Joint Budget Hearings
October 25, 2022
Actions Taken (click to jump to that discussion)
- Military Department social worker position approved
- Higher Education agency request approved
- Department of the Inspector General executive recommendation approved
Irvin: We will call this meeting to order. Glad to have everybody here this morning. And we will move through this– we’ll move through this meeting. And do we have anything right off the bat?
BLR Staff: Just the personnel report.
Irvin: Okay. So we’ll just go ahead and start with Item B with the Personnel Subcommittee Report. So Senator Wallace, you’re recognized.
Wallace: Good morning, Madam Chair.
Irvin: Good morning.
Department of the Military, Youth Challenge social worker
Wallace: Ma’am, the Personnel Committee met on Wednesday, October 19, and adopted the executive recommendation for each of the departments and agencies listed in the report, including a revised executive recommendation for the attached special language for the Public Defender Commission. The committee also heard a presentation from Kay Barnhill with OPM regarding a proposed pay plan adjustment and how those plan adjustments affect the executive recommendations. No action was taken regarding the proposed pay plan adjustments. After discussion in ALC and Joint Budget, and at the request of another member, I move to adopt the report, with the exception of the Military Department Number 6, which is the only report in which we will pull out and vote on separately.
Irvin: All right. Are there any questions regarding this motion? Is there a second? Second. All those in favor say aye. And opposed? Ayes have it. The report is adopted. Senator Hill, you’re recognized.
Hill: Madam Chair, I make a motion to adopt the agency’s request for Personnel for the Military Department, along with adding one additional position of M009C licensed certified social worker at a GS-09 for the Youth Challenge Program.
Irvin: All right. And there’s a second. Are there any questions on that motion? All right. All those in favor say aye. And opposed? Ayes have it. Motion carries. That recommendation will be adopted. All right. Moving on to B2. Let’s see. Representative Cavenaugh, you’re recognized.
Cavenaugh: Thank you, Madam Chair. The Special Language Subcommittee met on Tuesday, October 19, at 1:30 p.m. and reports the following actions. The Subcommittee adopted the legislative recommendations for agency language held over from the October 11 meeting. Those items are noted on the report. The Subcommittee adopted the executive recommendations for agency language listed in the report. The next Special Language meeting will take place Wednesday, October 26, at 1:30 p.m. in the Big Mac B room. I move for adoption of the report.
Irvin: Okay. Are there any questions on this report? Seeing none, do I have a second? All those in favor say aye. And opposed? Ayes have it. The report is adopted. Thank you. All right, moving on to Item C. We have Dr. Maria Markham, if she can come to the table, and Mr. Rice. We have a handout for you, members. And then we will have Mr. Rice, I believe, discuss the handout, and Dr. Markham. And if you’ll just all identify yourself for the record.
H Rice: I’m Henry Rice, BLR staff.
Markham: Maria Markham, Division of Higher Ed.
Fuller: Nick Fuller, Division of Higher Education.
Irvin: All right. They’re passing out this handout, members, and then we’re going to discuss this handout. Okay. Dr. Markham’s going to discuss it. All right. I think everybody’s got one of the handouts. Dr. Markham?
Higher Ed Productivity Funding
Markham: Okay, thank you. The handout that you have in front of you are the productivity funding recommendations. There’s an increase of 1.09% over the previous year. That includes the spring semester of 2020, which was the first academic term impacted by COVID. Total new state funding recommendation is just over $6.3 million. But I would point out that there is only $614,490 new dollars of general revenue that would be added to the state allocation for our institutions of higher ed. The remaining $5.7 million comes from the redistribution of one-time incentive funds from FY 2023. So the state appropriation recommendation reflects a 2% adjustment above the funding levels to account for any fluctuations of other state funding sources such as ETF. And the cash fund appropriation recommendation reflects institutional requests that are based on individual needs of the campuses. So I’m happy to take any questions about the productivity funding or our other appropriation requests.
Irvin: Okay. On this, we do not have to adopt this. But there will be– if you have a question– Senator Hammer, you’re recognized for a question.
Hammer: Thank you, Madam Chair. Can you speak to the ones that did not reserve– that did not receive their productivity funding, the trends or the reasoning why they didn’t get to the level to get it?
Markham: So thank you for that question, Senator Hammer. There are going to be different reasons by institutions. A lot of those institutions did not see an increase in productivity over the previous year, either because they saw fewer credentials, the types of credentials were lower, the types of students that they were able to be successful with did not have as many weighted productivity points. It could have also been that they had a really good year the previous year and they were unable to surpass the productivity from the prior year.
Hammer: Okay. All right. Thank you.
Irvin: You’re welcome. Senator Chesterfield, you’re recognized.
Chesterfield: Thank you. Thank you and good morning.
Chesterfield: Dr. Markham, I guess I’m concerned about the productivity model in the midst of a COVID crisis. And there’s absolutely no way, I think, except maybe the University of Arkansas at Fayetteville, that you’re going to have people moving apace with student involvement and all the other things that go there. Did we do any weighting or anything that would have taken into account the challenges that our colleges and universities had as a result of COVID?
Markham: No, Senator Chesterfield. And that’s something that we were very concerned with, not this year in particular, but the previous year. So we had some conversations about changing the weighting to look at whether or not there was going to be a need for that. However, both the last 2 years, we did see a productivity increase, so we felt it was unnecessary to modify the model for that anomaly of a year. And yes, UA Fayetteville did see the largest increase in productivity this year, but there were several other universities and about half the 2-year colleges also saw it increase. So we didn’t feel it was necessary to adjust the model.
Chesterfield: Were there particular areas of the state that were most impacted as far as loss of productivity and therefore loss of funding?
Markham: I don’t have this broken down regionally, but I could do that for you. It doesn’t seem to be a regional impact. Of course, Fayetteville was up. Arkansas State University was up. Little Rock was up, as well as UCA and, I believe, SAU.
Chesterfield: Okay. Was Monticello up?
Markham: No, Monticello was not up this year.
Chesterfield: And SAU Tech?
Markham: SAU Tech, they were down this year, but I believe they were up the previous year.
Chesterfield: And what about the Hope Community College?
Markham: Overall, community colleges were up 1.09%.
Chesterfield: The Hope one. Hope, Arkansas.
Markham: Oh, Hope. I’m sorry.
Chesterfield: H-O-P-E. My home town.
Markham: Let’s see. Hope-Texarkana. They were also down this year.
Chesterfield: They were down this year?
Markham: They were down.
Chesterfield: And I guess I’m concerned, because I’m looking at those areas, and it troubles me because– what about Phillips Community College?
Fuller: If I might add to that–
Fuller: –Senator Chesterfield, next year when we come to year 7 of the productivity, that will all include a full academic year of when COVID was impacted. This year’s distribution only included that spring semester of 2020.
Chesterfield: The people are going to lose money.
Fuller: So as we start collecting that information, our funding work group continues to review these and see if there’s more of a drastic impact statewide that we may need to pause this for next year.
Chesterfield: But in the meantime, there are colleges that will lose money because they were not able to increase student participation, dah, dah, dah, dah, dah, dah.
Chesterfield: And the areas that I’m talking about are the areas that can afford it probably the least. So that’s my concern. Thank you.
Irvin: Senator Elliott, you’re recognized.
Elliott: Thank you so much. Nick, did I hear you say something about a working group? We have a productivity working group?
Fuller: Yes, ma’am. We have a group of different presidents and chancellors and fiscal officers from the different campuses that meet–
Elliott: And their purpose is–
Fuller: –throughout the year.
Elliott: –to do what?
Fuller: To review the model and see if review the model and see if there’s any–
Elliott: Review the model and let you know–
Fuller: –unintended impacts due to the way the model is done.
Elliott: So with that in mind– and I know this is always– this is a walking on eggshells kind of thing. Because I remember when we put this model in place and it was a matter of everybody was happy with it because that’s what folks had to say. I get that. I get that. So I’m just wondering if that same working group, if they have, I guess, the gravitas, maybe, to take a look at this model and be able to respond to us earnestly whether or not this is still a good thing that we are doing and really be able to report to us– I know I’m asking for the moon here, but– outside of any coercion of politics. Is that something you think is possible? Will the working group be doing that kind of work of checking it? How research-based is this really dependent on, or is it something that we would just like to see?
Markham: Can I respond to that?
Elliott: Please do.
Markham: So not to call out Dr. Houston Davis, who is the chair of the working group from UCA, but I would say that that group meets quarterly. They meet and request data runs from the division. So if they have something they want to see, we provide the research for that. And then that group makes those recommendations back, like, “This is this change that we would like to see or we think that we can make.” That group is working on a 5-year review right now that they’re about to publish that looks at the impacts of the model and the things that they considered, if they rejected those things, or if they went ahead with that recommendation, and why. So that will be something I believe we have for our January Coordinating Board is that 5-year review. So it’s going to look at those metrics. It looks at how we’ve moved the needle as a state to see if the overall impact of the model was a positive one, and also the increases in funding that higher ed as a community has seen as a result of that. So I can’t say that it’s completely independent from the politics of what’s going on, but it is based in data and in research that these practices have made a positive impact on the state of higher ed.
Elliott: Do you think it would be a good idea perhaps if we had somebody looking at the model outside of the higher ed institutions?
Elliott: Somebody that’s totally–
Markham: Certainly. We’ve had a lot of requests from outside entities to study our model because of the uniqueness of that. A lot of dissertations and doctoral students and then as well places like Lumina Foundation and Complete College America have an interest in our model, as well.
Elliott: Well, as long as it’s going to be the institutions themselves. I would ask us to think about not just telling me what’s in the model and whether it’s working according to the way it’s set up. Would really like to have some understanding of whether or not we have the bad news. Because Houston is the UCA Bears, I think, right? I don’t want to use that one. But is this still a good model? Period. Not how the model we have is working. Is it something that’s still used and yields good information and shows us whether or not this is a good method for some of the funding of our higher ed institutions? This the thing we should be doing in the first place based on seven years of work. So thank you.
Irvin: All right. Thank you. I have a quick question. EACC, East Arkansas Community College, actually looks like they had the largest percentage increase at 8.3%. That’s beyond University of Arkansas at Fayetteville. Where is East Arkansas? Forgive me. Where is that located?
