elliott Thank you, Mr. Chair. This is a question to Representative Wardlaw. I just wanted to understand better in the other business section about this subpoena process or what we’re doing with this with–
Wardlaw Absolutely. And I’m going to have the– Marty Garrity from the Bureau staff address that question for you.
Elliott Okay.
Garrity Senator Elliott– this is Marty Garrity. Senator Elliott, the Bureau received a subpoena for legislative documents, documents that we consider privileged documents, communications, correspondence between members, between members and staff. And so it is always the policy of the Bureau that we engage attorneys to– what’s the right word– to look at whether we need to turn those documents over or not because of the legislative privilege that is enjoyed by the members with respect to these documents.
Elliott Is, is there– if I may, Mr. Chair– is there more pressure or a different kind of pressure request that we are not able to say this time around? Because I know before that’s what we– we, we just said these are working papers, so forth and so on. Is there something different about the request now that–
Garrity No, this is similar to other requests we’ve received and where we’ve engaged Mitchell Williams to represent the Bureau with these types of requests.
Elliott Okay. So we just engage them on an ongoing basis as we need to.
Garrity Yes.
Elliott Okay. Thank you, Mr. Chair.
Rice Okay. Seeing no other questions, I’m back to my co-chair, Wardlaw.
Wardlaw I just have a motion to adopt the report.
Rice Have a motion to adopt the report. All in favor, aye. Your second motion.
Wardlaw I have a motion to adopt the addendum to the ALC rules in pursuant to the School Safety Grant program.
Rice Okay. Members, I am told this does require a separate vote for the House and the Senate. We will vote the House first. All in favor aye. Opposed. For the Senate, and all in favor aye. Opposed. Thank you. Passes. Thank you for the report. We now have our standing committee report starting off with Administrative Rules. Representative Les Eaves, you are recognized.
Eaves Thank you, Mr. Chairman. The Administrative Rules Subcommittee met Thursday, August 25. The subcommittee adopted a report of the Executive Subcommittee concerning its approval of emergency rules. The subcommittee also reviewed and filed the quarterly reports that were submitted by the Department of Corrections and the Parole Board. The subcommittee received agency updates on outstanding rulemaking pursuant to Act 595 of 2021, and the subcommittee filed the August monthly written updates pursuant to Act 595. All rules were reviewed and approved and I move adoption of the report.
Rice Thank you. Any questions on the report? I have a motion. Do I have a second? Have a second. All in favor aye. Opposed. Thank you for that. Report is adopted. Next, we’ll go to Claims Review and Litigation Report Oversight. Representative Bruce Cozart.
Cozart Thank you, Mr. Chair. The Claims Review Litigation Reports Oversight Committee met on Monday, August 22 of 2022 concerning litigation reports, oversight and subcommittee review of seven litigation cases. The subcommittee also reviewed one proposed settlement submitted by the Arkansas Rehabilitation Services. Concerning claims review, the subcommittee affirmed the ruling of the Claims Commission as to three re-issuance of warrants and one negotiated settlement agreement, one awarded claim, and 14 denied and dismissed claim, dismissed claims. Subcommittee declined to consider five claims that were submitted outside the statutory time frame for appeal of a Claims Commission decision under the Arkansas Code annotated section 19-10-211a. I move adoption of the report.
Rice Okay, I have a motion. Is there any discussion on the motion? If not, have a second? Have a second. All in favor aye. All opposed. Report is adopted. We have our Game and Fish, State Police subcommittee. Senator Blake Johnson, you’re recognized for the report.
B Johnson Game and Fish and State Police Subcommittee met Tuesday, August 23, 2022. The Arkansas State Police provided general updates regarding law enforcement in the state, and the Game and Fish Commission gave a report on ongoing conservation projects and initiatives. With that, I would move to adopt the report.
Rice I have one question here first. Senator Pitsch, you’re recognized.
Pitsch No, I’m good there.
Rice Okay. If you’ll get back in the queue, you’re just getting ready for the next report. Seeing no questions, I have a second to that? Have a second. All in favor aye. Opposed. That report’s adopted. Now Senator Pitsch for the Hospital and Medicaid study report.
Pitsch Thank you, Mr. Chairman. The Hospital and Medicaid Study Subcommittee met on Tuesday, August 23, at 3 p.m. in Committee Room B in Little Rock. The subcommittee heard a report from the 3M Health Information Systems about modernizing the hospital inpatient payment system for Arkansas Medicaid. The subcommittee learned that seven states are using a per diem or cost based, hospital based inpatient payment system like Arkansas, and that 43 states are using some form of a diagnosis related group payment system. Respectfully submitted by co-chairs Senator Ingram and Representative Ladyman. I do make a motion for approval of the report.
