ALC-JBC Budget Hearings

report. thing. Yeah. Thank you members. Welcome back to ALC JBC budget hearings, uh, first up, we're gonna have, uh. Ms. Mildred Hamilton come up and the first one up is Claims commission. You'll come to the table. Good morning to both of you, if you state your name. First Mildred excuse me, Mildred Hamilton. Bureau legislative Research fiscal division. Good morning, members. Good morning. My name is Catherine Irby. I'm the director of the Claims Commission. Thank you for being here, Ms. Hamilton. You recognize. Thank you, sir. Good morning members. On page 2, you'll see the department appropriation for the Claims Commission. You'll see they've got 3 appropriations. You'll also see that they're authorized. Appropriation amounts, excuse me, are in the 3rd column. It operated under 2.9 million. They've got 10 full-time positions. You'll also see the agency and executive requests as you go from left to right across the page, and you'll see that they are funded with state central services and fund balances and a few miscellaneous transfers. They first appropriation is on page 3. It is an operations appropriation. It provides for the personal services and operating expenses of the commission. And as I mentioned before, it is funded with state central services, with the exception of the regular salaries and personal services matching adjustments that I mentioned that happened during the Biennium according to law. They are requesting 762,000 in fiscal year 26 and 763,000 in fiscal year 27, which is also the executive recommendation with the continuation of the 10 positions. Second appropriations on page 5. It's for various claims and it's being paid out of the Mtaneous agencies fund, and this appropriation provides for the payment of small controversial claims, noncontroversial claims, and death benefit awards. They are asking for a continued level of appropriation as the 2025 authorized, that is 2.2 million and that will be continued into the next biennium for both years, 26 and 27, you'll see that the executive recommendation recommends that on page 6. The Last appropriation is for the firefighter benefit review panel. This is a panel that provides advisory options and reports concerning the instances of cancer amongst firefighters. They review claims for death benefits of firefighters who've died of cancer and they make recommendations to the State Claims Commission on the death benefit awards. They're requesting a continuation of their current appropriation of 8000 for both years of the biennium. That'll be for 26 and 27, that is the executive recommendation and that concludes my presentation, Mr. Chair. Thank you, Ms. Irby. You have You think you'd like to bring? No, sir, but I'm happy to take any questions, uh, start off with the questions, uh, uh, Senator Hammer. are recognized Thank you, Mr. Chair. The question I have is along the uh firefighters' portion of your budget. Based on historical data, uh, in your experiences, do you think, do you have any opinion? That it might be beneficial to provide annual screening for OK. Thank you. Um, do you think there'd be any benefit to doing annual screening or that we would need to take a look at doing annual screening for firefighters, uh, with regards to cancers that might be related to their profession. Do you have any opinion about that or any historical data that support that thought. I do not have any historical data that would support that. The commission only gets involved with these claims when, when one is filed. Um, we are not involved in the preparation of claims or in the analysis of a situation to determine whether or not a claim is appropriate. Um, I know that the, uh, Arkansas firefighters Association, um, Has I believe has been involved in the preparation of several claims and maybe a, maybe a better source of an opinion, sir. OK, do you, are you aware of any, the number of claims that have been made associated with that or would I go to them to get that or do you have that? I couldn't give you an exact number over the last year, but I think we have had 2 or 3, firefighter cancer death claims filed in the last year. less than 5, and, and that, that number just, it, it fluctuates by year. Sometimes we see more, sometimes we see less, um, Where those cancer related claims, do you know that I'm speaking of, yes. OK, I'll get with y'all fly then. Thank you. Thank you, uh, Represent Richardson, did you get your question answered, uh, Senator Chesterfield, you're recognized. Thank you. Thank you, Mr. Chair. Uh, we're becoming more and more aware of the deaths. The firefighters suffer as a result of this. What exactly is the 8000 for because it seems like a pittance when we're talking about this kind of healthcare. So is this about how y'all handle it. I know it's not about claims. No, ma'am. um just tell me specifically what the 8000 is being spent for that amount is an appropriation for reimbursement for travel and other expenses of the firefighter benefit review panel. So the 7, The 7 individuals appointed by the governor to review these firefighter cancer death claims and to provide an an advisory opinion to a recommendation to the commission, um, when that panel started, they were traveling to Little Rock to meet and, and, and there needed to be an appropriation to reimburse them for the expenses as provided in the statute. Um, as I understand, um, The panel may be meeting via Zoom or via telephone since COVID. I'm, I'm not sure how they're meeting the commission is not involved in that, but that's the purpose of the $8000. is to reimburse their expenses. All right. Thank you. Thank you, Mr. Chair. Thank you, Senator Hamer, back to you. Do, do you know how much was paid out in claims on those 5 that you referenced. I would have to go back and do some research, the maximum amount allowed by statute is as $150,000 plus scholarship benefits, um, and how many of those were paid out, I believe. I believe that in In the past 8 years that the, that the firefighter cancer death. The statute has been in effect and that I've been at the Claims commission, um, We have had Maybe 2 recommendations by the panel that the claim not be approved. Um, and I believe that the others, I could get you more specific information, but the majority of the claims that have been filed, the panel thus far has recommended. Payment of those claims. Would you, would you get the total amount paid out in claims related to cancer deaths for the firefighters, Mr. Chairman, I'd like to ask that information be provided to the chair to send out to the committee. Um, if you would, if you allow, did you have something to add to it I was just going to ask what date range you were looking for since the statute was enacted or the statute was enacted, I think that gives us a good idea of the total amount that had been paid out in claims because maybe we ought to look at doing some pre-screening in order to help reduce the payout and that's where I'm going in my thought process. So, Mr. Chair, if that's OK, she can send it to you and it'd be passed out to the committee police. Thank you. Yes, sir. OK, thank you. Uh, Representative Richardson, you're recognized you, Mr. Chair. Over here to your right. So you just said that they pay out the 150+ scholarships. So is that, how much is in scholarships is typically that dollar amount. Uh, so that, that scholarship benefit does not have a dollar amount associated with it the way the statute reads is that the spouse and eligible children, um. Who are awarded the scholarship benefits are, um, can be awarded up to 8 semesters at a state-sponsored, state-supported institution, um, And so, obviously that amount can fluctuate, so it, it, it goes by semesters that they are awarded and it's administered by the division of Higher Education. OK, members not seeing any other ones on the screen. I have a motion for executive director. I have a motion. I have a 2, 2nd on favor. I. Post executive rep is approved. Thank you all for being. Next up we have uh. This penalty determination uh analyst is Lala Walls, if you come up and Mr. Arthur Bier. Welcome. Thank you all for being here and uh Ms. Walls, if you go ahead and identify yourself and we'll go across the table. Thank you, Mr. Chair. My name's Lila Walls with the Bureau of Legislative Research. Arthur Budiet, director of Social Security Disability pull your mic down where we can hear you. Sorry, Ricky Moore, assistant director for Social Security disability. Thank you. Uh, go ahead, Mr. Wallace. All right, let's see where you're going to be starting on page 9 in your manual. Um, this agency is responsible for determining the eligibility of Arkansans for disability and other payments in accordance with the Federal Social Security laws, and they investigate suspected cases of fraud and abuse. They have a single appropriation of $76.7 million. That is 100% federally funded and they have 596 authorized positions. If you will turn with me to page 11. You'll see the appropriation summary for their appropriation. Uh, their total request is for a little over $78 million in both fiscal years. Um, and they're requesting, uh, $75,000 in capital outlay to accommodate possible building modifications at their training center. And they're also requesting changes to salary matching to align with position changes that they requested during the interim and their executive recommendation provides for the agency's request for the capital outlay and for some of the changes requested during the interim, but varies from the actual position total requests, and those, uh, totals will be discussed in an upcoming personnel meeting and This concludes my presentation for this agency. OK. Arthur, do you have any words of wisdom you'd like to share with us? We've got plenty of business. That's pretty good. Uh, represented back, you've got a question, I see. Just a quick question right here in front of you. So you, your, your statement you have plenty of business about how much do you process? I mean, how many claims do we we do 30,000 cases for other oops. We do 30,000 cases for other states. And we do 70,000 cases for the state of Arkansas. Right, um, Thank you. And that's about 260 in Arkansas, we give away about $262 million a month. So about $3 billion. Senator Chesterfield. And how are you, young man? Good to see you. What does one do in order to qualify? To receive these services, I think the big problem and the big disconnect is there's so many people, for instance, that have a placket in their car. And they think, you know, and they're ready to file for disability, they can get disability. It doesn't work like that. I remember a bunch of years ago, uh, Senator Kennedy asked me, he said, what's it take to get on that program, booty? The guy's missing a leg, and I said, Senator, what he's missing the other leg, give us a call. Now it, it is really It really speaks to the point, you know, the person has to be able to not work. So people get a prosthesis and they're able to work. So sometimes if the prosthesis doesn't work or there's infection, that's a different story. But typically we have people who apply who say, I have a bad back. I am obese, I have high blood pressure and I'm diabetic. Well, so am I, but I'm still working and I'm 76, so. And that's what we generate, but there's a lot of people who really need the program, you know, and, uh, since the Affordable Care Act, there's a lot of people, especially in poor communities that now can get disability that before never they couldn't prove that they had disability. We would go out and we would buy an exam form, spend $50 million a year buying exams for people who didn't have doctors. We don't have to do that so much now because a lot of people have 4 or 5 doctors and everything's a specialty now. And so when we get the records, people apply If they're denied, people say, well, everybody gets denied the first time. Not true. We allow a third of the people the first time. And then this, and then they can reapply and if they reapply it goes to a different adjudicator goes to a different doctor and sometimes we screw it up, OK, and that's the safety net for them, so we are able to reverse the decision. So it's a pretty good process and we're like 12th in the nation in quality and we're one of the fastest people in the nation to do the cases. Thank you, thank you, Mr. Chair. Motion at the proper time. Thank you. Um, going to representative Richardson. Thank you, Mr. Chair. So you just I had a question what you just said. You said you're one of the fastest processing. What's the time frame for processing those claims. When I first came here it was 68 days. It's now 180 days. 180 days. And so the national average is 220 days. So we've had a great year this past year. We're one of the few states that met all of their goals, um, and, but it takes a long time now. The reason it does is the evidence is exploded. So in the last 14 years, we have 4.5 times more evidence to read. than we had before the Affordable Care Act. And the adjudicators have to read every bit of it, and they're responsible for it to the federal government. So it does take that long for us, um. And then it goes on to a judge. The judge used to be 2 years. Now the judges are down to 8 months. So the process is speeding up and it's becoming more efficient. Thank you, uh, Senator Irvin, you recognize. Hi You may have said this already, but what states y'all, y'all process claims for other states as well? Well, it changes each year whoever needs a lot of help. So this year we're doing South Carolina. Lou in Louisiana and a little bit of New Mexico, you know, 2 years ago we did 30,000 cases for the state of California. So when people get really behind, we're able to help them because we have a force that this body approved a number of years ago as an economic development program so we could give some good jobs to people in Arkansas. We hired 120 people, um, rather than giving those jobs to Missouri and you all approve that and that body of adjudicated. This is doing cases for other states. I mean, I think that's just a great testimony to how efficient. An effective you are at doing this and all the people that work for you are. And then you may or may not have talked about the disability fraud unit that you helped create and I, I just think it's an incredible, um, an incredibly, um, Great accomplishment for our state. I would make a point that we had the first, one of the first two fraud units in the country. And this, it was the only time in the history that a state legislature approved money to a federal funded agency back when we had the crazy Check program in Arkansas that kind of started here and so that started the fraud unit that was over 20 years ago. Anyway, thank you. Representative Wood. German right here, OK, um. Have have have the judges recently or has Social Security recently reviewed, uh, Our cause to review. Of all disabilities or the, the reason I'm asking is I've got a constituent that has been on disability for many years. He's challenged, uh, mentally and physically. And uh now they've denied him. And uh but what I was wondering is this a normal review or do you need to call me on a case like that, but Generally what happens if somebody's been on disability for a number of years, depending on their malady. I mean if they're blind, no one's going to call them. We're not going to call them back for a review. But sometimes people get better and if they get better, they need to come off the rolls and there's oftentimes that judges, sorry, put people on that maybe why were they put on? We don't know. So when the case comes back, usually 57, or 10 years, depending on what their malady. case will all be reviewed. If the person's missing several limbs, they're not going to review that case. OK, the president has schizophrenia. They're not going to review that case. The schizophrenia is not gonna go away. So it depends on what the malady is. The person who had a bad heart, and you know, and all of a sudden he's had several stents, he said bypass surgery