ALC-JBC Budget Hearings

didn't call that out without hearing. OK, members. We are officially gave in to the Arkansas Legislative Council joint budget budget hearings. Welcome today if you'll take your seats, uh, members not on the committee and, and don't have seat assignment you can take up whatever other seats that there are available. First up members, we have adoption of rules in your packet. If I have a motion to adopt the rules of a motion and second on favor I. Rules are adopted. Please take your visitation outside. Uh, we have a handout of in the packet out of me members without objection gonna refer that as usual to ALC JBC personnel committee. As required under A. 796 or 2021. OK, next members we have uh Mr. Robert Brack gonna come up and uh give us explanation of your budget manuals. Members, many of you, this is, uh. For me to your sum it's not, but please give Mr. Brecht your attention, keep the noise down. Thank you for that. Mr. Brack, you are recognized if you give us your official title and all, and you're ready to go. Thank you, Mr. Chair. Robert Brecht with DFA. And what you've got, uh, you, you've got week one budget manual, you should have that in front of you. I'm just gonna gonna go through this and show you how this works. This is actually, I like to think of it as it simplifies the budget, uh, whatever you're interested in, everything within the budget manuals is, is, is simplified down to fund centers. So I'll kind of go through that for you. If you have any questions after this, if you want to ask, ask me questions later, you're certainly welcome to. If there's something you're specifically interested in. It in we can, we can show you where that's at in the manual or where it's going to be at. But I'll just kind of go through how this works. Uh, this is actually information that you require and but, but the budget office puts this together. So if you look at page, uh, 2. I think we've got the same and I'm looking at the department appropriation summary, uh, for the Arkansas State Claims Commission. Mm And I'm gonna show you, there's two different types of forms that you need to be aware of. Uh, this is the department appropriation summary. So what you're going to have, you'll see these numbers on the, on the upper left 227, 228U90. Those, those are fun centers. So each one of these lines is a fun center within a business area. The business area you can see down at the bottom where it says Arkansas State Claims Commission 0360. 0360 is the, that's the business area. And it will show who the director is. But this is a, a summary of everything in that business area. And so what you've got, you've got the far the far left columns it says 23. 2023, 2024. Those are actuals for last fiscal year. So you've got real numbers, uh, from the last fiscal year in this business area and so. Uh, you can see the actual numbers and you can see where the funding comes from. And you'll also see percentages on this sheet that shows up to 100% of where all the funding comes from for this business area. Uh, not, I want, I want you to turn over to page 4 and you'll notice the 227 in the upper left, page 4, you'll see appropriation for 227 claims operations. So each one of these, when you see a summary, each one of these fund centers is going to have its own page. So you, we'll just look at the claims operations for, and you, you'll see that the funding source is state central services, OK? Uh, this will show 23, 24 actual salaries. They spend $455,416 on salaries. They had 10 employees throughout the year and you can see the personal services matching the operating expenses, the conference and travel. Now if you want to get in the weeds a little bit, you'll see these numbers beside, uh, personal services, 501-0003, the 03 is just a code for those are regular salaries, uh, 02 is for operating expenses. 09 is for conference and travel. OK. You'll see the total of their spend in in this particular fund center was 723,163. Now you can go down to the bottom to funding sources. It's gonna tell you what their fund balance was at the beginning of the year. It's going to tell you they got 720,000 from state central services. They transferred $1,0007. You can see that transfer of the negative number and you can see their total funding of 731322, which resulted In an excess funding of 8,159. OK, now if you go over to the next next column, you're going to see 2024, 2025. This is what is actually budgeted for this fiscal year. So you got real numbers for last year, you got budgeted numbers for this year. And you'll see generally that those are going to be, uh, generally they're going to be close to the same. But for regular salaries for this year, Uh, they're budgeting 477,767. You can see actually, this is more than authorized. That's because of salary adjustments that were made during the biennium. So that does happen occasionally. Personal service matching, you can see that. Those are just that's those are the fringe benefits. They're operating expenses, uh, they don't, they're not, uh, budgeting anything for conference and travel professional fees or data processing or capital outlay in this particular fund center. But their total budget for this fiscal year is 758. 1800 then you can go to their funding sources. They've got the 8159, that's their carry forward balance. You can, that's what there's excess from last year. The state central services is expected to be 7758, 800, and so their total funding is 766959, and they're expecting have $8,159 in excess funding for the year. Now, if you move over to 25, 26, this is, this is why we're here, uh, this is going to be for FY 26. This is the agency recommendation. And you'll also see the executive recommendation. And you'll see that they generally follow pretty close. And then beyond that, you can see the for 26 and 27. Just remember that the top, the top rows. are for uh expected expenses or appropriation, the bottom is the funding. That that's how the whole system works. I mean, if you look at the whole, uh, hundreds of pages in the budget manual it might overwhelm you, but if you're interested in, in certain areas, you can drill down very easily to a specific area and, and I can help you find that if you, if you're looking for it. But generally that's how it works, uh, I like to think it's really simplifies things. It gives you a very good snapshot at a low level, drilled down to a really probably a lower level than most states will do, to be honest. But this gives you the opportunity to see exactly where the money is being spent in every, every part of the, of the budget. And I'd be more than happy to take any questions you might have. And If you don't want to ask any questions publicly, uh, please reach out to me. I don't mind at all. Uh, there's, there's no, no dumb questions as the, as the school teachers in the room will say, uh, be more than happy to, to get with any of you individually. And, and, and help you through this. But if you, but if you understand just this one page, you can expand that and pretty much understand the entire budget or at least understand the portions of the budget that you might be most interested in. Thank you, Mr. Brack. You make it sound so easy. It really is one thing, one thing about Mr. Bragg, he's always available to answer your questions, so. Feel free, uh, if you have that. Do we have any questions for Mr. Bray. And if you don't have my cell number, uh, just get with me. I'll, I'll be more than happy to give it to you. Most Members were gonna be just a minute. I did not push any buttons. Members will take a 5 minute recess. OK, members, uh, sorry for the break, we had a little technical difficulty. Senator Hammer, you are reckon. Just a minute. OK, there we go. Thank you. Thank you, Mr. Chair. Uh, Robert on the illustration that you were using and I'm on page 4. It shows a carrie For balance of 8159 that transfers to the top and that's actually calculated in how they arrive at the 7,580,800. Is it customary for them to be able to carry forward or certain agencies can, certain agencies can't, and what is it that allows them to or not to. Well, the code or the law will allow them to do that. Uh, it's it's not something that's done, uh, by, you know, my office. There are situations where, uh, Jim Hudson can do it as the chief financial officer, but the code gives him that authority to allow them. uh, so, but generally what you're gonna see, you'll have fun balances carry forward for special revenues and cash revenues. If you'll think about, uh, for instance, with labor and licensing, the heat. They, uh, balances. Those are all special revenues or cash revenues. They can only be used for that specific board, uh, for their duties. And when you pass the laws, licenser laws, typically those laws will state that the that the fees can only be used for the, for that particular purpose. So those we are carried forward because there's nothing else you can do with them now where you're gonna find where where balances are swept or with the RSA dollars with general revenue dollars and, and. Some of those are swept, although we don't sweep that many at the end of the year, but. But you're going to see fund balances kind of transposed from where you see the uh the excess appropriation or funding, you're going to see that show up at the line on the fund balance for the next year. And, and when you look at FY 2425 on this particular page, they're expecting just a, a flat budget where the revenues are going to meet, uh, their, uh, expenses, so they expect 758,800 in expenses. They expect to get 7,758,000. $800 in revenues and so that same 8159 is going to show up as another surplus, and that's, of course, this is just forecasted because this hasn't happened yet. And then you'll see that carry forward into 25, 26 and 26, 27. But generally, uh, most of the fund balances that trans that automatically, uh, go to the next year or those revenues cannot be used for any other purpose. Can I get one more, Mr. Chair. One more thanks. So we're, we're where we are and Looking at 24, 25, but then you extend it out and with the tax cuts that we've been giving with the forecast projections and with the surpluses that we have, uh, would you care to give any comment if Jim doesn't mind, you care to give any comment about what the horizon might be looking like, um, because what we do now will have a direct effect of what happens next year and the year after. Right, I, I can tell you that the era of the $1 billion dollar surpluses are, you know, is likely over for the foreseeable future. Uh, we're trying to do forecasting, uh, that'll be more accurate. Uh, I hope that people don't have the attitude. I don't blame you because we have been the revenue forecasts have been off, but I, I believe the revenue forecast for, for this fiscal year is 280 million, somewhere in that range. Uh, please don't expect it to be 600. You know, we're not, we're not I'm gonna miss it by that much, uh, you know, we'll, we'll see where we end up. I can tell you a year to date, I think we're about $400 million over, over what we projected so far, you know, 14th through the year. but, but keep in mind that you've, you've done tax cuts that retroactive and those tax cuts haven't really gone into effect yet. So just expect that, that the revenue forecasts are going to be closer and, and, and keep this in mind when I first Came into this job. I took the, the RSA and just put in some multipliers to see what would happen if the budget grew by 3%, 4%, 5%, and I can tell you, if you start growing the budget by 4 or 5%, it's going to get away from us uh quickly. Uh, think about a $6 billion. I'm just thinking about the RSA and I'm rounding down to 6 billion, uh, but if you grow at 3%, that's 180 million. If you grow at 5%, that's 300 million. And so, and then it's going to just in the compounds year after year. So just keep in mind that if we start, you know, having large budget increases, it's going to have a profound effect. Uh, one illustration I like to use when, uh, Governor Hutchinson came into office. We had just passed the $5 billion mark on the RSA. We, we passed the $6 billion mark just as he was leaving. We're, if you start growing at 3% or 5% rather, you're going to pass the $7 billion mark in 3 years. So just keep that in mind, just generally of what happens with the RSA if we start growing too quickly recognize you if you identify yourself for the record. Good morning, committee. Jim Hudson, Secretary of DFA, uh, Robert's, uh, budget expert, he's got a profound mastery over all this and I routinely when I ask him questions, he does sometimes tell me I ask a dumb question, so he was really being really nice to y'all. Um, you know, he really understands how little inputs can affect a big output. And so I just really appreciate all these, all that he brings to this conversation. We will give you a revised, uh, revenue forecast, uh, in, uh, November prior to the, uh, governor. Presenting her balanced budget, you know, that's by code, we do that, um, before, before every session. So we'll look at, you know, the trend factors in terms of the economic, uh, growth factors that we use for building the budget. And, and by and large, what you have in the manual is mostly appropriation, uh, numbers. It's also special language in there as well. Uh, generally, the manual just shows flat in terms of funding as it relates to, you know, RSA general revenue, there can be some changes in the federal, uh, dollars that are in that. So any changes that may be recommended by the governor in terms of the RSA that would be presented in the context of her balanced budget presentation which we happening, uh, in November. Thank you. Thank you, Senator Hammer. Uh, next up is Representative Wooton. And, and with, with the current forecast and the current budget of 2% is what I'm hearing. How much pent up inflationary spiral. Do we have in these agencies and it what point are we going to reach to where funding. Reserves are no longer satisfactory. Well, I can tell you and many of you may know this or or may not, but, uh, most of the money, if you look at the RSA, it's, it's, it's all goes to education, uh, 41%, higher ed is about 13%, uh, DHS, uh, 25%, 93%, and then you got 8% for corrections. 