Joint Budget Hearings
October 20, 2022
Actions Taken (click each to jump to that discussion)
- Department of the Military, agency recommendation approved
- Department of Transportation, agency recommendation approved
Wardlaw: Start on the Department of the Military. Thank you. Yes, and if the Department would go ahead and come forward, that makes it a lot easier.
Department of the Military
Rook: Thank you, Mr. Chair. Jennifer Rook, Bureau of Legislative Research. We’re going to start in Volume Two on page 313. It’s going to be the Department of the Military. I’ll give you guys a chance to get there. Volume Two. Yes, ma’am. Volume Two. We’re going to start with the Secretary of the Department of the Military’s appropriation. This is a salary and match for them. It is funded from general revenue. The agency is requesting about $251,000 for each year of the biennium, and the executive recommendation provides for this. Salaries and match are above the authorized for FY 2023, and this is due to adjustments made during the previous biennium that need to continue. And if you’re okay with me moving on to the Department, okay. So we’re going to move on to the Department of the Military. And the appropriation summary page is on page 316. The agency is requesting about $98 million for each year of the biennium. The executive recommendation is about $97 million for FY 2024 and about $98 million for FY 2025. The executive recommendation provides for the agency request with the exception of various personnel changes, and I’ll go over each one of those.
Rook: The agency has 13 appropriations. Eleven of these appropriations have change levels. We’re going to go to those. The first one with the change level is on page 319, and this is their general operations appropriation. This appropriation is funded from general revenue and a fund balance. The agency is requesting about $8 million for each year of the biennium. This appropriation is above the authorized for FY 2023 due to the restoration of three growth pool positions, request of two positions, an increase in salary and match associated with reclassifications, an increase in the extra help appropriation for help in the maintenance shop during the summer months, an increase in operating expenses due to increasing cost of utilities and an installation of a new phone system, and an increase in conference and travel so employees may attend in-state conferences. There’s also an increase in professional fees for armory renovations and an increase in capital outlay for armory renovations and renovations of other structures on Camp Robinson. The executive provides for the agency request with the exception of the two new positions, various personnel changes, and associated appropriation.
Rook: The next one with change levels is going to be on page 325. This is the federal training site appropriation. It is funded from federal revenue. The agency is requesting about $21 million for each year of the biennium. The appropriation is above the authorized for FY 2023 due to addition of one position, the restoration of two growth pool positions, increase in salary and match associated with reclassifications, and an increase in overtime appropriation and match to help cover staff shortages due to the pandemic and deployment. The executive provides for the agency request with the exception of the new position, reclassifications, and the associated appropriation. Moving on, we’re going to go to the third appropriation with change levels, and it is on page 329. If I’m going too fast, you guys can let me know. This is the Military Family Relief Trust appropriation. It is funded from income tax donations and a fund balance. The agency is requesting about $61,000 for each year of the biennium. The executive recommendation provides for this request. The agency reduced this appropriation level to better align with funding. The fourth appropriation is cash appropriation. You can find this on page 331.
Rook: It’s from a fund balance and a cash fund. These cash funds are derived from rentals and fees for usage and facilities at Camp Robinson and the commercial harvesting of timber. The agency and executive are requesting about $1.2 million for each year of the biennium. The fifth appropriation is on page 333. This is the counter drug asset forfeiture appropriation. It’s funded from a fund balance and a cash fund. It’s derived from the sale of seized assets and are used for operations and training. The agency and the executive are requesting about $164,000 for each year of the biennium. This is an increase of the authorized to better align with funding. We’re going to move on to the sixth appropriation that has changes. And that’s the military support revolving appropriation on page 335. It is funded from a fund balance. This consists of fund transfers and deposits from federal agencies. The agency and the executive are requesting about $240,000 for each year of the biennium. They have reduced this appropriation to better align with funding. The seventh appropriation is on page 337. This is the Fort Chaffee training site appropriation. This appropriation is funded from federal revenue. The agency is requesting about $24 million for each year of the biennium. The appropriation is above the FY 2023 authorized due to an increase in regular salaries and matching associated with reclassifications, a reduction in conference and travel to better align with anticipated expenditures, and the restoration of $2 million in capital outlay for construction projects and to purchase new equipment. The executive recommendation provides for this request with the exception of the reclassifications. The eighth appropriation, you can find on page 339. This is the National Guard Museum appropriation. It’s funded from general revenue.
Rook: The agency is requesting about $155,000 for the first year of the biennium and about $158,000 for the second year of the biennium. The executive provides for the agency request for appropriation only, with no increase in general revenue funding. The ninth appropriation that has changes is going to be on page 341. This is the Arkansas National Guard Youth Challenge program. This appropriation is funded from general revenue. The agency is requesting about $1.5 million for each year of the biennium. This is above the FY 2023 authorized due to an increase in salaries and match associated with reclassifications; an increase in operating expenses for renovation, maintenance, and security upgrades for the barracks and buildings at the Youth Challenge campus; and to cover the increasing cost of meal plans for cadets and to upgrade their current phone system and aging IT equipment. The executive provides for the request for appropriation only, with the exception of the reclassifications, and there is no increase in general revenue funding. We only have two more left. The tenth appropriation is military grants. You can find this on page 344. This appropriation was created last session. The agency and the executive recommendation are requesting $5 million for each year of the biennium. At this time, the agency is still in search of funding and would like to continue this appropriation. The final appropriation with changes is going to be on page 346. And this is the access control building, Camp Robinson. This appropriation is funded from federal revenue. The agency and the executive are requesting about $1.3 million for each year of the biennium. This is a reduction over the authorized for FY 2023– or under the authorized, to better align with funding. And this completes my presentation.
Wardlaw: Representative Wooten, you’re recognized.
Wooten: Thank you, Mr. Chairman. Ms. Rook, this is a question for staff and Kevin may want to answer. Why is there such a discrepancy or difference between agencies and internally as it relates to personnel matching services? In this one, for example, on the page that has the Secretary in it, it’s 25% of the salary outflow pay. On page 319 for $2,454,000 in salaries, and then we’ve got $1.1. That’s 45%. And I’ve noticed that in several budgets. Why is there such a difference? Shouldn’t it all be– don’t we use 28%, Kevin?
Rook: Can I answer that? Thank you. Mr. Chairman. Yes, Sir. If you look on the page right before that, the easiest way for me to show you this. You’ll see on page 318 under where it says the executive recommendation, the very last sentence there says the executive recommendation is different from the agency request because it says various personnel changes, including new positions and reclassifications, are placed on hold for the new administration to review and recommend. Therefore, any reclasses or upgrades have not been recommended in any of these budgets because they are waiting for the new administration to come in. So that will be the difference in salary and match in executive rec and agency request. Does that answer your question, Representative Wooten?
Wooten: No. No, it doesn’t. I understand we’re holding. We went over this in Personnel committee yesterday, but are you saying that that’s the reason, they’ve already increased the personnel management services budget and not increased their regular budgets?
Rook: Yes, sir. The agency has asked for some reclasses and upgrades and since there is a new administration coming in, the executive has not recommended any of those. And that’ll be the dollar differences and the position differences. Personnel committee, as you know, is looking at all of these and does have the prerogative to change that and go with the agency request and recommend the upgrades. If the personnel committee were to wait and go with executive recommendation, there are mechanisms through the Personnel subcommittee where these could be requested at a later date to match accordingly.
Wooten: Okay, a follow up, if I may. On your positions, 38% of the 151 vacant positions are over 2 years old. And yours is one that I found a position when we first started on this down this road that has been vacant since 2008. What is the age of these positions and how many of them are over three or four years old?
Stanger: Scott Stanger, Chief of Staff, Department of the Military. Representative Wooten, what we have done in the last two years have paired those way down. None of them should be older than two years. I have to go back and look at every one of them again individually. However, the Department of the Military is unique in the sense that out of 450 positions that we normally have at our cap level, 330 of those positions are federally funded and either 100% or all the way down to 50/50. And so on the military, they work for a direct military supervisor. And so what we do, is some of those positions we do hold based off of the ever-changing Department of the Army or Department of the Air Force budget. So we try to read the tea leaves every September to see what’s going to happen in October on the Department of the Army and Air Force when they pass the money down to the National Guard.
Stanger: Those requests, those 38%, are from the federal program managers requesting that we hold those positions, and they’re betting on that money arriving. When they hit a certain point, and each one of them is different, we either get rid of those positions, turn them in, or we move them to a different program manager that has the money at the time to fund it. And all that comes funding through the cooperative agreement. And each one of those budget line items, there’s 20 different funding sources, from either the Army or the Air Force. So the representation of those vacant positions we’ve had for up to two years are on the military side.
Wooten: So there’s 72 positions that look like that they’re budgeted, and then there’s 79, I believe, that are not budgeted. Is that correct?
Stanger: That is correct.
Wooten: And so you’re saying that you hold on to those positions because of the Pentagon. Is that what you’re talking about?