Rice Okay, seeing no questions, do I have a motion? Do I have a second? Have a second. All in favor aye. Opposed. Thank you for that report. Next for the Peer committee. Senator Dismang, you’re recognized.
Dismang Thank you, Mr. Chairman. The ALC Performance Evaluation Expenditure Review Report summary is as follows. There are two subcommittee reports on the agenda. The first report is from August 11, when the subcommittee gave final approval of the first round of the ARP ESSER funds. The second report is from the August 23– from August 23, and includes final approval on the second round of ARP ESSER appropriation requests for the Department of Education. One item, a restricted reserve fund transfer for the Military Department, A2, is held in the subcommittee to receive more information and have further discussion. Two items were a late submission and were not on the agenda but were discussed for the subcommittee’s information. Attachment 2 is a restricted reserve fund transfer request of $1 million to the Division of Environmental Quality for the Used Tire Recycling and Accountability Program. Attachment 2 is a cash appropriation request for ADEQ for the same amount and purpose and will give the division spending authority to use restricted reserve funds. I move for adoption of the report. And I move that we refer items, the items related to ADEQ and the Used Tire Recycling Accountability Program to JPR working in conjunction with Legislative Audit. I move that we suspend the rules, take up ARP ESSER requests for the Department of Education. And the Department of Education requestS $773,998 in ARP appropriation to send ESSER funds to the Rector School district. Staff has handed out the documents related to this request. Do I need to break that up into two? Yeah, well, let’s back up. All I’m going to do is move so far for the adoption of the report and for– to refer the items related to ADEQ to JPR in conjunction with Legislative Audit, then I’ll move to the other motion.
Rice Okay, proper motion. Members, we’re going to have a vote on adopting the report. First, we’ll do it separate. I have a question from Senator Chesterfield.
Chesterfield Yes. Could you explain to me the thing with ADEQ?
Dismang I can do my best. There was a– there’s been a request–
Chesterfield Is this the water thing?
Dismang No, this is for tire disposal.
Chesterfield Oh, okay. Gotcha.
Dismang There was some financial requests for assistance related to the tire disposal program. I think that, you know, it’s bounced around quite a bit until ultimately I think there may have been some timing issues on when the last payment went out. And so some of this may fix itself. And again, I’m in over my head in trying to detail it and there’s probably other members that have more information. But if that’s generally correct, I’m happy to turn it over to somebody else.
Chesterfield Thank you. Thank you, Mr. Chair.
Rice Seeing no more questions, I have a motion to adopt the report. Do I have a second? Second. All in favor aye. Opposed. Now, if you would, restate your part for the education part.
Dismang So first, I need to move to suspend the rules to take up an ARP ESSER request for the Department of Education.
Rice Okay, I have a motion to suspend the rule. Second. All in favor aye. Opposed. Those rules are suspended. Now state your motion.
Dismang Thank you. The Department of Education requests $773,998 ARP appropriation to send ESSER funds to the Rector School District. Staff has handed out the documents related to the request.
Rice You heard the motion. Seeing no questions, all in favor aye. Opposed. Motion is approved. Thank you. Next we are going on to Policy Making. Senator Linda Chesterfield, if you’ll give that report, please.
Chesterfield Thank you, Mr. Chair. The Policy Making subcommittee met on Wednesday, August 24, and heard from Senator Terry Rice and Representative Jeff Wardlaw requesting approval of the Employee Health Benefits actuarial consulting services contract between the Segal Group and the Bureau of Legislative Research. The subcommittee voted to recommend approval of this contract. And I move adoption of the report.
Rice I’m sorry. I was distracted. Did you make a motion with that?
Chesterfield Yes, sir. I move for adoption of the report.
Rice I have a motion to adopt a report. Second? Second. All in favor aye. Opposed. Thank you, Senator Chesterfield.
Chesterfield Thank you, sir.
Rice Next, Senator Scott Flippo will give the Review report.
Flippo Thank you, Mr. Chairman. The Review subcommittee met on Tuesday and reviewed methods of finance, discretionary grants and services contracts. In addition, the disclosure of a proposed contract between the Arkansas Insurance Department and Senator Hammer was reviewed. And I do believe, Mr. Chairman, that Senator Hammer wanted to make sure that he’s going to be abstaining from this. And I’m sure he’ll chime in here in a second to tell that. The committee heard a report from Secretary Mitch Rouse that after further consideration, the Department of Transformation and Shared Services Office of State Procurement would not move forward with the study proposed earlier this year for the development of a statewide contract for potential savings for the state. We’re going to wait until next year to move forward with that per the, the amended ALC rules in April of this year. This report will conclude the study requested by the end of the year on this request. No items were held, and I moved adoption of the report.