93% of the budget are those agencies. And so you can get into a situation where you could cut every, every dollar past those. And still not keep up with, with, you know, the potential, if you, you start growing the budget too quickly. Uh, now, there is, there is concern. The concern I think is, is mainly, you know, those three education, uh, Medicaid, and, uh, and, and prisons. So we've talked about, you know, increasing the number of beds, that's going to take an increase in the RSA to run those beds, even if they're paid for. And so, uh, there is concern there. Uh, I, I think it's going to. It'd be difficult to keep the the spending down, but I can tell you, if you, if you try to chase inflation, uh, for instance, uh, you're gonna have a budget that's out of control quickly. I follow what you're saying. Follow up if I may. Let's take the penitentiary prison, corrections, whatever you want to call it. I understand they have a $300 million need down there for water purification and, and clean water and that type of thing that's gone on since 2014. At some point, we're gonna have to address that. One way or another, and they don't have the money and this is what worries me about the other agencies throughout state government that if realistically, Uh, I'm not saying that we need to meet the inflationary uh number of. 4% or 5%, but we've ignored it through the whole time. It was a 1.76% budget and then a 2% budget, and then I think, uh, Governor Hutchson had uh 5% for 4 or 5% which was closer to the reality, but are we gonna run into a situation where we're going to have to address some number greater than 2%. We just want to clarify, when you, when you reference 2% earlier, the, the governor has not presented a number for FY 26. And I'm not familiar with that, that 2% number. So that discussions about what the budget needs are for the next biennium of our RSA perspective are still ongoing and there, there is not a number she's recommending at this stage. Well, uh, Mr. Secretary, if we approach it from that standpoint and I've set where you have was dependent upon the governor, but our efforts proved to be futile last time. Is it related to a pay plan and some other things. Is our effort here on the budget and working and coming up with budget numbers that you all have presented, uh, are these gonna conform with the governor's desire. If we pass them, if we approve them and send them on. Well, again, the, the governor's presentation of her balanced budget is a part of this process. So you'll have, you'll have that input as you, you know, conduct your hearings. And I would note too, I, I think there's agreement in terms of the big, big cost agencies. But several of the general revenue funded agencies turn back money. Uh, turned back about $30 million at the end of FY 24. So not all agencies have to spend all the money they've got. And so I think, you know, to say that we're funding at the exact level of need is probably not true for all the agencies. Some agencies are going to need more funding, no doubt about it. They've identified it, yeah, new needs coming in, but some agencies are doing just fine at the current level by evidence by turning money back. Well, OK, uh, one more question and then I'll be through the uh The, the, the question keeps coming back. Relative to income tax cuts. At some point, if we continue to hold these budgets at the level of 2%. And we give a just do away. With the leading source of revenue. we on a collision course for a major. Downturn in in uh revenue and state government. Representative Wooton, I think the, the governor has, she's indicated a commitment to get us to a terminal rate of 0 on income tax, but she's also been very, very clear too that we're going to do that in responsible manner and so we're not gonna rush to that 0%. We got to make sure that we have a growing tax base. It's not just a question of just, you know, cutting, we want to grow the tax base. We're also growing the revenue sources as well. And so we want to do that responsibly. I think we have to take a cautious approach in the upcoming fiscal year just to make sure we see where the dust settles on the most recent tax cuts and see how we're doing based on our projections. We need to be. Clear in our Forecasting relative to revenue growth and not the tax increase somewhere else and that's what I'm hearing from my people in my constituents that if we do away with the income tax, we're hampering state government to the point that we'll have to do one or two things, whether you'd have to raise taxes or cut services. Yeah, I, I think we have to have a strategy that does neither of those things, uh, and again, I think the key is having pro-growth policies where we attract more businesses, we get more Arkans in working and paying more income taxes, more sales taxes, and, and really generating economic growth that way. I think the governor is very committed to doing this in a responsible fashion. Thank you, Mr. Chairman. Mr. Chairman, thank you for your forbearance. Thank you, Mr. Secretary. Thank you, you're going to my co-chair Representing Wardlaw. Thank you, Mr. Chair. What is 33.1 million represent if we added 33.1 million to the budget is that 1%, 0%, 0.5%? What does that represent? That's about 0.5%. OK. Looking at these agencies that turned back that $33.149 million. If you pull out corrections, they turned back $17 million. We just signed up for a $1 billion contract. Where was that $17 million supposed to go? And I, and I think it's important to point out real quick, as these agencies come to the table over the next 4 weeks. We probably aren't to put an astridge by the names that are on this list so that the members understand during that budget uh presentation that they turned back X number of dollars. Um, But out of the 33 million, half of it came from corrections. So, kind of walk me through what that $17 million was meant for, if you can, you're the budget director. Uh, that, that was in Category B of the RSA last year. And so it wasn't funded until, uh, late May or June and. It was, it was for salary increases, but they didn't have time to implement those increases. So it was turned back, but I don't expect that to be turned back, uh, next year, especially those salary increases on the mark to be done this year since they didn't get done last year. That's correct. I believe they could. So we're not only going to pay for the salary increases at, at prisons we're going to pay $4 billion health contract as well. Our one year of that $1 billion dollar contract. Well, you know, that's a policy decision, uh, you know, for this entity that's already been made. The contract's already been signed and done so that policy decisions already left the train station. Right. But whether how that 17 million is used, that's, that's another issue. If you follow them down, the health department turned back $5.8 million. What, what was that $5.8 million for. I don't know specifically, but that would have been general revenue, uh, that remain unspent, uh, I, I'll point out that the governor did ask each department secretary to try to maximize any dollars that could be swept back and to look for any efficiencies. And so I think that number, the number of dollars swept last year is probably more than normal. Yeah, or more than we've seen in the past. Chair, I just think that from learning this amount of money was sent back, I think we just need to make sure that those agencies let the committee know that or our staff let the committee know that as we're reading through those budgets going forward over the next 4 weeks. Thank you, we can do that. Uh, next up, Representative Les Eves. You are. Thank you, Mr. Chairman. I'll just be real quick. When, when Dave and I scores bills that we run, tax bills or really any other bill that has a fiscal impact. Typically those are scored statically. What would it take for us to be able to get some dynamic scoring on the bills that we're running? Do you have the capacity or capability to do that, and if not, what would you need? Representative, I think probably there are two components to the answer to that question. One is we have to build the capacity in order to be able to do it. That's probably. You know, investing in personnel and probably also software systems to be able to do that. And then more importantly, it's probably just underlying policy, you know, consideration in terms of how we would use that data. Um, I think that it, it, uh, It could press us a little bit in terms of just the consequences of a miss, if we rely too much on dynamic scoring versus, you know, actual forecasted dollar for dollar revenue loss but some of the static scoring is also just a best guess. I mean, it's hard to, I would assume for you to know exactly, you know, what the effects, who's going to take advantage of it, how many, you know, are taking some exemption or whatever, but, um, are there services out there that offer dynamic scoring to states. Of of tax bills or any fiscal bill? We'd have to just look into it and get back to you, sir. I, I'd hate to kind of guess here at the table. OK, no, thank you for that. Representative Kavanaugh, you recognized? People I can fly an airplane, but I'm having trouble with this. Thank you, Mr. Chair. So when I'm gonna go back to the sweeping of the, the money. My understanding is that that is actually something that's required under statute is for agencies to sweep this extra money and give it back, is that correct? I'd say generally, you know, just generally if, if it's money that came from general revenue and from the RSA if that money remains unspent, generally it would be swept back. Uh, you know, that's true. What do you mean by generally? You're gonna have to there are exceptions, for instance, the DHS, uh, there is a portion in the code that allows for uh Secretary Hudson to allow them to sweep that into their Medicaid fund, for instance, uh, you know, so it's not 100%, but, but generally, hate to use the hate to use the term, but, but generally if it's left over, yeah, it would be swept back, you know, and that swept after the After the years closed out, so you, you've got the end of the year, it takes 45 days to kind of close the books at at the end of that time period, if there's any money left over, then that's swept. So what DHS and Department of Education are those that generally. Don't get swept with the other agencies. I think the last two years, if I'm not mistaken, the DHS is not swept into the Medicaid fund. It's gone, uh, but they haven't had anything to sweep, I would say that, uh, then also, uh, with education, they keep their funds. Uh, it stays in the public school funds as far as I know. OK, and the public school funds, it just, it just grows. There's no way to sweep it back if we see that there's no need for that fund. At the level that it is the public school fund, there is money in there. You might be referring to the adequacy fund which has been growing. I think there's 625 $650 million in that. Uh, that is due to a 78 cents sales tax that, that requires that money to go to the to educational adequacy. So that money couldn't be swept as far as I know. Now what can happen is you can adjust how the money is distributed, how the how the money is paid to the schools for, for the foundation funding and everything else that goes through the Matrix, uh, so that can be manipulated somewhat, but, uh, those funds have to be used for education. So basically with that And if we see that we don't need GR to meet the needs we can use that fund and not use GR for that. That's correct. OK. And that's something that we're doing on a regular basis. We're, we're always looking at the adequacy fund, uh, what happened with the adequacy fund because it was tied to sales tax, uh, when COVID hit, you had COVID and you had the internet sales tax that kind of occurred. That's why our sales tax numbers have grown so much education, uh, actually, they get the benefit twice because education Excellence that also, uh, comes off of sales tax mainly and so they've they've got quite a, you know, enormous growth in their, in their funding that went to education so that can be manipulated where they don't need as much GR, uh, but yeah, the internet sales tax and COVID sort of came together at the right time and that's why our sales tax numbers have grown so much and, and actually, if you look at the sales tax numbers, it's more than made up for. The cut in the income tax and, and I'll say this just. Just so you, although we've cut income tax up to this, up to this last half cent are, our income tax revenues have not dropped. Now our spending has increased, but the spending increases were taken care of with the, with the sales tax for the most part. Yes, and I think you just hit something that's always a concern to me as we cut Our taxes We may get it with, you know, sales tax. Usually that's to a specific fund that we have to use, but we're our keep increasing our spending. At some point, we have to be truly conservative with our money, and that means that if we're going to continue to cut and cut taxes, which I'm all for. I want us to be competitive. We also have to start cutting spending and look at these budgets pretty hard and say it's time that we cut this spending, we cut this spending, because the last thing any of us in here want to do. Do is to come back and say, oh, we didn't calculate properly. We didn't forecast properly and now we're going to have to raise taxes. So, you know, I think as long as I've been down here, be honest with you, it's hard to get people to quit spending money. I mean, I've tried. It's a little hard to get it done. I mean, but at some point, we have to take a bigger look at stuff and we have to say, this is, this is something that we particularly may not need, um, it also looks at our fund balances that we have sitting out there. Are there ways to use those in other areas. So I guess what I'm asking is when you're looking at your budget proposal for us. When you see a big fund balance like that, are you generally trying to find a way to use that fund balance instead of using GR? I guess that's my question for you. It really depends. Uh, if you look at education, I think it's a, it's a great example, to be honest. They do have a high, they have their adequacy fund is, is, is, is high at 625 $650 million something like that. The good thing about that, just in case, uh, someone doesn't know this, the beauty of Arkansas' system when you pass the revenue Stabilization Act. The beauty of our system, and I, it's very unique throughout the country and I don't know why because I think it works. It's a fabulous system. If the RSA doesn't come in, you know, we have to forecast a number. If the forecast doesn't come in and, and the budget is actually higher than the forecast Then everybody takes the exact amount of cut. So if it's gonna be 2% short, the forecast ends up being 2% short of the budget. 