Markham: That’s in Forrest City.
Irvin: Forrest City?
Markham: And part of their increase is due to the fact that they absorbed Crowley’s Ridge Technical Institute. So a lot of the increase in their credentials come from the merger of those two institutions.
Irvin: Okay. And then it looks like, is that Ozarka College, as well, had a pretty significant percentage increase. 7.51%?
Markham: Yes, ma’am.
Irvin: That’s a 2-year–
Markham: That’s a 2-year.
Markham: –in Melbourne.
Irvin: And then UACCB, 8.54% increase. That’s also a community college. Is that correct?
Markham: That’s correct.
Irvin: And then UACCRM.
Markham: Rich Mountain in Mena.
Irvin: In Mena?
Irvin: 5.33% in Mena. And that’s a 2-year college. Is that correct?
Markham: That’s correct.
Irvin: Thank you. Senator Hammer, you’re recognized for a question.
Hammer: Thank you, Madam Chair. I’m asking because I don’t know. But I know some of the colleges count high school students in their populations. Does that have any bearing or effect on the performance, the productivity numbers?
Markham: It does. So the high school students that are included have an impact on the 2-year college productivity rates. Any time a high school student completes a credential or completes a gateway course, they count just as though they were a postsecondary student. They do not count for gateway courses on the university side, only when those students reach a credential.
Hammer: So if they were taken out of the scenario, if they were taken out of the picture, what kind of impact– or do you have it down in the weeds detailed enough to know that if they were taken out of the picture how the productivity numbers would look otherwise?
Markham: We could review that and give you that with those students taken out. We routinely run FTE and headcount numbers taking those students out. We don’t typically run that for productivity, but that is something that we could provide.
Irvin: If you’ll send that to the chair, then I can send it out.
Hammer: Can I have a follow-up question, Madam Chair?
Hammer: Thank you. So on the matter of the ones that are not getting productivity funding, and they are not going to get the money that the other ones are that have the higher productivity, correct?
Hammer: Okay. So we’re going to take money away from those. I mean, that almost seems like an adverse effect that we’re taking it away from those that did not reach productivity because they’ve got less money to do what maybe needs to be done in order to reach those productivity levels. So I’m curious and would like to hear your thoughts on is that the best way to address this? Is it administration, management, circumstances out of their control? Because it seems like when we take money away from those that aren’t, what kind of adverse effect is it having on them?
Markham: I can say that, yes, it does have an adverse impact. I think anytime you reduce the budget for an institution, there’s some adverse impact there. And difficult decisions have to be made at the leadership level. But I will also say I think that was the intent of productivity funding when it was passed that those institutions who were more successful would receive more funding. So whether or not that’s the best way to do it, I can’t answer that. But I think the intent was, reward those with more productivity with the funds that would have been used at the institutions who had lower productivity.
Hammer: And do you ever do a side-by-side comparison of those that are getting productivity? And maybe it’s out there and I just haven’t seen it. But I’m just thinking the ones that did reach it, outside of maybe things that are out of their control, COVID, for example, whatever, to see best practices of those that are achieving versus those that are not achieving. Where do I find that so I can do a side-by-side comparison? Because as a legislator, I want to know, well, you don’t need to get more money, because you didn’t do a good job with what you had, otherwise you wouldn’t be in the position you’re in, versus things that are out of their control that they’re just maybe not getting to the high watermark because of things they don’t have any control over.
Markham: Right. I don’t know that I have anything that’s like a quantitative analysis of practices at one institution versus the other. We do have the institutions who are receiving additional productivity present to all of the institutions pretty regularly on the things that they’re doing, the positive things that they’ve done on their campus to impact those numbers, and they share that with the other institutions. I can’t really prove a negative on those that are not doing those things, but I can provide some feedback from the institutions, if you would like.
Hammer: Please. Thank you.
Irvin: All right. Representative Beck, you’re recognized for a question.
Beck: Thank you, Madam Chair. I’ve heard the term that the production model is working used a few times. And this might be a really simple question or a really hard question. I don’t know which one it is. But help me out with the parameters that you would say, “If this parameter goes up, the model is working. If this parameter goes down, it is not working,” just to maybe give us a little bit better feel for it.
Markham: Thank you for that question. And that is why I say that the model is working, because the goals that we set for the model initially were to increase the number of Arkansans with credentials, to reduce the time it takes a college student to reach their degree– 4 years for a 4-year student, 2 years for a 2-year student– reduce the number of credits those students have when they complete their degree. So they’re saving themselves and their families some money on the way to getting that, to serve more students who are in traditionally underserved roles, our underrepresented minorities, our adult populations, our students with remedial needs, to increase the number of those students who are successful in getting through to their credentials. So when we’ve done our reviews of the model, really that’s our measure. Are we increasing the number of Arkansans with credentials? Have we reduced the cost of higher education to those students and families? Are we serving those populations more efficiently and effectively? And the answer to all those questions is yes. So our individual institutions, some are losing money. Some are gaining money. Maybe that’s undesirable for those that are losing and a win for those that are gaining. But as a state, we’re seeing an increase in the quality and a decrease in the cost of higher education.
Beck: Thank you.
Irvin: Representative Springer?
Springer: Good morning. Thank you, Madam Chair. Where would one find the productivity funding criteria? Is that something that’s available on your website, or is it–
Markham: It’s on our website. So there’s the statute that created it, but then there are also three sets of administrative rules. One for 2-year colleges, one for 4-year colleges, and one for the way we use those scores to distribute funds.
Springer: Oh, so, your website. All right. Thank you.
Markham: It’s all on our website.
Springer: All right. Thank you.
Irvin: Okay. Representative Wooten.
Irvin: Representative Wooten.
Higher Ed Building Maintenance
Wooten: Thank you, Madam Chairman. Madam Secretary, I want to ask you some questions if it’s appropriate at this time about the deferred maintenance and the maintenance budget. Is that proper right now? Okay. My first question is, everybody has a wish list. And you had $1.26 billion in requests and you funded $226 million, that’s roughly, what, 15-18%, 20%. How do you arrive at that number?
Markham: I’m going to defer that to Assistant Director Fuller.
Fuller: We do take a percentage for recommendations based on the various Carnegie classifications of each institution. We have a breakdown of the level that we will recommend up to a certain point for each classification. I can send you that if you’d like to see how much we recommend up to that point. I will say on the $226 million of funding, that is just recommended. In the past, this– I’m sorry. In the current biennium, we recommended around $190 million of funding. And about $12 million of that have been funded in those 2 years. So it’s not expected that a majority of this will be funded. Again, back here, you’re talking about a wish list. We try to bring these projects back down to somewhat of a reasonable amount.
Wooten: You just trim the wish list down?
Fuller: Yes, sir.
Wooten: So of the $226 million, what do you anticipate might be funded?
Fuller: I don’t have an expectation for what would be funded. That would be up to you all as a legislature to distribute those funds.
Wooten: Follow up, if I may, Madam Chairman?
Irvin: Yes, please.
Wooten: Deferred maintenance, $3.6 billion, and you’re recommending $60 million? And you say that a lot of projects by 2025 are going to be where they’re going to do structural damage or equipment damage?
Fuller: Yes, sir.
Wooten: And we’re sitting on a $3.6 billion estimate.
Fuller: Yes, sir.
Wooten: We’re going backwards. We’re not making any–
Fuller: Yes, sir. That’s another program that does not have a dedicated stream of funding to support those maintenance needs. We are looking at ways we might can present a proposal to create a fund to offer some offset to that deferred maintenance. But currently there’s not a dedicated funding stream for deferred maintenance on campuses.
Wooten: All right. Thank you. Thank you, Madam Chairman. I’ll have some further questions later in the queue. Thank you.
Irvin: Representative Hodges.
McClure: Well, Representative McClure sitting in–
Irvin: I’m sorry. I just was reading– I’m so sorry.
McClure: Thank you so much for all your hard work. I know this funding formula is a little bit difficult. Just for the committee, could you give a little bit of an overview of the history of how long this formula has been in place and who helped write the formula for us?
Markham: Yes, sir. Thank you for that question. So the initial funding model was passed in 2017. I was the director of the division, and that was a part of the governor’s legislative package and the agency supported bill. The work group that helped design the criteria, the details for the formula, was cross-sectional between the institutions of higher ed. And that group has evolved over time, so now that’s the steering group. So this is now, I think, the fifth year or sixth year of recommendations as a result of that. Prior to that point, we used what was called the Delaware Model to recommend funding for institutions of higher ed. It was a cost model that looked at what we should be giving institutions to do the things that they should be doing. And that model had recommended upward of $130 million a year in excess of what we were funded. So much like the deferred and critical maintenance, we recommended a very large number for higher ed, and we got a percentage of that. So this was a way to help institutions of higher ed who had grown and who were doing really well start to capture some additional funding to support that, because over time, the percentage of state funds to support institutions of higher ed as opposed to tuition and fees had declined. So institutions were really suffering in being able to provide quality higher education to the students in our state. So we’re about six years in with the funding. We have now grown the contribution of RSA to higher ed in the first time in about 15 years. So we’re happy with that. It’s not a huge increase into the contribution of state funding, but I think all the institutions would agree that they’re grateful for the additional assistance. So that’s a very high-level history.
Irvin: All right. Thank you. Representative Springer.
Springer: Thank you again, Madam Chair. And I have gone on to the website to see your productivity funding model. Do you have the supporting documentation? What I mean by that, the rubric as to how you scored each one of the universities, is that information available for us to see?
Markham: Yes. And that is a little harder to find on the website. But the technical specifications, I believe it’s under our institutional research area. And that gets down to exactly how information is pulled out of our Arkansas higher ed information system and applied to this.
Springer: Okay, so I can find that information?
Markham: You can drill down much deeper into the weeds. So yeah, we start out high-level and get more and more detailed.
Springer: All right. Thank you so much. I’ll look at it later.
Irvin: Okay. And this is additional money. Is that correct? These are additional dollars.
Markham: For productivity?
Markham: Yes. The request is for additional dollars. There is some variation between and within institutions. Some go up. Some go down. But overall state increased, yes. Correct.
Irvin: So this isn’t decreased–we’re not taking money away from anybody–
Markham: Not as a system.