Rice Okay. Thank you. We’ve got a couple of members on queue here. Just a second. Senator Hammer, you’re recognized first.
Hammer Thank you, Mr. Chair. For the record, publicly, I’ll be abstaining from voting on just this report and this report only today. Thank you.
Rice Thank you, sir. Representative Cavenaugh, you’re recognized.
Cavenaugh Thank you, Mr. Chair. I had requested some information from the Department of Corrections. And they’ve provided that, but I have further questions I’d like to ask them.
Rice Okay, if the department would come up. Welcome, gentlemen, if you will, pull your mics up to you, turn them on, recognize yourself.
Cooper My name is Richard Cooper. I’m the assistant director of construction and maintenance for the Department of Corrections.
Wembley Lamont Wembley, the chief financial officer for the Department of Corrections.
Rice Thank you for being here today. Representative Cavenaugh, you’re recognized for the question.
Cavenaugh Thank you, Mr. Chairman. I’m over here to your right. Okay. On00 thank you for providing me the information I requested. On your phase one and phase two, it’s approximately $18 million that we’re spending on these energy saving projects. Phase one is– and basically both of them are showing that we’re going to save $1.1 million on those. So we’re spending $18 million to save $1.1 million. Do we have projected out how long these savings will last? Because looking at it, you know, it’s going to be 16 years before we recoup the money that we’re spending.
Cooper Thank you for your question. The, the contract itself is based on a 20-year term. That’s how the contract is designed. Typically, we have two payments that we pay out toward that contract annually. The savings that we realize, the actual pure energy savings that we realize is somewhere in the neighborhood of right at $750,000. And that’s what makes that payment every year. So it’s virtually at no cost by the time you calculate that out annually. So we pay that out, that $18 million, off in annual installments. So it zeroes out basically annually that will make those payments. For 20 years, we’ll make those payments and the savings will pay for it.
Cavenaugh Follow up, Mr. Chair.
Rice Go ahead.
Cavenaugh For your report that you gave me, you had energy savings, I think you had maintenance savings, and then you had something called capital avoidance savings. What is capital avoidance savings?
Cooper Yes, ma’am. That’s us not having– this is new HVAC equipment, new boilers, new chillers, large equipment that we would have had to have purchase or repair over the duration of this time frame annually that we provide that those savings is what– you know, capital avoidance is us not having to buy equipment as they are provided through this contract.
Cavenaugh Okay. Okay. But we’re, we’re buying them through the contract.
Cooper Yes.
Cavenaugh So how are we avoiding that capital expenditure if we’re buying them through the contract?
Cooper Well, the capital equipment that was established in the contract was low efficiency. These were items that was really costing us a lot more than just our maintenance on the actual pieces of equipment itself. So by installing this new equipment, it created a higher efficiency that affords us the opportunity to be able to operate in today’s world new. When we have to make any kind of repairs to it, they’re available. A lot of the equipment that was repaired or replaced, we cannot even get parts for anymore. So that’s what is– instead of us having to come up with a large sum of money at one time to replace a $200,000 chiller or a $250,000 boiler, that is spaced out because we’re, we’re entering into that into the contract. It’s part of the contract. So we’re able to be able to diversify those funds over a period of time instead of having to come up with all those funds at once.
Cavenaugh Okay. But we’re still paying for them.
Cooper Yes, ma’am.
Cavenaugh Okay. I don’t really understand how we’re avoiding it when we’re paying for it in the contract, but. Okay, so basically we’re saving $750,000 a year and you’re using that savings to pay for this new construction.
Cooper To pay for our payment toward the performance contract.
Cavenaugh Which is equipment for the new lighting, HVAC, assuming water.
Cooper Water conservation. Wastewater.
Cavenaugh Okay. Thank you.
Rice Thank you. Got some questions here. Representative Beck, you’re recognized.
Beck Thank you, Mr. Chair. On your contract, I think I understand it. You’re paying for the contract off the savings that the contract produces. What is the life expectancy of the equipment? You mentioned chillers and boilers. What would the life expectancy of those equipment be once they are replaced?
Cooper Well, that really is going to be determined on the type of equipment. I mean, if you’re talking about a package unit, they got a life expectancy of somewhere between 17 and 20 years. Chillers can last up to 25, 30 years. So you’ll actually be realizing savings even after the contract has matured. You should be realizing those savings continue.
Beck All right. So. So, do you have any numbers? And I’m sorry, I did not see that report. But do you have any numbers related to what percentage of this equipment will be ongoing beyond the 20 years? I’m assuming that you’re doing the math here and the 20 years is when we get the contract all paid off and all that. So how much of that equipment will be actually performing for us beyond that 20 years? Do you have a percentage of the cost?
Cooper If I were to have to put a guess on that today, I would say 70%.
Beck Thank you.