2% comes off the top of everything. Now education has a special statute that says they cannot be cut, but they can use their adequacy fund to make up for that. 2% without impacting the rest of the RSA and the cut. So those fund balances are important. They're important if you do have a downturn, you can use those. The problem with using fund balances. If you're going to increase spending on the budget is one of those fun balances dry up or they're no longer there. Now you've got to come up with a big number in the RSA to make up for that. So fund balances are great, but uh you've got to be very careful in how you balance those and how you can land softly at a number if that's what you're after, if that makes sense. Yeah, and Representative, I mean, I just, what I would add is the governor is just as concerned as you are. About holding down the budget and I think her direction to the Cabinet secretaries as we began this process last early in the summer for this particular biennium coming up was to hold down spending. So she's not one advocating to, to increase spending beyond the priorities we've already been talking about in terms of education and corrections. You know, in terms of our reserves, I mean, let's, let's talk about some good news that we have there, um, for an economic downturn, should it occur? We are exceptionally well reserved. At about close to 40% of our RSA budget. Last time I checked the numbers that made us the number 2 state in the nation. In terms of adequacy of reserves. So we're well reserved for an economic downturn, but we don't use reserves just to go increase the budget. We're not gonna spend out a reserves. And so the whole point of this process and the governor participate with you in it is to come up with a conservative reasonable budget that holds down spending so that we don't get into the problems you're talking about. I mean, that's, that's something I want us to do is to look and, and it takes hard looks. Nobody wants to be the one to say we're going to cut the spending here, but at some point when you start talking about being conservative responsible, that's, that's what we do. We start looking at making tough. Choices and you know, and that's how we get to be able to cut taxes further and to get money back into the pockets of Arkansans. And again, I think y'all have done exceptionally well, good job, you know, the governor's involvement as well that we create. Pro-growth policies so that we're incentivizing economic development. So again, we're growing that tax base. Representative Ladyman. Thank you, Mr. Chairman. Uh, I want to go back to what, uh, Representative Wooten was talking about a little bit a while ago about the future, you know, if we continue to cut taxes, are we going to get into a situation where we have to have more income. So my question related to that is. Uh, I agree that we need to grow the bottom line, the tax base we broaden the tax base. And if we're, if we're growing economically in the state. Then that will cover the extra cost based on inflation or whatever. But my question is, when we're predicting what the budget is going to be and what the income streams are going to be, uh, how do we, Project that income? What do we use? Do we have an, uh, algorithm or, uh, how, how do we do that? What do we use to predict, predict the income side. Of the formula. I'll take my shot at and Robert can give you the right answer. Uh, first of all, my condolences, sir, on your loss. Sorry for you. Uh, we do subscribe to multiple services, uh, Standards and Poor's be one of them. We look at all the analytics they provide. In terms of general macroeconomic indicators. Um, we have a really very detailed historical understanding about what our revenue patterns are, um, in terms of different types of economic situations, robust, you know, medium, low growth, no growth. And so all those models go into, you know, the, the inputs for determining what the forecast is going to be and we have, you know, folks who use econometric models to be. to do that I, I, I think that's right and and we're looking at those numbers and we track the numbers every day from the various incomes streams into the state, uh, where we can see any anomalies and, and we can see if there's anything that that's really, uh, troubling us in the future. Uh, I can, I'll just. Give you a preview for next week. Uh, you're gonna notice that that sales tax, uh, revenues are gonna drop. That was because of a large sales tax, uh, refund that we had to make. So, but we're watching that all the time and we're, we're trying to make sure that the trends are going in the right direction, along with everything that Jim said with the subscription services and looking at what's happening nationally and so I think we've got a pretty good handle on it, on that one, that's, that's actually a good news story in terms of the rebate because that's the tax back. C program that AED AEDC administers, building a large plant in order to incentivize that construction, we rebate a percentage of the, uh, the sales tax for construction materials. So it's a near-term hit, but for a long-term revenue generator. But I guess I understand that, but you talk about some of these agency, uh, algorithms or whatever you use, but do we look at Arkansas, what our growth has been over 10 years economically because to really grow the economic base, you have to make things. I mean, we're in Agrind state and that's great, but, you know, we have lines around the state we can't grow the number of acres. We can improve the production per acre, but, but to actually grow our economic we have to make things. It's like building factories or whatever. Even the retail business is based on building factories or, or new products. So how do we, how do we inject that into the formula and how do we make sure that's correct? That's my bigger question. How, how do we know we're, we're using the right number. Um, you know, I think we have staff members who report to Robert, um, who really do look at all those inputs. And we do have very detailed information. Um, most of it's produced by the federal government that tells us things like GDP at the state level and that GDP is broken down very discreet lines we can see what's coming from manufacturing, what's coming from retail, what's coming from construction, what's coming from Agra, and then we can overlay that against what the historical patterns have been. I think the thing that we really pay a lot of attention to is is employment. And if you have an increasing number of our Kansans who are working, that's an increasing number of Arkansans who are spending some of that money to generate sales tax. You know, to buy homes, to buy cars, that spurs on economic activity. That's another good news story, I think for, for all of us, the governor's leadership, y'all's leadership, um, that we have more Arkansans working. Being productive members of society. That's, that's a great economic indicator. Senator Hammer, you recognized? Thank you, Mr. Chair. 2 quick ones on the turn back money or the money that's being turned back, all of that is 100% state dollars, no mixture of federal dollars in with that, is that correct? That's, that's correct. You cannot sweep federal dollars back and then at what point would an agency realize that they're going to have a surplus, take for example, the Department of Corrections in the 17 million, where would they have realized in the last year that it was going to grow to that much. We should they have realized that it was going to grow that much. I know that that's about the amount that was in Category B, so we were well aware that that money would not be funded and, and just everybody understands the RSA is divided up into categories. Category A is funded before anything in Category B is funded. So we had Category A, I believe, around April 17th or something if I recall. Uh, sometime in late April and then, then category B is funded. We knew. That they would not have time to spend that money and to be honest, they had salary savings as well because of all the open positions that they have so it wasn't, it wasn't a surprise, uh, but I would not expect that money to be available this year. So that's $17 million was a combination of, um. Unexpected revenue. Or Because of the open positions and other things that had they had those positions filled, that number wouldn't be 17, it'd be less. Uh, that's likely, yes. Yeah, OK, so. Would they have then had the money. To hire or was the money too late in the fiscal year for them to realize that in order to get it spent because, well, they're always trying to hire new people, I think prisons especially has a hard time filling all those positions, uh, because of the nature of the work and, and the pay. So, uh, you know, could they have spent more of that money perhaps, uh, but like I said, we, we were not surprised that they would have that money at the end of the year. The point though on the, on the Category B is we don't release Category B. Until we fully funded Category A, so it's, it's happening toward the end of the year. It wasn't necessarily unexpected revenue. It was just unavailable revenue to them until we got to the end of the year. And that's why we shouldn't count on it for next year because it was kind of an unexpected occurrence or it came so late in the fiscal year. Well, what typically happens, and again this is uh this is a policy decision for you for for your bodies, but what typically happens, Category B is new money, so that's money that they did not have the prior year. And so what we try to do is make sure that agencies have at least as much funding as they had the prior year. The 17 million was new money, so it was in category B. This fiscal year, now that that money is in category A. So they will get that money now throughout the year and have an opportunity, uh, more of an opportunity to spend it. So let's just also just, you know, talk about what the, the goal was in the sweeping, uh, and the the governor made a concerted effort on this. I mean, I'm coming out of an agency, I understand what the agency behave. is, you get toward the end of the year, you've, you've got, you know, unspent money. And so the temptation can be, well, there's some things we can go buy now because we didn't really know we had the money available to us earlier in the year. And so I think her point was rather than go and spend that money on things that you don't necessarily have to have, let's turn it back. Let's put it back in the state coffers for us to make a decision about collectively how it can be spent. So the whole goal was to eliminate the potential temptation for unnecessary spending at the end of the year. Right, which means They, it was in their best interest not to spend it or try to spend it or to compensate the salaries because they knew what would be coming then. OK, thank you. Representative Beck you recognize? Thank you, Mr. Chair. My question was, I, I look at numbers and and if if someone constantly hits a number, I say they're fudging the number, right? It's like you, you, you know, things happen, right? The different things. So my question is this in terms of the, the line items that we have all the appropriations that we have here. How many of them actually came up and said we're short. Well, that does happen and you'll notice in the peer committee, you know, nearly every month, people are coming in and asking for a new appropriation, either federal appropriation for, uh, new, uh, miscellaneous federal grant or perhaps uh various temporary appropriation, you'll see that more and more now because I can tell you 2025 years ago when I started the appropriation numbers were much higher than they are today. I mean, your appropriation might be at least double what your funding was expected. Now as we've, as we, as we've dropped the appropriation and, and in each one of these line items, especially, that's why you'll notice in the peer committee budget classification transfers, transferring it from one line to another or asking for additional appropriation because it was too tight. Yeah, and really, and that's appropriation only, you know, it's a little easier to get additional appropriation during the interim. It is very, very difficult to get increased funding during the interim. RSA is closed. It's fully, it's fully developed at that point. So the only way more funding can come in will be either through a special revenue source like a federal revenue stream, or has to come out of some sort of restricted reserve transfer, which requires an extraordinary action by ALC during the interview. Um, so it's, it's hard in the governor's office, the governor's support on that as well. So you don't see the funding