Irvin: –based on this productivity formula plan. We’re not taking money away from these institutions based on this productivity model or formula.
Fuller: There are some institutions that have negative productivity.
Fuller: The funds will be reduced from their recommendation to be reallocated from the ones with productivity.
Irvin: Right. Okay.
Fuller: Yes, ma’am. And I will add as we’re looking at who is productive and who’s not, when we do this, it’s comparing the institution to themselves, how they did in prior years.
Irvin: It’s like a PR.
Fuller: We’re not comparing one 2-year to another 2-year and saying, “They’re productive. They’re not.”
Irvin: Right. They’re comparing them to themselves. It’s a comparison to themselves.
Fuller: Yes, ma’am.
Fuller: It’s a comparison to themselves in former years. Right. Okay. Which is good. I think that’s great. Representative Richmond, you’re recognized.
Richmond: Thank you, Madam Chair. Going back to Representative Wooten’s question about maintenance and everything, this hole’s seeming to get deeper. Does the higher education institution– do they rely entirely upon state funding to address their maintenance issues?
Fuller: No, sir. The majority of their institutional facility requests, they use their own cash funds, tuition fee revenues, auxiliary revenues, bond issues, loans, to be able to meet those needs. We don’t have state funding that go towards those facility needs.
Richmond: You do request state funding, though, which is what you’re doing here, trying to get $60 million to address a much larger problem on this thing.
Fuller: Yes, sir.
Richmond: And so would you say this problem is getting worse?
Fuller: Yes, sir.
Richmond: And how is the higher education institutions addressing that outside of state funding?
Markham: Outside of state funding, they have to raise tuition. They have to pass bonds. They’re leveraging debt. And they’re shuttering buildings in some situations. I know I’ve got one campus who has three state-funded buildings that have a lot of usable life left. UAPB, last time I visited their campus, because of some of their infrastructure needs, they can’t use their buildings.
Richmond: All right. Thank you. Thank you, Madam Chair.
Irvin: Thank you. So, I mean, there’s a lot of new build, and there’s a lot of proposals for new builds as well. So I’m not sure how I square deferred maintenance to–
Markham: It’s difficult.
Irvin: –new buildings. And so there’s a lot of funding requests out there for new builds, left and right. So are we just ignoring the leaky roof and then building a new building?
Markham: So a lot of the new builds are being used– the way that they’re being funded is usually a combination of private gifts, some kind of loan, a little bit of tuition and fees. It’s cobbled together.
Irvin: But that’s contributing to the problem.
Markham: It is. Redoing a roof is not sexy. Wingate doesn’t want to pay for an institution to fix their HVAC, but they will build a new arts building on their campus. So we have a very– we have an uneven maintenance versus new build. It’s a lot easier for the federal government to give us an ARPA grant to build a new building than to renovate or replace clay pipes under a facility. So it’s what you’re able to get financing for. New buildings you can finance. Old buildings you can’t necessarily do that. But they’re still state buildings sitting on state property, and they’re falling apart because we really don’t have a mechanism to maintain those.
Fuller: To add on, a lot of the bond issues and loan issues that are done for institutions to build these new buildings, there is a policy with our coordinating board that the institution has to set back a certain dollar amount per square footage for maintenance for those new buildings. That wasn’t in place more than 10 years ago when a lot of the older buildings were built. So as the new ones are built, there is funds being set aside for maintenance of those newer buildings.
Irvin: Okay. All right. Thank you. Senator Hammer.
Hammer: Thank you, Madam Chair. Two quick questions. The one on the universities compare themselves to previous years on the productivity, who audits or what’s the process to determine that that information is accurate?
Markham: So all of that information is information that we’ve received from the institutions through our higher ed reporting system. We run all of that. We turn it back forward facing to the institution. They have an opportunity to make any changes or clean up or point out anything that might be incorrect. So that is a collaborative effort between the division and the institutions.
Hammer: So the auditing of the information so that it’s more than just self-reporting, you looking at it, sending it back, who actually looks at the data, the information that’s being submitted by the university to verify that what they’re sending you, that you’re looking at– does that fall upon you? Or you’ve got an internal organization within Higher Ed that audits that?
Markham: No, it’s internal to the division.
Hammer: Within Higher Ed?
Hammer: Not within the institution itself, but within Higher Ed.
Markham: Within Higher Ed.
Hammer: Okay. And then the second one, the building that was just mentioned. Somebody comes in, they want to build a new building. Can you get a list of the buildings that are in repair? You mentioned about some buildings being state-owned. Some were built by somebody. Maybe I’m just not getting it right. But the buildings that are on the universities that are in a state of disrepair that equates to this large number, are some of them– they all become possession of the university. They all become possession of the state at the time that they’re built and given. Is that right?
Markham: That’s correct.
Hammer: So I’m just curious. If somebody builds a building, and we’re sitting here 20, 30 years down the road, and that building needs repairs, where is it in the budget? And where is it that we got behind in the budget that this amount has built up to be such a large amount? Because building a building is a great gift. But if the maintenance cost of that building now shifts over to the institution, where do you build that into your budget that we’ve gotten so far behind over the years?
Markham: Right. And as Mr. Fuller mentioned, until about 10 years ago, there was no requirement for the institutions to build that maintenance into their budget. Now there is. But there are instances where institutions reject gifts of buildings because of that. When I met with Dr. Robinson at UAF several months ago, there had been an offer to build a new building on his campus. And he said, “I can’t maintain any more buildings. Even if I had a building placed on my campus, then I’m going to have to budget for the maintenance and the operations of that building.” And they were not able to do that. So it has to be a consideration when new buildings are built, how those will be maintained ongoing. I know at UA-ForT Smith, the building was built last year. And part of the financing for that building from Wingate was an ongoing maintenance operation budget. So they included that in their gift. But that doesn’t always happen.
Hammer: So the total dollar amount that we’re looking at having to make up the difference of, is that a dollar amount that is represented in buildings pre-dating what we did 10 years ago and we just never captured that amount 10 years– that window of 10 years ago and back, is that the sum total of what–
Markham: Yes, that’s correct.
Fuller: And the costs continue to rise each year?
Hammer: I’m sorry?
Fuller: And the costs continue to rise each year that we don’t fund those.
Irvin: I’m going to allow questions to continue on this, but we’re actually on the productivity formula model. So if we can just get back to that, we can bring up those other things specific to the institutions, which is the next thing that we are going to discuss. Senator Elliot, you’re recognized.
Elliott: Madam Chair, I don’t know if my question is going to be exactly on the productivity model, but I can make a case that it would affect it. So I’ll go ahead, and you can just decide. But what I ask of you is, can you tell us– I don’t mean right now, but maybe make a report and come back to us– over the last 20 years maybe, or 10, what the state funding has been percentage wise? I know it has gone down year by year by year by year. I’d like to see that laid out somewhere that shows us what the–
Markham: Percent of their budget?
Markham: Yes, we can do that.
Elliott: Overall. Because I know in some cases and in many states, that’s been a very precipitous fall. And I’d like to see that.
Markham: It has. And we can provide that for you.
Elliott: Okay. Thank you.
Irvin: All right. Thank you. Okay, last one. Representative Wooten. Representative Wooten, did you have a question?
Wooten: Yes, I do. If I may, I’ve got several on personnel if that’s permissible. Do you have the total salary cost over all the institutions with you today?
Fuller: We do not have that summed up total for all of them.
Wooten: Do you have it for the department?
Fuller: For the agency? I do not. That would be part of the Department of Education budget when we present that in, I think, two weeks.
Wooten: Well, let me move on. Could you get that for us?
Fuller: Yes, sir.
Wooten: I don’t want it broken down by institutions. I just want to know the total–
Markham: Total employees.
Wooten: –cost of salaries at institutions and then break out and then a line for yours.
Fuller: Yes, sir.
Wooten: The next question is, you pay health benefits, do you pay health benefits on vacant positions?
Markham: We do not.
Fuller: No, sir.
Wooten: You do not?
Markham: No, sir.
Wooten: All right. Next question, if I may, Madam Chairman.
Wooten: Total positions of the institutions that are vacant, do you know that?
Fuller: I do not have the total number with us this morning.
Wooten: What number–
Fuller: The total vacant positions.
Wooten: –do you have?
H Rice: Mr. Wooten, as of June 22, the total vacant positions for the institutions was 11,507.
Wooten: Totally unpaid positions?
H Rice: Yes, sir. Vacant positions.
Wooten: Of those, how many were two years old or older?
H Rice: I do not have that information, but we can get that for you.
Wooten: All right. Do you show in your budget anywhere interest income and interest expense?
Irvin: This is probably a question maybe for item B2. I mean, C2. Do you want to– on the budgets themselves and not on the productivity plan that we’re discussing. Do you want to just–
Wooten: That doesn’t answer my question, Madam Chairman. Do they include their interest expense?
Markham: The institutions do, yes.
Wooten: And what about your interest income? Do you show that?
Markham: The institutions do, yes.
Wooten: The report is great. But it doesn’t cover what– we’re talking about from a budget standpoint. Can you give me those numbers, the interest? And do you show that as a budget line item, interest income and interest expense?
Fuller: It’s not its own line item on the reports. There’s not an individual line item for interest income or expense.
Wooten: Do you think it ought to be? Isn’t that a pretty sizable amount of money?
Fuller: It has not been reported in the past. We can create that line to present that to you.
Wooten: I would request that. I’d also like to know how many positions have been vacant for two years or longer.
Fuller: Yes, sir.
Wooten: Are you going to discuss personnel a little later?
Fuller: I believe that we had that prepared for the personnel subcommittee.
Wooten: Okay. For the committee. Okay.
Fuller: Yes, sir.
Wooten: All right. And–
Irvin: Yeah. Representative Wooten, if you’ll just hold, I’m going to keep you on to answer your questions, but let us go ahead and move to Mr. Rice presenting the budgets for the institutions. And then, Representative Wooten, I’ll just keep your mic on, and then you can continue to ask questions. Because you’re asking about, I think, what he’s about to present about.
Wooten: All right.
Wooten: Thank you.
Irvin: So let me go ahead and move to you. There’s no other questions on this. Thank you for that report on the productivity funding distribution spreadsheet. So we’ll move to item C2. Mr. Rice, you’re recognized.