Rice Senator Hammer, you’re recognized.
Hammer Thank you, Mr. Chair. To your far left over here, gentlemen. Morning. Just a quick question. Following up on Representative Beck’s. If the equipment fails prior to the end of the contract, who absorbs the cost of replacing the equipment? Because if I understand it right, the equipment is supposed to help pay for the cost of the upgrades over a period of time. But if the equipment fails during the length of that contract or proposed time that it’s supposed to last, who’s responsible for that?
Cooper The agency would be responsible for that, sir. But they also– part of the contract is preventive maintenance performed on that equipment per that contract. So there shouldn’t be a reason other than a major power failure or something of that nature that would cause that equipment to fail to the point of, of non-repairable.
Hammer And in the event something like that happened, that would affect the projected savings, because now you’re having to step in and replace whatever that is. But nobody really knows if that’s going to happen or not. So how, how do we track it or are we just going to have to monitor that over the next 20 years to see if the theory really plays out in reality 20 years down the road?
Cooper Our division is actually tracking all of the equipment replacements and the preventive maintenance that’s performed on each piece of equipment.
Hammer And is preventive maintenance part of the contract, you said?
Cooper Yes, it is.
Hammer Okay. Thank you. Thank you, Mr. Chair.
Rice Thank you. Representative Beatty, you’re recognized.
Beatty I would just– maybe I was asleep and I just heard numbers and my mind started calculating. You said $750,000 a year on an annual payment and that would repay$ 20 million– or $18 million over 20 years. I mean, my math would say that’s more like $900,000 a year. So could you clarify that again so I can, I can get that straight in my head?
Cooper Well, the $750,000 that’s referenced is pure energy savings cost. Again, there’s capital avoidance. It’s a maintenance cost that’s been avoided through the contract that will get you to that basically 1.1. So it’s not necessarily just the pure energy cost savings. At $750,000, it’s the money the agency is saving by not having to spend an enormous amount of money at any given time on any piece of equipment.
Beatty So this is managerial accounting and not true mathematics. That nod would be a yes? Thank you.
Rice All right. Representative Beck, do you have another question?
Beck Thank you, Mr. Chair. I think maybe Senator Hammer and I are back and forth a little bit here. But is it– and you might be able to clarify this. On these contracts, when we extend these out, the equipment that’s on these contracts if they’re extended out 20 years has to have a life expectancy of the length of the contract, whatever that contract is. And that is determined by a national organization that says that that piece of equipment should last you X number of years. Is that not correct?
Cooper That is correct, sir.
Beck Thank you.
Rice All right. Seeing no other questions, thank you, gentlemen, for being here and answering our questions today. I have a motion from Senator Flippo. Do I have a second to accept the report? I have a second. All in favor aye. Opposed. It passes. Next we have Representative Cavenaugh. You’re going to give our Personnel subcommittee report today, please.
Cavenaugh Thank you, Mr. Chair. Mr. Chair, the Personnel committee met Wednesday, August 24, in Room A in the Mac building. The committee reviewed and/or approved the request continuations and reports listed as items 1-30 on the report. I would be happy to entertain any questions and I move for the adoption of the report at the proper time.
Rice Okay, I have a second. No questions. All in favor aye. Opposed. Report is adopted. Representative Deffenbaugh, you have our lottery oversight report this morning.
Deffenbaugh Thank you, Mr. Chair. Lottery Oversight Subcommittee met Wednesday, August 24, 2020, at 2:30 p.m. in room Mac B. The subcommittee heard testimony and reviewed the following items. Number one, the Office of Arkansas Lottery Report. Number two, the Arkansas Division of Higher Education Report. Number three, Arkansas Division of Higher Education Academic Challenge and Workforce Challenge Scholarship Award and Student Status Report. So I move for the adoption of this report.
Rice Okay. No questions. I have a motion. Do I have a second? Second. All in favor aye. Opposed. Thanks for that. Our Highway Commission Review and Advisory Report. Representative McNair.
McNair The Highway Commission Review and Advisory subcommittee met Thursday, August 25, at 3 p.m. The subcommittee heard testimony and discussed the following items: the progress of each highway construction project of $10 million or more, july and August 2022 monthly updates of the ALC Efficiency Study recommendations rules for implementation, the proposed contract with Data Transfer Solutions to develop a maintenance management system for the implementation of efficiency study rule recommendation number seven, and the Federal National Electric Vehicle Infrastructure Formula Program update. I move for adoption of the report.
Rice No questions. I have a motion. Have a second? Second. All in favor aye. Opposed. Next, we have Senator Hammer is going to give our Employment Benefit Division Oversight Report. You’re recognized.