or whatever those kinds of things, people who have strokes often get better and so the law is that we have to review, to know the fact is only 15% of those people come off. But 15% nationally is a lot of money. You know, in another, in another 14 or 13 years, everybody who's got the Social Security check may lose 17% of it if they don't straighten it out and find ways to save money. But they're not saving money by taking it off the backs of people who aren't truly disabled and can't work. Uh Thank you. Thank you, Mr. Chairman. Uh, OK, I've got one more, uh, center hammer. Thank you, and I, I wanna just publicly thank you every time that any constituents had a need your office has been superior as far as responding and, uh, maybe not always what they want to hear, but you have good justification for it and for those that you've helped very appreciative. You just said something though that, that's that I want to clarify. If somebody has a diagnosis, you, I think you meant uh said schizophrenia, for example, um. When you, when you are certain diseases determined to be lifelong to where the review process is not necessary. So, and when somebody applies, there is built-in things into the computer system that will bring a case to the front. I mean, if somebody has ALS, you know, they're going to pass away. So a case like that, the computer automatically picks it up if we've got 10,000 cases in backlog, it'll bring that case right to the front. And so they have all these, these codes built into the computer that will analyze those things. But if somebody's been on disability for a while and they have certain ailments. They won't bother them. Well, the reason I ask that is because I think about certain things we do at the state level that require periodical redetermination of what, uh, and I was curious to what you have determined or what the federal agency is determined as not necessary for redetermination, why we might not bring that down to the state level, if somebody else has that same diagnosis, maybe not receiving Social Security, but they're receiving other medical services and well, I don't know that it'd be fair to the state because the rules for federal social Security disability are so much more difficult. Um, We could, I'd be happy to send you those, those types of ailments that, you know, we don't bother, but, uh, it's pretty strict to get on the program. OK. All right, thanks. I'll get that from you. Thank you. Thank you not seeing any more questions before I go to uh Central Chesterfield's motion. I, I just want to encourage you, I think I did this from chair maybe 2 years ago. I encourage your assistant, your staff. To soak up all the wisdom you can from this man all the time that you can he does a good job. He's fair. He's, he, he's. He, he tough when he needs to be, that is a balance. It's got to be hard to do. And Arthur, you do a good job and we appreciate you, Senator Ches fill your motion. Uh, I know executive rep I have a motion in a second, all in favor. I opposed. Thank you. Thank you. Appreciate you, Arthur. OK, members, uh, we have analysts coming up, James Penman. And the election commissioner's board. Thank you all for being here and Mr. Penman, if you'll start off, we'll go across the table and identify yourself. Thank you, Mr. Chair. I'm James Pendon with the Bureau of Legislative Research Fiscal Division. My name is Chris Madison. I'm the director for the State Board of Election Commissioners. Wayland Cooper, I'm the legal counsel for the State Board of Election Commission. Thank you for being here, Mr. Penman. Thank you, Mr. Chair. If you'll turn with me to page 14, we'll have the appropriation summary for the agency. This is for the State Board of Elections Commissioners. They administer state-supported political party primary and special elections, and they're funded by general revenue and judicial filing fees. In total, the agency is requesting $9 million for FY 2026 and 2027, along with 9 positions. And both the agency and executive requests align. We'll go through these 3 appropriations. We'll start on page. 16, this is for the nonpartisan general elections. This is funded by, uh, the nonpartisan filing fee fund, which the board will promulgate rules and regulations establishing nonpartisan office filing fees for covering the cost of election expenses. The agency is requesting to continue appropriation in the amount of $1.6 million each year of the biennium and the executive recommendation provides for the agency request. On the next page, page 17 and 18, this is the operations appropriation for the agency. This appropriation is funded by general revenue from the miscellaneous agencies fund. The agency is requesting appropriation of $1.1 million each year of the biennium, and 876,000 in general revenue funding for each year. The agency request includes the following change in their operating expenses line item, an increase of $5000 for increasing rent costs and the executive recommendation provides for the agency request. And the 3rd and final appropriation for the agency on page 19 and 20. This is election expenses. This is also funded out of miscellaneous agencies and general revenue. This appropriation provides reimbursement for expenses. Provides reimbursement to counties for the expenses of state-supported political primary elections, special primary elections and statewide special elections. This, uh, agency request appropriation of 6.3 million each year of the biennium and 4.1 million in general revenue funding for FY 2026 only. And the executive recommendation provides for the agency request. And Mr. Chair, that concludes my presentation on the State Board of Election commissioners. Thank you, not seeing any on the board I have a motion for executive rec. A motion is 2nd. All in favor. I. Post Sorry that y'all didn't get a chance to speak. We let you throw something in after if you want to. Thank you. I'll stand aside. Thank you for thank you for being here, wise man. Uh Next up we have the ethics commission and our analyst uh Lala Walls, if you'll come back up. And Mr. Graham Sloan, and if you come up and introduce yourself and who's with you. Thank you for being here, Ms. Wallace as you recognized. Thank you, Mr. Chair. I'm Lila Walls with the Bureau of Legislative Research. You'll go ahead and identify yourself. Graham Sloan, director of the Arts Ethics Commission and our business operations specialist Cindy Jones is here with me. Thank you for being here. Thank you, Mr. Chair. Um, we're going to talk about the ethics commission and it's going to be on, start on page 22 of your manual, and this agency is responsible for enforcing standards of conduct and disclosure laws for those involved in the process of government. They have a single appropriation of $1.1 million. That is 100% German revenue funded from the miscellaneous agencies fund, and they have 11 authorized physicians. Um, if you'll turn to page 24, that's where their appropriation is for operations. They're requesting an increase to $1.2 million for both, uh, years of the biennium and those increases are for salary and matching adjustments that were made in the interims authorized by law and the executive provides for the agency's request and this concludes my presentation for this agency. Grams think you'd like to add? No, sir. I see no questions. I have a motion for executive rec in a second. My own favor. I posed Thank you all for being here today. Yeah, I'm sorry, your chest fail, and it is not a question. Graham just wanted to say thank you. Every time I've called, you've always called me back. And sometimes you tell me what I wanted to hear, sometimes she told me what I didn't want to hear, but you're always honest with me and so I just wanted to say thank you for being there over the years and giving what I consider sound objective advice. I appreciate that, Senator. Uh, thank you, Senator Chesterfield for that and from many other ones of us, Graham, uh, that, that echoes, uh, you, your responsive and we appreciate your service and, and uh. taking our costs. Thank you very much. OK, we have the uh judicial discipline and disabilities. Uh, up next, and again, Ms. Walls will. Be handling that so if y'all will come to the table, Miss Abby you'll hit your microphone there. State your name who you with. Good morning. I'm Emily Abbott, the director of the JDBC. Welcome, Ms. Walls. You're recognized. Thank you, Mr. Chair. Um, there, uh, this agency begins on page 165 of your manual, um, they receive and investigate complaints of possible ethical misconduct or disability of Arkansas's judges. They have one appropriation of $7,775,000 and it is 100% general revenue funded through miscellaneous agencies fund, and they have 6 authorized positions. Um, if you'll turn to page 167. You'll see there are, um, appropriations. summary, um, and they're requesting increases to 18 I'm sorry, $37,000 in fiscal year 26 and $108,000 in fiscal year 27. They're requesting increases to operating expenses of $42,000 in fiscal year 206 and $20,000 in fiscal year 27, those increases in year one are for one-time expenses for the replacement of computers in a database and their ongoing increases for both years for rent. And either operating expenses. They're also requesting um increases in conference fees and travel of $18,000 in fiscal year 206 and $77,000 in fiscal year 27. These increases are for training, travel, and conference fee costs for commission members. I spoke with the agency and they said that they have several new commissioners, so they're trying to get everyone caught up exactly on what they need to get done. And the executive recommendation provides for this agency's request and this concludes my presentation for this agency. Ms. Abbott, do you have any statement? No, sir. Happy to answer any questions. I hate to disappoint you. I see no questions. I have a, do I have a motion? Most for executive rec on or in 2nd. Second, all in favor I. Post, thank you for being here M A. Public Defender commission, uh, Mr. Greg Parris, if you'll come up and our analyst will be Jennifer Rook. Welcome, gentlemen, uh, Mr. Rook, you'll go ahead and state your name go across the table. Jennifer Rook, Bureau of Legislative Research. Tracy Ray physical officer. Greg Parish, executive director of Arkansas Public Defender Commission. Again, thank you all for being here, Ms. Rook, you're recognized. Thank you, Mr. Chair. So we're going to start on page 277 for the Public Defender Commission. This is the department appropriation summary. Give you guys a chance to get there. This agency has a total of 5 appropriations. The agency request is about 41.5 million each year of the biennium, the executive recommendation is $40.5 million for each year of the biennium. Um, the executive recommendation provides for the agency request with the exception of one appropriation, and we'll go over that one. The only changes. To the other 4 appropriations are the Ombudsman program, the operations trial office and commission for parent counsel, our change levels in the salary and match line items that are due to adjustments for employees as authorized by law. Now, if you'll turn to page 285. This is the one that's different. This is a cash fund that was added in FY 22 through a restricted reserve fund release. You'll see that they are requesting $1000 the executive recommendation is for 0. These funds have all been expended. So I've spoken with the agency and they are OK with letting this appropriation go. And that concludes my presentation, Mr. Chair. You gentlemen have a statement? Thank you, Mr. Chair. Uh, I have no statement. I'm open for any questions. Thank you, sir. Uh, Senator Chesterfield, you're recognize. What was the 10 to be used for? It was the initial. From Governor Hutchinson for, for the initial COVID relief to get us through until we could get the ARPA funds. And so that's not gonna have a deleterious impact on your. That money has been expended and we're not asking for you, Mr. Chair. Motion at the proper time. Going to Representative Woo. Thank you Mr. Chairman right here. Yes, sir. I have a question on the sources. What, what, what is the interagency fund transfer? Can you tell me what page you're referring to, Representative. 281. And funding sources. It varies from agency to agency in the amount, but I was just wondering what, what is that category of inter Agency fund transfer 17322. In your case it's just $1732. What I'm, what I'm speaking with my financial officer, we're not asking for that money. There's nothing that they asked for. You will see that it's zeroed out uh. And uh forgive me one second to confirm with my financial analyst I can tell you if there's any more information I can give you. OK, just one second. What, what is your, um, one. Yeah, it's on page 281. Representative Wooten, I'll have to get back with you on that if you don't mind. I would be glad to do so, sir. Thank you. One follow-up question, what is your ratio of attorneys to clients. Depends upon where you are in the state, uh, yes, sir, it depends, but I will tell you on an average, uh, for felony cases. Uh, it's very common that most if not all of our full-time attorneys are carrying in excess of 300 felony cases. At any given time Our part timers are probably carrying in the neighborhood of 150, is it? 40 clients to one attorney or one? No, sir. Uh, what we do is we count people, we don't count counts, for instance, when charges are filed, a defendant could have, let's say, a burglary, a theft, a fraud, something along that. We only count that as one defendant, one person. 300, roughly 300 defendants to each attorney handling felony cases yesterday did not increase your appropriation last time. It seems like to me you came forward and needed more attorneys and we did we not address that. We, we always need more attorneys and what we had was an executive reck for 1.5 million, uh, and what we did so I because I keep losing attorneys, uh, we. Increased grades of attorneys who had been with the agency in excess of 15 years so I could retain that experience. All right. Thank you, Mr. Chairman. Thank you, sir. Yes, sir. Thank you Representative Fortner you recognized. Thank you, Mr. Chairman, uh, I'm right over here. Uh, now, did I understand you to say that you are not asking for this money because on page 285, it appears to be and help me understand this. It says that the agency is requesting 1000 and 25, 26 and then again in 20627. That's correct. That should not, that should not be representative that we're requesting it. That was money previously received from the prior administration, uh, we are not requesting that amount of money. OK, thank you. Yes, sir. Senator Hammer Thank you. On the Ombudsman. I'm trying to read this interpret it. Do you just have one or is it one position that's funded from moving money over from DHS DYS. We, we just have the one person, however, the statute calls for an additional position. Uh, we have not requested it. Uh, we anticipate sometime. I've been speaking with the, the director of DHS about this issue. We may be addressing the pool at some point in the future, but we still have talks ongoing. This is uh this position came to the commission from DHS. They support the position. The position is under. Our agency OK, and the case load you referenced was for public defenders. What about the case load of the ombudsman that you have vary because she is not an attorney, uh, uh, her, her primary goal is going around to the detention facilities and providing any assistance for alternatives, uh, and at present, I think, and I know she was testifying in a court earlier this week, but I would say on any given moment she has at least 25 active court cases where she may be called to testify. OK, so your opinion as far as Is, is she overloaded also or is she able to keep pace for the caseload that she's carrying, she is overloaded as well because she has to travel the entire state. She also has to attend the juvenile detention facilities whenever there's any type of complaint that she needs to