moving very much during the interim just because it's very difficult to do by design. So just a quick follow up so. If I'm reading between the lines here just a little bit what you're saying is as we get tighter. Almost an indicator, right, a barometer of sorts, right, would say that would start singing and peer and all that, a lot of uh. Yeah, very between lines within an agency I guess temporary appropriation didn't even exist, uh, Kevin can probably tell you when that started that didn't exist in the past, so that is really, it's needed now I think because of the appropriation levels have been dropped and, you know, just so everybody understands in the audience. I know all of you do, but, you know, appropriation is just the authority to spend, it's not the money. And so you could have $1 billion in appropriation if you don't have a dollar, you can't spend a doll. So, you know, that, that, that's the way that works. But as we get closer and tighter, you're gonna see more probably peer request, uh, and more budget classification transfer request. Thank you. Representative Wooton, you're recognized. Thank you, Mr. Chairman. You keep referring to Category B. Um, I don't have that in the RSA mine is 6.2 billion in 24 and 25 is 6.3 billion all in a we were told everything was funded and that the money was but we didn't get a B. I don't know what you're talking about 17 million was actually if you look the year before, uh, everything is a Category A this year, uh, in last year, it was not. Last year that we had a Category B. If you'll look closely at it, you, you're, you're correct. This year, everything is in Category A and everything will be funded. Last year, that wasn't the case. There was a, and it wasn't much, but there was some in Category B. is the 17 million in the 6.3 billion the 6.2 billion go to go to the year before last year it's in that money and it's turned back, then it's up to us to reappropriate. Is that correct? What it what happens to it when it's swept back, it goes into a fund where all the surpluses go and so it would have to be, it could be, uh, spent however you pays at the penitentiary or the corrections department, then we'll have to be appropriate that into well or they got that because they didn't get their raises if uh, they, they got the funding this year in Category A, so The funding went forward. We took the funding from last year, we swept it. The new funding for this year, they've got it, it's in category A, they're getting it throughout the year. I think you can tell from the discussion this morning we're all very concerned about the fiscal status of the state. It looks good and, and we have a balanced budget, but what we forget or what politicians forget is the fact that that's mandated, that's a law. You've got to have a man. budget in Arkansas, you cannot spend more than you take in question. Give you an example of new money, $1000. Has been set aside for the freedom accounts. Public education only got 34 million increase. Now if we, how, how, how do we uh Are we gonna make up the 100 million that a percentage of that would have gone to public ed or are we just going to give it away to people to go to private schools. Well, you keep in mind, I think you're, you're mixing a couple of years, but I'm somebody when we get through this fiscal year, we will have committed $1000. That's true that's come out of public school money, right? No, absolutely not. It is not coming out of the public school we're supposed to give a percentage of our total money that we take in. To public education and we're not doing that when we give $100 million for freedom accounts. Now, let me, let me make sure everybody understands how this is being funded. Not $1 is coming out of the adequacy fund, not $1 out of educational excellence. If you'll notice, if you look on the RSA, it's not even coming out of the public school fund. It's not even in the same section. You'll notice the Freedom accounts are in a different section. It is general revenue. But it is not coming out of the schools. It's not coming out of adequacy. I can assure you that's a fact. But it's $100 million that we don't have access to for public education to have a percentage of that. I can tell you public education was funded to the adequacy levels that no, I am. They got every dollar that they should have expected. Uh, the 100 million came out in $65 million to private schools and only funded public schools with a $34 million increase. You're, you're not looking at the other increases that they got. You're only looking at the RSA. You know, you're only looking at the RSA number, you're not looking at the entire increase that they enjoyed. Thank you, thank you, Mr. Chairman. Center Hester, you recognize. I guess I'm just trying to. Um, we've been an hour and a half into this and I, I don't, I don't know. We continue to debate. Individual agencies' budgets that are not in front of us yet. So I'm just trying to figure out if members understand that like, Uh, I don't know, maybe this is the time that we're just going to talk about every aspect of a budget that doesn't exist yet. But the, the point here is to start going through agency by agency to create a budget. Um, so I, I guess that's me, we can just continue on, but, uh, I don't understand what's going on right now. Um. And maybe we have members that don't understand how the budget works and I'm sure they would talk to you about that offline, but, uh, we're trying to create the budget. And we haven't even started yet. We're an hour and a half in. And I'll shut up. Representative Kevin now you recognize. Thank you, Mr. Chair. I just want to make sure. We understand. Everybody here understands what appropriation is, and I, I liken it to the fact that that your credit limit, and that's what you've got the ability to spin too. How do you control spending? You lessen somebody's ability and their credit limit. And we talk about how appropriations have gotten tighter. Well, they've gotten tighter because we're trying to control spending. And as we've seen in the past, sometimes when you have an overappropriation, sometimes agencies are a little, uh, eager to spend that money. So they don't lose it. And so I just want to make sure we all talk about it's just appropriation, but the way we start cutting spending in this state is we cut appropriations to a level that's really needed, as you stated earlier, you have the ability to come before us and get an additional appropriation if you need it. That's when you're like, you go to the bank and ask for an increase in your line of credit. And that's all we're trying to do, and that helps us control our spending. And I think the governor's office agrees with you and you'll notice, uh, several things in this year's budget manuals where you'll notice the appropriation has been cut and specific line items. OK, members, uh, boards cleared, we're gonna bring up uh for presentation the budget request, uh, first, thank you, gentlemen for being here. We're gonna bring up, uh, Katie Walden and uh. And then also have the agencies come up for labor and licensing. At the same time she'll call out the particular agency where. Burke also members you're getting a passed out. Please go ahead. Kevin's going Burke also members you're getting a passed out. Please go ahead. Kevin's gonna explain to you. We are giving a handout out right now and this is act 114 of 2023 report. This basically shows an act was passed if an agency has a large fund balance, which is 3 years more than their annual operating expense. These, uh, boards and commissions can stop charging their fees. Their members and live off that fun balance until it's down to a normal level. This report shows that the agency put this together. They're here to explain it if necessary, you can, you can see in the report, basically in the middle, we'll have these reduced, a yes or a no if the agency did that. Mr. Chairman, that's all I have. OK, thank you. Katie, we're gonna let you start off identifying yourself and then we'll, uh, go across the table before you start. Yes, sir. Thank you, Mr. Chairman. Good morning members. My name is Katie Walden. I'm from the Bureau of Legislative Research Fiscal Division. Mr. Chairman, uh, Darryl Bassett, I'm Secretary of Labor and Licensing. Mr. Chairman Tyler King, AUC Controller. Thank you for being here, uh, members, if you'll look on your sheet D1. Are there any questions regarding uh Arkansas Board of Appraisers abstract home inspectors. If not, we're gonna move on down the list. You want to go ahead and summarize that, Ms. Katie. Yes, sir, members in your packet item D1, as you know, I'm presenting all of the labor-related boards and commissions that fall under the authority of the Department of Labor. And those boards and commissions are sprinkled all through this budget manual. So what staff has done is we compiled this spreadsheet summarizing all of their budget requests for your review. All the information that was taken from the manual is in this report, um, just to kind of walk you through this, you'll see the board and commission name, the page number where you can find the detail for those boards and commissions. revenue stream, and I do want to mention to the committee that all of the boards and commissions that I'm going to go over with you today are all cash or special revenue funded. So relating to the discussion that we just had all these boards and commissions are allowed to keep their funding from year to year because their cash is special. Then you see the 24 actual expenditures, and then what they have appropriated for this current fiscal year, and on the far right, you'll see the agency request and the executive recommendation for FY 26 and FY 27. So for these boards and commissions, um, there are a few changes that I just want to go over you with you really quickly, and I'll list these out. So, as Chairman Rice just mentioned, the first board for your review is the Board of Appraisers, abstractors and home inspectors. They have a total appropriation of about $828,000 annually. They have 5 appropriations underneath them, and those allow for the specific functions of the board. A couple of changes to this appropriation. They did add, or they relocated $10,000 from their professional fees to operating expenses in the abstractor's board. This was approved during the interim and Pier, and it was to provide for an online payment system for the abstractor's board. Additionally, they got rid of a $100,000 public awareness campaign for the Home Inspector's Board. That was something that they never used, they just eliminated that, um, and then you'll notice in 26 and 27, the executive recommendation provides under the abstractors word for a decrease in their appropriation. That is because the executive recommended for the elimination of one unused position. And so they also cut the salaries and matching for that position. Then you have the board of registration for professional geologists. The request is for about $62,000 annually in one position. The fire protection licensing board this regulates the sprinkler system industry in the state and fire extinguishers. They have a total appropriation of 250,000 each year with three positions. The manufactured home commission, that regulates the manufactured home industry. They have a total appropriation of $485,000 in three positions. The Motor Vehicle Commission regulates the motor vehicle sales industry. They have a total appropriation of 705,000 for each year with 6 positions. The Real Estate commission that regulates real estate in the state, and they have a $1.9 million appropriation and 15 positions. The board of architects, landscape architects, and interior designers, regulates those industries. They have a $359,000 in three positions. The State Board of Public Accountancy has a budget of around $1 million each year, and they have 6 positions. The towing and recovery Board has a budget of $325,000 each year and they have 4 positions. The auctioneers licensing board has an appropriation of about 146,000 and one position. The contractor's licensing board, you'll notice a difference in their budget this, this time around. It is about $2 million but you'll see the executive recommendation is a little bit less, and they eliminated one Unused position with the regular salaries and matching also removed from their appropriation. The bail bonds and bail bonds company and professional build bondsman licensing board. They have a total of $1.7 million annual in appropriation in 4 positions. The State Athletic Commission has a budget of $353,000 each year in one position. The board of barber examiners has a budget of about $300,000 each year with four positions. The board of collection agencies has a budget of 1.8 million each year with 4 positions. The Board of Professional Engineers and surveyors has a budget of 7,740,000 each year with six positions. And then the last three boards are all, you'll all find that all of those under the division of labor, but they are regulatory boards, and so I wanted to go ahead and mention them here. The first is the boiler inspection board. Inspect all boiler systems in the state, and you'll see in the executive recommendation, they did recommend the appropriation to go down. This is for one eliminated position, and you'll see that reflected in the position number as well. And then the Board of Electrical examiners, has a budget of about $70,700,000 each year. They have 7 positions and the HACC licensing board has a budget of about $723,000 each year with nine positions. So that's just a very, very quick summary of the labor boards and commissions that we are looking at today. Thank you, Mr. Chairman. Thank you. Representative Kavanaugh, you recognize. Thank you, Mr. Chair. Just wanna say thank you for bringing this report. About um. How what licenses have been able to be reduced. I mean, that's something that we've all worked on together and I appreciate y'all doing that. But with