Stanger: Yes, sir.
Wooten: To hold on to those.
Stanger: We hold onto them, and then when we realize, generally about two years, that we do not believe on the state side that the federal government is going to come through with the funding, we turn them in, sometimes at the protest of the federal program manager. But we even hit a point that we say we don’t believe that those will be funded again. And then occasionally we have turned those in only to come back six months later to ask for them back when the federal government did provide federal funding to support those positions.
Wooten: One more question, Mr. Chairman, if I may. What about the interest? I don’t see any interest income shown on any of the fund balances, and you have some substantial fund balances. Could you briefly explain to us why you don’t show interest as a funding source when you’re earning interest? Are you earning interest on that money?
Stanger: No, we are not earning any interest.
Wooten: Where do you have the money invested?
Wardlaw: Representative Wooten, we should have that interest breakdown by Tuesday for all agencies. We have requested it, and it is coming. And the committee will have a report on it come Tuesday.
Wooten: Well, can you answer the question relative to, is the money being invested, the fund balances?
Stanger: No, Representative. That money is in a cash account that has accumulated over time from various leases and stuff like that on our military reservations.
Wooten: So we’re not earning any interest on that money?
Stanger: No, we are not.
Wooten: All right. Thank you, Mr. Chairman.
Wardlaw: Senator Wallace, you’re recognized.
Wallace: Good morning, Scott. How are you doing?
Stanger: Good morning, Sir.
Youth Challenge Program
Wallace: Hey, my first term down here, I stayed out at the post and would stay at the bachelor officer quarters. Had a chance to watch your, I call it basic training program out there with our troubled youth. Thought you guys did a great job. I think that you call those leaders, they’re called a youth program specialist?
Stanger: Yes, sir.
Wallace: And I kind of equate that to a combination of a guidance counselor and a drill sergeant. Maybe not quite as tough as drill sergeants in the Marine Corps and other places, but they do a great job. You’re having some trouble with turnover of those guys, aren’t you, due to low salaries?
Stanger: We are. The turnover rate in those positions right now are 38%. They are entry level positions, GS-3s that deal with, for lack of a better term, troubled adolescents.
Stanger: The Youth Challenge program, they are 16- to 18-year-olds that are typically high school dropouts, have had no structure in their life, and they come to our program and we’re the first structure they’ve ever had in their life. So the adjustment for them is quite eye opening. Every 22 weeks we have a new class that comes in. And what we call the cadre, which is the military term for a youth program specialist, the cadre are the folks that are with those kids 24/7/365. They are the hands on parents for those kids that provide the structure, provide organization for most of these kids for the first time in their lives. I’ll be blunt, we pay them GS-3 pay. Now they are funded 75/25. 75% of the money comes from Department of the Army, 25% from general revenue. Four years ago when I first took this job, we asked for an increase to be GS-5s. We thought that was a good place to be. And of course, cost, inflation, everything has gone up since then. And what came out of that arrangement was we had the ability to, within 12 months after you hired a cadre member, that if they were still within good standing, we could increase them. We had in our budget bill then, they could jump up to entry level or top end GS-3 pay, which money-wise feels like entry level GS-5. We thought that might solve the problem. It has not. With the 38% turnover rate, it is hard to get relationships built with these kids. Now, some of this committee members that are here today, two weeks ago, came out and talked to Youth Challenge. And there was a question from a committee member that asked one of our cadets, “What is the biggest impact you’ve had being in this program?” And this male cadet said it was a cadre member, sergeant so and so. He said that is the first time he’s been talked to like a person in his short life. And those are the people that we currently have the highest turnover rate. So that cadre member where we would love to retain them, I can make no guarantee that that person will be here the next class that starts in January.
Wallace: Follow up question, Mr. Chair.
Wardlaw: Yes, sir.
Wallace: I heard you say 38% turnover, more than one out of every three. I’ve been in the military, I’ve been in civilian world and business. I don’t see how any organization can survive with more than a one third turnover. How can we help you?
Stanger: We have asked to increase these positions to GS-5s. Now, realizing these positions are on hold, and I know why. But the agency feels despite that, that gives us enough flexibility based off federal funding and future federal funding to maintain the people that we hire. Because once we hire them, we have to put them through a six week training process and we have some leave during that training process because they realize what they’re getting into. I mean, they’re getting into an environment where these kids generally don’t want to be there in the first place. If you’ve been around some angry adolescents, you know it’s kind of tough. And so we seek out certain skill sets, but that’s still kind of tough to do when, as of right now, you can leave the program and then go make the same pay being a cashier at Target and deal with nothing but adults and not angry kids. So we went through that process a few years ago and the ask is the same for this one.
Wallace: Thank you, Scott. Thank you, Mr. Chair.
Wardlaw: Representative Dotson, you’re recognized.
Dotson: Thank you Mr. Chair. So especially with Youth Challenge program, most of that is federal funding, if I recall correctly. Is it about a 3-1match?
Stanger: That’s correct. It’s 75% Department of the Army, 25% from the state.
Dotson: And some of these additional positions that you were requesting, was that in that program or other programs?
Stanger: There was an additional one in that program and then the other ones were five additionals that were just smattered around the department. The other ones for some of the departments, two years ago, Department of the Army had cut us off their IT backbone. Department of the Military has been living off Department of the Defense’s IT system for over 20 years. And then two years ago they said, we’re not doing that across the 50 states and 4 territories. And so we built one out of hide. Well, as we’re learning and more requirements, especially at Youth Challenge where these kids come in with different needs across their academic career, we had to build a computer lab out of hide and several other things so they can do some unique online classes that obviously we don’t offer there at Youth Challenge. Because of that, we bought that stuff four years ago. Obviously there’s some turnover there. You have to update the equipment, there’s life cycle stuff, and in a position to be able to help there too.
Dotson: So would that one as well be a federally funded program? Is that a federal employee?
Stanger: Anything we do with Youth Challenge is federally funded. That is correct, 75%.
Dotson: So regardless of whether or not we approve this now or later, the Feds are going to bear the majority of the cost of these positions.
Stanger: Yes, sir.
Dotson: Okay. Thank you.
Wardlaw: Co-chairman Rice.
Rice: Thank you. On the Youth Challenge, clarify for me. And I got to see that up close number of years ago. Very impressed with the program and have kept up with it through legislative committee. These kids are there voluntarily is my understanding, correct?
Stanger: Yes. Yes, Sir.
Rice: Okay. Some of them come in with different degrees of problems. It’s a tough love program, a lot of life changing stuff. And I talked to the kids there and some very impressive young people. What do you do if you have a child with certain troubles that you or somebody sees is heading in a deal that just discipline doesn’t do. What is available there?
Stanger: Sir, what we’ve done this year, we started a new program that is inherently unique to Arkansas. The model that is funded by the Department of the Army for Youth Challenge is pretty much standard across the United States. We took it a step further because we recognized some of those problems. And the way the program works, very briefly, is it is a 22-week in-resident course followed by 12-month out of resident mentorship program where we go out and recruit a nonfamily member to talk to these kids, take them out to lunch every once in a while, interact with them and report back to us how they’re doing for the next 12 months. The idea behind that, other than keeping track of the kids, especially the ones that are 17 or 18 that do not go back to school, the idea is once they’ve been through the program, the reason the Department of the Army funds it is because they go recruit them. What we’ve done for the post-residential is also partnered with Job Corps and another program called Skills to Launch to get these kids that are not going to go back to school into a career producing program using some kind of trade school or something like that. US Job Corps is absolutely free. Skills to Launch is free. So we’ve been looking for those kind of programs. That is post-residential.
Stanger: What is unique that we’ve done this year is we started partnering with organizations that wanted to come in in-resident. So when you have a kid that comes in and is not responding to the cadre, we bring in other adults. Just recently we went out and some of the kids said, “Hey, I don’t even know how to ride a bike.” We took some of the state money from our cash account and went out and bought bicycles for these kids. And we brought in a mountain biking club because we have mountain bike trails out there, that are all interacting and teaching these kids this kind of stuff, and they’ve responded. Another great organization we partnered with is 100 Black Men. They’ve come in and have helped tremendously with the two male platoons talking to those kids. And we have seen some results of these kids responding to people, other adults that have no connections to them, that are just there to help these kids minus the cadre that’s telling them, “Wake up, take a shower, go eat”, and basically running their lives. Like you said, sir, that tough love. Some of the kids respond to that instantly, other ones don’t. So we brought in what we call residential guides, which are just mentors, not to be confused with post-residential mentors, to see if these kids would respond to another adult. And so far, that program is paying dividends. It’s the first time we’ve done it, and we plan on continuing doing it. And I think we’re the only state out there, the 40 Youth Challenge programs that does that right now.
Rice: Thank you. I appreciate that explanation. I appreciate your program. Thank you.
Wardlaw: Representative Springer, you’re recognized.