be addressed with the way juveniles are making allegations as well. OK, so where are you in your discussions with DHS as far as you would have to get money from DHS in order to get that other position or get it from somewhere else in your budget or your preferred method is DHS. Yes, sir. That's my preferred method. So how's that conversation going? it's it's very well. The director and I of DHS have had several conversations, and we expect, we want to approach the governor's office at the appropriate time, and we've had that discussion. Uh, we anticipate probably that something will happen within the next 160 to 90 days before the, the biennial starts. OK. All right. Thank you. Yes, sir. OK, uh, I had a message go away here. Anybody else have a question? Not to have a motion for executive break. That second on favor I. Post executive rec is approved. Thank you all for being here. Thank you, Mr. Chair. Thank you, members. Republican employment retirement, public employee retirement, Ms. Fetcher, if you will come up and, uh, William Parish will be our analyst. Good morning. We'll start with Mr. Parish, if all of you will recognize who you're with. Thank you, Ms. Char Billy Parish, Bureau of Legislative Research. We're on page 290 in your manual, page 290, this is the Arkansas Public Employee Retirement System. OK, let's go across and go ahead and let the others identify themselves, please. Amy Fettcher, director of Aors. Jason Willett, CFO of Aors. Thank you, Mr. Welcome Mr. Parris you're recognized. Thank you, Mr. Sherry. Uh, so we're on page 290, uh, this, this agency administers a statewide public employee retirement program for certain state, county, municipal, and some school district employees. Abers also administers the state police retirement and judicial retirement systems. The director serves as Social Security administrator and is responsible for coverage-related issues for state and local government employees. I do have some information on the. System from their fiscal year 20th year report, uh, the fiscal year 24 report won't be available until the end of this calendar year. They currently have as of the report, they had $10.6 billion in assets. They have 43,000 working members with an average salary of 48,000. They have 42,000 retired members with an average annual annual benefit of 16,000. They have unfunded liabilities of 2.39 billion with a projected payoff period of 17.3 years and they're funded level is 81%. On pages 290 and 291, uh, the show state contracts award a minority owned businesses and employment summary and publications on page 292 is the Department of Appropriation summary. Uh, the system has 6 appropriation requests, one section has a change level that's a public employee retirement operations and one section has a reallocation. That's the judicial retirement operations. The system requests 960.5 million for each year of the biennial. That is less than a 1% increase over what was authorized in fiscal year 25. But the executive recommendation is for less than the agency requests, about 300,000 less. Uh, the system is funded by investment income, uh, for fiscal year 23 That an 8.83%, uh, return, employer contributions, it's 15.32% of salary for most of the 613 employers and employee contributions. It's currently 5.5% of salary for contributory members, and that's gonna go up 0.5% each year until it reaches 7% in 2029. The next page is the, uh, we're on page 293. This is the public employee retirement operations and this section provides for the administration of the system. It's supported by the Apres Trust Fund. On page 294 is the appropriation summary. For fiscal year 25, this is the 3rd column at the very bottom, the total authorized for that year is 138.3436 million. The request for 26 is 143 million. That's a 3% increase. The executive recommendation is also a 3% increase, but it's 300,000 less than the agency requests and that holds true for uh Fiscure 27 as well. Those change levels begin with the regular salaries line item for 25, what was authorized was 4.4 million. The requests in 26 by the agency is 4.9 million. That's a 10% increase. The executive recommendation is for only a 6% increase that holds true for 27. The next line is personal services matching what was authorized in 25 is 1.6 million. The request is for 1.7 million. That's a 7% increase in 20, for the executive recommendation, it's a 3% increase, and that's the same for 27. The agency requests change levels and salary match are due to adjustments for employees as authorized by law. The executive recommendation is to reclassify 3 positions and to discontinue 4 positions and more discussion of position movements will take place in the personnel subcommittee. The next uh line with the change level is operating expenses. The, uh, what was authorized for 25 is 2.1 million, the requests by the agency is 2.2 million. That's $100,000 or about a 5% increase. The executive recommendation is also for $2.1 million but it is for only a $30,000 increase. So the agencies requesting 5% increase and the executive recommendation is only for a 1% increase. Uh, these change levels are, uh, an increase in rent due to the lease contract for their office building space that's 30,000 of the 100,000 you're requesting. The agency is looking to purchase the building, but they are waiting for the release of the Arkansas Ford report on real estate, and that is to inform the decision, the signing of a one year lease at their current facility at Union Plaza, uh, that increased the cost for the lease this year. Uh, they're also looking for increases for employment services. That's for difficult to recruit positions like accounting and investments due to their current pay levels, uh, looking to increase employee training with an emphasis on benefits and public affairs, and to replace aging furnishings. Executive recommendation provides for the increase in rent, but not for the other 70,000 requests. I spoke with the agency and they are in agreement with the executive recommendation. The next line item is data processing of 3 million is what was authorized in 25. The request is for $7 million so that doubles and the executive recommendation provides for that request. Uh, this is to provide an upgrade to Compass, that's the pension administration system. The agency feels the upgrades are needed for increased cybersecurity uh to improve self-service functionality, to improve workflow processing system performance availability and quality, and the upgrades will be a one-time cost. If you look at the funding sources table, the retirement systems, they operate differently than traditional agencies. The system assets are put into investments to produce revenue for the system, and funds are drawn down as needed to pay benefits, benefits, uh, refunds system administration and system administrative expenses, the trust funds, uh, the system act more as paying accounts, so that you'll see a zero balance and the funny matches the year's actual expenses. Next page 295 is the state police retirement operations, and this provides for the administration of the of the state police retirement system. It's supported by the state police retirement fund. On page 296 is their summary. There is no change level but was authorized in 25 is 30.2 million, and that's the request for the biennium and the executive recommendation provides for that. On page 297 is a judicial retirement operations and this pro uh provides for the administration of that system. On page 298 is that summary. There is a reallocation in 25, they had 8.6 million authorized. Uh, the request is for the same for the biennium, however, they're going to transfer between the benefits and the refunds line items, uh, what was authorized for benefits in 25 is 1.25 million. The request is for $500,000. That's a 60% decrease. Uh, it's, it's $750,000 in appropriation, and they're moving that to the refunds line item moving from 7.25 million to 8. and this is a reallocation to align appropriation levels with actual expenses. The next page is 299. This begins the cash sections for each system. Uh, these are the appropriations to make benefit and refund payments by direct deposit. The first one is for public employee retirement, on page 300 is the summary, and there's no change level 725,000, I'm sorry, 725 million was authorized for fiscal year 25, and that's a request for the biennial. On page 301 is the direct deposit uh appropriation for state police retirements. On page 302 is their summary 32.5 million was authorized and that's what's requested for the biennium. On page 303 is the judicial retirement cash, and on page 304 is their summary. Again, there's no change level, 21 million is what was authorized, and that's the request for the biennium. This shared, those are all the appropriation requests for the agency. Thank you, Mr. Parish. Uh, any statement, Ms. Fetcher, are you ready for questions? OK. Uh, Central Payton, you're recognized. Thank you, Mr. Chair. Uh, I have questions like, I'd like more information about this $4 million data processing. Is that uh. A sole source contract or you said an upgrade and I think Mr. Parish. Mentioned it was a one-time expense, but it seems to be. Repeated in both 26 and 27, which would total 8 million. So is it 4 or is it 8? Is it an upgrade? Is it a new operating system or new software or hardware? What is it? No, it's an upgrade to our existing system. So we went through procurement and worked with all of the, the laws that govern procurement. Um, we did not have to do an RFP because it's an upgrade to an existing system. It's 1 million total or the first year, Philip? Total, the 4 million is total. Uh, it'll take until 2027 to implement it. goes from 3000 to 7 million in both years of the biennial. So that's an $8 million increase over two years if it's a one-time expense, it doesn't seem that it should be repeated. In 27. But correct me if I'm wrong, our current cost for that system is 2.2, Right. I believe that's. The way my budget analyst is saying that's the way they do it because they're not sure how much you'll spend in one year versus the next year, so they put the total amount of the contract in both. If you have a contract, it seems like it's spell out when you're spending it. At least in business, we do, um. So your existing expense for 2324 was 2.2. Mhm Is that an ongoing, you know, fee that we pay, and we'll, and we're going to be paying beyond the $4 million that we're spending. I'm gonna have my IT director come up, but yes, there is an ongoing cost associated with the pension administration. So my question is, is that cost changing or inflating? No, it will not. OK. Philip Norton, IT director at Apers. Uh, Norton, is that what you said, Mr. Norton? Yes. OK. So. Do you not know when they're going to complete the work and when we're gonna need to pay them the $40. It'll be over the next biennium, both years. OK. And so why do we need 8 million appropriated. I don't believe we do. I thought it was 4. OK, can you verify that? The ongoing expense will still be in the neighborhood of 2.2 where it has been, it, it will be, yes, to keep the existing system functioning, dealing with, uh, defects and change requests that we have to, uh, address while the substance is being implemented. And Senator, we do have a timeline for when the work will be done, uh, much like a construction project, you know, it can go over on the timeline of how long it takes them to get one thing done from one year to another, um. But, but we do have an estimated timeline that we could share with you. OK, well I'm just apprehensive about. Uh, Giving spending authority. For double what we're. Contracting to spend. Uh, cause I know how those contracts can morph over time and the job gets bigger and the expense gets bigger, but we've already given you the suspending authority. I'll, uh, And with that, Mr. Chair, thank you for the latitude. Thank you, center hammer you recognize? on that subject, the, how long have we been with uh Compass as far as them providing services? Uh, it was implemented in 2017. And in the original contract, was there any consideration for ongoing improvements or upgrades that would have prevented. Now a $40 million hit. I'm, I'm just curious as to why a $4 million hit all of a sudden programs 7 years old. We have been, uh, upgrades have happened every year, every quarter actually, we're having upgrades to the system and that was included into the initial contract. Um, some of the things that we're doing on this version, the, the company will no longer support the version we're currently on indefinitely. So, there is a need to. grade to improve our security. Um, as you all know that retirement systems are a target for, um, cybersecurity, criminals also to improve the self-service functionality. Currently you have to have, uh, a computer to access our system if you want to go onto the portal and estimate your retirement or see about your years of service or any reciprocal service. You have to do it on a computer. It's not compatible with a phone or with a tablet. So we'll get that capability as well. And just improve our processing and, um, the overall quality. So the You said they no longer will support it. Were they the ones that designed the system that now they will not support their own system. They designed any longer or did they inherit it in 2017. I think, I think it's much, uh, you could look at it like a, a Windows. 10 versus 11, when you get to a certain point with upgrades they won't support the first, the, the younger system. Philip, the system was originally designed in 2012. We went through a five-year project to implement it and, uh, 2017, uh, I think that by the time we end up moving to the new system that they're proposing an upgrade for that we're proposing an upgrade for, uh, it'll be almost 10 years old, so it's time to update that technology. OK. And then shifting gears to the rent subject. Um, is that a $30,000 a year increase to the rent that you're already paying now. Yes, sir. And the justification or the rationale behind behind the high, I know rents up everywhere. Uh, what was the rationale for $30,000 increase that they gave. Because we were only willing to sign a one year contract, um, because the board of trustees is looking at other options, so we're not paying rent when we could purchase a building. OK, very good. Thank you. Thank you, Representative Kevin all you recognize. Thank you. Thank you for being here. My question is going to be on the apers, um, when we're looking at the refunds and reimbursements, I've noticed that we were, you know, asking for 85 million because I realized we don't know what we're going to be getting in. But if I look back at the 10 year history, it is dropping dramatically. It's by half of what it used to be. Um, you highest was looking, if I look back, it's probably around, uh, 2000. 