Hammer Thank you, Mr. Chair. The Employee Benefit Division Oversight Subcommittee met on Wednesday, August 24, of 2022, at 10 a.m., Committee Room A in Little Rock. The subcommittee approved the actions of the State Board of Finance, which met on August 16, 2022. The actions approved were the adopted EBD quarterly report for the fourth quarter of 2022, approved changes to the EBD drug formulary, and approved RFP for the Actuary Employee Assistance Program. Subcommittee also heard a pharmacy benefit manager update. And this is respectfully submitted by the chairs, Deborah Ferguson and Senator Jason Rapert. And I’d move for the approval of the report, Mr. Chairman.
Rice All right. I have no questions. Do I have a second? All in favor aye. Opposed. And, members, on, on the EBD, you know, we’ve been working it several months and we appreciate the input from members that’s had on that because it affects everything in the state. Council, you have been sent out the schedule of the meetings that are going to be around the state. You can look at that and you can help get that information out to your constituents in your area that affects. And we will be sending that out to, without any objection in here, to the entire legislature where everybody will be involved in that. And let me recognize Representative Wardlaw.
Wardlaw Thank you, Mr. Chair. I want to add to that. We met with director Jake Bleed this week, and he’s going to be getting a 1-800 number out to all the members to put on your social media account, to get out to your constituents. For any questions related to the MAD plan or the drug benefit plan, they will call that number. What we had found is our constituents were calling UnitedHealthcare and they were getting general UnitedHealthcare answers instead of employee benefits division plan answers. So we want those people to call employee benefits, not UnitedHealthcare. So he’ll get you all that number, we’ll get it out to all the members in the coming days. Just make sure to distribute it out to your constituents. Thank you.
Rice Thank you. Senator Chesterfield, you’re recognized.
Chesterfield Yes. Following up on that, Mr. Chair. Representative Wardlaw, are we going to have those meetings around the state still?
Wardlaw Yes, I think that’s what Chairman Rice was pointing out is that schedule was sent out to all the council members I believe yesterday and this afternoon will be sent out to all the members of the legislature.
Chesterfield Okay. Thank you so much.
Wardlaw Thank you.
Chesterfield Better start checking my mail.
Rice And there, again– a lot of work gone into that. We’re pleased with what we see on the plans. I’ve had a comment or two that said this, this looks too good. It’s not the off the street plan. This is a exclusive plan for our state and public employees. And I think we’re seeing some people pleased with it, but we definitely want to get them to the place to get the correct information. And we appreciate everybody helping with that. Senator Breanne Davis, would you be available to give our Occupational License Review report?
Davis Yes, thank you. Mr. Chair. The Occupational Licensing Review Subcommittee met on Thursday, August 25, 2022, to receive reports on occupational authorizations from the Arkansas Department of Health and the Veterinary Medical Examining Board. I move for adoption of this report.
Rice Do I have second? Seeing no questions. All in favor aye. Opposed. Thank you for that. Next, we have communications reports. Okay. Members, all of these don’t require action. If there’s any of those that you see that you want to pull out and get– have questions on, get some answers on, we’ll be glad to do that. First one that we will be covering is number 6, Department of Human Services. I believe Mr. Mark White’s going to come up and give that report. If you’ll recognize yourself, Mr. White, you can proceed.
White Thank you, Mr. Chairman. Mark White, Department of Human Services. So, as you all may recall, back in the fiscal session, there’s special language included with our Medicaid appropriation directing us to do a rate review around assisted living services and look for ways to increase that rate. We have been working with assisted living facilities. I had an extensive number of meetings to go through that. We brought in a vendor to help us with that process and they produced a report. That draft report is what is in your agenda today. And they are recommending a new rate for assisted living of $96.76 per day. And so we are moving forward to adopt that and will be submitting that to CMS to get CMS permission to implement that rate. The vendor, since we submitted this, they have now submitted their final report. It doesn’t have any substantive changes other than just adding the feedback they received and a few other minor things. And we’ll submit that to you all for next month. With that, happy to answer any questions.
Rice Any questions? Representative Murdock or somebody in his seat? It’s Representative Bentley. You’re recognized.
Bentley Thank you, Chairman. And Mark, just, I know we dig into this more, but that’s a pretty huge jump from 60 something to 96 an hour. So can you give us a little insight on that 30% increase there?
White Sure. The increase, it’s really attributable to two factors. First of all, in the past rates, we have declined to include some expenses around meal preparation and some related things because we were concerned that would fall under what is excluded by federal law in Medicaid rates. What we’ve– the compromise we’ve reached with stakeholders is we’ve included it in this rate. We’ve called it out in the report and so we’re going to submit to CMS. If CMS accepts it, great. We’ll pay that rate and move forward. If CMS declines it, then we’ll circle back and revisit and see what we need to do. But that accounts for its $9.68 of that difference. For the remaining difference, it is the increased staffing cost reported by the providers. As part of this process we did a cost survey. They submitted the cost they’ve incurred. This is looking at more recent data than the past cost surveys we’ve done and that increased cost they reported, that accounts for $17.45 there. And so put those two together and that’s the difference.