Springer: Good morning. Thank you, Mr. Chair. Good morning, Colonel Penn. I was one of the representatives that visited your site a couple of weeks ago, and I too was impressed with your Youth Challenge program. My question has to do with the follow up with respect to Representative Wooten. He was talking about these certain positions and personal service matching. On page 325 of your appropriation, I see that the number of positions that we have here from 2022 to 2023, the recommendation remains the same for 2023-2024, 96 positions. I see how the amount has gone up approximately $700,000 and I was just wondering why or how did that come about, that amount? You have an increase from 2023 from $5.1 million to $5.8 million in personal services matching.
Stanger: Yes, ma’am. A chunk of that is with extra help positions.
Springer: So that does include– well, the extra help position remains the same, too, basically.
Rook: May I answer that?
Springer: Yes. I’m trying to follow.
Rook: The extra help positions is the 96 positions. They are requesting 354 positions, which is three positions over the authorized for FY 2023. The executive is requesting the 353. So that extra amount that you’re seeing in personal services will be for those extra positions and other things that need to continue from the year before.
Springer: Okay. All right, thank you.
Rook: You’re welcome.
Wardlaw: Representative Ennett, you’re recognized.
Ennett: Thank you, Mr. Chair. Major General Penn, how are you doing? Did I say that right?
Stanger: Major General Penn, he’s the secretary.
Ennett: I’m sorry. I’m so sorry. I’m nervous.
Stanger: No, he couldn’t be here today. He got tied up with a– we have a unit that’s deploying and–
Ennett: Okay, forgive me for that.
Stanger: You’re fine, ma’am.
Ennett: So a couple of weeks ago, we had a committee meeting there at Camp Robinson. That was my first time visiting the Arkansas Youth Challenge. And it’s an impressive program. You all are doing a great job there. When I was speaking to some of the staff members, they did mention that having a social worker might help with the program. So my question or comment is if the state could consider hiring somebody, a social worker, to work with these kids, because some of these kids come to this program with a lot of challenges. And when I was reading the bulletin board in the classroom, there were some pretty graphic descriptions of things that were done to some of these students. And so I’m just asking if the state could consider hiring a social worker for the kids at the Arkansas Youth Challenge. Thank you.
Stanger: Yes, ma’am. What you’re referring to is, in one of the English classes, they did a creative writing assignment. And this is anecdotal. And some of these assignments were shared and put up on the bulletin board in the female barracks. Without going into details, some of them were pretty graphic. They were scary. They were abusive. And most of them were focused back at their parents. We currently do not have a social worker, and that would be a great asset to the team because one of our greatest fears and the reason we try to get these kids that aren’t going to go back to school, which is the first choice, or join the military, which is choice number two, into some kind of trade school, some kind of program that they can wind up with a certificate to get a job. Part of that is to keep them out of the environment they came from. Some of them just don’t want to go back. We’ve had some parents that refused to come pick their kids up when it was over. We have seen all kinds. And if you could see these kids when they first come in compared to how they look 22 weeks later, the ones that stay, the changes are phenomenal. However, some of them bring some really heavy baggage, ma’am. And so a social worker is something we do not have on staff that we think could pay big dividends for these kids that come and change every two weeks that could also help us bring in some of those in-resident guides that we’ve done on our own to include helping with the post-residential mentors that watch these kids for the next 12 months after the fact because sometimes, those are the only adult guidance, and adult family members– and they’re not family, but they wind up that way– often, that these kids have. And then, especially the 17-year-olds, they’re going to turn 18 within that next 12 months regardless. Some do it in the class itself, and now they’re out there on their own, and they have no idea how to be an adult.
Wardlaw: Representative Meeks.
Meeks: Thank you. I’m way, way over here to your far, far right. There you go. Good morning. I’m going to switch gears here just a little bit and ask about the $200,00 increase in operating expenses. The reason that you give for that is cost of utilities and the new phone system. And then you’re also asking for an increase in capital outlay by about half a million dollars for renovation in other structures. I guess my question is that $200,000 increase in utilities seems like it’s a huge jump. And I understand you have a lot of buildings out there. So my question is, is that renovations that are ongoing, is that to improve the energy efficiency of these older buildings? Being a former military man myself, a lot of times those buildings were not built with energy efficiency in mind. Is that going on in order to try to lower those expenses in the future?
Bathrooms for women
Stanger: Yes, sir. We have 54 armories across the state. The average age of those armories are 35 years old. Obviously, some of them are in disrepair. The big issue we have with that, which includes that half a million dollar outlay, is an additional match because any armory maintenance we do or modernization is a 50/50 split with the federal government and us. Out of those 54 armories out there– like I said, the average age is 35– in the state, we’ve historically instill, prominently instill, combat arms units, which means 35 years ago, the military did not let women in those units. When those armories were built, they were not even built with female bathrooms, which with the current level of funding, with the match we get from the state, we can do about four armories a year. And we are in desperate need because if you look at the total part of it, it’s about an $18 million list just to bring these armories up to standards where we can have, now that we have females in those units and in those formations. It sounds like kind of, in a modern-day, silly problem to have with bathrooms, but that’s currently where we sit. Now, we could speed that process up if we didn’t have other things that would trump that. So, for instance, when we have a leaky roof and we have soldiers out there catching water in 5-gallon buckets, which happens, we immediately have to swoop in and spend that same money that we were going to do renovations and upgrades to– and, literally, our focus this last year has been female bathrooms– we have to put a new roof on. And construction is not cheap. And future construction dollars always goes up.
Meeks: Have you not spoken to the governor about possibly getting the funds to get that taken care of out of his rainy day or surplus?
Stanger: We have in the past, sir, yes. And he has done some of that.
Meeks: Okay. It sounds like we may need to invest a little bit more based on what you’re telling us.
Stanger: The issue with it though is, if the state wanted to, and we don’t recommend this, to pay 100% of the bill, we could absolutely do that. But what happens is every federal appropriation from the national defense appropriation that comes in, gives the National Guard side of the house the money, the federal match, to be able to do that over time. And so we’ve got this programmed out over time. But to play catch up and to deal with the female bathroom, our current problem, we come up short on state match. So this ask for the state match helps us catch up with that into the point that we have, in the past, turned down federal dollars because while the federal government is real nice about that, their budgeting system is pretty tough and they just like to dump money at the last second. Well, it’s really hard to react.
Meeks: Right. So what you’re telling us is this will catch us up with the federal match so we can match what the federal government’s offering, but anything we want to do beyond that to try to help take care of these problems, the state would have to cover the entire cost.
Stanger: Yes, sir, anything beyond a federal match. That is correct. Because the rule with an armory is the federal government builds them. Now, we have some brand new ones out there, and the federal government maintains them for the first 10 years. After those 10 years, all the titles revert to the state and they become state property at that point. And then that’s when the 50/50 match comes in. So we’re talking the older armories here.
Meeks: And then final question, is there any opportunity maybe to merge some of those armories to downsize?
Stanger: Yes, sir. Yes, there is, sir. And we have done that in the past. The issue with that is, when you do that, you also condense and constrict the recruiting areas for these units. And the National Guard is no different than what’s been going across the nation, even on the active duty side where they’re hurting. So anytime we do something like that– and sometimes we do do that based off the age of the armory and other outside forcing functions. If the age of the armory is just so old– we’ve had some really old ones; we’re talking 60, 70 years– it’s not worth renovating, we do consolidate. But right now, the recruiting environment is tough across the board, and the National Guard is a microcosm of society. So the active component struggles with recruiting right now. Obviously, we do that, too. Now, we do a little bit better here in Arkansas than a lot of the other states when it comes to recruiting. But the more you consolidate, the more you condense your recruiting areas. And then you’ve got guardsmen that are driving farther to come to drill.
Meeks: Right, right. Having been a former reservist, I definitely know where you’re coming from with that. So thank you for your service. Thank you, Mr. Chairman.
Wardlaw: Senator Elliott, you’re recognized.
Elliott: Thank you, Mr. Chair. I just wanted to follow up real quickly on the discussion between you and Representative Ennett. And I’m wondering if you are convinced the social workers would be helpful, and I agree with that. Will you consider, or have you decided, if you will request funding for a social worker come the next administration, regardless of who that is?
Stanger: Yes, ma’am.
Elliott: Okay. Thank you very much.
Wardlaw: Senator Stubblefield, you’re recognized.
Stubblefield: Thank you, Mr. Chairman. Scott, yeah, I’m over here. I, too, want to thank you for all the work you do with this Youth Challenge. I have a couple of questions I want to ask you. First of all, I’ve always been someone who believes the greatest gift you can give someone is a second chance. And I was just curious as to whether or not is there a spiritual component involved with the Youth Challenge up where you’re working with these youth?
Stanger: Yes, sir. Our military chaplains come in, and they do church services with the chaplain for the kids that want to. We’ve also partnered with outside churches that want to come in and volunteer and do that same kind of thing. That task is usually given to our military chaplains that work on post because they’ve got those connections. But we do do church services and outreach in that area.