that being said, I'm still gonna ask about fun plates. Because I'm always looking at, uh, money, uh, and my question is, when we're dealing with like the appraiser licensing board operations if you'll look that does have a large fund balance and compared to theirpenditure. Um, When you're looking at whether or not fees can be reduced or not, are you looking at like each one of these funds or are you looking at as a big overall budget. First of all, thank you, uh, Madam Representative, it's been a pleasure to work with you, uh, over, uh, Act 114. Uh, no, ma'am, we, we are looking at each of these individually. Uh, we're discussing their fund balances with each of the directors as well as their boards of directors and we're using uh your act actually, uh, representative Wardlaw, your act, and also Senator Hammers. Act to uh use it as a barometer, uh, that threshold is where we are. What we've discovered, uh, with 114 as we as we apply 114, uh, is that only two departments though, uh, are, uh, going to meet that threshold and that's motor vehicles, uh, and architects, but no, ma'am, we look at each individual agency to see where they are with regard to that threshold. Appreciate that, but also like on the appraisal licensing board operations cash and treasury, which is our page 189. Um, it's appropriation U 88. So if you look at their fund balance, their fund balance is 1.43 mil, but their expenditures is 437,000. So, I mean, that's what I'm asking, are you looking at each one of those line item fund balances or you just kind of aggregating it together in one fund balance for the board. we Sorry Yes ma'am, we are, we're looking at a 3 year rolling average, of course, that's the threshold. Uh, if they meet that threshold, then they're going to be a candidate for a reduction in the fees. So yes, ma'am, we look at each of them again individually. And then just on one, it's on the athletic commission, um, They're spending more than they're bringing in. Is that a question, ma'am? Well, no, they're they're they're spending their fund balance down which my question is, are we, are we spending the money wisely or are they just spending it to spend their fund balance down? No, ma'am. I think they're spending it wisely. Uh, they're in a unique position. They're carrying over $350,000 that they received last term from the previous governor. So they're in the process of spending that down at the rate that they're going though, uh, they should have between 3 to 4 years before. they uh exhaust at 350,000. So at this juncture while they're very close, as you aptly point out, uh, they do have enough revenue from that uh previous administration to carry them for 3 to 4 years. And then in 3 to 4 years, we're going to have to address, we're going to have to look at some alternatives. Yes, ma'am, we're going to either have to look at uh some type of cash infusion, whether that be, um, raising uh fees or, uh, some alternative, uh, approaches to. actually administering the athletic facilities that might include, uh, placing more burden on the promoters rather than mons coming from our department, we may have to put more responsibility on the promoters, but yes, uh, in fact, uh, representative, we will need to look at some alternative funding, uh, approaches in 3 to 4 years. All right, thank you. Thank you, ma'am. So, to that line of questioning on the athletic commission. If If I remember right, they were struggling and they were given that money. So why would they spend that money at a high rate like it looks like they're doing if they were struggling and that money was given to them, when they want to conserve some of that for a longer period of time? Maybe Uh, that microphone's really important, by the way. Yes, sir. I, I, I'm starting to learn that. Uh, yes, sir, in fact, uh, indeed they have been encouraged to do just that, uh, uh, the reason they received that money, and of course we went to the previous governor to get that, uh, get that funding was that spending was not exactly meeting um, meeting, uh, revenues. Uh, there's a new sheriff in town, so to speak there now. I think they realize uh that they cannot, they can no longer continue those spending patterns and what you'll see over the last 12 months is that those spending patterns have changed, uh, the recognition that that money is not gonna last forever, uh, is now a reality, uh, and you, you, you can, you, you see a tremendous change in their, in their, uh, in their spending habits. Thank you, Mr. Chair. Representative Wooton, you recognized? Thank you, Mr. Chairman. I have a question on the athletic commission also. On page 2 of the all the findings. Um It requires that financial report be submitted. And they apparently there's 8 people that should have filed it and 8 of them did not. Now, do they not have holdings or do they or do they just not file? Yes, yes, uh, yes, they, uh, they do proba they do have holdings, Representative Wooden, uh, that's an audit finding that I take personal responsibility for, uh, all of those 69 individuals that you see in that audit finding where our board directors, uh, and as I say, I take personal responsibility for that finding. What I did not do was aggressively follow up with an email that I sent to. The board members and a uh and one, only one additional suggestion that they filed by the deadline and that's solely on me, uh, and uh I take responsibility for that finding. Uh, there were 69 members. What I can tell you is that uh currently uh the last term we have 16, only 16. So we've gone from 69, who did not file to 16 now who still have not filed that is uh. Not 100%, but we're, we're going in that direction. That wasn't a staff area. That was my decision not to aggressively, uh, suggest that these board members file. I understand 69 down to 6 to 16, yes I mean if I may follow up Not 100%, but we're, we're going in that direction. That wasn't a staff area. That was my decision not to aggressively, uh, suggest that these board members file. I understand 69 down to 6 to 16, yes I mean if I may follow-up question on that. Do you have Enough legal authority, you feel like to oversee all these boards or do you need more in the law that they moved to transformation and moved uh all these boards and commissions to you, uh, as a secretary, do you have enough authority to, to be in charge of all of the. Well, I, I think you've given me, uh, the necessary tools uh to do that, of course, always you can always ask for more, uh, but I think what we've seen over the past 12 months or is more cooperation among the board members and the administration and I think that's kind of what is improving our circumstances. We have, uh, transformation was not easy for a lot of people. Uh, and so going through that transformation, there was a honeymoon period where people were trying to get to know one another. I think what we're seeing now is more trust, uh, between these board members and the department and as we see more trust, uh, we're starting to see the kind of results that you, that you see here, 69 to 16, uh, do I, could I, could I use a little more authority every now and then? Yeah, absolutely, but I I think what uh what the reason that we've been, been more successful as of late is is a greater understanding between the board and the administration. One more question on interest. Do you look at the interest are they investing their money? To where they are in interest, and if they are, where, where is it, where is the interest income show up in the budget request in uh additional funding or funding. Reserves are we talking about the, let's say they're carrying a balance, a fun balance forward of 100,000. Let's just use that. If do they invest that money and are they earning interest and if they are, where is the interest going to In their agency. Yes, sir, right now we're 100% in ACs, so it goes into the treasury. State treasury. So they they're investing in employees uh vacancies do you have in your agency throughout the agency, OK. Let That, uh, kind of hit me there, uh, I'm not prepared. I don't know, uh. Can you get that number I can get it. Representative, let's let him get that to you and I've got I can get that to you, sir, if you would include in that report, uh, the number of vacancies that are over 2 years old. Thank you. Thank you, sir. Thank you, Senator Dodson, you recognize. Thank you, Mr. Chair. um. My question is really for the bail bonds. fund balance or not fund balance, um, sorry. Recovery bond The bail bond recovery line item there and the expenditures and the last 3 years, the expenditure in that was, uh, 68,000 1 year, 38,000 the next year and 42,000 this, this last year as far as actual spend. Why, why are you requesting $1.1 million for that? Sir, The situation with the bail bondsman and licenses deal on, on the number of requests of the liability. It's more like a liability account. Where Individual bail bonds and go out of business. They would come forward and put a request in. To have that money spent to recover. It's it's a recovery fund. It's not. How you gonna say regular operating expenditures, so you don't have any idea what sort of requests might come in it's a liability pretty much. What, what is the? Like the biggest amount of exposure you've ever had in a given year on that. I would if Can I get back with you on that question, Randy, because I only have the last 3 years in front of me and, and what that was and the biggest amount was 68,000. So seems like that's not a lot of requests made a lot of bells bumps and going out of business. So mainly those individuals who go that would go out of business would make the request in to close out those accounts. From those requests. So, so it's not a highly used recovery fund. And we got several recovery funds in our agency, so that's just one of the many. All, all right, thank you. I can get back with you with it with you. Senator Hammer, you reckon? Thank you. Uh, first question is gonna be on the um. The abstractor's home inspector board, those numbers uh previous to them being consolidated do these numbers represent. Both funds when they were consolidated or did one not have a fund or. Yes, sir. Yes, sir, that's correct, Senator Hammill. That's correct. It's been merged. So these numbers represent before they were combined or after they were combined after. OK, so. Their ability to give um. Wait a minute, it's the state board architectural landscape, the one, the ones that are giving. It the the appraiser. And the abstractors and the home inspectors, those were all combined, right? And even after they were combined, they're still not able to have a reduction in their fees. Is that correct? Yeah Wait a second. That's that's correct, sir, because they fall below even as they're combined they're 3 year average still falls outside of the threshold for Act 114. OK, then, and one other question, maybe I'm just not looking at it right. Is there a reason there's not a column that shows what you've got the average expenses per year, but am I missing it? There's not a column that says they're income per year because why I'm reading this, unless I'm reading it wrong, we'd have to take and divide column 3 by 3 in order to know what the average income. Per year. Am I reading that wrong or no, sir, you're reading it right. There is no income column. If we, we can provide you with an income column, but there's none here because this, this, uh, spreadsheet was designed around the threshold for Act 114 and that only indicated expenditures so we can provide you with a a separate spreadsheet that gives you revenue if you'd like. I'd like to have that column maybe added next to the average expenses per year and if we knew what the average Income was per year I could do a quick glance and just see. Yearly, are they falling behind or are they ahead if you could do that. Appreciate it. Absolutely, sir. Thank you, Mr. Secretary, if you get that to Kevin he'll be able to put that out to committee, uh, Representative Kavanaugh, you recognized? Thank you, Mr. Chair. Um, if we could have somebody from the athletic commission to come forward because I, I have some questions about the spending. They saved the seat just for you. Yes sir. Mm Please give us your name. Who you with for the record? Sure, Mr. Chairman, Ralph Hudson, I'm the director of the Division of Labor. You go ahead, Representative Kavanaugh. Thank you. Um, my question is, when I look at the appropriation summary that we're looking at and the request, your fund balance we're talking about a secretary talked about 3 or 4 years, but this really isn't 3 or 4 years. If I look at the spending, actually it's gone in 25, 26, and you're actually have no fun balance and you're out. Can you explain? That Sure, there should be a, is there a separate sheet that covers the fund that we, that we had from the governor. We, we know you got the money from the governor and that is in your fund balance. But this, and this shows that you're going to be out of your fund balance by the end, probably of 25. So, That's not 3 or 4 years, that's about a year and a half, not even that long, to be honest with you. So. My question is, Why, why are we spending more than what we're bringing in? Well, in a nutshell, Prior to transformation, uh, there was some legislation passed that end up getting wrestling, uh, professional wrestling out of, um, our jurisdiction. And so that dropped off income. We're down to one staff member. We've, uh, uh, increase the number of inspector vendors across the state and done it in a regional basis so that there's not, Overnight stays because we've got an inspector here that needs to go up to Northwest Arkansas. Um, we, we, we've done what we can to shrink that, but there's no, there's just no getting past the fact that there's not enough income. To hit that, to hit that budget mark. Um, now I was, uh, looking at this projection that our CFO gave us and it It, it, it extends us based on income coming in and that stay static. Income