H Rice: Thank you, Madam Chairman. Henry Rice, BLR staff. If you’ll please look at the document entitled Summary of Institutions of Higher Education, which should be on your desk, it’s a summary of appropriations that we hope will assist you in your decision making today. You’ll be looking at and making a decision on the appropriations for treasury, cash, and other appropriations that are in this binder. And the binder is broken down. The first volume is the universities. And after that, it’s the colleges. And going back to the summary, there are three parts. And on the first part, you’ll see the treasury appropriations. And those are paid from Revenue Stabilization fund, Educational Excellence and Workforce 2000 funds. And if you read it from left to right, it will show you the institution and the fund. It will show you the page that the appropriation appears on in the manuals. And it will show you the authorized appropriations that they currently have in this fiscal year. And after that, the Arkansas Higher Ed Education Coordinating Board, that’s AHEC B recommendation for the next two fiscal years. That’s fiscal years 2024 and 2025. And the columns after that show the change in the dollar amount for the next biennium, as well as the percent change from the current authorized appropriation levels.
H Rice: So the far right column, it has asterisks. And one asterisk will show line item changes. Two asterisks will show either an addition or deletion of a line item. And three asterisks will indicate the deletion or addition of a new appropriation section. So, on this first page, it totals the four-year institutions at the bottom. The second page of your handout totals the two-year institutions in the same format. And these are still the treasury fund appropriation summaries. On the third page is the beginning of the cash appropriation summaries. And these are paid from their tuition and fees, sales, and federal funds. It also has the same format. And going to the very last page, we have what we call other appropriations on this handout. It includes tobacco funding, special revenues from court filings that go to the University of Arkansas and UALR law schools, and breast cancer research funds, among others. Madam Chairman, that’s all I have on this summary.
Irvin: Okay. So, Representative Wooten, you’re still on. Are there other questions that you need to ask specific to this report?
Wooten: Well, he may have answered them. I haven’t had a chance to look over this report. I see a total institution cost of $946 million. Is that the total expenses?
H Rice: What page are you on, sir?
Wooten: Page 2 of the summary. Down at the bottom, it says, total all institutions, $946,263,000.
H Rice: So that’s the total of their treasury appropriation for the current fiscal year. So that’s state funding. And if you wanted an all inclusive amount of their appropriation total, you would need to include the cash appropriation, which is on page four. So that’s approximately $5.4 billion.
Wooten: Okay. Okay. But now, this is just on the institutions?
H Rice: Just on the institutions. Yes, sir.
Wooten: Okay. All right. Thank you, Madam Chairman. I appreciate it.
Irvin: Yes, sir. Okay. Representative Jean, you’re recognized.
Jean: Madam Chair, I have a question for the agency when it gets up here.
Irvin: Okay. Which institution?
Jean: Dr. Markham.
Irvin: Okay. Dr. Markham.
Jean: Am I recognized?
Southern Arkansas University
Jean: Okay. Thank you, ma’am. Dr. Markham, we’ve talked about this earlier, the Southern Arkansas University funding. And I’m not picking on any institution. I’m not going to name any institution. And I realize we’re not funded on FTEs. But the Southern Arkansas enrollment has gone over 5,000. And when I think this formula was funded, we were at least 4,400. And schools that had 2,800 enrollment have significantly more money on their base from the state than Southern Arkansas University. Can you address how we got there? And I know it was that part of that old formula, but that formula needs to be changed because enrollments change. Programs get added to schools. A lot of stuff regionally– education in Louisiana got higher. We got a lot of Louisiana students across the border. Explain the funding as it deals with Southern Arkansas University and why it’s so underfunded compared to other four-year institutions that are its size or smaller.
Markham: Sure. And thank you for that question. What happened with SAU as well as some of the other institutions is at the time that their base funding was set, they were much smaller. Other institutions in the state were larger. So their funding per student at the time that it was set was relatively similar. Over the course of the last 20 years, we’ve seen some institutions get much larger. Other institutions have lost population due to some reasons other than they can control. Some just are killing it like SAU. They’ve done a great job of recruiting students. But because we never really funded based on a per student basis, when you break it down on the number of dollars per student, we have some that are out of line. And SAU is one of those. They’ve grown a lot. They did not see their funding increase steadily as they grew. And now, we’re in a position where for the number of students they have, they really aren’t adequately funded.
Jean: And I think just this year’s enrollment for what we’re going to have a 3.8% increase in funding, and SAU’s enrollment has jumped over 15%. So it doesn’t match up. And before we get into the session, Madam, I’m going to ask that we flag the Southern Arkansas University budget. I would like to have a discussion with your group and see what we can do.
Irvin: Members, I’ll also let you know there are representatives here from all of the institutions, I believe. So if you have a specific question to any particular institution, we can also call them up to answer any of those questions. Do you have any specific questions for SAU to come to the table and discuss or answer? Because I can bring them up at this time.
Jean: Well, if President Berry is just itching to get up that table, I’ll–
Irvin: That’s fine. Thank you, Dr. Markham. If you’ll just state your name for the record, and then you’re recognized.
T Berry: Trey Berry, President of Southern Arkansas University.
Irvin: Representative Jean.
Jean: Dr. Berry, I’m over here. What I was discussing on y’all’s funding, kind of explain where y’all are at on enrollment. And once again, we’re not picking on any other institution. I’m concerned with making Southern Arkansas University whole. Explain the dilemma that you’re in on the increase in enrollment and such a small amount of funding that you have been increased.
T Berry: Yes, sir. Dr. Markham was exactly right. Our funding base was set decades ago when SAU was really half the size that it is today. That base has stayed the same as we have grown. And this year, we broke the 5,000 mark with the same amount of base funding per student. It makes it very difficult, but we’re doing a very good job of budgeting and making sure we can do the best we can with what we have. But it is a struggle. It’s a great thing that we’re growing. We’re going to continue to do that. I think it’s good for South Arkansas that we continue to do that. But it is a struggle to have the same base funding we’ve had for literally decades.
Jean: Can I have a follow-up?
Irvin: Yes, please.
Jean: And explain kind of what you’ve done on your tuition. I know we’ve tried to– we’re in the south part of the state. Incomes are lower. How have you addressed your tuition over the last few years?
T Berry: We know that we have a different demographic of students that are from lower socioeconomic, and we try to do our best to keep that low. Over the past three years, I think our tuition has gone up about 2.3%. And so that’s deliberate on our part. But we also know that we have to do a better job in fundraising. We have to do a better job in budgeting to keep us between the ditches, as they say.
Jean: Appreciate it. And I do want a flag the Southern Arkansas University–
Irvin: Yes. It has flagged.
Jean: All right.
Irvin: It’s been flagged. All right. Thank you.
Jean: Thank you, Dr. Berry. Thank you, Madam Chair.
T Berry: Thank you.
Irvin: Thank you. Okay. Okay. Does anybody else have a question for– okay. Not for them? Okay. Then I will defer to Senator Elliott. Go ahead. You’re recognized.
Elliott: Okay. Thank you, Madam Chair. Dr. Berry, I know many times when there is growth, it matters greatly for funding. Growth in what areas? What kind of degrees are you having to pay for now in a lot of that growth? Could you just give me an idea of, with the student growth, what kind of degrees are the ones that are the most representative about the growth? And what are the degrees that cost the most to fund a student to go through SAU?
T Berry: Thank you. Without a doubt, our growth has been primarily in the STEM areas, which is science technology. Engineering has grown. We started an engineering program six years ago. We have over 250 students in that program now. As you can imagine, all the equipment for engineering is very expensive. Nursing program, all of our our pre-health has grown significantly. And then our computer science program has drastically increased. And as you can imagine, with all the technology needed for those graduate programs and those undergraduate programs in computer science, it’s very expensive. And so, yes, we love the growth, but that growth is in areas that are very expensive to maintain.
Elliott: And the fact that I might come to SAU and I’m in the STEM area, it’s going to cost a whole lot more for me to get the degree that this state desperately needs– hope I don’t leave– but it costs a lot more. But tuition-wise, does it cost more for me as a STEM student to get a degree than anybody else? It’s just student- student, right?
T Berry: No, ma’am, it does not cost you any differently, but it does cost the institution more to educate you per student.
Elliott: And is there anything in our state formula that accounts for that? How does the formula account for, “I’m here as a STEM student. And I’m going to cost a whole lot more than anybody else”? How do we handle that?
T Berry: Well, I think there is a part of the formula that weighs heavier on some STEM areas and graduate areas.
Elliott: But it doesn’t pay totally for that student that costs a whole lot more.
T Berry: No, ma’am.
Elliott: And maybe that’s something you all can talk about when you get back with Dr. Davis and others, when you get back to having your discussion about our formula. I know we’re talking about the productivity formula, but I think that’s an important part of what it means for our colleges and universities to produce in the very areas that we need so badly. So thank you so much for your response.
T Berry: Thank you.
Irvin: When you define tuition, are there additional fees that are included into the tuition? I mean, I know my kids were in different programs, and there were additional fees that they had to pay for in addition.
T Berry: Absolutely. If you’re in certain STEM areas, there are a few fees that you are paying that are different than others, but it’s not drastically different.
Irvin: Okay. But there is a little bit of a difference–
T Berry: There’s a little bit. Yes, ma’am.
Irvin: –because they’re in that kind of a program. So they may have to pay additional fees to cover the expenses of that.
T Berry: That’s correct.
Irvin: Okay, thank you. I just wanted a clarification on that. Okay. Thank you. I think there’s no other questions for you. Thank you so much. Representative Meeks, you’re recognized.
Meeks: Thank you, Madam Chair. Being the tech guy, my questions are related to ARE-ON.
Irvin: Is there somebody here– thank you. If you’ll come to the table.
Meeks: And so Mr. Anderson may be able to answer my first question. On their appropriation on page 119, they are authorized $3 million. And the new recommendation is going to drop that to $2.1, but everything else is all zeros on that page. So is this just a pass-through appropriation, or is that better left to the agency? Okay.
Irvin: Agency. If you’ll identify your name for the record.
Turner: My name is Elon Turner. I’m the executive director of ARE-ON. We receive no general revenue funds. This request represents what our next priorities are. We’re interested in replacing some of the equipment on where we provide broadband services to colleges, universities, and hospitals in the state. So this is reflective of our future priorities.