Stubblefield: And the participation in these programs by these youth, is it substantial or– I mean, the ones that decide they want to go voluntarily?
Stanger: Yes, sir, the vast majority of them. There are several– there again, if you want later, I can share some of these letters and some of these essays that they wrote that that is brought up, some of their prayers, and some of their other things. But I have no doubt– I was a young soldier 33 years ago, too – that a good way in basic training to get away from the drill sergeant was to go to church. So I’m not saying there’s not some of that there either, but definitely, the participation rate of every class into the chapel services and that kind of stuff are historically high.
Stubblefield: All right. Thank you again for all you do.
Stanger: Thank you.
Stubblefield: Thank you, Mr. Chairman.
Wardlaw: Representative Dotson, you’re recognized.
Dotson: Thank you, Mr. Chair. And I stepped away for just a second, so you may have answered this. I apologize if you have, but with regards to the social worker, is that part of your request right now in this, the one that’s needed for the Youth Challenge?
Stanger: The position itself, the position request, the position is not in there. We’ve requested funding. And so what we’re going to have to go do– because this came up after the budget submission. And then, I’ll be honest, the essays we got were a game changer for us and immediately launched into that. And so that will be coming in for the session.
Dotson: So that would be specifically with regards to the Youth Challenge appropriation on page 341?
Stanger: Yes, sir.
Dotson: Talking about you would need instead of the 19 positions, you’re requesting a 20th one there?
Stanger: Correct, sir.
Dotson: Okay. I’ll have a motion at the appropriate time, Mr. Chair.
Wardlaw: Representative Crawford, you’re recognized.
Crawford: Thank you. My question is on 328-329 on the Military Family Relief Trust. The agency requests a reduction of $137,128. And it says this is because to align with the funding. In watching all of this budget, very few people align with the funding. They just ask for it. So my question is, why are we decreasing the assistance for families of deployed soldiers rather than increasing that?
Stanger: Ma’am, what that program is, is we gave a $100,00 grant last year to the Arkansas National Guard Foundation for them to cover that process. And so what we were doing in the past, it was a check off through income taxes. The money was coming to us, and the department was having to go through a process to determine eligibility for those soldiers and airmen that were deployed or in some kind of need. We’ve had houses burn down and that kind of stuff. The thought two years ago was to be able to give that money as a grant to the National Guard Foundation, which is a nonprofit. They operate on post, and they are much better suited to do that line of work. And so that was approved. We gave the money to them, and they actually do that function. However, over time, the check-off system is still in place, and some of that money does roll into the department. However, we don’t spend it like that anymore. So we requested a decrease of appropriation to align with funding. And then when that pot builds back up, we would come back and ask for authority to grant another grant to the National Guard Foundation that is actually doing that process now.
Crawford: Okay, thank you.
Stanger: So there has not been a decrease in any of the help.
Crawford: It’s just been moved.
Stanger: The process has changed and the money’s been moved. That’s correct.
Crawford: Okay, thank you.
Wardlaw: Representative Wooten.
Wooten: On your building maintenance, you’re doing four a year?
Stanger: Yes, sir.
Wooten: That’s going to take 13 and a half years. That’s going to mean those buildings are going to be 50 years old by the time you get to the last one.
Stanger: Yes, sir.
Wooten: Have you all looked at, or would you consider asking or going along with Representative Meek’s suggestion that you ask the new administration to fund $10 million, $18 million, whatever you think, in order to go ahead and get that done? Because the longer you wait, the more it’s going to cost.
Stanger: Yes, sir. We are considering that.
Wooten: All right, thank you. Thank you. Mr. Chairman.
Wardlaw: Representative Holcomb, I’m recognizing you for a motion.
Holcomb: Yes, Mr. Chair. I recommend that we accept the agency rec.
Wardlaw: Got a motion and a second. Any discussion on the motion? Seeing none, I will tell the committee that there is a second part of doing this agency rec. Tuesday, we will get the personnel report, and there will have to be an amendment to that report. Staff has drafted a motion and handed it to the member that requested it. So we will have that done on Tuesday. So I just want you guys to remember there is a second part to this motion as agency rec. So with that, all those in favor say aye. All opposed? Ayes have it. With that, we’ll move on to the audit funding for Highway. If you guys would, introduce yourself for the record and you’re recognized to introduce the finding.
Sanders: I’m Christie Sanders, Legislative Audit.
Morgan: Don Morgan, Legislative Audit.
Sanders: I’ll go over the finding that’s on page 16 of your agenda. It was presented, the full committee, for the audit of the Department of Transportation in the annual financial comprehensive report. Arkansas Code Annotated 19-4-1502 requires an agency to keep and maintain a record of property owned by the agency. Arkansas Department of Transportation failed to maintain a record of right-of-way property owned. Failure to maintain a complete record could lead to the misuse of misappropriation of assets. We recommend the agency develop and maintain a record of all right-of-way property owned with costs that support the balance reported in ASIS. That completes this finding.
Morgan: The Arkansas Highway Employees Retirement System for the year ended June 30, 2021, contained one finding. The Highway Employees Retirement System reported to us an overpayment of retiree benefits. The death of a member that occurred in January 2021 was not reported to the system and was not discovered until April of 2022, resulting in an overpayment totaling $61,561. Mr. Chair, that concludes our findings.
Wardlaw: Thank you. I’ve got a question on that first finding. What was the agency’s response?
Sanders: They were working to update and reconcile the complete ongoing record of right-of-way property, which I can say this was done for the June 30, 2021, ACFR, like I said. But we have since done their departmental. It just has not been completely through the review process. And I can say that they have, at that point, had brought it up to current with their balance.
Wardlaw: Okay, thank you. So, members, any questions for our audit staff? Seeing no questions, Billy, we’ll recognize you. And if the director and her staff will make their way to the table. Thank you.
Morgan: Thank you, Mr. Chairman.
Department of Transportation
Anderson: Thank you, Mr. Chair. Members, we’re in the Transportation budget manual. It’s a separate manual at your desk. It looks like this. So this is Arkansas Department of Transportation. The Arkansas State Highway Commission is responsible for maintaining and improving the state highway system, including the planning, design, and management of highway projects and administering the state Highway Employee Retirement System. The Commission has five members appointed by the governor with advice and consent of the Senate for 10-year terms. The Commission became a constitutionally independent agency with the passing of the Mac Blackwell Amendment. That’s amendment number 42 in 1952. On page 1 is the agency position usage report. On page 2 is the organization chart, but I believe staff has handed out an updated chart, so you should have that at your desk. On page 3 is their audit findings for fiscal year 2022. On page 4 begins their history, and it continues on to page 5. On page 6 is their employment summary. On page 7 are state contracts awarded to minority-owned businesses. And on page 8 is highway user revenue distribution. The bottom of the left column shows Arkansas highway users produced $879.3 million in revenue in fiscal year 2022. That’s primarily– or about 62% of that revenue was from the motor fuel tax, which produced $543 million that year. That’s the first entry in the column on the left.
Anderson: The next large item was vehicle registration fees. That makes about 17% of the total. The column on the right shows where revenue was distributed. The State Central Services Fund, cities and counties, ARDOT, State Police, and ADEQ all received a share of state highway revenue. A little over $575 million went to the State Highway Department Fund, which is 65% of the total state highway user revenue. Next page is page 9, this is the State Highway Department fund. The Department’s main operating fund is a mixed fund that takes in federal revenue, special revenue, interest, and transfers. The fund collected $1.37 billion in fiscal year 2022. The Federal Highway Trust Fund accounts for $718.5 million of that total, which is about 53% or more than half of all the revenue that went into the fund. Highway state revenues, which include the state motor fuel tax, is the next largest source and accounts for $413 million. That’s about 30% of the total. Act 416 funds increased the motor fuel tax. That was 3 cents a gallon, and diesel taxes, 6 cents a gallon. It added registration fees for hybrids and electric cars, and it directed transfer from the gaming proceeds or from the restricted reserve fund, and it produced $95.4 million for the fund. The fund also received $50 million from the state surplus, $35 million from natural gas severance, and $29 million from Act 1 transfer funds. That’s the Arkansas Highway Improvement plan of 2016, which was primarily interest earnings from the Securities Reserve Fund. On page 10 is the Department’s appropriation summary. The Department has 12 requests. Five sections have a change level. The total authorized budget in fiscal year 2023 is $2.8 billion. The Department requests $3.2 billion in appropriation for fiscal year 2024. That’s about 12% over authorized. And the department requested $3.4 billion in appropriation in fiscal year 2025. That’s 22% over authorized. On page 11 is the first section. This is operation section, and it provides for the department’s overall administration and construction, maintenance, operation of roads. It’s supported by the State Highway Department Fund. The total amount authorized in 2023 was $1.73 billion, and that’s the third column in that table.