16. But it's now that was like 55 million. Now you're it's like 17.5. Why such a dramatic drop in those reimbursements and refunds. Um, the, uh, drop accounts that, that the agency has, uh, where people have drop accounts. Right now is about 125 million in total and when those are paid out, typically they're done as like a rollover they typically go through there and we really have no, it's very hard to project when people are going to come out of that. So that's why we've maintained that, but yes, you're right, it has decreased over time as people, more and more people have gone to direct deposit. In our system that has trended downward, you're correct. OK, yeah, it hadn't just turned it down. It's dramatically trimmed it down. Yes. So at some point, is that appropriation request going to be reduced because it, you're not using that appropriation request at all. You're by half, we will be, yes. And when will that be? Uh, we anticipate the next biennium. We would be doing that. Thank you. Thank you, uh. Representative Wouldn't you recognized? Thank you, Mr. Chairman. Um, I noticed on page 292 is where I'll be asking the questions. Um, Actual expenditures in 24. We're 50 on the first one. Or 150,639,000. $929. But in your request you asked for 143, almost 100 million more than what your expenses were. Is there, is there a reason for that? Yes, that, as I was saying, uh, people that have drop accounts in our system, uh, those are typically paid out through that fund and for example, right now, there's about 125 million in drop accounts in the system in total. Uh, we never, it's very hard to try to project when people are going to come out of the drop and so over these years, we've always maintained a pretty, pretty big cushion there because you never know. How much you may have to pay out in a year. OK, so. Uh, the next question, uh, on the same page you show 78 positions, you show that you feel or had 74 filled of those 708, how many vacancies do you have that are over 2 years that's the positions that are, are being eliminated. Uh, we had two GSO 8s, 1 GSO7 and one GSO 5 that'll come out of the budget due to, um, Act 796. Yes, sir. OK. All right. Thank you. Thank you, Mr. Chairman. Thank you. Center Petty you recognized Thank you Mr. Chair. I just wanted to circle back on page 294, because I thought I understood it and then I, I. Kind of rehashed it in my mind on the, uh, data processing services. I thought that the project was a $40 million project and that the normal recurring costs were $3 million which would mean that if it's a total of $4 million project, then let's just say 50% is completed in one year and 50% is completed in the next year, that would still only be 5 million in each year, uh, instead of 7 million in each year. Uh, and then I thought I remembered there was some conversation about not knowing what was going to be spent and what year and so we basically with his appropriation are giving the full 7 million, which is. 4 million each year for a $4 million project. I mean, can you kind of clarify that for me? I believe that's a question for budget on the way they, um, the way, the way they divide it out per year. Can you, you explain the cost over the, the full project to him. The, the 4 million is for the upgrade. And then there are ongoing expenses. OK, Mr. Chair, follow up. So we've got the 3 million. In the uh 2024, 2025 budget. I'm, I'm assuming that that's the ongoing. Yeah, Is that And, and then in 2 202506 and 2627. That would mean that there's 4 million. Which part of that is the upgrade, but are you saying that there's, in addition to the 3 million more ongoing that raises it to the 7 million. I'm gonna take So I think my understanding was, is that for the purposes of our upgrade project, there would be about 2 billion in each, uh, fiscal year that we would have access to for the upgrade project. There would be, uh, I think it's about 1.5 million each year for ongoing. Uh, expenses to maintain that system. Mr. Brack is there anything that you can add to that? Uh, thank you, Robert Brecht with the Budget Office. It's not uncommon to put it in the manual that way when you don't, when you're not sure how much it would be spent over a biennium because you're not sure what the timeline is going to be if in this instance there, there's specific on the timeline, it could certainly be lowered, uh, but you could also have the option of coming in in the fiscal session and, and, and lowering that if, if it need be, uh, but it's not uncommon with the IT contracts to when it's going to be over a biennium period, they go ahead and put that in there. just so there's no, you're not slowing anything down if, if, if that project's going faster than, than needed, but if they're sure what the number is, it could certainly be lowered, uh, or you could leave it as this, as it is, and you could adjust it in the fiscal session. Anything else? OK Uh, Central Peyton you recognize. Thank you, Mr. Chair. So you said we have a completion date in the contract. What is that completion date? 2027, is that fiscal year or calendar year fiscal year. And of fiscal 2027. OK, and I think you made the statement that the procurement law. Didn't apply because it was an upgrade instead of a new system. Correct. OK, but then you made the statement that they're no longer going to Do maintenance and upkeep on the old system that we are having to change to a new system. It's just the same provider. So it's kind of like Shakespeare rose by any other name, is it gonna be smell different. I mean, is this, who determines it? Who determines If this is an upgrade. Or or purchase. If this company is offering their product. The first time customers for 4 million. And we're calling it an upgrade and we're spending $4 million. It's not an upgrade. So My question is, who determined that we're going to label it an upgrade and was that just to get around the procurement law? No, sir, I would liking liking it much to like the AI system that, um, the state uses, um, it's one of those that there were decreases in our ongoing expenses because of the upgrade, so I wouldn't say that a new customer coming in, installing it right now would get the same price that we're getting, uh, for the full system. OK, if I could follow up, have we shopped any other systems to see how they compare to this upgrade cost? We have met with other vendors. Yes, sir. Can you share with us how the How the cost comparison would be? I think, uh, at this stage with the relationship that we've got with our existing vendor, the complexity of the operations that we have in place, the complexity of the calculations, uh, trying to, uh, secure another vendor and migrate that really kind of complex logic to a new, uh, platform. would be Um, I'm so sorry. So I have one more. I guess Question or caveat in this contract for $400 to get this upgrade and new system up and running and everything. Do we have any Contractual agreement on how many years they will promise to do the upkeeping updates, uh, for this new system or, or can they hold us hostage by just saying we're not going to service that system again. You're going to upgrade to 10.3. I think the idea with the new, uh, system that we're looking at implementing is that, uh, they're kind of getting away from that model of having to, you know, every 10 years go in and do a big upgrade project, uh, one of the things they're trying to do is sort of productize, uh, the system that we have so that, uh, you're able to do updates to it, uh, at a more regular cadence so that you're not, you know, in a spot where you're 10 years behind technology and having to, uh, you know. Make this big push. That sounds great, sounds like a great goal. Do we have it in the contract? Uh, we are in the process, I think, of finalizing that contract with them, uh, we don't have that, uh through ALC next week. Well, I, I would just like to suggest. The number one, you get the money lined out in the contract as to when we're spending it, when they're going to complete, so that we can budget accordingly. And number 2, that we contractually tie them to a time frame. Of how long they'll take care of the system so we don't have to. Upgrade spend another $4 million anytime they say, thank you, thank you, Mr. Chair. All right, Representative, I say Senator Chesterfield. Very simple question. Uh, when does one have to contact you in order to start drawing one's retirement. To uh to apply for retirement it's required one month before you're ready to start drawing it. Thank you so much. I'll see you later. Representative Kavanaugh. Thank you. I'm gonna go back to the refunds because I wanna make sure I understand. On the refunds. So you're talking about this line item is for people that you're writing checks to each month is, is that what I understand? It it is, it's that as well as drop and Paul payments is and termination refunds, all of those. OK. And then on the benefits non-employee, are those the people your EFT or ACH and the money. Uh, in the operations fund? No, that, that is people are still paying with warrants. OK, so on all these items where it talks about refunds and reimbursements on each one of these appropriation requests. They're, if we look at that, that's people you're still stroking chicks too. Yes, yes, ma'am. And is there a I guess goal to get everybody going to direct deposit rather than stroking checks the majority, if you look in the cash fund, it's much larger what we're paying out, that is all EFT electronic, and we made that mandatory several years ago, all new retirees. I don't remember exactly how many years ago that was. It became where they, they're all direct deposits. So, but we still have. People, you know, from way back that are still getting paid with warrants, it's with our current male situation, you got to be losing a lot of mail because I'm just telling you I lose mail every day. It's a, it's a miracle. It gets to where it needs to go. So is there gonna be a, a push to tell all retirees that you're going to have to go to ACH because it's more direct deposits better, it's quicker, it's more secure for them. We're there, there won't be any. It'll, it'll, it's gradually decrease, it's decreased. every year. It's just those legacy retirees that have chosen to stay on it. All right. Thank you. Senator Hammer, let me get you there. There you go. Thank you. Thank you, Mr. Chair. When we get this, when we get the new system upgrade. Do you anticipate that, as I understand it, you're paying 22, you're paying 2.24 million right now, I guess for maintenance of the program and cover the cost of the program, is that correct? Yes, that's correct. OK, with the upgrade, do you anticipate that that cost is gonna go down then because we'll be on a new system where it's going to go up or is it gonna be? Built in the contract addressing Senator Peyton's question about, um, Trying to avoid a major hit like this again. I think the idea is that uh we would only have to incur additional expense if they're changes or uh new mandates, I guess we have to sort of implement, uh, that would require, uh, additional sport hours to. $4 million to upgrade a system that they've been maintaining since 2017. The 2.2 that we're currently painting to maintain the system right now because it will have a current upgrade. Are we going to see that 2.2 go up with the new contract, or will it go down because now we're operating on a new system. It's really hard to say, uh, Senator Hammer on that because I'll just, you know, after every session, um, there are upgrades to the system. If there's a changes in the in the tax tables, if there's a change in anything on the payments, we have to go in, um, and, and make changes to the system to, um, pay out our benefits. So it's hard to say. We, we hope it'll go down, um, but, but it's just, it's hard to say. And with all those details be In the contract that's going to come out to ALC where we, well we can question deeper than when it comes to ALC, correct? OK. And then I want to ask you about the $20,000 for employment services for the Biennium to increase difficulty hiring employees, but then you go on down there and it says that you are also asking for reclassification of 3 positions. What's the reclassification of those three positions that you're asking for and in the 4 positions, if I. understand it right that you're going to discontinue, how does that all play into the financial numbers of your budget? Um, I believe the reclassification, um, that, that came from OPM and that's on a positions that were acquired throughout this, this current biennium that will be put into the budget and then as, uh, I was telling Representative Wooton, the other four are those that have remained vacant for over 2 years. OK. And Are you fully staffed right now then or how short? How many opening positions do you have right now? I think we have 2 right now that are posted and maybe 3 or 4 that are vacant. And what's your turnover rate of your employees? Um, over the last year, it's been in the 20, 20% tiles turnover. Yes, sir. OK, thank you. Representative Ho. Bet'll get you Reent Holcombe. Didn't pop up. You'll recognize Rick. You don't have a question, all right. There you go. Senator Chesterville Executive Rick. All right, seeing no one else in the queue, we have motion executive reg, all those and, uh, do you have a second? I have a second. All those in favor say aye. Motion carries. All right, we'll move on. Thank you all. Move on to the public service commission, uh, Catherine Waldman, would you please come forward? You're coming already. She's ready. And, uh, Mr. Michael March, March, Marchant. And whoever Oh, we got some others. OK. Y'all would, uh, talk with Catherine, would you introduce yourself and uh your name and who you work with. Thank you, Mr. Chairman. Good morning, Ms. Katie Walden, Bureau of Legislative Research Fiscal Division. Mr. Chairman, uh, members of the committee, I'm Doual Webb, chairman of the Public Service Commission. Good morning. I'm Danny Hofer, Chief of Staff of the Public Service Commission. All right, Ms. Waldron, you may continue. Thank you, Mr. Chairman. The Public Service Commission budget request begins on page 305 of your budget manual? As you all are probably aware, the public service commission is responsible for regulating all the utilities in the state. This includes natural gas, water, electricity, pipeline safety, telephones, and transportation networks in the state. On page 305 of the manual, you'll see, um, the kind of the mandatory reporting that they have to do, the state contracts over $50,000 awarded to minority businesses, the breakout of their employment summary. And as well as the publications that they are required to submit. On the next page 306, you'll see their department appropriation summary. You'll see they have 4 appropriations for your review today. Those appropriations total about $15 million currently. And they also have 115 positions. So breaking down these appropriations, the first one begins on page 307. This is their operations appropriation, and it's detailed on page 308. This appropriation provides for the operations of the commission. This includes the consumer complaints, um, just the ongoing regulation of the utilities. They have 91 positions and 6 extra help positions, and it's $11.7 million annually for this appropriation. They have 2 requests associated with this particular section, the first is to restore one growth pole position that was previously adopted by the Legislative Council in July of this year. This is for their chief of staff position. And so they're just asking to integrate that into their regular budget. The second request is for an increase of $5000 in extra help. Um, the Public Service Commission, like so many other agencies, participate in the My AR internship program. And so they pay those interns, summer interns out of their extra helpline. And so they're requesting an increase to allow them to continue with that internship program, but also to bring on any extra help that they may need for additional caseloads or rate reviews. The executive recommendation provides for the restoration of that growth pool position, and they also recommend that instead of increasing extra help that they reallocate that $5000 from professional fees to extra help. And so that's just a little different. Moving on to the next appropriation. That's on page 309. This is their pipeline safety program. Under this program, the commission maintains the safety and regulation. And they monitor the transmission by pipeline of hazardous materials such as gas line, oil, and natural gas across the state. This is funded by special revenue inspection fees charged during these inspections, and this is according to the pipeline mileage of each provider. The total appropriation. For this pipeline safety program is $1.2 million each year. I skipped ahead, excuse me. Um, And it has 10 positions. For the pipeline safety program. They're requesting an increase in capital outlay of $175,000 in FY 26 only. And this is to provide for the replacement of 3 vehicles and the addition of one new vehicle. And these are the vehicles that go out and perform all the inspections in the state. The next appropriation is on page 