Meeks: And I’m way over here to your far, far, far right.
Meeks: Okay. So can you explain the appropriation on 119, why it’s all zeros except for the $3 million authorized? And then it looks like the recommendation has dropped from $3 million to $2.1 million.
Turner: I believe it’s because we did not receive any of those funds, and none of them were spent.
Meeks: Okay. So that appropriation is still needed then?
Turner: The priority has changed and so the amount requested has been changed as well.
Meeks: Okay. So we still do need that appropriation then?
Turner: Yes, it will help offset some of the expenditures and revenues that we would need to receive from the schools to take on that project.
Meeks: Okay. And then on your main appropriation on 122, or at least 122 in our manual, the request is for $24.5 million for capital improvement. It looks like there was nothing spent on that last year or this year. Do you have a source of funds for those capital improvement projects, for that $24 million? Or is that just, “We hope to get money to be able to use for capital improvements”?
Turner: Yeah. Generally, that’s what this line is reserved for. It’s federal or state grant funding. Generally, the programs are not the same every year, but we keep a certain amount of appropriation requests in case we receive those. Currently, we have about $36 million in requests out that are under review. We don’t anticipate spending all that in one single fiscal year. And so this is the level that we think is appropriate for the expenditures that we might have if we were to receive those.
Meeks: Okay. So you actually do have potential funds coming in for that line item then?
Turner: Yes, yes. We do.
Meeks: Excellent. All right. Thank you. Thank you, Madam Chair.
Irvin: Okay. Are there any other questions for the gentleman at the table? All right, thank you. Senator Hammer, you’re recognized.
Hammer: Thank you, Madam Chair. I’d like to ask Dr. Markham a question. And then U of A System, please.
Irvin: Okay. If someone from U of A System can come forward as well.
Hammer: So on the question of– oh, sorry, ma’am. Do you want– sorry.
Irvin: Let them come to the table and identify themselves for the record. All right. Go ahead. If you’ll identify yourself for the record, Dr. Babbitt.
Bobbitt: Excuse me. I’m Don Bobbitt, President, University of Arkansas System.
Irvin: All right. Senator Hammer, you’re recognized.
Hammer: Morning. First of all, for Ms. Markham, when we hear discussion around enrollment numbers, does that include high school students that are calculated into the enrollment numbers of the institution as reflected on anything the way of financial request?
Markham: So that’s a yes and a no. So any time you hear enrollment numbers, high school students are included. But enrollment numbers are not a consideration in productivity funding.
Hammer: Okay. Not so much productivity funding but the request for appropriation, because does it take more to– if the institutions are counting high school students in their enrollment number for what those high school students are enrolled, does it cost more to educate a high school student less or the same as, say, a traditional student that is counted in enrollment?
Markham: I’m going to give a broad generalization that it costs less, and that is because a percentage of those students are being educated at their high school campus with a high school teacher, and they aren’t using a lot of resources at the college. There are going to be high school students that are attending at the college with the college instructor and would be consuming similar resources as a college student. But I would say in general, those high school students are cheaper or similarly cost to educate.
Hammer: So how are we as a legislature supposed to distinguish that when institutions come and say they need more appropriation because their enrollment is up? How do we know? Or help me understand how we should know, for the request of appropriation or any increase in funding, the distinction between the enrollment being up because of high school students that, if I understood you right, don’t cost as much to educate versus traditional? How are we supposed to separate those numbers out? Or is there somewhere out there that we could see that so we can make a good decision?
Markham: We can provide that to you with and without the high school students in the calculation.
Hammer: Okay. Madam Chair, can we get that, please?
Irvin: Yes. If you’ll send that to the chair, and then we’ll send it out to Mr. Anderson.
Hammer: Okay. And a question for Dr. Bobbitt, please.
Hammer: On the spreadsheet that we’ve got in front of us, when I look at the U of A System, part of it is UAMS. Maybe you want to call the individual ones up, but if I’m reading these right, it would appear that some of them are going to go away after 24-25. For example, the Garvin Woodlands, the Pryor Center for History, and the Arkansas Centers for Rural Education in Autism-Related Disabilities. Am I misreading that, or can you help me make sure I’m interpreting those numbers right?
Bobbitt: So I’ll defer to our CFO for the system who has up-to-date information on it.
Hammer: All right. Thank you.
Irvin: All right. If you’ll just state your name for the record, then you may proceed.
T Smith: Thank you. Tara Smith, CFO for the UA System Office. Senator Hammer, I think you’re speaking specifically to some of the appropriations that previously were approved for various UA Fayetteville operations. And UA Fayetteville has elected to not continue to request those appropriations. They have not been funded in the past. So that’s where you will see they’re going to 0 from the standpoint of the recommendation as they were not requested.
Hammer: Okay. And do you know, for example, like the Centers for Rural Education Autism-Related Disabilities, is that being picked up by somebody else, covered by somebody else, or do you know where we can offline discuss on that?
T Smith: I do believe we have representatives here from the University of Arkansas. I do not believe that those operations are going away, but they’d probably be able to best speak to answer that question.
Hammer: Okay. And then the last question would be this, down on UAMS on healthcare initiatives, if I’m interpreting that right, there’s a request for additional funding right at $500,000. Is that correct? Am I interpreting that right?
T Smith: That is correct. Yes, sir.
Hammer: And do you know what that’s going to be used for? I know with the discussion about the shortage of healthcare providers, nurses, etc., does that have anything to do with that? Or what’s the increase requested amount for?
T Smith: And I do think that UAMS is also here present. They can speak to the specifics that are involved and the expenditures that would be supported with those revenues if they were to be funded.
Hammer: Would the chair allow that? Or you want to defer for sake of time, or you want me to just talk to them offline?
Irvin: I mean, we can bring them. If they’re here, go ahead and have them come up to the table. Let’s go ahead and get the questions answered as best we can. Thank you. Thank you for having everybody here, too. We appreciate that very, very much.
Irvin: All right, if you will just state your names for the record, and then you’re recognized to proceed.
George: Amanda George, CFO for UAMS.
Irvin: Mr. Davis, do you want to–
Davis: Sorry, it’s my first time. Andy Davis, UAMS.
Irvin: You might not should have said that. My board just lit up. Senator Hammer, you’re recognized.
Hammer: Thank you. I’d like to direct my question to Representative Davis, if I may, please. Kidding, Andy.
Irvin: There it goes.
Hammer: There you go. Healthcare initiative, the $497,000, can you just hit a high level, what it’s going to be used for, and how is it going to improve anything?
George: I can answer that one. That $497,000 is part of an overall increase that ADHE recommended for the state funding initiative. So it’s just a 7% increase, and you’ll see that in all of our requests.
Hammer: And then on the Institute for Rural Health Transformation, can you explain those numbers for me? That’d be the last question. Thank you, Madam Chair.
Davis: Senator Hammer, I’ll take that one. There’s a plan for– well, I won’t even say there’s a plan. Put it on Representative Wooten’s wish list to create a rural health institute in Arkansas. It would be a partnership between multiple organizations such as the Rural Hospital Partnership, and that appropriation request would just be an appropriation mechanism for that if a funding source is identified in the future. There’s not one identified at this time.
Hammer: Okay. Thank you. Thank you, Madam Chair.
Irvin: Are there any other questions for the folks at the table? Representative Wooten, you’re recognized.
Wooten: Yes. First of all, on the rural autism area, I would encourage y’all to look at that closely and include that $2.5 million in there. I can’t fathom pulling out $2.5 million or not doing– did you never receive that money?
Davis: Representative, that’s a University of Arkansas-Fayetteville appropriation, but you’re correct. It’s never been funded.
Wooten: Okay. We need to address that. My question. Nursing school. I have received information that nursing schools in Arkansas are being told if their rate of retention in state does not increase, that their funding will decrease. Is that true?
Markham: Their funding won’t decrease because their funding is controlled by Higher Ed Coordinating Board recs. What might happen is if their pass rates for their licensure decrease, they may lose their approval to operate.
Wooten: No, I’m not talking about passing rates. I’m talking about there being some of them have been told, at least the information I’ve got, is that funding, if they– if a student graduates from a nursing school and goes outside the state to seek employment, that that facility’s funding may be cut as a result of that. They pass, they’re through, they’re done. But they go outside the state.
Markham: That is incorrect. We do not have a metric on employment for–
Wooten: Do what now?
Markham: We don’t have a metric on employment for students after they graduate, so that is unrelated to their funding.
Wooten: So you don’t know? They haven’t been told that?
Markham: Not by the higher ed division.
Wooten: Not by higher ed.
Markham: Not by higher ed.
Wooten: Well, are you saying that maybe an institution may have told them that?
Markham: Anything is possible. Yes, sir. Anything is possible.
Irvin: So what you’re saying is we don’t collect that kind of data to be able to make that. Even if you wanted to, we have no mechanism to collect that kind of data to make any kind of a decision like that.
Markham: It probably exists, but at this point, we don’t collect it and we don’t use it.
Wooten: Thank you, Madam Chairman.
Irvin: Yes, sir. Representative Springer, you’re recognized for a question.
Springer: Yes, ma’am. Thank you, Madam Chair.
Irvin: Is it for these individuals?
Irvin: Okay. All right. Anybody else have questions? Okay. Just hold, Representative Springer. Representative Vaught, you’re recognized.
Vaught: Thank you. Thank you, Madam Chair. For Dr. Markham. I know that we have a large workforce issue in our state, and I’m wondering if there’s anything in the formula for the noncredit workforce that I know a lot of our two-year colleges actually do for our areas. I know UA Cossatot does a lot of what they call noncredit workforce training. Can you tell me if in the formula there’s any way that they get funding for that or credit for that?
Markham: So in the productivity funding, there is no metric for noncredit workforce. The funding that the institution receives can be used for that, but they’re not measured on it in the formula. There’s been some conversation on adding a metric to that. However, so far those conversations have dead-ended because of the volatility of those outcomes. The number of hours that get done at the two-year colleges year over year, it swings pretty violently depending on the economy and the employers in their area. We’ve also had some conversations. Productivity, RSA is only one piece of the state funding that the institutions receive. So looking at some of those other special revenues and deciding whether we want to tie some kind of outcome to the ETF funds or the Work Force 2000 funds that the institutions get. So the answer to your question is the funding can be spent on noncredit workforce. However, there’s not a metric that measures that.