Anderson: The request in 2024 is $2.4 billion. That’s a 39% increase. And in 2025, it’s $2.6 billion, which is a 54% increase. If you look at the line items where the change levels begin, you start with regular salaries. $200,000– I’m sorry, $200 million was authorized in 2023. The request in 2024 is for $240 million. That’s a 20% increase. And then in 2025, it’s 30% over authorized. That’s $260 million. This is due to salary match adjustments carried over into the new biennium, but also when the half-cent sales tax was temporary, the Department relied more on consultants. With the sales tax becoming permanent, the Department plans on bringing those consultants in-house. The next line is personal services matching. $70 million was authorized. The request in 2024 is $110 million. That’s a 57% increase. And in 2025, that is 71% over authorized at $120 million. And this is because previously, their group insurance was paid out of operating expenses and they’re moving this expense to personal services matching to correct their budget. If you look at operating expenses, $240 million was authorized in 2023. For 2024, $250 million is requested. That’s a 4% increase. And then $260 million in 2025. That’s an 8% increase over authorized. Professional fees and services in 2023 was authorized at $80 million. There’s no change level for 2024, but in 2025 it goes up 13% to $90 million. Capital outlay is $1.15 billion. That’s what was authorized in 2023. In 2024, the request is for $1.6 billion. That’s a 58% increase. And then in 2025, it goes up to $1.8 billion, which is a 77% increase. Transportation grants and aid was authorized at $40 million. That holds steady for 2024, but in 2025 it goes up 25% to $50 million.
Anderson: These line items are all increasing due to inflation, but also because of the half-cent sales tax that will be deposited into this fund beginning July 1, 2023. Looking at fund sources– that’s the table at the bottom– the fund balance going into fiscal year 2022 is $323 million. The fund collected general revenue in the amount of $79 million. That was a surplus of $50 million, the securities reserve transfer and other proceeds from the Arkansas Highway Improvement Plan of 2016. Federal revenue shows $701 million. Special revenue shows $446 million. That’s primarily from motor fuel taxes and registration fees. Act 416 funds show $95 million. That’s the increase in motor fuel taxes and registration fees on electric and hybrids, and also gaming and restricted fund transfers. Non-revenue receipts show $34 million and other shows $2.6 million. That’s mostly interest. The Department has spent $1.4 billion in fiscal year 2022, and that leaves a balance of $274 million going into fiscal year 2023. If you look on page 12, that’s the next request. This is for the Arkansas Four Lane Highway Construction and Improvement Bond Account Program – this is also known as the Connecting Arkansas Program that’s from the half-cent sales tax by Amendment 91 that is sunsetting. It’s supported by an account within the State Highway Department Fund. If you look at fiscal year 2023 authorized, the total is $800 million. The request for 2024 is $435 million, so that’s down 46%, and they hold that across 2025. Looking at the individual line items, operating expenses was authorized at $10 million. The request is for $5 million, so that goes down by half. Professional fees and services was $25 million authorized. The request was up 20% to $30 million. Capital outlay is $610 million authorized. In 2024, the request was for $400 million. That is a 34% decrease. In debt services, $155 million. In 2024, the request is zeroed out and the same for 2025. And this is because the temporary half-cent sales tax, the support to Connecting AR Program, is winding down and will sunset in June 2023. However, they do still have projects in the pipeline. And the cost for those projects have increased, so that’s why the professional fees and services line item has gone up 20%. Looking at fund sources, the fund balance going in the fiscal year 2022 is $616 million. The fund collected special revenues in the amount of $253 million. Again, that’s that Amendment 91 sales tax. Non-revenue receipts show $1.4 million. Those are federal grants reimbursements. And other shows $3.5 million. That’s interest. The department spent $332 million in fiscal year 2022 and that leaves a balance of $542 million going into fiscal year 2023. The next page is page 13. This is the State Aid Road System program. This appropriation section provides funding to counties. It’s supported by a special revenue fund. The total authorized in 2023 is $34 million. There is no change level for the biennium. If you look at funding sources, the table at the bottom, the balance going into fiscal year 2022 is $36.8 million. The fund collected special revenues in the amount of $21.2 million. That’s motor fuel and diesel fuel tax of 1 cent a gallon. Non-revenue receipts showed $2.1 million. Those are county matching funds of 10%. And the department spent $24.6 million in fiscal year 2022. That leaves a balance of $35 million going into fiscal year 2023. On page 14 is the State Aid Street program, and this section provides funding to cities. It’s supported by a special revenue fund similar to the last request. The total offer is $34 million and there’s no change level for the biennium. Looking at fund sources, the balance in 2022 was $23.4 million and the fund collected special revenues in the amount of $21.2 million. This is the same amount allocated for it for motor fuel and fuel tax of 1 cent a gallon. Non-revenue receipts show $3.97 million. These are city matching funds of 10% by cities over 25,000 in population. The department spent $19.3 million in 2022 and that leaves a balance of $29.2 million going into 2023.
Anderson: The next request is on page 15. This is the Arkansas Public Transit Trust Fund program, and this section provides funding for local public transportation operations. It’s to purchase vehicles, equipment, facilities and operations. It’s supported by a trust fund. In 2023, $6 million was authorized. There is no change level for the biennium. Looking at funding sources, the fund balance going into 2022 was $4.6 million. The fund collected special revenues in the amount of $5.3 million. This is a rental vehicle tax of 5% of rentals of 30 days or less. 75% of that tax goes to ARDOT and then 25% goes to schools. Non-revenue receipts shows $7,000, and that’s federal matching grants. And the department spent $3.67 million in 2022, which leaves a balance of $6.2 million going into 2023. The next request is on page 16. This is the Commercial Truck Safety and Education program, and it provides for an education program for commercial trucks. It’s supported by a special revenue fund. The authorized amount in 2023 was $7 million. There is no change level for the biennium. If you look at fund sources, the balance going into 2022 is $6.9 million. The fund collected special revenues in the amount of $1.9 million. This is the first $2 million of a registration fee on class seven trucks or international plan vehicles with K tags. Non-revenue receipts in the amount of $122,000, and the department spent $440,000 in fiscal year 2022. That leaves a balance of $8.5 million going into 2023. If you look at the page 17, that’s the next request. This is a Road and Bridge Repair program and this section provides assistance to counties in the Fayetteville Shale area with active natural gas wells affected by heavy equipment. It’s supported by a special revenue fund. Looking at the state line item, $2 million was authorized in 2023. The request in 2024 is $7 million. So that’s tripled, and it’s the same request in 2025. This is because production of natural gas wells in the Fayetteville Shale has ramped up. If you look at your tax handbook on page 188, it will show the collections from 2019 to 2020 were down 64%, but production was up 37% in 2021 and then up 233% in fiscal year 2022. Looking at fund sources at the bottom of the page, the balance going into fiscal year 2020 was $108,000. The fund collected special revenues in the amount of $2.95 million. That’s again, the 5% of natural gas severance tax proceeds. The other 95% goes to RA, but $675,000 is sent to general revenue. The department spent $2.77 million in fiscal year 2022, and that leaves a balance of $286,000 going into fiscal year 2023.
Anderson: The next request is on page 18. This is the NOAA radio system and it provides utility costs to towers on Department of Transportation property near Star City, Arkansas. It’s supported by a general revenue fund. What was authorized in 2023 was $4,000 and there is no change level for the biennium. If you look on page 19 is the next request, it’s public transportation programs and this section provides funding for local public transportation programs. It’s similar to the Transit Trust Fund program. However, this section is supported by general revenue, and it’s designed to assist public transportation dependent persons. In 2023, $350,000 was authorized and there’s no change level for the biennium. On page 20 is the Highway Employees Retirement System, and this section provides for the operations of the Highway Employees Retirement System. It’s supported by a trust fund. The total authorized in 2023 was $200 million. In 2024, the request is for $220 million. So that’s a 10% increase. And then in 2025, the request is for $240 million, so that’s 20% over what was authorized. Looking at operating expenses, $20,000 was authorized for that line item. The request is for $100,000 in 2024, and it’s the same in 2025. That’s five times what was authorized. Professional fees and services is $12 million. In 2023, the request for the biennium is $15 million. That’s a 25% increase. Benefits was authorized at $184.9 million. The request in 2024 is for $200.9 million. That’s a 9% increase. And then in 2025 the request for $220.9 million. That’s a 19% increase. If you look at refund reimbursements, $3 million was authorized. The request is for $4 million. So it’s a 33% increase. And this is all due to possible increases in retirements that could result in increases in the distribution of benefits.