coming in and, and outgoing expenses related to appropriation, uh, we would make it to, uh, 6:30 of 2028. It's a 4.5, 5 year projection if it stayed static. Our hope is that through some proposed legislation that we're gonna, we, we can make up some ground on that, and there is a plan for moving forward and it's going to take you all in the governor's office and obviously our secretary, uh, to, to make that happen, uh. It is a concern. It is a legitimate concern, and we should be concerned about it. Combat sports in Arkansas is important and it's got to be regulated. So, uh, can you explain to us exactly what you regulate, exactly what you're inspecting. Sure, so, as you might imagine, if you go to a combat sport event, whether it's MMA. Boxing, those are regulated by the commission, so there's a chief inspector that goes out and manages that. We license the judges, we licensed the, the timekeepers, the referees, the fighters, uh, they have to submit, and there's a lot that goes into it, but they, they have to submit blood work that has to be evaluated to ensure that they that they don't have diseases that the statute says they can't fight, uh, bloodborne pathogens type things. Uh, and And And then they, then you have inspectors on site that have to stay back in the room when the fighters, if you think about it, fighters are wrapping their wrapping their hands. That's got to be observed by a qualified inspector to ensure that they're not cheating or not overdoing it based on the statute and the regulations. Um, And, and then, you know, they're responsible for ensuring that, that bad things don't happen if they do, they, they're cited for it, uh, uh. I, I don't, I don't know if that adequately answers your question, but I, I hope that it does. It's a pretty broad responsibility. So every time a promoter puts on an event. We've got to go staff that event, make sure the ambulances are on site. Make sure there's law enforcement on site, all of that stuff has to happen. And those staffing and then the. Expenses for had the ambulance and everybody there. Where is that expense? Where the promoters responsible for paying the contract vendors. Now we require a bond so that if it fell all apart, the vendors were going to get paid and the fighters will get paid. But those expenses are generally borne by the promoter. The athletic commission is responsible for the inspectors, the statute allows $100 to be paid to them to to be at that event. Now that's not our full-time staff member, that's not the chief. These are the vendor inspectors, if you will, they're not state employees. Uh, they, they go there, that's $100 that is passed back just $100 is passed back to the promoter. And he has to reimburse the state for that. We invoice them for that. What we don't recover is in in this. It's part of the problem is overnight hotel stays, uh, mileage, meals associated with the trip. Putting vendors in geographic areas and and a little closer, they're not having to overnight. They just drive the 50 miles. They do the event and they drive home. The state, the athletic commission recompenses them that for their mileage. They wouldn't have any meals for an overnight steak, but we don't recover that mileage from the promoter. That's all, that all ends up coming out of our budget. OK, so. In a perfect world it looks like you're, you're passing all the expenses of the staffing and all the expenses for the event on to the promoter. In a perfect world, that's what you're trying to do, except for what the commission actually lays their hands on because they're not your employees. Their contractors. And you're sending them out there, but you're billing the promoter for that. We're billing them for the inspection fee, ma'am. We're not, we're not billing them for the mileage we can't. And the same goes for if they did have, if we did have an inspector situation that required an overnight and, and by the way, the chief inspector always has to overnight because he has weigh-ins the night before. And so, and we don't recover that. So, so, so to say in a perfect world, yes, ma'am, that would be great. We'd love to be. Able to invoice the, the promoters for, uh, for all the expenses related to putting on their event which they're, that's their business. They make, they, they're making money, uh, but at this point we don't have the authority to, to, um, to invoice them for all of it. It's only the inspector fee. OK. And then you're, you made the comment that you're reducing your, your expenses because you're not having the overnight stay because you've started using vendors wherever located. Throughout the states in other areas, so it's a little closer to where we know venues typically are. Jonesboro, Northwest Arkansas, Texas, and once in a while down in El Dorado in Hot Springs has been been pretty hot lately too in terms of events because I just know the, the spending doesn't reflect that. That's why I was wondering about that, so, on the request for the appropriation, it doesn't it doesn't show that you're spending less money. It shows you're actually gonna. and spend more, so that's why I was asking. I don't, on your actual spend, you're spending $100,000 but you're asking for appropriation of 353,000. So that's not, it's not showing that you're actually reducing. What you're, you're asking for the same amount, but you're spending more than what you're getting in, but I don't see a reduction in your numbers for what you're saying for the changes that you've made. That's all I'm asking is and then if we're saying that we're making these changes and that we're gonna, you know, but we're gonna need help later on because of the things that happened where the wrestlers got taken out, but it's not reflected in these numbers is what I'm asking. But anyway, thank you. Representative, You're, you're correct what you, what you're, what you're seeing is there, there are requesting more, but what they're doing is they're spending the restricted money down. And that's what I was referring to at some point though that restricted money is gonna go away and that's when you're going to have, we're gonna have to really look at some alternative ways, uh, to not only control spending, but we're going to have to look for some ways to enhance revenue as well. So you're, you're absolutely correct. Going to center love and then members you're getting a handout on uh. Uh, center Hammer's questions, I'll go to him next. Senator Love you recognize. Thank you, Mr. Chair. And I'm just gonna follow up on some of the questions that, um, Representative Kavanaugh was asking because I, I guess I'm, I'm trying to understand because it seems like the expenditures are coming. Hm The expenditures, the expenses are coming to the state and I'm just, I'm just gonna cover the athletic, the, the association of the state because we're providing the revenue for you to function. Why are you not billing the promoters? For these expenditures. The regu regulatory authority and the statutory authority does not allow us to do that. We can, we can only push back, and I believe it's by statute, we can only push back the actual fee of the inspector. So that's when we invoice them, we, we, we invoice them for the $100 for each of the inspectors. If it takes 5 inspectors to staff an event, they're gonna, the, the promoter is gonna recompense us $500. So Have you ever, do you feel like though we should be expensing those items. I think I'll refer to Secretary Bessett on that. We we've talked about legislation and some alternatives, uh, but I'll, I'll leave it to Secretary because I'm just trying to figure this out is, is if I was a promoter, I, I would feel pretty good that I didn't have to really pay these expenses. The state's picking it up, but if it's all in in Part and parcel of the business. Then should we not be billing the promoters for. These expenditures, Representative Senator, uh, rather, I'm sorry, uh, absolutely, I think so. I, I think we should, we should do that. There was a time when the athletic commission was housed at another department, uh, and they had wrestling, they were flush with uh, with funds, and they could afford to shelter or or or shoulder these additional cost, um, they've lost wrestling, they've lost another other uh. Several other revenue sources and now they're down to just mixed martial arts. They're, they're the coffers are not full anymore and so I think we have to take a real concerted uh look. At how do we continue to make this entity viable and that means uh there are only several ways you can do that. We can increase fees, which I I find abhorrent, or we can find, uh, we can ask for more. We can ask for general revenue. Which we are not inclined to do or we can start asking the promoters to shoulder more of the, uh, more, more of the birding. So absolutely. OK, I would, I would, I would expect that you all would have some legislation because I, I mean, I understand that people don't want to raise the fees, but I don't think that it's. I don't think that uh the state in general should be, you know, shouldering these expenses either. So, uh, I, I think that there needs to be some legislation so that we can go ahead and make that adjustment now. Well, actually, actually, the state doesn't shoulder the expenses. This, this comes out of their special revenue, so it's really coming out of their fund balances. This is not SGR. Uh, the, in fact, we only get 3.8 million in SGR at the department. So all of these expenses that athletic is uh is incurring. They're, uh, coming out of their, uh, their fund balances, their special revenues. So did, uh, I did not I thought I heard you say that the governor gave money. The governor did. That money is restricted 350,000, uh, and it's restricted to the athletic commission that OK, so how did the governor give that money? They gave it out of general revenue, did they not? Yeah, it was, it was just a one time, uh, restricted fund release. OK. All right, so that I'm just saying that I think, I think that we should correct this so that Moving forward, either promoters or who whoever is whoever's benefiting from Um, Should should pay for. So if this is the promoters, then the promoters should be. Should, should, uh, pay for this show these uh these expenditures point well taken. All right, thank you. OK, uh, center Hammer, you recognize members you had the legal size handout just hand out I believe is what his questions are about. Thank you, Mr. Chair. Just so I have a good understanding, uh, revenue sources are cash special and federal cash revenues from the fees that the participants pay. Is that the cash where the cash fee, where does it come from? Yeah, that, that would come to excuse me that would come directly from, uh, licensing fees, uh, and then there's a gate fee, uh, as well, uh, that's paid based on the number of ticket sales that they have, um, and they, and they're invoiced for, for, for that and so that would, those would be the two incomes, uh, sources other than our invoicing for the vendors, you know, but that's just outgoing and incoming, so what about the special? What, what are the sources of The special funds that's licensing. That's what they would pay into that, OK. So Take down there and just pick up on the state athletic commission. Um, both of those are cash. According to what this chart shows. And if you look at their receipts versus their actual expenses, they, those two categories seem to be. Upside down, but even if you add those two together, they're still going to end up in the, in the hole for the 23, 24 year I interpreting that right? OK. And and so their future as far as their ability to sustain themselves is in question because based on last year's expenses, something's gonna have to be done or is there a place they could be combined with another board in order to, um, offset the expenses when it comes to the. operations. Uh, again, I'd probably defer to the secretary on this, but at the end of the day, I don't think we're opposed to any potential discuss. I mean, we, we'd love to enter into discussion about a potential solutions we have some, uh, I mean, we, we haven't been sitting idle on this. I promise the secretary and I and the chairman have met on a regular basis, um, to try to project some things out. We've got some proposed legislation that, that, uh, that, that at some point you will be able to look at and, and I think we've got some way forward. For instance, one example. Right now we have no to to Senator Love's point, we don't have the ability through regulation or by statute to get gate fees from pay per view revenue. It's not part of the gross receipts definition in the statute. And so these promoters have an event, they get a fee for pay per view, somebody's attending that, watching it live, but our statute and the regulation don't allow us to collect the 5% gate fee for pay per view. That's something that we need to talk about and it's, it's a reasonable discussion to have, uh, but, but at this point, the athletic commission is in a position to do any of those things, uh, absent this body and the governor's approval and obviously the secretary's approval. And ultimately the commissions, I mean they, they obviously have the front and say, OK, then one other question I yield the step up above this one as the professional bail bond company. Some of those categories just seem way out of whack, um. As far as like actual expenses 425 receipts, 166,000, but then you go up there to the top one and actual expenses 327 actual receipts, 104964. Can you, can you help me understand the discrepancy in, in why those are segregated out the way they are, but it just seems like the numbers are upside down. Yeah. Uh, Senator Hammer, what I have on looking at uh 0 to 11, you have the Operations, that's the actual expenditure salaries. Frings, etc. That's the total amount that you have with the actual expenditures at 327704. And then you, the next column down you have the cash reimbursements. Again, this $220,000 was just, uh, setting aside by the bail bondsman to pay those, uh, to pay off some of those claims. The second, the 3rd line, uh, Professional bail bondsman bail recovery. That's more like a liability to the agency though. So when those companies go out of business, somebody's got to pay those those bonds off. So this money, the 40, that's all that was represented there. They have paid in a uh an exorbitant amount of money. I see the 1.1 million, but that fund, it could be hit if uh a certain liability come where a bill bondsman owes a lot of bonds, then those bonds have to be paid. Somebody's gonna have to stand for those, and I would refer back to Randy Murray. He's the chair of this committee. Of this agency. He's chair of this agency that can come and talk to you more about the 1.1 million because those funds are set aside for those to pay off those bonds if that bail bondsman company goes out of business. Well, like on their operations where they show actual expenses 327, but receipts 104, how can they operate at less a missing it, how can they operate at a deficit like that or are they moving money between the columns to make up the difference. Well, some of the money that they use goes back 75% of their revenue goes back into SGR. In state general it turns back over to the state and I think that causes some of the discrepancies in some of the balances. Um, I don't see. Everything looks good. In terms of actual expenditures. With the sheet that we were handed. Under 0211, professional bail bonds company and professional bail bonds licensing board operations. Actual expenses 23, 24, 327,704 receipts 104,964. I mean, to a layman, that looks like they're. They're operating in the hole unless they're able to move money from those other two categories to make up the difference and why, why would they be operating in the hole that bad unless, and if I'm misinterpreting it, you correct me, please. Yes, sir, I don't see the 104. Senator, let me take that. OK. OK, I know exactly what you're, what you're referring to. The bail bonds, uh, the board of trustees, 75% of their special revenue. Yep, there it is. 75% of their special revenue fees go back into a general revenue fund. They only keep 25%. So the numbers that you're looking at are going to look skewed, uh, when you look at the 327704 as opposed to the 104964, it looks like they're operating in a deficit, but they actually aren't. What they're, when, when they look at those actual expenditures you're seeing that 75% of their fees coming back out of there. That's why it looks like they're upside down, yeah. And that's your back where, uh, to the general revenue fund, 75% of all of their special revenue fees go back into the general revenue account. They only keep 25% of their fees. OK, we're offline and thank you, Mr. Chairman. Thanks. Senator Irvin, you recognize. Thank you. Thank you so much. Appreciate you guys. Um, I have a quick question. I'm right here. Hey guys. Um, I have just a quick question when it comes to licensing, um, is there, is there anything that is Uh, the ability for The licenses. Some of them meet, um. I, I think at different times to review new licenses. So I'm interested in just getting people their licenses as quickly as we possibly can, understanding there's some constraints around the timing of when boards and commissions meet to review those applications. Is there any type of a shared service that that exists within your department that assists these different boards of commissions to where there's kind of a rolling monthly, um, process. And then they could meet, you know, periodically to review those as like a temporary license type of situation. Is there anything that exists like that? Senator, that's a fair question, and since we, uh, inherited these agencies that has become a very common question because we have these rolling renewals. What I would like to see is for us to somehow get all of these boards to agree on common renewal periods because we have some boards that renew in July, others were due in January. So we're renewing at all these different times and so, uh, we, we've got to get to a point. Where we can have these temporary or emergency uh renewal uh periods. We just have not been able to get everyone around the table and agree that that is necessary so. Fair point And uh maybe if you'd like to help me I will 100% will help you get everybody in a room and, and do that because I think it's, it's really important that people get to work as quickly as they possibly can. And these delays that are occurring around licenses they're kind of weird and whacky. I've, um, in my opinion, and I, I think, you know, just administratively, that's kind of creating a burden on your department and your agency handling all those different schedules and. I just, I think we don't need to let the, you know, tail wag the dog in this instance. And so, I definitely want to work with you and if we need to just create legislation to create that, I think that we need to do that. And then I, I want them to be self-funded with their fees and their licenses, but I also think that a portion of that, um, should go towards this type of a system, if you don't have that technology in place to create that as kind of a shared service within them. That's housed within your agency. I think it's appropriate for them to help fund that out of their, their special revenues. Um, but either way, I think it's a good investment from the state if we need to do that, but I'm definitely interested in doing that and I will get with you and let's work on that if you don't mind. I would be more than pleased, Senator, because that's part and parcel of what we're really all about over there that is removing. Unnecessary barriers to entry and that's a huge barrier to entry. We concentrate on other barriers, but what we don't concentrate often on are the administrative barriers that we have internally and those multiple renewal periods throughout the year is, is certainly burdensome and it's onerous. I, I appreciate it. Thank you, Mr. Chair. Thank you, Mr. Secretary. Representative Kevin, how you recognize? Thank you, Mr. Chair. I'm going to move on to the manufactured home commission. Um, And that is on our page number 244. When you look at that, they have a fun balance of $2.3 million. And their expenditure is 311. OK. So my question is, but we've got noted on here different numbers. The data that we were provided from BLR shows that their spin was 311, 900. That's what shows on the sheet that they gave us is what shows in the budget book. But the information that you gave us, unless I'm reading it wrong and be honest with you, I've had a rough couple of weeks, it could be, um. You, you're talking about there, um, average expense to be 323, but their fund balance is only 542,000. This shows a fine balance of $2.3 million. We're talking about the. Manufacture home recovery fund. This just says Department of Labor and Licensing Manufacture Home commission. The commission Mhm. OK. We're looking at two separate accounts now. The first is operating account, the one that's on the. Act 114 sheet for 2023. That does not include the recovery. amount that's different. OK, so That's what's on our sheet. That we're given from BLR. On our day one sheet. That's what we were given. And that's why I was talking about when y'all look at these fund balances, are you looking at these fund balances individually, or are you looking at them as aggregate individually. OK. The recovery fund balance. I would have to give you that later, but right now, they're operating account for I'm not talking about the operating account. I'm talking about the recovery fund balance. I'm looking at it. It's 2.3 million. The spend was 311,000. And of that, the claims was only 274,749, the operations of the The Commission was 237,000. So that's a total of $311,900. But you're saying you have a fund balance of $2.3 million. That's what's in the budget book. I'm just reading what's in the book, so they're not coinciding with what you're providing. Representative Kavanaugh, all, all I can tell you at this point is that on the fund balance on. Manufactured home. That's what we're dealing with right now. It's $542,000. On the manufactured home, we're looking at about 1.7 million. So I have to give you the, give the the numbers that I have. OK, because what's in the budget book is not matching either number you're saying, what's in the budget books, and this is on their appropriation, and it's showing that, um, the excess funding, your fund balance is $2.3 million. She's on. Oh, you motor vehicle. No, I am a manufactured home. I'm on page 244. Where you get. This is a, that's on manufactured home. Representative, there is a difference between what we're showing and what DFNA is showing. Our records are showing 5:42 839, 83. DNA is reporting a different number. That's the incongruity we need to figure out why there is an incongruity. OK, can DFNA speak to that, please? Secretary Hudson, if you answered that. Jim Hudson, Secretary of DFA urge him Kavanaugh, I think we just, it may be a timing issue in terms of what they're looking at in terms of their numbers versus what we pulled for the budget book. We just need to go look at it and get back to you because that's that's a big timing issue. I mean, it's not a little bit. I'm with you. I'm tracking with you, yeah, yeah, because that would make a difference on whether or not they can reduce fees or not or what we can do, but I mean, it's, it's a huge difference, so let us look into it and we'll circle back. Thank you. Thank you. uh. Center Chesterfield, you're recognized. I was gonna make a motion at the proper time. OK, if you hold that motion. One more second. I've got 1 more on the board, uh, representative Wotton, do you have one more before the motion? All right, thank you, Mr. Chairman, if I may, I need a question from the secretary. On page 244 again. Um, A number 235 inappropriation. Investments and claims. What is, what is that investment? I He's just asking what they hear. These investments and claims are. When Let me get this right. When they inspect. These homes our inspectors investigators go out. They'll go underneath these, uh, mobile homes. And if they find something that the manufacturer or the person that is that did the installation. That was Inappropriate. That was wrong. They had a fund. This fund was set aside. To actually pay that homeowner who owns the mobile, and that's a claim against the investments. It says investments and claims to me that's two different things. One is earned income and another one is paid out in claims. What, what, what is that investment? Is that interest or money invested in the bank or placed in a CD. when funds are not being used, what, what is investment? Representative who take it. Let me take it. That's an aggregation of the interest that they earn from the monies that go that flow into the treasury. The interest that's earned that goes into the treasury is also used to pay claims that he's referring to. So actually you're showing, you're showing interest income. I that's what this is my question, Mr. Chairman of DFA is, how come we don't do this in other agencies or other agencies. I know the insurance commission does it because they got word prior to coming before us that that question would be asked, but I don't see I don't see interest income or investments in any other agency. OK And I know Mr. Breck is he provides me with a report that shows what a agency earns, but that doesn't tell us the complete picture. I, I mean, I don't. Go ahead, Mr. Brooke. Uh, uh, thank y'all. I'll try to answer the. Typically trust funds, they can keep the interest with the trust fund. If it's a trust fund, it really depends on how, how funds are, are identified. But all funds across state government as long as they're in the treasury, they're all invested. It just depends on where the investment money goes, and most of it goes into the securities reserve trust fund. I understand that, Robert, well, my question is, where is that money showing up. On these, on these budgets because that's income and I realized that law may say. The interest from this fund goes to a totally different category of state government, but, but it doesn't show up there and it doesn't show up here, so where is that interest? It shows up in monthly reports to the peer committee and securities reserve Trust fund. You'll, you, if you, at the back of the, it's near the end of the, the peer submission packet, you'll see one for security reserve trust fund, and it'll show where that interest is being. Uh, gathered and, and it goes into that trust fund is using that money and that interest that they earn either to retire debt or just investing their funds, it should be like they're doing, they're showing it if they shouldn't the agents? I mean, we're not getting a clear picture and when you're investing and you're talking about millions of dollars. You're talking about. A lot of money is flowing into these agencies somewhere, but we're not seeing it there's close to 300 or north of 300 million that is done, but it doesn't go back to the agency necessarily unless there's something specific in the law. So Represent we can request that. Copy. Well, the question is, well, how come we don't show that? His income to the, to the agency that is specifically goes to. I, we can provide a report that shows if it goes to that specific one and we can provide a report, as I've mentioned to you earlier this morning. Is there any way that we can put it on this is a fun balance or funding source is interest income. We could if this body tells us to put it there, you know, my office puts in the manual what is what you require or what you ask for. So if, if, if this body in the future wants wants that. So you're saying that the legisla. Council I joint budget or someone in our position has to make a request or another request, but it needs to be a statute. Well, just