Vaught: I would think that that’s very important to most rural areas, that we have this type of noncredit training that’s going on in our areas, so I’m wondering how much it’s costing our colleges that they’re not getting money for, and they’re having to rob from Peter to pay Paul. If you can kind of give me a roundabout about how much that cost our colleges, I would appreciate that.
Markham: I’ll see what I can produce just at higher ed. It may be something that we have to engage the institutions in to find that over, but yeah.
Vaught: Okay. Thank you. Madam Chair.
Irvin: And also identify the different funding sources that they are using for those type of programs I think would be helpful. Senator Wallace, you’re recognized.
Wallace: Thank you. Now I’m on. Okay. Hello. How are you today?
Wallace: I would agree with DeAnn. From my point of view, anything that our colleges can do that gets our graduate to a job afterwards, we need to be able to track that. It does no good for somebody to spend four years in college and rack up $30,000 of debt and not have a job when he comes out, whereas some people can go two years and come out with a great job. Arkansas Northeastern is a good example of that. They have the highest salary graduate in the state of Arkansas. What can we do to help with that?
Markham: So we’re in process. The state longitudinal data system is new. It’s in its infancy, and a lot of the state agencies are now feeding into that data system so that we can do exactly what you mentioned. We’ve known that that’s always needed to be a part of it, but we haven’t been able to reliably measure institutions. There’s been a lot of holes in it. Those individuals who go to work for the military, the federal government, across state lines; there’s lots of people who aren’t captured. And so as all of those holes are plugged and we’re able to provide some reliable information on how those outcomes are distributed throughout the state, we’ll be able to add metrics for that. So yes, I completely agree with you. I just think that we’re not yet to the point that– I can’t hold institutions accountable for things that I can’t verify.
Wallace: I hope we get there quick. Thank you, ma’am. Madam Chair.
Irvin: You’re welcome. And also, that also ties into the Higher Ed Consumer Guide legislation that we passed last time.
Markham: Yes. And those are all published now for each institution.
Irvin: Okay. So just describe that for the membership really quickly.
Markham: So the Higher Ed Consumer Guide is basically a scorecard. It lets students know the success rates for the students, how much it costs to go there, what their outcomes are, so that students can compare and help make an informed choice about their institution. So we’ve provided one for all of our institutions in the state, and it’s now available online. And the institutions provide it to students when they’re admitted. Correct.
Irvin: And so that is on your website, correct?
Irvin: Okay. All right. Are there any other questions for the folks at the table? All right. Seeing none, we will move on. Representative Springer, you’re recognized. Which institution that you have a question about?
Springer: UA-Little Rock.
Irvin: UA-Little Rock. Somebody is here from UA-Little Rock. If you will come forward. Members, it’s my intention– since it is 10:15, this is the last question I have right now. It is my intention to go ahead and push through and not take a lunch break but to push through and to move on to Item D, and then we’ll have everything done by lunch, and we will not have to meet this afternoon. Representative Springer, you’re recognized for questions.
Springer: Thank you, Madam Chair. Good morning, Dr. Drale and–
Irvin: Let me just let you all identify yourself for the record first and then you may proceed.
Drale: Christina Drale, UA-Little Rock.
Lee: Joni Lee, UA-Little Rock.
Irvin: Push that one more time, please. It needs to be red. Let me turn this person off. Okay, go ahead.
Lee: Joni Lee, UA-Little Rock.
Ganz: Hi. Jerry Ganz, vice chancellor for finance and administration.
Springer: Thank you. Thank you all for being here today. As you all know we have– Dr. Drale and I and Tony here have had conversations about your funding sources over the past year or so. And as I look at page 220, your funding sources– we have specifically talked about the funds that you all received from the Charles W. Donaldson funding, and I’m trying to locate under your funding sources on page 220 where is that line item, specific line item located in the funding sources that you show here on your page? And if you can tell me where it is, then tell me what the balance is with respect to that account, that funding source.
Drale: Well, it comes into our accounts as a grant fund, so I’ll defer to my CFO. Where are grant funds in this spreadsheet?
Ganz: Ma’am, generally, grant funds would be paid through the federal funds. Will that be the cash appropriation? And on page 220, which you’ve referenced, in the current fiscal year, they received about $2.9 million of federal funds. It could be in that line item, but I would have to defer.
Springer: Okay. But this particular funding did not come from the federal government, even though you’re saying that it may be in that particular fund source?
Ganz: What was the grant program that you referenced?
Springer: Charles W. Donaldson Academy. It was a educational fund that came from the case of the Little Rock School District versus the Pulaski County Special School District. It initially was funded in the amount of $10 million, and that fund was awarded to the university back in 2015. And I’m trying to decide what is the current balance of that grant fund that was provided to the university.
Drale: We’ll have to get back to you on that.
Springer: Okay. Would you flag that one for me, please? Thank you.
Irvin: Yes, we will. All right. Representative Wooten, your question is for these folks?
Wooten: No, I have them for the Director of Higher Ed.
Irvin: Okay. Anybody else have questions for UA-Little Rock? All right. Seeing none, thank you so much for being here. And if you’ll get that information to us, that will be appreciated. All right, back to the table. Thank you. Representative Wooten, you’re recognized for a question.
Wooten: Thank you, Mr. Chairman. Just so everyone won’t think I’m senile. I know that she’s not a secretary, but I think that position ought to be a secretary position and not relegated down to the directorship. My question is, do you all budget anything for remedial efforts of students coming out of the schools?
Markham: Yes, the institutions do. They don’t necessarily budget, but they have to provide an allocation of how much they’re spending at the institution level on remedial efforts.
Wooten: Does that have anything to do with the formulating of the formula?
Markham: It’s not part of the funding, but it is a metric. So institutions who– much like STEM that Dr. Berry mentioned earlier, when an institution has success with a STEM student or a remedial student, they actually get three times the multiplier on their productivity funding. So we give them a lot more credit for being successful with students who are starting out behind.
Wooten: Good. I like that word, behind. Do you know what the total cost to institutions for remedial efforts?
Fuller: I don’t have it with me today, but we do have that posted on our website. We have it annually, and we have a report posted.
Wooten: Okay. I appreciate it. Thank you, Madam Chairman. Thank you, Madam Secretary.
Irvin: All right. Thank you. Senator Elliott, you’re recognized.
Elliott: It’s for these.
Irvin: Okay. Go ahead.
Elliott: Okay. Can you tell me in a kind of a macrocosm way– years ago, I used to keep up with this, the three top costs for operating higher ed. I know technology was one of them. I remember well. I don’t remember– I’m just wondering what it is now because I’d like to be able to look at those top drivers and compare it to funding and maybe over the years.
Markham: So this is, again, very broad generalization. Well, the top cost is personnel. So more than 70% of the budgets for higher education are faculty and student support staff. So that’s number one. The second would be infrastructure, mainly critical and deferred maintenance. And not to go back to that, but one of the reasons some of our institutions struggle so much is they have to use that M&O budget that we provide through productivity to address those critical and deferred maintenance. It’s basically putting out fires literally as those things come up. So personnel, critical and deferred maintenance, and then technology. And technology often struggles because things that were budgeted for technology end up getting spent on those critical and deferred maintenance emergencies. So our technology on our campus many times is not up to par with what it should be because of those. But those are our three largest drivers.
Elliott: Of the three of them, have you seen, especially as you’re saying personnel, major increases in the costs of personnel, or has that pretty much been held flat, or?
Markham: I would not say we’ve seen an increase in cost. I think we’ve seen a huge increase in the inability to have longevity in our personnel. So we have lots and lots of turnover. Much of that is because it’s so inflationary sensitive, and we don’t have an inflationary adjustment in the way we fund those positions. COVID was a huge driver because a lot of our knowledge workers were able to seek employment in more flexible environments where they weren’t expected to come to campus and they had a little more control over their work environment. So much like with state agencies, we’ve seen a lot of our faculty and our knowledge workers leaving higher education for those other things. So even though we may not be paying a lot more for the positions, the cost has increased because with the turnover, it’s very expensive.
Elliott: All right. Thank you. Thanks, Madam Chair.
Irvin: All right. Thank you. Representative Wooten, you’re recognized.
Wooten: I’d like to make a motion, Madam Chairman, to accept the AHEC recommendations of the budget as submitted.
Irvin: All right. So the motion is to accept the AHEC B recommendation, which includes all the institutions that are on this report and their budgets. Is there a second? Second. All those in favor, say aye. And opposed? I’m sorry. We’ll get you the information. It’s just flagged. All those opposed? All right. Seeing none, motion passes. Thank you. Thank you so much. All right. We’re going to push on, folks, since it’s only 10:25, and go to Item D, Department of Inspector General. I believe those folks are all here, so we do have an audit finding. Leg Audit is here, so we’ll have Leg Audit come up. And want to say thank you to all the institutions, membership that came. Thank you so much for being here this morning. We’ll let the room clear out. Next time you should all wear your colors so we can see exactly where you’re from, and a mascot head would be appropriate. Bring your mascots. Like College Game Day. Put the head of the mascot on or a banner. Just hold just a second. We’ll let everybody clear out. Thank you. Okay. If folks can move out, please, we’re going to continue. If you’ll state your name for the record, then you’re recognized. As you’re leaving, if you can close those doors and be quiet for us? We’d like to continue with our business. Thank you so much for being here. If you’ll state your name for the record, you’re recognized.
Shaw: Thank you, Madam Chair. I’m Tammy Shaw with Legislative Audit.
Irvin: Bring it closer.
Shaw: Is that better?
Shaw: One finding was issued regarding deficiencies in the agency’s cash-receiving procedures for the two-year period ended June 30, 2020. The deficiencies included the following. For the Arkansas Fair Housing Commission, 35 checks totaling just under $15,000 were held 21 to 42 days on average prior to deposit. Two of these checks were held for over one year before being deposited. A check log was not maintained for the last three months of fiscal year 2020. For the office of internal audit, one check totaling almost $3,300 was held 22 days before being deposited. A check log was not maintained, so ALA was unable to confirm if four checks totaling just under $26,000 were deposited timely. And for the Office of Medicaid Inspector General, nine checks representing Medicaid reimbursements from providers and totaling approximately $15,000 were not transferred to the Department of Human Services timely. Receipt to transfer averaged 10 days. Madam Chair, this concludes my presentation of the findings for the agency.