Anderson: If you look at fund sources similar to other retirement systems, the assets are kept in investments and funds are drawn down as needed to pay for system costs. But the trust fund did pull in $137 million. That was what was collected in 2022, and this comes from investment income, contributions from employers and employees. Page 21 is the next request. It’s the Intermodal Facilities Grants program and this provides grants to those existing intermodal authorities. That’s Central Arkansas, Little River County, Northeast Arkansas Regional, River Valley, Southeast Arkansas Regional, Southwest and Western. It’s supported by an account in the department’s main operating fund. In 2023, $525,000 was authorized. There is no change level for the biennium. The other line shows $525,000 was collected by the fund in fiscal year 2022. By code, the first $525,000 of interest on the State Highway Department fund is sent to this account. On page 22 is the next request. It’s the Transportation Related Research program. They make grants to publicly funded institutions of higher education. The scope of the fund was expanded in the last session to include workforce development. It’s supported by a miscellaneous fun. Looking at grants and aid, $2 million was authorized. In 2024, the request is to decrease this by 25% to $1.5 million, but then it ramps back up to $2 million in 2025. And this is because they tend to allow the fund to accumulate balances before paying out a grant. If you look at fund sources, the fund balance going into 2022 was $90,000. The other line shows $500,000 was collected. And again, by code, the next $500,000 in interest is sent to this research grant program after the first $525,000 is sent to intermodal facilities. The department spent $0 in fiscal year 2022, and that leaves a balance of $590,000 going into 2023. Mr. Chair, those are all the appropriation requests from the department.
Wardlaw: Okay. If you all would introduce yourself for the record, and Co-chairman Rice has a question.
Tudor: Hello. I’m Laurie Tudor, the Arkansas Department of Transportation director.
Patton: I’m Patrick Patton, the CFO for ARDOT.
Woods: I’m Crystal Woods, the head of human resources for ARDOT.
Rice: Thank y’all for being here today. Director Tudor, in subcommittee meeting yesterday you mentioned– I don’t know whether the term was local or city- county– we’re getting more revenue because of the increased highway funding. So the portion they get, 25%, whatever, I guess, is what you were talking about in there?
Tudor: Well, what I’m talking about as far as our local programs has to do with federal funding, grant funding that the locals are getting now with the new highway legislation.
Rice: If you can pull your mic a little bit closer to you, I think you– there you go. That’s good.
Tudor: Is that better?
Rice: That’s good.
Tudor: All right. For our local programs, what we do now, we have several federal aid programs that we guide the cities and counties through. We have the Transportation Alternatives program. We have Rec Trails program. We have the grant programs that are made available by the new highway legislation, the IIJA, that the cities and counties now can directly apply for and get that funding. And then as the DOT, we try to help them navigate through all the regulations and manage their grants to keep them from losing any money. We also have some internal programs. We have our Intersection Improvement program. We have a partnering program. We’re partnering with our local agencies to do highway improvements that they need but they don’t have the funding for. And they come to the table to accelerate those projects by providing either swapping some state highways for city streets or possibly bringing some money to the table. In Arkadelphia, for instance, we just did a groundbreaking. The City of Arkadelphia tax and sales and brought $8 million to the table. We let the contract, it was a $56 million contract for a bypass around Arkadelphia. And we work with those local agencies as they come to us and try to improve their city or their county. So those are the kinds of things that that local agency division will take care of, will be a better partner with our local agencies.
Rice: That’s kind of where I was going with that. I wanted to make sure you’re able to do that, even if it’s not federal part of it, too.
Tudor: Right. Right.
Rice: You can do that because, again, they’re getting some more monies in– they’re never going to get enough– but they’re getting some more monies. And with the expertise of ARDOT, you’re able to help them with some of their planning?
Tudor: Absolutely. We know how to navigate through that federal highway regulation system, so we help them to do the same.
Rice: Very good. The other question I had and have asked at different times in past years, on the federal funding, I don’t know if it’s USDOT or whatever it is, I asked numerous times about what we agreed to to get certain grants and all that. Is there any type of report that you all do annually or anything that shows any of those type grants and what’s required, such as barriers in the middle of the highway or some of the programs they have to lower fatalities? Is there anything that you have that you all do annually that’s something we could see?
Tudor: Of course. I think, for instance, we do a lot of– our highway safety plan is a requirement by the Federal Highway Administration and it lines out how we’re going to reduce crashes in the state of Arkansas and how we’re going to try to reduce our crash rate. And we put in there our proposed, how are we going to do that? And that’s a requirement by the Federal Highway Administration. We work closely with them to get a plan in place that they will approve, and then from that plan we move forward. So I can provide that kind of thing to you to show you how we map out how we’re going to spend that federal money as we move forward.
Rice: And then in conjunction with that, on like highway police which works closely with DOT or are they considered a state DOT? I mean there’s so much federal comes in– I’m not saying money– so much federal regulation is part of their job. And what I’ve expressed to you and in committee before is concerning. Some states seem to just almost turn it over to USDOT and mirror whatever they want them to do in other states. And I’ve been concerned in Arkansas and have expressed that, that we keep as much of our state regulation and authority that we want rather than just do what they want done because they’re sending the dollars over.
Rice: Is there anything in a report that shows a breakout of highway police? I see the director’s personnel deal, but we don’t have anything to show separate out. Is their budget up quite a bit?
Tudor: No, sir. The money we receive from the federal government for our highway police is for commercial safety programs. And we do have reports that show you how that’s broken out and how we spend that money. And from that amount of money, we have a goal of so many stops per year to do a safety check on our commercial motor vehicles, just a sampling, but to keep everybody on their toes, to keep the brakes in line, to make sure their vehicles are safe and they’ve got their CDL and all of those things. But we are careful to make sure we don’t allow the federal government to tell us how to work the highways.
Rice: Not too many years ago, we got into a lot of stuff where it was subjective in what they call commercial, high school kid or early college kid driving a truck with a trailer and a horse. And they’re saying that’s commercial. And all they were doing is barrel racing, and it’s running them out of business. But we had some authorities doing that.
Tudor: That’s right.
Rice: And that’s what I don’t want to give up some of that stuff even if a federal may say different.
Tudor: I have to give a shout out to Representative Wardlaw that helped us to get our state law where that’s not happening anymore. But once you cross the border, then you end up in a different situation. But as long as you’re within the state of Arkansas, he carried that legislation for us and that’s no longer a problem.
Rice: But there’s other areas like that that seem small but do creep in if you don’t keep on your toes, as you say, with the federal funding.
Tudor: We try to keep that balance. And we do the best we can and we’re always open to hear from any of you and all of our legislators as you hear from your constituents. Keep the roads safe but not be overreaching what we’re required to do.
Rice: Okay, thank you. Thank you, Mr. Chair.
Wardlaw: I have a couple of questions. The federal aid program you talked about a few minutes ago with Senator Rice’s questions that the counties are eligible for, do you know how many counties have taken advantage of that program?
Tudor: I don’t know off the top of my head. We’ve had–
Wardlaw: Can you get that to the staff?
Wardlaw: The other question was, I know for hearsay that there’s a new intermodal coming. If a new intermodal is put in place, that money that’s being pulled from the interest that we talked about while ago, is it divided by that new number at that point? Is there any appetite to raise that so that that division stays the same as it is today to each intermodal? So it’d take new statute, correct?
Tudor: Yes, it would take new statute. I’ll have to defer whether or not there’s appetite for ARDOT to increase the amount in that fund because that would take away from other activities. But I’m willing to have those discussions. We can talk about the pros and cons of that.
Wardlaw: I would just hate for the current intermodal system to hurt because they knew when it came online. And we also do not want to discourage new commerce in the state either. So it’s definitely a conversation that needs to take place, so.
Tudor: Yes, Sir.
Wardlaw: Okay, with that, Representative Meeks, you’re recognized.
Meeks: Thank you, Mr. Chairman. I have two questions. First one, I think is going to be for staff. On page 11, the report says that we spent roughly $79 million in general revenues, and it looks like the authorized level is $70,000. So it looks like we’ve got more spend than authorized. And, I’m wondering if we could get an explanation on that or how that works or what that money was used for.
Patton: And you’re talking about– sorry.
Meeks: On page 11.
Patton: On page 11. And you’re talking about under the funding sources–
Patton: — side. So the $79 million, we got part of our fiscal year 20 surplus during that time because that’s what that line item is. And so we pretty much got two years’ worth of surplus in that. So we’re not anticipating that going forward, that we’ll be on time with the surplus and our security reserve request. So that’s why it’s going to the $70 because the max for our surplus is at $50 million and the max for security reserve request is at $20 million.
Meeks: Okay. So we’re not violating any appropriations by– okay. And then what was that money used for?
Patton: This would have been for our general operations.
Meeks: General operations, okay. And then the next question that I have is on page 16 with the Commercial Truck Safety program. It looks like you currently have a $7 million fund balance and are only spending about $400,000 a year. And you’re generating close to $2 million a year, it looks like. Am I reading that correct? Is that fund balance going to continue to grow and are we way overcharging on this? Kind of, what’s the story on that?