Bentley All right. And do we know yet what that’s going to cost us annually as a state? We get any numbers on that yet? Thanks for the follow up, Chairman. I’m sorry.
White I think Mr. Hill may have that. I was going to put that in my folder, and I don’t believe I did. Okay. And we expect the total budget impact to be $3.9 million. Of that, we expect the state share would be $1.1 million.
Bentley Thank you. Thank you, Chairman. I appreciate it.
Rice Thank you. Going to the Senate Chesterfield next.
Chesterfield Thank you, Mr. Chair. Good morning, Mark. It– one of the questions that came to me is how did you guys at DHS implement your raises that the governor approved? Because we had– those around us thought that if you were making $100,000, you wouldn’t be eligible. But I noticed that several people at DHS who are already making $100 [thousand] got the raise. Could you explain that to me?
White And, I’m sorry. You’re referring to the, the raises that the– the cost of living raise that the governor did last spring?
Chesterfield Right.
White I would have to go back and double check that. My memory is that we just applied that across the board. Now, if an individual was close to the maximum for their particular pay category, they could only go up to the maximum. But my memory is that that was across the board.
Chesterfield Okay. So it was not– did he governor say people making over $100,000 were to get raises as well? I’m just trying to gain clarity on that.
White I don’t recall that limitation, but that’s, that’s been several months ago.
Chesterfield Just check with me later. Thank you. Thank you, Mr. Chair.
Rice Representative Bragg, you’re recognized.
Bragg Thank you, Mr. Chair. Over here to your right. I know it’s speculation, but do you have any idea how long it would take to get this approved and be effective?
White We will be submitting this to CMS by the 1st of October. CMS has a 90-day clock, in which they should give us an approval. We don’t expect it to take a full 90 days. Ordinarily I know they try to get it done within 45 days. So we’re expecting– we’re hoping that we’ll have approval by probably November or so. And then we’ll be bringing this to you all for legislative review in November, December. The rate would be effective January 1.
Bragg Okay. Thank you.
Rice Senator Hammer, you’re recognized.
Hammer Thank you. Just a clarification to what Representative Bragg was saying. Is it– why are we having to wait till October 1 to get it to CMS? Is it not ready to go out the door yet or what do you lack getting it out the door to where it could get there?
White Well, we’re putting together the package that has to go to CMS. That’s been pulled together. The next step is for the secretary to approve it and then for the governor to approve it. And then once that happens, there is a public comment period. It has to be published in the newspaper. So we’re just going through those procedural steps.
Hammer And is there no way to make it retroactive? And you’re saying that the rates would kick in January 1 of 2023. There’s not any retroactive method to pay back to when this started?
White It’s no– not to go back that far. But keep in mind that we are paying a higher rate now under a special permission that was granted by CMS. So the providers are already receiving an increased rate at the moment and that will continue through January 1 when the new rate kicks in.
Hammer And what’s the current rate they’re being paid now?
White It is about $85 per day.
Hammer And the new rate is going to be around $96-ish?
White Yes, sir.
Hammer Okay. Thank you. Thank you, Mr. Chair.
Rice Okay. Seeing no other questions, gentlemen, thank you for being here today for that report.
White Thank you.
Rice Okay, members, before we proceed with some more reports, we need to go back to EBD, Employment Benefits Division. We had an error in the report. I’m going to need to expunge that vote, if I could have motion to do that and a second. Second. All in favor aye. Opposed. Okay, now I’m going back to Senator Hammer. If you will, give our correct report, please.
Hammer The Employee Benefit Division Oversight Subcommittee met on Wednesday, August 24, 2022 at 10 a.m. in the committee room A in Little Rock. Subcommittee approved the actions of the State Board of Finance, which met on August 16, 2022. The actions approved were the adopted EBD quarterly report for the fourth quarter of 2022 and the approved RFP for the actuary program. The subcommittee held the EBD drug formulary changes and the RFP for the Employee Assistance Program until next month. Subcommittee also heard a RFP for a Pharmacy Benefit Manager update submitted by Representative Deborah Ferguson and Senator Jason Rapert. Move for the adoption of the report, Mr. Chairman.
Rice Okay. I have a second. All in favor aye. Opposed. Thank you for that. Now, members, we’ll go back to 7A– or excuse me– 7B is the next one that requires a motion. We’ll have Mr. Jeff King, if you come up with the Civision of State Parks. Thank you all for being here today. If you will, give us your name and title and then we’ll go to questions.