Irvin: Okay. Members, are there any questions regarding the audit? All right. Seeing none. Thank you so much. Okay. We will go ahead and bring up the Office of Inspector General. If you’ll come up to the table. And Miss Walls. If you’ll just announce your names for the record, and then, Miss Walls, you may proceed.
E Smith: Hello, I’m Elizabeth Smith, the secretary for the Department of Inspector General.
Bealer: My name is Tony Bealer. I’m the CFO for the department.
Walls: Thank you, Madam Chair. My name is Lilah Walls. I work for the Bureau of Legislative Research. And we are going to be looking at Item D in your packet which says Department of Inspector General – Administration and Shared Services. They are not in this manual. They are in this handout.
Irvin: If you’ll pull that mic up a little bit. Thank you.
Walls: All right. We made this packet so it was easier for you to see the changes that the department is requesting in their appropriations. They’re associated with the Office of the Medicaid Inspector General or OMIG. The department is requesting that these five appropriations be moved to the department-wide business area, but we can’t show that in a single appropriation summary page. So the pages that were associated with OMIG were moved up to face the corresponding appropriation summary page for the next biennium. Changing the order of these pages will allow you to see the pertinent historical information alongside the request for the next biennium. And if you’ll turn to page 1 in your packet. It’s the very top page. The Department of the Inspector General was created by Act 910 of 2019, and it combines under a single umbrella the Office of the Medicaid Inspector General, the Arkansas Fair Housing Commission, and the State’s Internal Audit Section. Act 586 of 2021 established the Independent Tax Appeals Commission within the Department of the Inspector General to resolve disputes between the Department of Finance and Administration and taxpayers. If you’ll turn the page to pages 2 and 2A, we’ll walk through their current authorized appropriation. On page 2, which is the top page, this is the information associated with the department-wide business area. The appropriations that are associated with OMIG’s move are zeroed out in the first three columns. They’re all zero all the way across, and then they have requests for 24 and 25. The historical information for these appropriations is located on the bottom page on page 2A for those five appropriations at the top that are zeroed out. The rest of the appropriations that are associated with this move will be set up in the same manner. The request for the next two years is going to be at the top, and the historical information is going to appear on the bottom page. In total, the department has authorized appropriations of $13.2 million with 66 authorized positions, and they’re funded primarily from federal revenues, general revenues, state central services. They have 11 appropriations total. One of those was discontinued during the last session and is not requested for inclusion in their upcoming bill, but it is shown in the historical information for the department. Of the remaining 10, the agency is requesting changes to appropriation levels in 7 of them and the continuation of current authorized levels in 3.
Walls: And if we’ll turn to pages 3, 4, and 4A, we’ll talk about the Medicaid Integrity cash appropriation. This is the cash appropriation that’s associated with the Office of Medicaid Inspector General and their goal is to ensure that Medicaid payments for services are consistent, billed appropriately and correctly and that applicable collections are pursued. They also perform on-site provider reviews to ensure compliance with Medicaid policy. And the next three appropriations are for OMIG’s operations. The one that’s listed on 4A is the historical information for their cash appropriation, and it is approximately $202,000 and is funded by an interagency transfer from the Department of Human Services Division of Medical Services. If you look at the top on page 4, the department is requesting that the transfer of the entire appropriation from its previous business area to the department-wide business area, with a continuation of current authorized line items in the new business area, and the executive recommendation provides for the agency’s request. The next one we’re going to talk about is on pages 5, 6, and 6A, and this is the general revenue appropriation that’s associated with OMIG, and it’s currently authorized. If you look on page 6A at the bottom, it’s currently authorized approximately $925,000, and it’s funded with general revenues through the Miscellaneous Agencies Fund. On page 6, which is at the top, the department is requesting this transfer in the entire appropriation from its previous business area to the department-wide business area with the following changes. They’re asking for increases of approximately $144,000 in fiscal year 2024 and $150,000 in fiscal year 2025 for salary and personal services matching adjustments made in the interim, and personnel changes, including reclassifications. The executive recommendation provides for these requests with the exception of the additional appropriation from the reclassifications in the personnel changes.
Walls: Now, if you’ll turn with me to pages 7, 8, and 8A, we’re going to talk about the federal appropriation for OMIG’s operations. On page 8A, on the bottom, you’ll see their summary, and they’re currently authorized approximately $1.5 million, and this is funded through federal funds. And on page 8, which is on the top, the department is requesting the transfer of this entire appropriation from its previous business area to the department-wide business area with the following changes. They’re asking for increases of about $59,000 in FY 2024– I’m sorry, $69,000 in FY 2025 for salary and personal services matching adjustments that were made during the interim, and personnel changes, including reclassifications. The executive provides for these requests with the exception of the additional appropriation from the reclassifications in the personnel changes. If you’ll turn with me to pages 9, 10 and 10A, we’ll talk about the appropriation for the Enterprise Fraud Program. This one is the appropriation for state funds associated with the Enterprise Fraud Program, and their current total authorized appropriation, which is listed on page 10, is for approximately $900,000– on page 10A is approximately $900,000. And on page 10, the department was requesting to transfer the entire appropriation to the department-wide business area, with continuation of the current authorized levels in the new business area, and the executive recommendation provides for the agency’s request. And then on pages 11, 12, and 12A is the federal appropriation for the Enterprise Fraud Program, which is currently authorized at $3.6 million. And then on page 12, you’ll see that they are requesting that this entire appropriation be transferred as well from its old business area to the department-wide business area, and they’re requesting continuation of the current authorized level of appropriation. And the executive recommendation provides for the agency’s request. This is the final request that’s associated with OMIG. So we’ll only have one page as opposed to two going forward.
Walls: The next one is on pages 13 and 14. And this is for the operations for the Arkansas Fair Housing Commission, which receives, investigates, and resolves complaints alleging violations of the Arkansas Fair Housing Act, works to prevent and eliminate discriminatory housing practices and is working to establish a statewide education and outreach program on these issues. And this appropriation provides for its operations. If you look on page 14, they’re currently authorized approximately $1.1 million and they are funded with general revenues through the Miscellaneous Agencies Fund and with federal reimbursements from HUDs Fair Housing Assistance Program and Fair Housing Initiatives Program. The department is requesting the following changes. They’re asking for an increase of $144,000 in FY 2024 and $153,000 in FY 2025 for salaries and personal services matching adjustments made in the interim, and personnel changes, including classifications, and they’re requesting a decrease in operating expenses in both fiscal years. The executive recommendation for this appropriation only provides for the changes for salary and matching requests, with the exception of the additional appropriation associated with reclassifications. In all of the other line items, they’re recommending the continuation of their current levels of appropriation, including the operating expenses line item. The next one is going to be on pages 15 and 16. And this is for the Arkansas Fair Housing Education Trust appropriation, which provides for statewide education and outreach efforts and for the annual Fair Housing Conference that the commission hosts. Their current authorized appropriation, if you look on page 16, is $170,000, and this is funded with federal revenues and cash funds generated by continuing education and training fees, contributions, and administrative and civil penalties. The department is requesting approximately $137,000 in both fiscal years, with a decrease of about $33,000 in operating expenses to better align with actual expenditures. And the executive recommendation provides for the agency’s request there.
Walls: The next appropriation we’re going to talk about is on pages 17 and 18. And this is for the Independent Tax Appeals Commission. This one’s new. The Independent Tax Appeals Commission was established to provide a neutral body to resolve controversies between taxpayers and the Department of Finance and Administration, and this appropriation provides for its operations. They’re currently authorized approximately $2.5 million, and that’s listed on page 18, and they’re requesting about $2.3 million in both fiscal years, with the following changes. They’re requesting increases in personal services matching only of about $16,000 in FY 2024 and $23,000 in FY 2025 for personal services matching adjustments that were made in the interim, and they’re requesting a decrease of capital outlay of $300,000 in both fiscal years that will take their capital outlay down to zero. And the executive recommendation provides for the agency’s request. The next appropriation is on pages 19 and 20, and this is for the internal audit section, and this provides for the operations of internal audit, and they’re currently authorized at the appropriation of about $888,000, and they’re funded through state central services funds. The department is requesting increases to approximately $1.2 million in both fiscal years with the following changes. They’re requesting increases in regular salaries and personal services matching of about $268,000 in FY 2024 and $275,000 in FY 2025 for regular salaries and personal services matching adjustments that were made in the interim. These changes are also associated with the continuation of two pool positions that they received in the interim that are associated with the annual Project Review and Efficiency Study at the Arkansas Department of Transportation. And that responsibility was given to them per Act 298 of 2019. And they’re also requesting a reclassification of one position. And they’re also asking for an increase in operating expenses of about $49,000 in FY 2024 and $54,000 in FY 2025 for increases in responsibilities in the positions that are related to those audits that they’re doing for the Department of Transportation. The executive recommendation provides for the agency’s request with the exception of the reclassification.
Walls: And our final appropriation is on pages 21 and 22. And this is the appropriation for the shared services for the department. They’re currently authorized about $1.3 million, and they’re funded with transfers from the other sections of the department. And they are requesting increases to approximately $1.5 million in both fiscal years, with the following changes. They’re asking for increases of $172,000 in FY 2024 and $182,000 in FY 2025 for salary and personal services matching adjustments that were made in the interim, and personnel changes, including reclassifications, and an increase of a little over $8,000 in operating expenses. And the executive recommendation provides for these requests, with the exception of the additional appropriation for the personnel changes from the reclassifications. And this concludes my presentation for this department. Thank you.
Irvin: All right, thank you. Representative Cavenaugh, you’re recognized for a question.
Cavenaugh: Thank you, Madam Chair. My question is going to be on pages 10A, 12, and 12A, which is going to be the fraud tool. So from what I understand, this is from an Act from 2014. I don’t see where this is funded. Has this ever been funded?
E Smith: It has not.
Cavenaugh: Why do we need an appropriation for something that has not been funded since 2014?