311. This is the tax division. This particular division employs 15 employees and 5 extra help employees, and this division is responsible for the ongoing valuation and assessment of all the properties owned by their over 600,000 providers and the agency is requesting one change, they're requesting a reallocation of $8000 from operating expenses to conference and travel. In this appropriation, they state it is because they have had a lot of retirement. And so they're bringing on some new employees and with the very technical nature of this division's work, they're requesting to train their staff and send them to conferences to allow them to get caught up to speed, um, in this assessment process. And the executive recommendation provides for the agency request. Additionally, you'll notice on the schedule on page 312. They also On their bottom of their appropriation had a contingency line. And this was just to allow the agency to have flexibility, um, for increased expenses as needed. They did request for that $400,000 to continue into the next biennium, but the executive recommendation provided for the deletion of that appropriation. And so that would bring the executive recommendation for this total appropriation down to 1.4 million in each year of the biennium. The final appropriation is on page 313. It is the Public Service Commission's contingency appropriation. This is just a general overall contingency appropriation that the agency has, um, just in case there are any additional expenses come up related to law cases or employee participation, um, expert witness activity, that kind of thing. Um, and so the agency requested to continue that appropriation into the biennium, it's $1000 each year and the executive recommendation provided for the discontinuance of this appropriation. And so that is my review of the Public Service Commission budget request for the biennium. All right. Mr. Webb, y'all have anything to say? Uh, Mr. Chairman, yes, our chief of staff has been the lead on the two contingency matters that we need to bring before the uh the body. Yes, thank you so much. Um, I want to emphasize the PSC's asked to continue certain special language, especially the special language on, uh, pages 61 and 62 of special language, section 10 for emergency contingency in the utilities division as well as the special language on pages 64 and 65. Just a minute. Sorry, am I getting ahead of myself? Uh, yes, sir. Um, Kevin Anderson, thank you, Mr. Chairman. We won't be doing special language in here that will go before the special language subcommittee. I understand that the contingency is associated with that, so it's good to explain it, but this committee will not be making a recommendation on the special language. We will let the special language subcommittee know what this committee does with these appropriations so they can act. Accordingly, would you like me to explain at all what the contingency does or just go ahead and do that in special language. You go ahead, go ahead and do it now. Go ahead and do it now. But you want to try those, OK. Um, So the Arkansas Public Service Commission currently holds $100 in contingency fund for the utilities division and 400,000 in a second contingency fund for the tax division pursuant to pursuant to two separate special language provisions in our budget. Um, The special language provisions set forth very narrow purposes for which the money within the funds may be used in a highly prescriptive process by which the APSC may, uh, receive pre-approval to use the contingency funds, including approvals from the governor, the state CFO, and the General Assembly. In the event that the special language provisions are stricken, the result will be to leave two unappropriated fund balances with no clear disposition, um, effectively stranding $1 million dollars in the utilities division and $400,000 in the tax division with no authority for the APSC to spend reallocate, refund, or otherwise address the APSC as a 100% special revenue agency does not really have an equivalent or another sufficient option to pursue. You should emergency funds become necessary for us. Um, and well used infrequently, the need for these contingency funds. Remains, um, we have previously used them in 1998 and 2008 for very unique circumstances, but they're the type of circumstances that we can't really plan for. And so that is why we, um, continue to make this ask and we think it's very important to our agency. Are you ready for questions? All right, let's get started. Representative Wardlaw, you recognize. Thank you, Mr. Chair. So recently there's a letter went out from Summit Energy that they're going up 23% on gas bills. Can you guys walk me through the process for these utilities to get this, this seems like a very significant increase and, and in the letter, it says you guys approved it. That's a real hard hit to people in Bradley and Drew and Dehea County when they're on a fixed income and You know, center point was there for years. We never seen these type of increase when Center Point was running the gas company and maybe that's my center point ain't here anymore. And if that's the case, tell me. But it seems like a very significant hit for low income Delta families to have to pay going into the winter. And I just want to understand it because you guys are over there for a reason and that's to hold the feet to the fire and make sure these folks do not gouge our public and it feels like today, you guys are letting them run. rampant. And before we let you have a budget, I'd like to understand how this works. Yes, sir. I would be glad to, um, I will. Kind of put a little bit of an asterisk before I continue, um, while there is a settlement that has been agreed to by the parties, the commission has not ruled on it, um, that settlement was just filed the day before yesterday. So the commission has not had the opportunity to review, um, and, and to deliberate, make decisions and issue a final order. So I will say that, that while there, there's a settlement that's been agreed to by the parties participating That is not a final approval by any means. But if you want I can give you the utility send a letter out to their ratepayers saying they were going to see a 23% increase then. I can't speak for the utility, um. I, I, I can only speculate that perhaps they were um. Giving people a heads up of a possibility, uh, of something, but I, I don't want to go too far down the route of speculating for them. Um, one of the problems every time you guys are in front of us is it's always all this legal language. I don't want to suspect, I don't wanna do shoot us straight. Stop. Saying that and shoot us straight. Well, how do you look at the rate to to establish whether that rate can have that type of increase? Do you look at the gas prices? Do you look at the cost of operation? What are you look at from Summit Energy when they come before you to approve that type of increase. That is a significant increase to the people of my district. Tell me how I can go look them in the eye and let them know the state of Arkansas has approved a rate increase like that. Yes, sir. So, a rape case, uh, is a 10-month process through the APSC, um, when it is filed, it's filed as an application by a utility asking for a rate increase and Then through that process, um, the general staff of the APSC is a party, the Attorney General's office is a party and there are other parties that, uh, may intervene such a stakeholder groups. To your point or your question specifically about things that are considered both by the parties, um, while they're finally in testimony, while they're negotiating, and then also what the commissioners and the commissioner's staff review, yes, um, gas prices, cost of operation, capital investment, those are all things that are considered, um, the commissioners and, and our staff work very hard to try to balance the need for, um, physically healthy. Utilities so that they are able to provide safe and reliable service. That's the big thing is that, um, a company needs to be in a fiscally well off situation enough to be able to provide that safe and reliable service. We don't ever want. A situation where people aren't able to get service. The balance, the big balance on that is, of course, affordable costs for ratepayers. And so, um, I guess the biggest thing I can tell you is that we work very hard to try to strike a balance somewhere in between there, the, the 23% increase is a balance. I mean, I don't, I don't for the life of me. You you're, you're letting them increase by almost 25% of their rate. That's not a balance in any form fashion, that's not a balance. And these poor Delta folks that live off of that gas to stay warm in the wintertime are getting hit with that right on the brink of the winter. So you're still not explaining to me how you approved that rate. We have approved that right. And, and I know you don't want me to point too much to leaders. I honestly cannot tell you why. We explaining why they sent a letter to the ratepayers, if you ain't approved the rate yet. That is certainly a question that we can pose to them. Thank you, Mr. Chair. Represent Wooton, would you key back up again? I bounced it that way. Representative. We've got a mess with Summit. I had Trying to attempted to contact them last week. This is a small insignificant thing. But I went through hell, if you will. Dealing with their people down in Houston. And I don't think that the citizens of this state should have to deal with that and have to deal with the so-called 23% increase that they're saying y'all have approved. But they, they came on my property. Went off and left the $7000 meter. On the property and they didn't know where it was. And when I called down there to try to tell them. I got a smart ale on the phone that wanted all my account information, all this, all that. And it's just ridiculous. So then I called your office door. To try to get a number and I got the same 1 800 number and I had the smart out the call. So it didn't help. So then I tried to contact their governmental person in Arkansas. I have got yet to hear from me. 2 years ago I got a $600 bill for one month. One month I think their cash. I think they've got a shortage in cash flow, and I think some of these increases are to help them on that part of it, but my question is, on page 306. What is an inner Enter and intra agency fund transfer. I asked this earlier and could not get an answer. What is that? So an interagency fund transfer is something um that we would transfer between our utilities budget to our tax budget. We have, um, two separate divisions. We have both the utilities division at the Public Service Commission. We also have the tax division. They both, of course, fall with under the APSC, but they have separate budgets and so, um, on years where it is necessary and it is not always necessary, um, there is A statutorily available option to be able to do an intraagency transfer from the utilities budget to the tax budget. That's an intro. Correct. What's an inner There's 2 of them. There's an intra. Agency fund transfer inter agency. It's not much, but it's still. Unexplainable. Every DFA can answer it. On page 308. 30306. And there's an inter fund transfer. Agency fund transfer on 312. Yeah, I mean, we do that, so. OK, so, um, I can follow up with you for certain, but we believe, well, we, we believe that it comes from, um, our tax division through part of its assessments. It basically acts as a flow through to certain other agencies like um I believe legislative audit is one of them, um, in terms of fees that are assessed and collected from common carriers that does not all stay with us. The majority, um, Pass through, but I, this specific line item, I can chase it down for you and, and get with you on that. I mean, what, why would Well I'll wait to get your explanation of what an inter I N T E R I N T R A. Agency transfer is because it's it doesn't amount to a lot of money here, but in some of the agencies, it does, and they were unable to answer it. Representative Wooton, let us get that answer for you. My next question is, what is your total employment pipeline, utilities, or what, what is your total employee employees at the time, um, that we submitted our manual, we had, uh, a total of 92 employees, total how many have been vacant for 2 years or longer. Um. Off the top of my head, a a few. A few 34 probably around 4. Well, my next question. His on page 308. You have uh 62,000 in travel expenses and conference. You, that's actual 62,800 you have a budget for 78,000. Yes, sir. And you go ahead and request the same amount for the next 2 years, 26 and 27. Yes, sir. What, what, what's the increase? Well, I, it, it's not so much an increase as it's the same that we have requested and we're continuing to request that. So you just continue it. Do you ever audit those travel expenses? I mean, the travel expenses are, are heavily audited, um, in terms of forecasting, um, we do have like any agency, um, uh, a fluctuating staff, so I mean not large fluctuations, but there are fluctuations, um, in addition to that, I think we're always conscientious of um increases in costs with inflation, um, but this is just asking for a continuation of the same amount that we've had. Yeah Next item is professional fees. You don't have any actual expenditures in 24, but in 25 budgets you request 15,000 and you continue that through 27. What is that? Uh yes, sir, that is for um. Um, so that would be for, um, certain consulting needs, um, and we, we just didn't have those needs come up in 23, 24, but there are, um, needs for them. I would say more years than not. Representative Wooton, I need to move you out and let some others talk and we'll come back to you if you would cue back in. We've got. The whole thing's lit up over there behind you. Because it has one more question. If you'll do a quick one, please professional services. You have 461,000 actual within your budget you're asking for 998,000. That's double. So that is a that is a continuation of what we previously asked for, um, In many years we have had extensive litigation, um, particularly FARC litigation, um, and we have definitely used a considerable amount, um, this past year, we were able to settle, uh, a great deal of FERC litigation that was able to reduce our costs for this year, um, but That doesn't necessarily mean that we won't have those needs going forward as different cases, different dockets that we rule on or different cases that we participate in might go through a a a lengthy appeals process Yes, sir. Yes, sir. No, not like the summit case. This, this, this would be for federal, um, Work issues primarily, um, the things like summit, um, Those, those are, I mean, that's predominantly uh going to be handled by our internal expert witnesses. All right, thank you, Mr. Chairman. Thank you, ma'am. Thank you, Don. Thank you, sir. Representative Evans you recognize. Thank you, Mr. Chair. Danny, I want to extend a little bit upon questions Representative Wardlaw pitched and um. So to start, Yesterday's Arkansas Democratic Gazette reported this story before I started receiving. Calls from my constituents back home. In the headline stated Summit utilities. Incorporated in Arkansas Public Service Commission staff agree on 23.4% rate increase. Now there were a couple of different times in this article that you were quoted, so I'm assuming that they collaborated with you on the information that they reported in this article. It states that. Uh, the average monthly residential bill will rise $15.43. Residential customers bills will rise by 23.4% in the settlement supported by the Arkansas Public Service Commission staff. And ratepayer coalitions representing commercial, industrial, hospital and the University of Arkansas system. So this seems to me that the agreement that the Arkansas Public Service Commission staff agreed to came from the collaboration of those groups, commercial businesses, industrial. Uh, properties, hospitals, in the UFA system says those groups