King Jeff King, deputy director of the Division of State Parks.
Fiskin Leslie Fiskin, chief of legislative affairs for Parks, Heritage and Tourism.
Rice If you will, pull your microphone a little bit closer to you. It’s got some cord there. You can pull it. Yeah, pull it. Pull the whole thing close to you. That way we can hear you better.
Fiskin I’m Leslie Fiskin, chief of legislative affairs for Parks, Heritage and Tourism.
Rice Thank you. Representative Wardlaw, you’re recognized for a question.
Wardlaw Thank you, Mr. Chair. I understand the law says that we should give favorable advice on this. I just want to understand what this real property acquisition is and explain to me why. And I’m guessing Parks put this bill forward to make it law. But why do we use the words favorable advice here?
King I’m not sure that I can answer the question related to the specifics of the language of the law. But we have followed this process. I’ve worked for the Parks Division for the last 14 years, and we’ve been following this section of code ever since then. I’m not sure of the specifics of that, but I can lay out our request to you if that’s appropriate.
Wardlaw Yep.
King So the code says that we will take all of our property acquisitions for State Parks and for any new parks for approval by the State Parks Recreation Travel Commission, also the governor’s office, the Department of Finance Administration and the Legislative Council. And so we’ve gotten those previous approvals for the purchase of this property that’s at Mount Nebo State Park of 146.77 acres. And so we’re– we’ve kind of gone through our process and gotten it to the level of review here by the Legislative Council.
Wardlaw Thank you. And Mr. Chair, I’d yield to any other questions.
Rice Representative Meeks, you’re recognized.
Meeks Thank you, Mr. Chairman. So I was looking through this, and I noticed that 100 acres of this proposed property is a dual claim of ownership. And I noticed that also that the Parks Department have a trail on what is essentially potentially private property. And so it sounds like there’s a back story there, and I’m wondering if you could give us that back story.
King Yes, sir, Representative Meeks. We’ve been working to acquire this property for a number of years. Our commission’s given various authorizations going back to the mid-2000’s. And so we’ve been able to reach an agreement with our– with the landowner of the property. And also really the dual claim aspect came about when we were digitizing our, our records. Our geographic information system personnel in 2019 digitized all the deeds dating back to the, to the 30’s for Mt. Nebo. And so that’s where we were, we were able to identify this as a dual claim piece of property.
Meeks So was that a problem back in the 1930s where both the state and, I assume, this gentleman’s ancestors both claimed that property as their own and filed paperwork to that effect?
King Right. And it really is due to the fact that we had multiple courthouses that you could file for property at Mount Nebo and also just the listing of the property, whether it was broken out in terms of lots and blocks or in terms of township section and range. It had a discrepancy there. But when you overlay those pieces of property in a digital format, you see that there’s, there’s two titles there that show ownership of a piece of ground.
Meeks Okay. So, so he had a legitimate claim to the property then. It wasn’t just something he made up, correct? Okay. And then my, my final question is, I’m kind of looking at the map here of the piece of property you’re wanting to purchase, and I notice there’s a piece of property here that’s going to be landlocked within the state park. Is that something y’all are going to look at purchasing at some point as well?
King That’s correct, yes. We’ve already been in contact with the owner of that property and we’ll be looking to negotiate the purchase of that kind of last in-holding.
Meeks All right. Thank you. Thank you, Mr. Chairman.
Rice Thank you. Senator Hickey, you’re recognized.
Hickey Just, just quickly. You will be acquiring a title policy on that land?
King That’s correct.
Hickey Okay. And if it has any abnormal exemptions, you’re not going to move forward, correct?
King With the exception of the known exemption that we’ll have here for, for this dual claimed piece of 100 acres.
Hickey Okay. How is that going to read on there? Do you, do you already know? I mean, I know you’ll have to wait for the specific exemption, but how, how is that going to be listed on that title policy or do you expect it to be?
King I’m not sure that I can answer that just yet, but I’d be happy to report back to you as we get into that process and have, have, have our title commitment.
Hickey Okay. Let me ask you this. With the dual exemption, if that’s an exemption on there, is that, is that going to– if at some point, 30, 40, 50 years from now, we wanted to get rid of that, is that going to cause a problem in selling the thing so that you would get the full purchase price at that time? Or do you know?
King I don’t know. But, generally, we say we’re, as a state park, we’re kind of in the forever business. Typically, when we acquire a piece of property, we’re utilizing it for its historic and cultural, natural resources. So I don’t see a, really a time where we would, we would look to dispose of the property. But I can gather some more information about the specifics on the exemptions for you.
Hickey Okay. The– this– is this an undivided interest? Is that what you’re calling the dual– I mean, is that what I would refer to as an undivided interest?