E Smith: There have been a number of changes over the years. When it was initially passed and requested in 2014, OMIG was just being created. The MMIS system for DHS changed and was reborn, rebuilt. And so we initially did a request for proposals. We initially were attempting to purchase the tool, and we had to pull that down based on the specifications related to the new system. Then we’ve now moved into managed care, and so the specifications and requirements for the system have changed. We are anticipating that we would like to go forward with this system, but we just have not.
Cavenaugh: Okay. We haven’t gone forward with it since 2014 and there is no funds for it. Where do you expect to find the funds for it?
E Smith: That is part of the concern. Thank you.
Cavenaugh: Madam Chair, I’d like to have this flagged for session, this budget flagged for session. And I have another question. I’ll get back in the queue.
Irvin: Okay. Representative Meeks.
Meeks: Thank you. Yeah, way over here to your far right. My question is on page 14. I’ve got a couple of questions if it’s all right. This is the Fair Housing Commission. First question is, if I’m reading this right, there is currently one employee there, and with regular salaries and matching, we’re paying that person or we paid that person $150,000? Is that correct? Am I reading that right? Regular salary is $121,000 was spent on this one person and personnel matching another $28,000. So it’s $150,000.
Bealer: Yes, sir. You’re reading that correctly.
Meeks: So can you justify paying one person $150,000 for this position, or is that justified? I mean, that’s twice as much as the Governor makes, so.
Bealer: For the justification, I believe that’s up to this body and to the Governor as well. I know that is a very specified requirements for that position. Frankly, it’s a pretty complicated position, too. And by that I mean because of the federal mandates and requirements that are in place. I’ve got to work with Fair Housing over the past few years, and I didn’t know what I didn’t know. And so this person that’s coming in is an expert in this area, quite a bit of expertise, and truly is a rare skill.
Meeks: And it may be justified. I’m just curious.
Bealer: Yes, sir.
Meeks: So then my next question kind of follows on to that. The agency is requesting up to 12 positions, which is where most of the increase is coming from. You currently only have one. So are we anticipating hiring an additional 10 or 11 people for that department?
E Smith: So there’s two separate fund centers, I think is the right terminology, and one is for the executive director. And that’s the position you were asking that Mr. Bealer was speaking to. But yes, there are other positions that are filled, and we do have open positions we’re working to fill for investigators, grant specialists.
Meeks: Okay. So you will need 12?
Walls: Madam Chair, if I could try to help answer?
Walls: During the last fiscal session, we made some changes to the appropriations that some of these positions were located in. We had an investigations division, the one that we took out, that wasn’t requested for the next biennium. Many of the positions that were associated with Fair Housing were actually in that appropriation, and they have moved to this one. So they’re not asking for new positions that they didn’t have. They’re just shifting them over from a different place.
Meeks: Okay, all right, that makes sense.
Bealer: That was on page 23 where those positions were.
Meeks: Okay. And then the final question that I have is I notice you had requested reallocation of a lot of positions, and the executive did not approve those reallocations. So I’m kind of give you the floor here. Can you make your best sales pitches as to why the legislature should approve those reallocations when the Governor’s office did not?
E Smith: So I’ll start with the Office of Internal Audit request for reclassification.
Meeks: Reclassification is what I meant.
Irvin: Let me just– go ahead and answer the question. Please.
E Smith: Okay. Thank you. So for the Office for Internal Audit, there was a request for reclassification. Currently, we have a position called agency controller, and that person acts as an internal auditor and does perform the managing auditing for the agency. And so we were simply asking for that name to be changed. I think that there was just across the board request to not allow the reclassification. So in particular, that was one. I think there was one in the Medicaid Inspector General’s Office where we have a nurse supervisor listed, but we want to reclassify that or rename as nurse analyst because the nurse does perform analysis rather than bedside nursing. And so we have within the office, within the department, we have functional job descriptions to allow for the work that they do. But we were looking to reclassify those. The other reclassifications, yes, the research project analyst is a GS-6 position, and we are having an incredibly difficult time filling that position. And we need someone with data experience to utilize, participate in reviewing and analyzing the Medicaid data that we review. So we were asking for a higher classification there. It is a higher into a GS-9 that we were asking for. And so we understand that’s, I guess deferred, so.
Meeks: It looks like Representative Wooten may have some input there, but thank you. Thank you, Madam Chair.
Irvin: Okay. Representative Wooten, do you want to add anything to that?
Wooten: Yes, the Personnel Committee, Representative Meeks, had decided at our last meeting, last Tuesday and Wednesday that we would hold all salary adjustments, reclassifications, and everything until the new administration comes into office. And that was an agreement with the executive branch so they would have input. Thank you.
Irvin: Thank you. All right, Senator Johnson, you’re recognized.
B Johnson: The Enterprise Fraud Program, is it $3.5 million dollars in federal money that’s already there?
E Smith: It’s my understanding that the way it would work is we would make the request for the federal funding that it would likely be allowed. It’s just, it’s not sitting in an account waiting for us to draw it.
B Johnson: All right, thank you.
Irvin: Senator Chesterfield, you’re recognized.
Chesterfield: Thank you, Madam Chair. I think Representative Wooten has explained it exceptionally well from our meeting. But as agency heads, you serve at the pleasure of the Governor. And so I appreciate the delicacy with which you treated that question about how the agency recommends. But the executive rec kind of trumps that, does it not? So if we start pitting agency against the person that is responsible, then people lose jobs. Is that correct?
E Smith: Thank you.
Irvin: Good answer.
Chesterfield: With that, I move to accept this report.
Irvin: Okay, I just have two quick questions. I’m going to go back to Representative Cavenaugh and then Representative Wooten, then we’re done. Thank you, Senator Chesterfield. Representative Cavenaugh.
Cavenaugh: Thank you, Madam Chair. I’m going to be talking about the Education Trust, and it’s the fund balance in your education trust. It’s got a fund balance worth 16.36 years. What are we going to do with that fund balance?
E Smith: And I’m happy to bring the executive director for the Fair Housing Commission up to answer more in depth. But what I can say is that the Education Trust fund is designed to be maintained over a period of time. It is different than the typical way that we hold state funds because it’s the federal grant to have the agreement for the Fair housing program. So if Ateca would like to join us.
Irvin: So there’s a stipulation or a requirement to hold a certain amount of money as part of the federal appropriation?
E Smith: That’s correct. And we keep it year to year and it grows and it’s utilized.
Irvin: If you’ll just announce your name for the records, then you’re recognized.
Foreman: Good morning. My name is Ateca Foreman. I’m the director of the Arkansas Housing Commission. It was Representative? Good morning. So, yes, the Education Trust fund holds the money from civil penalties that are assessed for the compliance, as well as fees that are assessed when we put on trainings. We have to keep those funds separated both from the state funds that are given to us as well as the federal funds that are given to us to keep from co-mingling the funds. We are allowed to build that money up over the years. We use it to put on our annual Fair Housing conferences. And in the years where we don’t close enough cases on the federal side, we’re able to use the money in the Education Trust fund to operate from. That way we won’t have to come to this body to ask for additional state funds.
Cavenaugh: Okay. Do you know when the last time you had to draw from that for operation funds?
Foreman: We’re currently operating this current fiscal year from our Education Trust fund.
Cavenaugh: Okay. And one quick follow-up, Madam Chair?
Cavenaugh: This is going to be on your investigation division. You’re not asking for that appropriation, so it’s going to zero. But you do have a little money in excess funding. What happens to that excess funding? Where does it go?
Bealer: We’ll end up transferring that money into either the shared administration services or some other fund as it’s appropriate, most likely it’ll to be to a Z45 fund.
Cavenaugh: Okay. Thank you.
Irvin: All right, thank you. And Representative Wooten, last question. You’re recognized.
Wooten: Thank you, Madam Chairman. To my illustrious colleague from the Senate. We just did that as a courtesy. We weren’t looking to fire anybody. We just did that as a courtesy to the new administration. I have a quick question on personnel, and this is on Fair Housing. You show 12 positions. You show authorized 11. And then on the report I’ve got, which BLR personnel developed for me, it shows Fair Housing 11, but no one’s working. And you’ve got a salary for $121,000.
Foreman: Yes, sir. I can assure you there are plenty of people working.
Wooten: Well, we don’t show what we pay to a person. I know that, but yet you do.
Foreman: Yes, sir. So our investigators are being paid from our federal funds, and I don’t think that is actually reflected here.
Wooten: It shows $121,000 on page 14.
Foreman: So the executive director’s salary, that’s my salary, it’s being paid out of state funds. The rest of the staff is being paid out of federal funds.
Wooten: So that’s you?
Foreman: Yes, sir.
Wooten: Okay. I’ll have one more follow-up. I have 18 vacancies. Well, I guess it’s 30 vacancies, and it shows 3 of them, it shows 3 of them over two years old. But this law was written in 2019 on Fair Housing, and that’ll mean that’s three years. So how many vacancies over two years do you all have?
E Smith: I’m sorry, if I may ask a little clarification. Are you asking for the entire department or specifically within in-house?
Wooten: Well, I’m asking for the entire department because this doesn’t jive with what the numbers are here.
E Smith: Right. And I don’t know exactly what you’re looking at, but because we had 4 different, now 4– 3 different agencies brought into one department. The Fair Housing Commission had existed prior to transformation, prior to 2019. Internal audit existed prior to transformation. And so we had counted up those numbers then. But our vacancy report, I think we have 8 positions.
Wooten: You had 5. You’re showing that this report came from the personnel staff, the BLR, and it showed a total of 52 employees–
E Smith: Correct.
Wooten: –18 of vacancies. And then 2 of those were over two years old.
E Smith: Yes.
Wooten: On here, what I’m saying is this law was written in 2019 and passed, and it’s in 2022. That’s three years. So shouldn’t there be more in over two years old?
E Smith: So from our report, we’d have 5 vacancies over two years. But I can explain.
Wooten: Okay, I’ll get with you when we get through it to get that correct one way or another. Thank you. Thank you, ma’am.
Irvin: All right. Thank you so much. All right, motion. All right. Executive Rec. Second. All those in favor, say aye. And opposed, ayes have it. Motion carries. Thank you so much for being here. And with that, members, we are adjourned. You are free for the rest of the day.