opposed the initial request of a 30% increase. So big business opposed a 30% rate increase, but through collaborating with your team, they've agreed to 23.4. Nowhere in that does it say there was any collaboration with the residential customers they're gonna be paying that increase. It says the rates will increase all 410,000 natural gas providers of Arkansas customers. Um, Goes on to say that the three-member commission has until November 24th. Um, but expects a favorable decision soon with this settlement summit sidesteps, a public hearing on the rate request scheduled for October 15th. So can you explain to me one? This information reported by the Democratic Gazette, do you consider that to be factual majority of it is factual, um, thank you for that. Secondly, uh, why would we, why would we take, I guess, the collaborative leverage of large manufacturers to pass on this type of increase to residential customers who had no say so in this, and we're sidestepping a public hearing to give them the opportunity to speak. So the attorney General was also a party to this do to the Attorney General. I'm asking the Public Service commissioner. I'm aware of that, but you also said that nobody represented the residential ratepayers, and that is what statutorily the attorney General is, uh, charged with doing in these cases. So they, there was a voice for the residential ratepayers. I want to say that, um, in terms of the parties involved. Um, the general staff of the public service commission represents a neutral viewpoint, um, so they actually are not an Advocate for anyone. They uh truly just review what is put forth by the other parties, um, to try to land on what they consider the actual best, most neutral numbers. Um, Now, I will correct the, the last sentence of that article. The public hearing has not been canceled. Uh, the parties asked that it be canceled. The commissioners have not ruled on that yet, um, there, there's not been any order issued to do that. Um, and public comments are still available to be made both online and if the public hearing is not canceled, they will be available to be made at the public hearing. I would ask that public hearing please be allowed, uh, and, and give our constituents back home the opportunity to come and speak. About this increase. Thank you. Thank you, Mr. Chair. Represent Kavanaugh you recognize. Thank you, Mr. Chair. Well, I do have a question, but I do want to say something on the rate increase. When you sit here and you listen, and I'm not trying to be rude or disrespectful, but you're talking now both sides of your mouth. When you say that no agreement has been made, but then you just say what he said in the article was factual, that agreement was made with the employees. Now, you're technically saying that the commission has not approved it. But the employees have made the agreement. So when you say it's not done, but you've made an agreement, your recommendation is going to be to the commission for approval of it. Now, that is talking out of both sides of your mouth. For any Arkansan. That's double talk. And that's what aggravates legislators is when we have an agency who can't come down here and tell the simple truth. And that's what we have right now. And it aggravates me. It aggravates me for the my constituents who have to hear the double talk. And when they call me and say, how am I supposed to pay this bill. And I say, let us do some investigating and then you come down here and talk out of both sides of your mouth. That's disrespectful to this committee. It's disrespectful to the constituents. It's disrespectful to all our Kansans. And with that, I'm going to ask my question. Because it just got my temper up. My question is, on page 308. When it gets to your regular salaries? OK. You've spent 5.7 million. Now you're asking an executive agrees with it to go to a 6.8 million increase. My question is, why do we need a $1.1 million increase over what our spend is. That's about, if my cats rise by a 20% increase. Are we planning on giving that much raises. Sorry, one moment, I'm looking for the line item. It's on our page it's sorry I was looking too far down. So what we have, what I'm looking at right now, and, and actually before I answer that, I, I do want to tell you I have meant absolutely no disrespect whatsoever, um. I am doing my best to explain and, and, and I can try to explain more, um, on anything that you have questions on. It is certainly not my intention to come before this body and and in any way try to be disrespectful of your time or the people of Arkansas. I appreciate that. um. With regard to the regular salaries, um, if you, if you're looking at, uh, the number of positions, we had 84 funded positions for 23, 24, and 91 funded positions, uh, for 24, 25. So, um, between the salaries themselves and then, um, the I'm trying to think of what the the budget. Name for it is, but basically the, the, the, the fringe benefits that go along with, um, the salaries. I, I believe that is the reason for the increase. Well, that really doesn't fit what this is. That's your regular salaries, your, your personnel matching is another line. So then taking out the personnel matching, um, it, I think we're still looking at a difference in position numbers. OK, well, you're going from 84 to 91. Budgeted would always 91. Then it went to 90, and it's 91. But we're not talking about a great jump of personnel numbers, but you're increasing $1.1 million from your actual spend. So I guess I'm asking is when you're doing your budget, How do you determine what you're really gonna need in that, in that. And it's not just y'all. I see it across the board is that we always have the same uh large amount of extra in salaries and it's always said it's for an increase, but when it's, you know, people give raises, which I'll all understand we have to do that. But when it's a 20% increase, that's always a little bit of red flag to me. So it, it is not, I, I can tell you this, it's not an increase in terms of it is the same amount that we asked for previously. What you previously I'm talking I'm gonna go ahead and bring up our CFO. That that's what the pause is for here. Thank you. Yes, ma'am. This is the amount that, uh, is projected in our budget system when we do our bed. My name is Vicky Hearn, CFO. This is the amount that is already in our budget system when we prepare our budget. We have not, uh, requested any increases. I realized that, but I guess. What you're missing the point of my question is. You're requesting 1.1 million over what your actual spend is. My question is, how do you come to that determination for your request that you're gonna need a 20% increase based over what you actually pay. In a business, when I'm forecasting, I look and I say, I've got so many employees I expect to do this raise. This is how much I'm going to need to budget. But that doesn't seem to be what we do in state budget, what we seem to do in state budget is to say, this is what I've always asked. Before I'm going to continue to ask for that. I don't see any adjustment. Um, this is just what I'm going to do. But my question is, and it should, and it's for every agency is when we make these appropriation requests. What process do we go through that we actually look at and say, hey, this is what we, that we project we're really gonna need to be able to actually, you know, meet the needs that we're going to have to have for salaries or whether it's professional fees or whatever it is. But with salaries in particular, it's easier to do than sometimes, say a professional. because you don't really know what might come up. One thing that I will go ahead and add is that we, we do have in excess of 20 unfilled positions, um, which require, um, us to budget for those positions. And so that, um, I think also is making up a difference between what we paid last year, um, in, in actual salaries and, and what we're still, um, making me ask for. OK, so if you have 2 unfilled, how long have they been unfilled? They are, are all various, they're, they're varying in, in terms of how long they have been unfilled. Some have not been. Open for very long and, and some have been open for longer periods. So the 57 might actually include some of that 20 because they've just been vacated recently and some of them it may not. That's what I'm trying to get to. I'm trying to find out how many of the 20 that you say are not filled that was not part of that 5.7. I'm just trying to understand how the agencies come up with their, when it comes to to any budget line item, and this salaries happens to be one that is across the board. So that's why, and you just happen to be the one here today with, with it, so I'm asking that question. When the budget is loaded in the system, OPM takes a snapshot at a point in time. What the salaries are. Uh, vacant positions are budgeted at the minimum amount. And so it's current salaries plus vacant positions at the minimum amount. And this is what the 6.8, so it's not that you asked for it, it's just you go and answer it and then the budget system figures it out for you. So it's not the agencies particularly asking for this. It's a built-in software, ma'am. OK, thank you. Yes. OK, members, I appreciate, Representing Cozart handle it while I was out for your information. I've got 7 more on the board, uh, this has been, we've had a request to flag this to hold for session if that anybody's questioning that, uh, we'll. Continue on with our questioning, uh, representative Deanne Balt you recognize. Thank you, Mr. Chair. I'll, I'll go quickly. Did I hear you say a minute ago, um, that by the statutory, you're not there representing the consumer or the companies. So, Are you, it's, are you asking about our general staff in terms of who the general, what is the job of the piece of y'all's agency. The Arkansas Public Service Commission as a whole, uh, is charged with ensuring that ratepayers have safe and reliable service that is also provided at an affordable cost. So they are charged with balancing, um, all the needs, but the, the ratepayer is, of course, ultimately who, um, they are, they. to protect and, and, and who, uh, all of our efforts are for. OK, so then I'm gonna jump back to Representative Wardlaw and Representative Evans. I'm gonna piggyback on that. I have consumers that, uh, call y'all constantly about the electricity in my area, which is off quite a bit, probably more than not. Um, so, uh, Their requests seem to be denied time after time, but yet we're gonna approve this big increase, which to a farming area, say southwest Arkansas, where we have lots of chicken houses, is going to dramatically affect my area. And yet we don't listen to their gripes about the electricity already being off. So that's the reason I'm asking what your job really is? Are you there for the consumer or are you there for the company? For the consumer. As of today, though, you look as though you are for the company and not for the people of Arkansas. If you are willing to raise prices as much as your, the paper has, and you said that what was in the paper seemed to be mostly correct. So which you told Representative Wardlaw directly the opposite of that, just a few seconds ago. So I'm just trying to gather up who you're there for, who you really do represent. With that, I'm glad that it's being flagged and I would like my name to be on that flag also. Thank you, Mr. Chair. I, I will, if I may, um, To clarify, when I said mostly correct, um, What I wanted to be able to offer was that, um, yes, the, the, the numbers that were thrown out in the paper are things that, um, Summit has asked for that the parties have agreed to in settlement. Um, what is not correct is that the, the Public Service commission, the actual commissioners, the three person body that acts as a quasi-judicial body and and makes the ultimate decisions. They have not ruled on that at all. So, um, My point about it being mostly correct is, yes, there is a settlement that has been filed. Um, it has not been approved or accepted by the commissioners, um, and in addition to that, the public hearing has not been canceled at this point. Um, There are also two public comment hearings that are scheduled in the coming weeks in different parts of the state. One in Texarkana and one in Jonesboro, I believe. Um, so in, in, I, I just wanted to throw that out there, um, that in addition to being able to make public comments online to be able to mail things in, to be able to call our office. There's going to be specific, um, actual in-person comment hearings that were going out into the state to do. Punch your microphone. here we go. You are going to do public hearings on this. There are 2 public comment hearings scheduled to receive comments, uh, the hearing to actually bring all the parties together is scheduled for next week. The parties have asked for it to be canceled. A decision has not been made on that. OK. I would suggest as Senator Wardlaw did, y'all talked to Summit because all of my constituents got the letter saying that it was approved. Thank you, Mr. Chair. You Representative Beck you recognize thank you Mr. Chair. Uh, this is an easy question, actually, it's on, on page 310. There's some special revenue of, of 465,000 that goes with the 580,000 just rounding numbers, uh, where's that coming from? because it was the previous year, it's at 0. I'm sure it's you might have said it and I missed it, but. That comes from the assessments to pipeline companies, so, um, our pipeline division assesses the pipeline companies that they go out and inspect. And so that's that that number comes from assessments levied. But the previous year, nothing? So that we start something new? Yes, sure, this the year it was 0, the fund balance was larger than the appropriated amount so they didn't need funding for that. I I'm sorry, but help me understand that. So you're saying that the fund balance. The fund balance from the pipeline division at the time that the assessments are calculated was larger than the amount needed to run the program. They also get federal money so that increases their cash balance. So when their cash balance is more than their appropriate amount, which is needed to run the program, we don't assess for that year. OK, so then, so you're saying that it's now not. Some years it's, they don't need assessments and some years they do. OK, so I'm just trying to understand so. You're saying that you're, you're asking for this budget and but it's very possible you won't use it because the fund balance could be more. Are you talking about appropriation or cash balance? Well, I'm talking about the cash actually. The cash balance is determined, uh, once a year when we do assessments. We take a whatever is in the fund at the time that's figured in the calculations for the assessments. And so if they're fun balance, cash money is more than the appropriated amount. They will not need to assess for that year. OK, so just one quick question and I I I'm sorry, I mean, I meant this to be easy. So I'm, I'm looking ahead. 