Tudor: I can answer that for you. And I can send that information to everyone, but that funding has been encumbered. It’s not being reflected here because it hasn’t paid out yet. But we are working closely with– we have a team or a coordinating committee that includes Arkansas Trucking, along with a private trucking firm, along with ARDOT staff, and we recommend how to use this funding. And lately, the majority of the funding you see, which has not been paid out yet, has been dedicated for truck parking facilities to expand some truck parking facilities across the state. So we’re making really good use of that funding. And I can get you that report to show you where that funding has gone from the inception of the program until today. That would be something I can send to the– I guess send directly to you or send to the entire–
Meeks: Okay. So the money can be used for the one that says truck safety. It doesn’t have to actually be used on the trucks or on education. It can actually be used for these capital improvement projects?
Tudor: Yes, sir.
Meeks: Okay. And that’s where most of this excess would go to is to those type projects.
Tudor: Yes. That’s the big focus right now is truck parking. We’re working closely to figure out how to expand that across the state.
Meeks: Okay. I just saw that huge fund balance and that low spend. I just want to make sure we’re not overcharging for this and just developing this huge slush fund that’s not going to anything, but that doesn’t sound like it’s the case here, so. All right, thank you for that explanation. Thank you, Mr. Chairman.
Wardlaw: Representative Beck, you’re recognized.
Beck: Thank you, Mr. Chair. I have two questions. One was back on page 11. You made reference to the money for Act 416 funds. Did I hear you say that’s part of that fund there was input from gaming or something?
Tudor: I’ll let you answer that.
Patton: Yes. There’s a 3-cent and a 6-cent tax on gas and diesel that was enacted with Act 416. There’s also an electric and hybrid fee, and then we get $35 million casino revenue.
Beck: Okay. That was my question. I was wondering what percentage of that was actually casino revenue. My second question, if I may, it has to do on page 20. Your operating expenses in 2021 was $16,000 and authorized $20,000. And you increased that in the biennium to $100,000. I mean, relative to all the other numbers, it’s a small number, but it is a large increase.
Patton: That was to take account for potential operating expenses and being an accountant I rounded, to be honest with you, with some of that also, so. That one could come down a little bit.
Beck: All right. Thank you.
Wardlaw: Representative Payton, you’re recognized.
Payton: Thank you, Mr. Chair. I’m over here to your left. This question may be for Mr. Parrish. I may have misunderstood something, but on page 22, the second $500,000 in interest is going to fund, it says future transportation research grants. Can you give me more information? I thought you said something about this being grants from the Highway Department to higher ed.
Anderson: Yes, sir. In its inception, that’s how it was created. It was a transportation research related program. And they’ve made grants to, I believe, U of A to their engineering department for a program for highways there. This was expanded in the last session to include workforce development. And I don’t believe anything has been outlaid for that just yet, but I’d have to refer to the department about their plans for that.
Payton: So if I understand right, there have not actually been any grants come out of this fund as of yet, is that correct?
Patton: No, sir. Since the inception of this, which was in I think 2017, there’s been six grants funded so far.
Payton: So under actual, why wouldn’t it show anything there under actual?
Patton: Because for this year, we did not receive any grants that would have met the qualifications. We currently have six in house right now that we’re considering for future funding. But within this fiscal year of 2022, there were none that we saw fit to fund for the $90,000 that we had in the fund.
Payton: So off of your memory, can you tell me who those grants were given to?
Patton: I think we gave two to the U of A, I think one to ASU.
Tudor: Can I have someone come up from the staff that can–
Payton: Well, that pretty much answers my question. Based on what I remember over the past 10 years that I’ve been down here, higher ed has fought highway funding on more than one occasion. I just found it curious that now the Highway Department is giving grants to higher ed, just crazy relationship.
Tudor: It’s by legislation that we’re doing this. It was legislation that was passed in, what, 2015. And then it was revised. It was revised, I believe, last session to expand it to include workforce development activities. So now not only is it transportation research, but also if a higher ed or a vo-tech school or whatever comes to us with a great grant request to expand their workforce development, we’re going to be able to use that funding for that as well. So I think it’s going to be a good use.
Payton: So expanding workforce development. I mean, they’re training highway employees, engineers? What are we talking about?
Tudor: Workforce development for the highway construction industry, which would include asphalt. We talked to the University of Morrilton or the– let’s see. Is that right? University of Arkansas at Morrilton. And they’re wanting to start a workforce development program where they teach students how to use asphalt equipment and things like that so that we prepare the future workforce for highway construction. It can be contractor employees. It can be ARDOT employees, but it could also just be students that are interested in coming in and learning more about being part of the highway construction industry.
Payton: Thank you. Thank you, Mr. Chair.
Wardlaw: Representative Cavenaugh, you’re recognized.
Cavenaugh: Thank you, Mr. Chairman. I’m over here to the right. Thank you for being here. My question is going to deal on page 8. I want to talk about some of your funding. On your vehicle registration fees, is that for sales tax on motor vehicle carriers? Is that what that actually has originated from?
Patton: No, that’s just regular vehicle registration that you pay the $25, the $27, or the 3-year.
Cavenaugh: Okay. Does any sales tax go in that?
Cavenaugh: Okay. How much of that registration fees do you receive? Do you receive 100% of it or do you receive a portion of it?
Patton: A portion of it. This one is split 70/15/15. So the cities and counties get part of it.
Cavenaugh: But 100% of it goes to ARDOT, and then it gets split to city and counties.
Cavenaugh: Okay. And then down here where you show receipts to state police, operators license fees, and drive out license inter-trans fees. But then you show that also as an expense, as a distribution to the state police. Is that a pass through?
Patton: We’re a pass through for that one and for ADEQ.
Cavenaugh: Why are you all a pass through?
Patton: In my five years here, it has been that way. I don’t know why it was originally set up that way.
Cavenaugh: And so the fees for the state police, you all collect it and then just transfer it to them?
Cavenaugh: Do you all get any fees off of those?
Patton: No, ma’am.
Cavenaugh: Okay, and you don’t get any fees from ADEQ?
Patton: No, ma’am.
Cavenaugh: Okay. All right. Thank you. Mr. Chair.
Wardlaw: Representative Beatty, you’re recognized for a question.
Beatty: Thank you, Mr. Chairman. Director Tudor, my questions are directed on page 8 under revenue at approximately 3% of your budget. The overload permits and penalties. Can you tell me how you’re– kind of walk us through how those permits and penalties are utilized by ARDOT?
Tudor: First of all, where are– oh, there you are. I couldn’t find you. Okay. I’m sorry. So overload permits and penalties. We have our permit section under Arkansas–
Beatty: Could you pull your mic a little closer?
Tudor: Okay. Is this good?
Beatty: Oh, that’s a lot better.
Tudor: All right. Thank you. Our Arkansas Highway Police Division, they have a permit section. And for all trucks that need to ask for a permit for different reasons, say, they have an indivisible load that is over 80,000 pounds or over-width, over-height, they have to get a permit so they know what highways they can drive on. There is a fee associated with that. So there’s fees that come from getting your permit. They’re varied. They’re based on statute. They’re based on the law. And so we administer those permits, and we collect the fees as for whatever they are by law. Penalties would be tickets, if we write a ticket for whatever reason, overweight, safety violations, whatever it might be. So does that answer your question?
Beatty: No, ma’am. I understood everything you just said. My question was, specifically, how does ARDOT utilize and deploy these funds?
Tudor: Oh, okay. It just goes back into our operating fund for the state police– I mean, for the highway police, and it’s just used as part of their operations. And whatever is excess in that goes to just our general operating costs.
Beatty: Follow up, Mr. Chair. Could you provide this committee with a breakdown on those fees as to how they’re allocated between permits and what penalties? And in addition to that, I would like to know where these fees and penalties are collected throughout the state and a breakdown, maybe, by county.
Beatty: Could you provide that?
Beatty: I was hoping that I would hear that some of these funds would be used at that education and safety side because it sounded like that penalties and permits, you could educate our hardworking truckers in the state on how to avoid the penalties and issues that they would have instead of parking lots. But I look forward to reviewing that information. Thank you.
Tudor: You’re welcome.
Wardlaw: Senator Chesterfield, you’re recognized.
Chesterfield: Yes. I move the executive– I mean, the agency’s budget in immediate consideration.
Wardlaw: Those are proper motions. Do I have a second? I have a second. All those in favor– this vote is on the immediate consideration for the agency rec. So this is not a vote on the budget. This is a vote on media consideration. All those in favor, say aye. All opposed? I’ve got to rule that the no’s have it because it takes two-thirds. So with that, agency rec is on the floor, and I have a second. All those in favor of the agency rec– well, no. I guess we won’t. We can take discussion on that motion. So is there any discussion on agency rec? Representative Cavenaugh.
Cavenaugh: My discussion is there are some of us in the queue with questions for ARDOT, and we need to have them answered if we can, please. Thank you.
Wardlaw: Senator Chesterfield, would you withdraw your motion?
Chesterfield: I certainly can, Mr. Chair.
Wardlaw: Thank you. Representative Wooten, you’re recognized for a question for the agency.