King It’s really two separate deeds, basically, that are outlining the same piece of property. So I would expect we get, basically, a quitclaim deed from the current owner to negate their, their interest in the property so that our deed is, is the standing priority. Right.
Hickey And I’m not looking to hold anything up here. But Mr. Chair, I think that at the least maybe we should at least have that to come to us so that we could review that.
Rice Okay. That’s noted. Senator Hammer, you’re recognized for a question.
Hammer Thank you, Mr. Chair. As far as successors to the heir and all that stuff, does this terminate upon death or does this transfer to future family members? Or how does that work? Or is that even in the discussion or in the picture?
King We would– as, as the property comes to us, that would take out any future heirs or successors that might have a claim from, from the private interest.
Hammer They would have?
King They would not.
Hammer Would not have. Okay. Thank you.
Rice Senator Ballinger, you’re recognized.
Ballinger Thank you, Mr. Chair. And I’m, I’m sorry that I’m not, not up to date. But you got on this but you’re talking my language as a, as a real estate and title attorney. But one thing that– so, what we have is an overlap in, in the title. Do we have any, any evidence that both sides are actually claiming or possessing the property?
King Well, I would say yes, because the private land owner is utilizing the property and has for, for hunting and recreation and we’re out– we’re utilizing a piece of the property because of the Bench Trail at Mount Nebo State Park actually goes through about a quarter mile section of this piece of property.
Ballinger Okay. So the, but the, the party, the private party currently possessing it is willing to give us a deed?
King Right.
Ballinger Even if it’s a quick claim deed. No title change.
King That’s correct.
Ballinger Why wouldn’t we want to do a quiet title action just to clear the title?
King We may– I would have to kind of defer to our, kind of the next step in the process, which will, will involve our general counsel and, and get the proper paperwork in order to close on the property.
Ballinger Okay. All right. Thank you.
Rice Senator Blake Johnson, you’re recognized.
B Johnson Is, is the– I’m over here to your left. Is the property that’s landlocked owned by the same private owner?
King No, it’s not.
B Johnson The private owner has been paying taxes on the dual-titled property, right?
King That’s correct.
B Johnson All right. Thank you.
Rice Okay, members, this is the first of two that we have for Division of State Parks. I see no more questions. Do I have a motion to approve– excuse me, for favorable advice? I have a motion and a second. All in favor aye. Opposed. All right. Now to 7c, and you’re recognized to present.
King Item 7c is pursuant to Act 174 of the 2022 fiscal session. This is a report of our general revenue comparison year over year and is listed by Park. So we are just asking for a review of this item.
Rice Members, any questions? Not seeing any questions, I’ll need a motion to review, to file as reviewed. I have a motion. I have a second. All in favor aye. Opposed. Thank you all for being here today and taking our questions.
King Thank you.
Rice The next one required action on, members, is 9b, Division of Building Authority. If Ann Laidlaw is here or someone come on up. Thank you for being with us today. If you will, recognize yourself.
Laidlaw Yes, sir. Thank you, Mr. Chair. And members, I’m Ann Laidlaw, director of Division of Building Authority. And with me is Chris Bell. He’s our administrator of real estate services.
Bell Good morning.
Rice Representative Wardlaw, you’re recognized.
Wardlaw Thank you, Mr. Chair. I’m going to make a motion that we hold this for one, for– until next month’s council, which is only two weeks away. I want to understand why we are approving that bid so low and if there was opportunity for possibly a better advertisement and a new bid. So, Mr. Chair, that would be my motion. And I appreciate a favorable vote.
Rice It is a proper motion. Any discussion on the motion? Senator Hickey, you’re recognized.
Hickey I agree with Representative Wardlaw, but I would like one thing. There– is there any time constraints with us holding that over our next meeting? When is it, Mr. Chair? Is it September 15? There is no– within the documents, or is there any time constraints with that?
Laidlaw No, sir. They are aware that it does require your review. So.
Hickey Okay. Thank you.
Laidlaw I think two weeks will be fine.
Rice September 16 on that. That’s all the discussion we have. I have a motion. Do I have a second? Second. All in favor aye to hold it over. All right. Opposed, none. Thank you for that. Okay, members, if you see there, we’ve got two interim study bills. I’d take a motion to batch those. I have a motion and a second. All in favor, aye. I have one more deal, if you’ll hang with me just a minute. Also, if anybody noticed that my co-chair, Representative Wardlaw, looked a little older it’s because he had a birthday yesterday. And, members, our last deal, I’m going to recognize Senator Hammer for an announcement. Senator Hammer, you’re recognized.
Hammer Thank you, Mr. Chair. Senate Ethics will meet 20 minutes upon adjournment of ALC in room 309.
Rice Okay, members, not seeing any more business, thank you for being here today. We’re adjourned.