2025, 5,580,000597. All right, that's what you're an estimate. That's an estimate. Now you're saying that if, if you guys collected that much or their balance, the balance after they collected this charge was that amount you would not utilize those funds. We wouldn't get those funds. That's just an estimated amount of assessment for that year. All right, thank you. Yes. Senator Hammer Thank you, Mr. Chair. On the, whenever it went from, uh, center point to summit, did that require y'all's approval for that? Yes, sir. Um, the asset sale, um, when Center Point sold off the uh the, the Arkansas assets to summit, uh, did come through the public service commission and was approved through the PSE, yes. And do you know right off how many rate increases they've had since that occurred? I believe that this is their first rape case that they have come to since that time. OK, and in the transaction, was it ever indicated that a rate increase would be coming, uh, with the, with them acquiring Center Point. Off the top of my head, I am not certain, um, whether or not they stated at some point whether or not Summit stated at some point in testimony or some other point, but it, it, um. I'm, I'm not certain what summit might have stated. Um, I, I, the Public Service commission certainly didn't, um, Have something in their order that said, you know, we expect you to come in, you know, at a certain point or something like that, that it was just, um, that that's at the company kind of um decision when they do that. period that you're gonna have you mentioned about online as far as. The time frame of the day of which that is there gonna be like a public hearing where people could actually show up and verbally give testimony during those times. Yes, uh, there, there will be. Let me All see if I can pull the dates here actually. Um. The short answer is yes. There are, there are two scheduled public comment hearings, uh, that people can go to and then, um, we're also, um, exploring options because those the, the currently scheduled options are in Texarkana and Jonesboro. We're currently exploring options for, um, Central Arkansas option, um, which, which may just be next week the currently scheduled hearing. OK. And then the last question is that with the comments that were made, uh, that have brought out so far, um, has there been any, uh, commitment on the commission's part. That this would already be approved given the comments that were in the paper, um, or you haven't entered into any legally binding, um, agreement that they could use against you. To Um, to get that rate increase without all these things happening first. No, sir, you, you are correct. Um, we, the, there has been no decision or approval by the commissioners, and there's nothing legally binding that holds the commissioners to, um, Anything that's been currently reported. OK, thank you. Senator, 11 item, uh, for those that cannot come to a public hearing, they can make comments into the docket of the Public Service commission. What is the case number? So that someone, they can do an email. What I, I honestly, I don't think anybody even needs to know the docket number. I'm certainly, I can pull it up if you like, but if you call, um, our office, whether you call the secretary of the commission or our constituent services, um, anybody who calls, they will know and they will be able to direct them through it and help them on the process, um. And, and I can provide anything that um that y'all would want in that in terms of links to our website or the docket number but I can also offer that, um. Help will be provided if you call our office and, and you really don't have any information besides just the summit rape case. Our, our people will take care of you. To get that public comment filed. Rick N. Thank you. You know, public hearings in a lot of cases, people don't know about it until after the fact, given the controversy surrounded on this situation I would think that if uh Summit wanted to be a good player in this, uh, that if they took time to send out a letter to all their customers that there's a rate increase coming they ought also send out a letter saying here's how you can, uh, give public comment because quite honestly you know somebody reads the paper, uh, Somebody's watching this, that information getting out to the public to know how they can give their opinion is often limited or found out after the fact, so I just encourage Summit, uh, you need to send out a letter to everybody telling them, here's how you can issue your public comment if they really want to know what people think. Thank you. If I may just a quick follow up on information, um. Specifically regarding your question on those public comment hearings, we have one scheduled October 22nd in Texarkana at 6:00 p.m. and another October 25th in Jonesboro at 6:00 p.m. Thank you for that information. Members have got 4 more on the board, uh, We do have teacher retirement uh system after this, uh, Senator Irvin, you're recognized. Thank you. Follow up on Representative Beck's line of questioning on the assessments and uh that line item. Uh, is there ever the opportunity to, uh, make that consideration for any general revenue request. In other words, why bypass assessments for the year. And Uh, versus going to To us for more general revenue to offset. So at this time, we are 100% special revenue. We do not, um, We do not have a general revenue, um, line item anywhere. positions that you pay, what is your annual salary of those increases of position is going to be. In terms of increases from actual and increases for previous ask. Increases for you look at 7 increases of positions. From your actual 84 to 91, that's 7, correct and then the regular salary. How much is that per person? Per position because of your Your increased amount. Of appropriation that you're asking for in this regular salaries line item. we're not asking for an increase in positions or salary. I feel like I'm misunderstanding your question. I'm sorry. OK, but if you're, if you're. If you're moving from actual that was spent in 2023 to what you're requesting in 2024. That's an increase. So yeah, it's an increase in terms of, yes, what was actually paid out, um, versus what we're asking for. We're asking, no, I've said this, so I'm not trying to keep saying the same thing. Um, we are asking for the same amount that we've previously asked for the discrepancy, um, besides that we have, like you mentioned, 7 more, um, budgeted positions is, well, Filled positions. We do also have to budget for the minimum of our unfilled positions and we have a number of those. Correct. So I'm asking what is the average salary for those positions. I would be guessing to give you an average salary, and I, I don't wanna guess truthfully. Um, that's something that I can and pull for you and, and go back and and take a look at, um. But I I don't want to guess and be wrong. And where are those positions primarily going to be located within your agency are located throughout the agency in a number of sections, um, primarily on our general staff. OK, I need, I need specific. OK, don't, I, I, I want specific. OK, we've got, um, an open position, we've got open positions currently in our gas section, um, our financial analysis. section, um, our. Audits section or legal section, um, those are just off the top of my head, um, where I know that we have. A number of open positions. In each section. OK, do your open positions, thank you, Mr. Chair, for the latitude. Are your open positions, how does that correlate between what's, what, why do you have extra help positions if you have open positions. Can you explain that to me? Um, our intent, of course, is to fill the open positions, the extra help positions exist for a couple of reasons. One, to bring somebody on in the short term, um, for short bursts, say like rape cases, um, or during the assessment period. For tax, tax does their assessments, um. The assessments actually go out in July and that's a really heavy time for them, but it's not an area where they have that need the whole year. Um, as we also mentioned earlier as part of our ask we do participate in the MyAR internship program. Those require us to allocate special help positions to those interns, um, and, and they are paid interns. Um, so that's another reason or another area where we use our special help. I would just encourage you to look at those unfilled positions to see if they're really necessary for you to continue to budget for or not based on the timeframe of how long they've been open. I just think that's probably a better practice at this point. So that's just. My takeaway. Thank you. In urban personnel will be hearing that too. Thank you, uh, representative. Stetson Painter, you're recognized. Thank you, Mr. Chair, and I would just add on to that, if we could get a uh a length of time for all of the unfilled positions because I think you said earlier, some were pretty recent and then some could have been a long period of time. So I think that would help us to know the length of time per unfilled position. Absolutely, yes, sir. Thank you. Representative Painter, one thing that the body may not be aware of this commission has not asked for any new positions in 20 years, so we are operating. Under the positions that we have and some of our deficiency is because of the salaries that are paid, as is true in the state, but with the focus now on energy, those individuals are, are finding places in the marketplace at a much higher rate than we are the, uh, Department of Energy can supply so most of these are are lower paid positions. Some are very professionals like engineers. Or lawyers that we cannot pay competitive salaries to attract those just a little information I understand. I appreciate that. Thank you. Center, uh, Mike Johnson. So I'm over here So way back before we started on questions. Y'all were trying to justify the contingency and said that you were gonna get, uh, trapped with $1,000,000 in your utilities operations division and 500,000 in your tax operations 400, 400,000 in the tax. So is that really trapped or can you come before ALC and ask for that spending authority? The issue that we have, um, and, and we are certainly open to working through whatever kind of available options there are to us, but because those fund balances have been created by special language and they've been created for a very narrow purpose. Um, our concern is that if the special language is stricken, we lose authority to use those funds. So even if we were to receive, um, say like a VTA, um, Um, appropriation, um. We have concerns whether or not those fund balances, um, can be used for anything besides the special language that created them and without the special language, we're not sure what the disposition is of those fund balances. Can you not come before ALC. And request the spending authority for those funds without special language. I am not sure, truthfully, um, I'm, I'm not sure where the legal authority on that lies. And and that that's our big concern. Our concern is that no, we, we, we don't have authority to touch those fund balances without the special language. The special language created the contingency fund. This body created the special language to allow you to do that. I think we can give you the authority to spend those funds. Am I wrong, Kevin? Mr. Chairman, thank you. Uh, no, you're not wrong. We have various temporary appropriation authority, which allows the expenditure for many types of funds. I think what, um, she's referring to is her special language is a little bit more restrictive on how those funds can be used. If you approve the various temporary, it won't be as restrictive. But, uh, end result would be the same. Yes, sir. So they can either keep those contingency appropriations in there. And then have that restrictive language apply to them, or they can take it out, or you can take all of it out and they can come to pier and get various temporary the end result would be pretty much the same. But the executive branch is wanting to take it out. That was a recommendation, yes, sir. Thank you. Search of pain in your record. Thank you, Mr. Chair, and we, we need to try to keep this brief, but so if you could give me a direct answer, it's been pretty interesting. For a country boy to learn all about this, I'm still on propane at the house, but, uh, I do have some at the businesses. My question is, if there's a settlement, I'd like to know who sued who, I mean evidently some got sued. They, they're losing, they're, they're making a settlement. What was that all about? And who's getting the money because if some it's paying out a large purse. To somebody and and now it's going to be passed on to the taxpayers of Arkansas, uh, the ratepayers of Arkansas. I mean, who is it that sued Summitt that's getting the purse, that's been taken from our constituent, we, I appreciate your question. I think, uh, Senator Urban's gonna have. Something that will help address that, uh, again, we're on the budget and, and this is part of it, I understand, but uh if you defer to Center Irvin, I'm gonna absolutely do it. Go ahead. Center Irvin, you recognized. Thank you, Mr. Chair. Uh, with all the questions and the issue at hand, uh, we are hearing a lot from our constituents all across the state. My 90 year old father here in Little Rock is absolutely one of them, a very important constituent of mine. Um, but I'm gonna make a motion that we refer, uh, this issue to insurance and commerce, joint insurance and commerce Committee to hear this issue, um, hopefully within the next week or two, I think it's a really critically important that we have a committee. on this issue so that all the legislators can ask questions. Would you define your issue a little bit more. That if the issue is the settlement, uh, the settlement, um, in the case, the settlement issue with summit and the increase, uh, that is being of rights that have been, has been asked or that's before the Public Service Commission. We need a full explanation of the situation of the issue, um, exactly what Senator Peyton's asking those questions, ma'am. Just need a full report to the insurance and Commerce Committee, um, and give this legislature the opportunity to fully ask all of their questions outside of the budget hearings. So my motion is to refer this issue to joint insurance and Commerce Committee to take it up at the soonest available time. That's my motion. OK, members, Open for discussion on the motion. The motion is refer the rate increase that's been talked about, not the budget. The insurance and commerce, uh, I've got uh Center Hills your, uh, on the motion. On it. OK, go ahead. Center Hill. Let's go ahead and get this official if we're going to do it and go ahead and set a date and a time for us and let's get it all laid out because I know we have to work outside the, the, the budget meetings and everything so if you wanna go ahead and look at your calendar and let's put a date and a time on there and that way we can get, get it on center Hickey's schedule. OK You you're, you're nodding, asking for that date and time before the vote. Are you? Just today. OK And, and I would have to, I would have to look at the budget calendar so because we cannot do it. OK. I want that on there is that way everyone here will know when it is they want to attend. Tuesday, October 22nd in the afternoon. OK, Senator Hickey cannot make it that day. OK, we'll, we'll set, just, just go ahead and we'll set this, we'll set this afterwards. I just kind of wanted it to be where the whole committee could, could hear and if they wanted to attend, they could be there. Well, I, it's just difficult to make that as part of the motion on the date you. Go ahead, go ahead with your motion motion would be to refer again. I think I OK, we've we've got a motion stated anybody not understand the motion. Uh representative Lady in discussion on the motion you recognize. Thank you, Mr. Chairman. Uh, I agree, we don't need to put the date in there. Our chairman's not here. I don't know with all that's going on, I, I, I think we can agree the chairs can get together and agree on date and time. I don't want to put it in concrete ear, but I agree with Senator Irvin. I was sitting here thinking the same thing. We need to know the details every detail. Why is this increase coming? Uh, uh, there's so much going on in the energy industry. Is it the cost of gas? Is it a lawsuit? Uh, you know, what are the details and we need that discussion, and I agree with you on your motion. OK, seeing no more questions on the motion, uh, and then I have a second for the motion. And second, all in favor of the motion, say aye opposed. OK, thank you for that. That'll be referred tour commerce and be up to the chairs to work out time in that remembers seeing no more questions, uh, yes, sir. I want to say as chairman of the commission, I appreciate the legislative input. I think it's necessary in this situation for the people of Arkansas. I think if anyone is interested, they can go read the