Wooten: Thank you, Mr. Chairman. Director Tudor, I have got two or three questions very quickly. Looking at your report on personnel, it shows 623 vacancies have been vacant over two years. But I’m assuming that the 116 that you’re relinquishing in your other part of your budget, they’re out of that. Is that correct?
Tudor: That’s correct.
Wooten: Okay. So do you know the average age of those that are remaining?
Tudor: I’ll pass it over to Crystal.
Woods: Are you asking how long those have been vacant? Let’s see. As you’ve said, 623 have been vacant for two years. 549 have been vacant for four years.
Wooten: For how many years?
Woods: Four. 391 have been vacant for six years, 379 have been vacant eight years, and 373 have been vacant 10 years. And that’s as far out as I went on my analysis.
Wooten: Okay. All right. You’ll all continue to evaluate those and look at them?
Wooten: Follow up, if I may. On the interest, you show interest as income sources in several places as a funding source. On page 9, you show $1.9 million. Does that include the interest on page 21 of $525,000 and on page 22 of $500,000, or is that in addition to funding source?
Patton: It’s in addition.
Wooten: It’s in addition?
Wooten: So do you know how much interest that you’re making on your money out there total?
Patton: It would have been about $2.9 million because of the $1.8 and then you take the $1.025 that’s allocated to those two funds. So about $2.9 for our operating program. And then for four-lane, our interest is about $3.5 million. And those are the only two that we get interest on.
Wooten: Okay. One follow up. On the page 11, it shows you paid $240 million in salary, and $110 million in matching is what you’re requesting. You’re requesting $240 million, your match is $110 million. That’s 45%. What does that make up?
Patton: 34% of it is the FICA group insurance, retirement match, and then workers comp and unemployment compensation. What also goes through there is service recognition payments, admin fees for our 125 program, our cafeteria plan, and then any leave that may be paid out that the person has accrued when they leave.
Wooten: Your leave money comes, so that’s why– okay. All right. Thank you, Mr. Chairman. Thank you all. Thank you, Lori.
Tudor: Thank you.
Wardlaw: I got a follow up to Representative Wooten‘s questioning there. When you look at page 11, that increase in appropriation in 2023 and then that– or 2024 and then in 2025, that’s going to be made up by removing the consultants. Is that not correct?
Wardlaw: That’s the plan anyway, right?
Tudor: Well, right. We’re going to– yes.
Wardlaw: That’s what I thought.
Wardlaw: Senator Irvin, you’re recognized.
Irvin: Thank you. Just a quick question. And I probably missed that. On the research grants, how are those funded again?
Patton: The research grants are funded by the second– it’s the first $525,000 of interest on our main operating funds. So whatever our fund balance is, is the–
Irvin: So you’re taking the interest off of it and that’s how you’re funding that?
Tudor: Off the top.
Patton: Off the top.
Irvin: Off the top?
Patton: The first $525,000 goes to the intermodal grants, and then the next $500,000 goes to the research grants and workforce development. And so that’s off the top. And then ARDOT’s operating fund starts receiving interest after that.
Irvin: Okay. And then when you’re talking about workforce development, would programs that are in our high schools qualify for that?
Tudor: They would definitely be in it. They could be if they applied for funding or want to set up some kind of program.
Irvin: Well, I know Vilonia has a construction management workforce program that they have developed which clearly would fit, I think–
Tudor: Yes, we would–
Irvin: –with that. Okay. I just didn’t know how these entities knew about how to apply for that, or.
Tudor: If we could, offline, let’s look at the law. I’m now wondering if I misspoke that it has to be an institution of higher learning, either a vo-tech or a university or something like that. So let me make sure that high school–
Irvin: If you’ll look at that for me because I think we’re starting to see a lot of those programs in the high schools, which then we’ll get them to the two-year or four-year or certification programs. But I love seeing that happening in our K through 12 because career readiness is really a big part, I think, of public education and our commitment towards that. So if you’ll look at that legislation for me and then get with me about that, that’d be great. Thank you.
Tudor: Okay. Thank you.
Wardlaw: Representative Vaught.
Vaught: Thank you, Mr. Chair. I’ve noticed that the highway police are working a lot more traffic stops. So I want to know, when they ticket somebody for speeding, where those funds go and what they’re used for.
Tudor: Well, okay. So those go into that line item that Representative Beatty pointed out a minute ago. Those would go into that. The increase in traffic stops should be just in work zones. This last year, we have a safety campaign, Slow Down, Phone Down. We’ve been working closely with Arkansas State Police to try to reduce distracted driving and speeding in our work zones, to reduce fatalities not only of our workers, but also just crashes in general, which could be devastating. But–
Vaught: Well, I can understand that. I live in rural Arkansas. We don’t have those construction zones where I live, and I see a lot of guys pulling people over, so–
Tudor: Thank you for letting me know. I will pass that along. That’s not their job.
Vaught: Thank you.
Tudor: Unless, well, let me just say–
Vaught: I understand. Unless there is a construction zone.
Tudor: Well, no. But if they are literally safety hazards.
Vaught: I understand.
Vaught: Thank you.
Tudor: Thank you.
Vaught: Thank you, Mr. Chair.
Wardlaw: Representative Springer, you’re recognized.
Springer: Thank you, Mr. Chair. Good morning. I’m looking at your report, the pages starting on page 25 through 45, the salary request, and I just note that it appears that you are making a request for the maximum annual salary to be $35,000. That’s on page 25. Is that correct?
Tudor: I guess I’m not following.
Springer: On page 45 of your report. You have 4,558 employees, and then at the bottom of that, you start at salary level one. So I’m reading this, and correct me if I’m wrong. The maximum salary level for level one employee is $35,186 max. Is that–
Tudor: Yes, ma’am. Max.
Springer: Okay. And I got a two-part question, Mr. Chair. So what is the current minimum now?
Woods: The minimum for grade 1 is minimum wage.
Springer: Minimum wage. Okay.
Woods: Yes, ma’am.
Springer: All right. So then, are you– so up above that, you talk about the– are those persons or the ones that– the grade 1 through 5, are those the persons that you’re making the request for, like seasonal employee, extra help, advanced intern, senior intern? Are those the persons that will be making that at some point in time if they continue with the–
Woods: Yes, ma’am. The seasonal employees are the grade 1 who start out at minimum wage. The more summers they work with us or the longer they stay with us, they may be able to move up to these, an intern or an advanced intern, some of the higher grades.
Springer: Okay. So I’m just trying to understand, these are very good salaries here. So if we look at the pages and as we go up, then they’re going to start from– like, I see on page 25, the maximum for director could be up to $276,000.
Woods: That’s correct.
Springer: And then back on page 45, the maximum for that grade level 1 person can be $36,000.
Woods: That’s correct?
Springer: Now, is that correct?
Woods: Yes, ma’am.
Springer: All right. Thank you. That’s what I want to just confirm that working for the highway department is pretty lucrative. Thank you.
Wardlaw: Representative Cavenaugh.
Cavenaugh: Thank you, Mr. Chair. My question is going to be on page 11 and 12. But basically, if you can just give me this information, send it to staff, and they can send it out. We’re looking at the debt schedule on these. Can you let me know what your debt schedule is for everything and what the debt is and what the repayment of it is? And when you’re looking at this debt schedule, does it include principal and the interest or principal only or interest only?
Cavenaugh: Yes. If you can just send me that, I’d appreciate that. Thank you.
Patton: I can do that. And just one follow up. The four-lane highway will end June 15 of 2023, so you’ll just see one short payment there.
Wardlaw: Representative Holcomb, you are recognized for a question.
Holcomb: Thank you, Mr. Chair. Anyone can answer this for me on the permits. Say, if I have a company like Grace Railroad down in my area that takes care of derailments, and sometimes, it happens on weekends late at night, and they seem to be having trouble getting permits, can they get that 24 hours a day if there’s an emergency, or how does that work, I mean?
Tudor: What hours they can get a permit–
Holcomb: Yes, ma’am. If they have an emergency and they– say on a weekend or in the middle of the night or something, if they got a derailment or something, can they get a permit then?
Tudor: Yes, I think they can, but let me be sure of that. But I think they can. We have an automated system, and we have someone on call 24/7, but I want to verify that for you.
Holcomb: Okay, well, I was just asked and they had had some kind of issue. And if you can look at that, we’ll certainly appreciate it.
Tudor: I sure will.
Holcomb: Thank you.
Tudor: Thank you.
Wardlaw: Senator Chesterfield, do you have a motion? I think we’re good with that first one. Agency rec is on the floor. Do I have a second? I have a second. All those in favor say aye. All opposed? The ayes have it. Thank you, guys. Members, just a little schedule information. Executive subcommittee is going to meet upon adjournment. Rules is going to meet at 1:30 today. And then obviously, Council’s at 9 a.m. in the morning. And next week, we’ll see you guys at 9 a.m. on Tuesday. With that, we stand adjourned.