docket on uh summit rape case, the docket is our case. It has all of the. Terms of all of the parties in that docket, which would be helpful in advance of that meeting, uh, and I would encourage the public if they have comments to to file those comments in the docket, uh, we do read those we've already had 50 comments and we read those extensively as members of the commission, so the staff is different than the commission and I appreciate the hearing today and the questions today. Thank you, Mr. Chairman. Thank you. And members, uh, realizing that uh as I told you, the, this has been flagged for session. I'm asking for executive rec, uh, on, uh, this agency. Pardons to draft the bill. That will allow the bill to be drafted. I have a motion to have a second, all in favor aye. Opposed OK, thank you all for being here today and answering questions, uh, we have a lot of just a minute we've got uh Senator Irvin, but in, in this member's, uh, let's do our homework we do represent the people, uh, those it's able to be at the insurance and commerce meeting and this uh. Uh Chairman Webb is is uh. Indicated there's information we can get ready for. Senator Irvin, you're recognized. Thank you, Mr. Webb. Do you mind sending that docket to, um, the, the, I think it's Miss Nelson, Michelle Nelson, who's our staff or the staff for our chair for Senator Hill. I think having that docket is sent to us, to the staff would be helpful and then they can send that out to all of the comments of all of the parties who reached a settlement so you'll know their positions and what what they had to say. Thank you for. Staff, by the way, thank you so much. That will be helpful. Thank you. Thank you, members. Alright, our last one today is teacher retirement system, uh, William Parish will be our analyst and Mr. Mark White gets to come back and say we don't get to see Mr. White there as much as used to. I'm sure he misses us and. Uh, probably misses some of the The excess time that he had to spend so welcome please um. Starting with Mr. Parish, identify yourself for the record. Billy Parish, legislative research. Thank you, Mr. Chairman Mark White, Arkansas Teacher retirement System. Curtis Carter, CFO, Arkansas Teacher retirement. Thank you for being here, Mr. Parris. You're recognized to present. Thank you, Ms. Char. We're on page 315, page 315, this is the Arkansas Teacher retirement system. This agency administers a pension fund that provides survivor, disability and age and service benefits for public school teachers and other school district employees. I have some information from their last uh financial report with some more updates for fiscal year 24. Uh, they started fiscal 25 with 22.3 billion in total market value. That's up 1.6 billion from fiscal year 24. They have 71,000 active members with an average annual salary of 46,000. At 54,000 retired members with an average annual benefit of $24,000. Uh, their unfunded liabilities, uh, are 4.5 billion with the projected payoff period of 26 years. They funded level is 82%. Page 335 shows state contracts awarded to minority-owned businesses and employment summary and publications. On page 316 is the department appropriation summary. The system has two appropriation requests. Only one section has a change level, it's our operations section. The total authorized budget and fiscal year 25 is 1.95 billion. The system requests roughly the same amount for the next biennial. The change level is $200 million less. That's a 1% decrease. The executive recommendation is for 142,000 less than the agency requests. The system is funded by investment income, uh, they had an 11.4% return if in fiscal year 24. Uh, they're also, uh, funded by employer contributions that's 15% of an employee's salary and employee contributions, that's a 7% of salary. The next page is 317. This is their teacher retirement systems operations request. It provides for the administration of the system. It's supported by the teacher retirement fund. On page 318, the following page that is the appropriation summary for fiscal year 25 authorized, uh, they were, they had 244 million in in uh in appropriation. The request for 26 is 223 million. That's an 8% decrease. The executive recommendation is for a 9% decrease, so it's another $14,000 less. And that holds steady for the, uh, fiscal year 27. Those change levels begin with regular salaries, uh, what was authorized in 25 is 5.1 million. The request is for 5.3 million. That's a 5% increase. But the executive recommendation is only for a 3% increase. Uh, for personal services matching, uh, what was authorized was 1.8 million. The request is for 1.9 million. That's a 5% increase. And again, the executive recommendation is only for a 2% increase. The change levels and salary match are due to adjustments for employees as authorized by law. The executive recommendation is to reclassify 4 positions and discontinue three of the 87 positions, that results in that $142,000 less at the, uh, more discussion on the positions will take place in the personnel subcommittee, but I did hear from the agency. They are in agreement the next line item with the change levels benefits, uh, 200 million is what was authorized. The request for 26 is 180 million. That's a 10% decrease. The executive provides for that, um, agency request and it's the same in 27. And the next one item is discount buyout 10,000 is uh what was author Roster 25. The request is for $9 million another 10% decrease. The executive recommendation provides for that and it's the same for 27. Uh, these decreases in benefits and discount buyout are to better align their appropriation with actual expenses. If you look at funding sources, again, this is similar to aper, uh, retirement systems operate differently than traditional agencies, so the system assets are put into the investments to produce revenue for the system and funds are drawn down as needed to pay benefits, refunds, and system administrative expenses. Uh, the trust funds the system act more as paying accounts. On page 319 is uh their direct deposit, cash appropriation, and it's supported by that cash fund. Page 320 is the appropriation summary. There is no change level. Uh, they were authorized with 1.7 billion and 25, and that is the request for the biennium and the executive recommendation provides for that. Mr. Sher, those are all the requests for the system. Thank you, Mr. Parish. Mr. White, do you have any? Come in No, sir. I'm happy to answer your questions. All right, Representative Kavanaugh, you're recognized. Thank you, Mr. Chair. Thank you for being here. I'm sure you heard my questions to the other retirement, and I'm gonna ask you the same thing on your refunds and those as they change from being to a. Direct deposit to writing the check, are you going to be reducing those appropriation request. Over time, I would expect so we do, we have a, in terms of our monthly benefits is a very small number of members who are getting checks. One of our issues is that we do have to use checks for for as an example for some rollovers. So if the member is rolling over to another company, there are, I've seen some cases where they have to have a check to do that. And so we still have to have that capability to write checks in those instances. But for monthly benefits, it is a, a handful of people who are getting those checks now and we will continue to work to decrease that number. OK. Well, your spend is, is in that refunds and reimbursement is going down as we, we see that trend happening. But your request is not going down for appropriation. Um, it's 9.6 million is what you've actually spent, but you keep asking for 20,000 plus. So I guess I'm asking at what point do y'all start asking for that reduction in those appropriations, which is the same thing I asked Aphers, so when we did the request, we decreased the others because there was such a large difference in what we had been spending the appropriation. This one was a little closer. There's a reason I didn't ask for a decrease there. I, I don't think it'd be a problem if that was decreased, uh, by, I mean, you know, I like to keep appropriations a little closer and you know, I, I have a discrepancy between what's a little close and you do, but when you're asking for $20 million you're only spending 9.7, you could reduce it easily to 15 million, you'd be OK. So Let me look, let me check my CFO on that. Yeah, that's we would have no objection to that. OK, thank you. I have a motion of proper time, Mr. Chair. I would take your motion. Oh. You turned yourself off? Sorry about that. Um, I'll make a motion that we take executive rec with the exception on the refunds and reimbursements that we take that appropriation down to 15 million. OK, any discussion on the motion? Not to have a second all in favor I. posed Uh, it is passed. Thank you. Appreciate y'all being here today. Thank you, Mr. Parish. I've got one thing, uh, members you in your packet just to make note, you've got a summary narrative of interest earned on certain funds that was asked for, uh, just make note of that if you'd like to take that with you. Oh, I'm sorry, I thought it was only you handing it out now. Yeah, just let's take just a minute, let that, let that be explained. Who's gonna do it? You're gonna do it? OK. You may Yeah, yeah. OK, Mr. Chairman, uh, we've been asked about interest earnings. Thank you, Mr. Chairman. On, uh, in, in the budget manuals and how interest earnings are hard to spot in here. um, Office of Accounting working with Mr. Robert Brech has put together this document that is a really good summary on how that works. And, uh, Mr. Breck is here to answer any questions. He's They give you just a minute to look at that if there's any questions we'll bring Mr. Breck up. Representative Wooton, you'd recognize. You, you, Mr. Breck come up? I have a question. Mr. Brack. No, OK, Kevin, OK, go ahead. This Bres too. You can be in on this. We want you involved. We've got $400 million here, roughly in interest. Why can't we have a line item of interest that the agency receives. carried in their cash funding and their funding. Keep in mind that 360 million of that is in one line item, and that's the treasurer's office and that's the securities reserve fund. Uh, so the, the bulk of that is going to that one thing. It can be, it is, it is in the budget manual. It's just not on an interest line. It's gonna be on the cash line or the other line. It is, it is in there, it's accounted for, but if you want it on an interest line, then if it's that, if that's what the body wants, it's going to take some. We'll have to You know, change the system a little bit. It's not an easy thing just to do. We, but we can do it, uh, we can, we can't do it this year, but we can certainly do it in the fiscal session if that's what the body wants, you know. I suggest that you work with Mr. Anderson and it shall come up with it and and then but you know, if it's gonna cost us a bunch of money, we don't need to do that, but at the same time, we've got 400 million whether it's one item or two items or 3 that's not being accounted for and that's all we're asking. It is being accounted for, but I understand what you're saying. It, it won't cost that much not being accounted for, we're not seeing the uh the budget system is actually a system that was designed in-house and so those changes can be made in-house and it won't, it won't take a change order or a contract with an IT company. We can do it if that's what this body wants Chairman, if it's an agreement, I'll make. Let's let's do this and that. Let's let the chairs get together and we in our meetings we'll bring that back up and uh we'll have a discussion on what that will entail and and and and thank you thank you Mr. Chairman. Thank you. Thank you. uh, going to Representative Kavanaugh, you recognized? Thank you, Mr. Chair. I just want to verify when this interest goes into their cash accounts, correct? Correct, for the most part, yes, for the most part, where's the other most part though, I mean, the bulk of this is going into the securities reserve fund, whether that's considered a cash one or not, I'm not certain, but generally for agencies that are keeping the interest, uh, yes, it would, it would go into their cash funds. Are there any agencies that are are there any agencies that aren't keeping their cash funds? Yes, I mean, not everybody gets to keep, uh, the interest. That's why the bulk of that is at 360 million, that is, that is the treasurer's office taking care of, of that. Uh, so it has to be either a trust fund or an end fund. I think those are the cash funds, but not everybody gets to keep the interest, so the interest that's not kept by the agency. So it's not to a trust fund or something, where does that That goes into the securities reserve fund. You'll see it on the report for the treasurer's office. That's the $360 million. Some of that is spread out of statutorily, the bulk of that is going into the catastrophic reserve fund at the end of the year. OK, so I'm just saying, is there ability that if we need to use it for something on those that don't keep their interest. We've got ability to use that for other items. No. Well, if they get to keep that interest for that purpose so that that then that would be, I assume you could. I mean, you have the power to do that. They're not considered special revenues as far as I know, uh, but it's, it's all done statutorily or through special language. It's it's not done, you know, by DFA. Thank you. Senator Irvin, you recognize? So the, on, on your report, the $5 million to the budget stabilization fund and the Arkansas Highway Transfer Fund of 200 million are those sets, they're set statutorily, correct? That's correct, is that an annual amount? Those are annual amounts, that's correct. So and those are only those are adjusted through. Special language and appropriation special language or it's statutorily, I'm not sure. It's statutorily directed. OK. And then if not, it gets swept into the catastrophic reserve fund. I believe 280 million or so was was transferred in the catastrophic reserve fund at the end of the year. Yeah, you'll see there is a report that goes to Per every month that has the securities reserve fund report. It's in there. OK, uh, if it, if it doesn't go to either one of those three places, then where else does it go? entities that portions of that I can't tell you exactly who gets what portions and how much they are. We, I can get you that report. That'd be great. But whatever's left I believe goes to the catastrophic reserve fund. OK, thank you. Sent Hammer, you recognized Thank you, Mr. Chair. So this report is, uh, a county of the interest earned off these various entities listed on here, is that correct? Uh, that's correct. That's a report of the ones, yes, that keep the interest. So like the DFA Arkansas Medical Marijuana amendment. What, what is that for? or do you know right off or I would assume those are the, the fees that come in, uh, for the, the licenser fees for the dispensaries or the cultivation centers. OK, so this is like $19,059. That's the interest that was earned off that amount. That's correct. So how would we get a report that shows or is the number fluctuating. As far as the total amount of which interest is being earned off of this like it would be fluctuating, uh, in some instances, some instances may be a trust fund that's static, uh, but, but no, it would fluctuate, uh, constantly. The treasurer's office is, is involved in that and they're the ones that reach out and they, they invest all of the all of the state funds at least that they have access to, uh, they're the ones doing that and it could be, could be in different types of instruments, but they're responsible for Investing somebody's like 43 cents in small numbers, I mean, that's probably a pro rata share of some other, of some, you know, amount that came in. All right, thanks. OK, members, thank you for your attention. Thank you for the ones that stayed, and we will, uh. Be adjourned until 9 o'clock in the morning.