I, I think it needs to be at least a request. I'm not sure what the form would be might be a question for Kevin, uh, but it has to come, you know, I can't make a decision just to put things in there. I can't do it for an individual legislator, but if this body wants that in the future, I think it could be done for those agencies that keep the interest income. Thank you. One more question of, of the secretary here, uh. How, how do you determine the funds that are transferred for shared services. I've got one here that gives 57,000 or 40, let's see. 440,000 and 24 and 25 is 47,000, the athletic commission gives 14,000 to shares. How do you determine what is shared service and how much to charge for various allocation methodologies and of course, you know, it depends on the year. It depends on how much money we have, uh, but it's an equitable allocation, uh, uh, methodology and. You know, feel after offline we can share that with you. So you, you don't base it on your, your expenses of services to these specific boards and commissions. Yes sir. Yes sir, what do they get for 47,000 and what do they get for 14,000 in the athletic commission. Well, it depends. I mean, there's, there's salaries there, there's a copies there, there's a a variety of other costs associated with the distribution of the money on the income that you get. No, no, no, not at all based we we base our allocation methodology on the cost of whatever it is we're allocating whether it be yeah that's what I'm talking about whatever the invoice is, that's how we base our, our, our, our determining factor that this agency, uh, manufactured homes, page 47,000 in shared services in the, in the uh athletic commission pays 14,000. Yeah, it's it's, it's good. it's gonna be based on the cost and also the size of the entity, uh, it costs more, uh, in a shared services from a shared services perspective to operate, uh, motor vehicles or manufactured homes than it does uh athletic commission athletic commission has one employee, manufactured homes has several employees. Uh, obviously the cost associated there would necessitate a greater allocation than one for, uh, athletic you have a formula. They're gonna need you to, we have a cost allocation methodology that I said I could share with you. Yes, sir. Thank you, Mr. Chairman. Senator Chesterfield. Thank you, Mr. Chair. I move that we accept the, uh, budget request of labor and licensing with the caveat that DFNA and labor will work to uh. To iron out the differences in the in the budgetary amounts that were presented. Proper request to have a second, a second on just a minute. Yes, executive motion. All in favor. I post. That proved executive right. Thank you. Thank you, Mr. Chairman, members of the committee. Uh, members next step. Thank you, Katie, for your patience. Next up we have Miller and Hamilton Department of Health. Members, we got a Information sheet being passed out same for Department of Health as we did for the labor and licensing. Thank you all for being here and, uh, Ms. Hamilton, if you proceed. Good morning, Mr. Chair. Thank you for recognizing me. Um, did you want the OK. Uh, my name is Mildred Hamilton. I work in the fiscal division of the Bureau of Legislative Research. Um, I'm gonna be presenting the medically related boards and commissions that are within the Department of Health, uh, as Katie had mentioned before, most of them are primarily cash funded. Some have got some special revenues and there are a few that receive some federal funds and some general revenue. All are responsible for the licensing and regulation of the professions that are in the title of the agency Border commission, as well as conducting investigations and or hearings. When there are violations of rules or regulations or law. I'm going to start at the top of the page on the left hand side you'll see that the funding sources are listed as revenue, about midway in the page on the left-hand side. In white Sure, it's page number 30. Gonna start with the Arkansas State Board of Acupuncture and Related Techniques, um, as an overall, just so you know, there are some change levels in salary and match, but these are due to adjustments and employees that are authorized by law that occurred over the biennium. They're not true increases. Arkansas State Board of Acupuncture and Related Techniques, you'll see that the authorized 25 amount was $11,000. This is what is being requested into the biennium by the executive recommendation. That is going from left to right across the page. Second agency is the state board of examiners of Alcoholism and drug abuse counselors. That's on page 33 of your manual, you'll see that the authorized amount was $31,966 which is requested in each year of the biennium. The third is the state board of Athletic training that is on page 36. You'll see they're asking for $20,55517 which is what the executive is recommending each year of the biennium. The next is the Arkansas State Board of Chiropractic Examiners. That's on page 39 of your manual, also a cash funded agency. They're requesting $2,026,630 each year of the biennium, that's just a slight increase over the 25 authorized State Board of Examiners and counseling is on page 42. They're requesting a slight increase of $454,00415. That is over. The 25 authorized a $446,288 this agency has got 4 positions. The next is the Arkansas State Board of Dental Examiners on page 45, another cash-funded agency, they do have two positions. They're requesting a slight increase. Each year, the next biennium, $372,734. Next is the Arkansas Dietetics Licensing Board that's on page 48. They're authorized amount is $41,714 they are requesting $71,035 which is also the agency, I mean, the executive recommendation, they do have one position. Next is the state board of dispensing opticians. That's on page 51 of your manual. This is funded by special revenues. They're requesting $93,993. They do have one position. This is a slight increase over the 25 author rise of about 70,000. Arkansas State Board of Hearing instrument dispensers is on page 100. That is. $50,678,000 with two positions which is the authorized 25 amount and requested for each year of the biennium. Arkansas State Medical Board is on page 103. Their total authorization is about 3.6 million. They do have 334 positions that they utilized in year 25. There is a recommendation from the executive to decrease the number of positions by 3 to 31 and reduce their appropriation to 3.5 million. At the request of the chair, we are going to skip over the state board of nursing. Next will be the State Board of Optometry which is on page 125. This is another cash-funded agency. They do have two positions. They're authorized amount was about 186,000. They're requesting 218,000 going into each year of the biennium. On page 128 we have the Arkansas State Board of Pharmacy. They do have 3 appropriations, one for operations, the other for the pharmacy student loans and scholarships. The overall appropriation amount is $2.6 million that they have for 10 positions. The request and the recommendation from the executive is to continue the 10 positions and the 2.7 million into each year of the biennium. The next agency is the Arkansas State Board of Physical Therapy, that's on page 134. This is a cash funded agency with two positions. You'll see that they also have two additional appropriations, one for their scholarship program and one at Treasury cash appropriation. Overall, they were authorized 447,00025, the slight increase being requested as well as the two positions is for 459,000 going to each year of the biennium. Next, we have the Arkansas Board of Podiatric Medicine on page 141. This does not have any positions. They're asking for what they have right now under 25 authorized, which is $66,200 for each year of the biennium. Next is the Arkansas Psychology Board, which is on page 143. This has two positions, they're requesting $369,000 for each year of the biennium. This is a slight increase of the 363 that they're currently authorized operating under 25. They also have two additional appropriations. One is for their scholarship program, and one is for their operations. On page 150, we have a special revenue funded agency. It's a social work licensing board. They do have two positions and they are operating under $218,000.25 there's a slight increase being requested for 26 and 27 of $219,000? Next is the board of examiners in speech language pathology and audiology. This is cash funded. It's on page 153 in your manual? You'll note that they had one position that were authorized in 25, and they operated with $152,000. They're asking for one and it is being requested by the executive one additional position, so they're requesting the increase of $216,978 for each year of the biennium. Next is a General revenue funded federally funded, and cash-funded agency is Arkansas spinal cord Commission, page 155 of your manual? Annual operating is approximately 3000. They had 25 positions that were authorized in year 25. There's a very, very slight increase that they're requesting for 26 and 27, but it's still approximately $300. You'll note that they also have 3 additional appropriations, one for long-term attendant care, which is general revenue and federally funded, and then their federal appropriations, which is all federal funds, and then their cash operations, which is slowly cash total for all of these entities within the Department of Health, the executive recommendation is 16.1%. 1 million for each year of the biennium with 118 full-time positions and that concludes my presentation, Mr. Chair. The committee, um. I've asked for the nursing board to be pulled. That's the reason staff skipped over it, uh, the nursing board director could not be here today, so we moved them to the end of the line. So when we get to November 21st and we hear DHS, they will be heard after that. So whether that's on the 21st, the 25th, 16th, there's at the end of the line. So that's Senator Dodson, you were the first to light up. You are recognized. Thank you, Mr. Chair. My question is for the Arkansas Psychology Board and in particular, the $150,000 appropriation there for scholarships that, uh. They don't, they haven't expended any funds for, um, Just, can you talk to me a little bit about that and what the plan is going forward if they're going to start. Granting scholarships. Yes, sir. Matt Gilmore, Department of Health. That was uh legislation that was passed this last session in 23, um, the board and the association and stakeholders kind of met and kind of figured out how they wanted to do that. So I think in the last several months they have issued some of those, but it's, it's taking a little while to get the process set up, um, but it will be ongoing, that appropriation will be there, so I think that's a good thing going forward. So, it is as a result. That's why there wasn't a it was a brand new legislation last session. Yes, sir. Thank you. Yes, sir. Representative Kavanaugh, you recognized. Thank you, Mr. Chair. Mine's going to be similar for the, the pharmacy on the student loans. Is that something new that we started? So this is, this has been in place for, I don't know the exact time, but many, many years, um, the, uh, board looks at their fund balance every year, and if they've got enough to, uh, issue those out, they do that, I think, um, They. This board gives it to the schools and then they kind of divvy it out for lack of a better word, um, I think in discussing with the board and the and the and the and the, uh, Uh, educational institutions, there was money still there at those schools that they hadn't issued out. So I think the board was going to wait and see how that went and then also look at their fund balance going forward if it, if it grows a little bit, that they will transform more there, but it was increased, I think. To, I think 400,000 a few years back, so that gave them a little bit more flexibility if they had more and could push it that direction. OK, so do you, we don't know how much we've given to the schools that have not been used? I don't know that I've got that number, but I could try to get that. Yes, ma'am. Thank you. Senator Chesfield, you're recognized at the proper time. Yes, ma'am, I'll come back to you. I still have members in the queue. Senator Irvin, you recognize. Thank you, Mr. Chair. 2 questions on the, um, agency request and the executive on the state medical board in reduction of those positions. Can you give me a little bit more insight about that, please? Yes, yes, ma'am, and, and, uh, Chief of Staf Adams may jump in as well. This goes back to, uh, Representative Wooten's, uh, bill that he filed several years and passed several years ago, where if we had unfilled positions, you know, every two years, those roll off. So that's what we're going through there. So, so they're, we're not there are some positions that they're just unfilled, yes ma'am, they they've tried to streamline their, they've reduced their, uh, staff, uh, over the last few years, so. OK, and then, um, on the spinal cord commission, do they give a report to the legislature issue one to the governor, uh, I believe, monthly, and I can share that with, with the members I would I would appreciate that. Yes ma'am. Thank you, Mr. Chair. Sir Jessfield, we're ready for your I move to accept the budget. Or the Department of Health. That's proper motion. I have a second? Uh, can you, can you change that motion to accept the department except the depar except for the board of nursing. With the exception of the board of nursing. It's proper motion. Senator, uh, Irving, you have a question. Just quick question, um. Will any of these uh changes in positions be reviewed by personnel subcommittees. Yes, they all do. OK. Thank you. I'll second the motion. motion seconded. All those in favor say aye. All opposed. Ayes have it. Thank you. Thank you. Miss Margaret, you, is there All right, members, we are done for the day and we will be here in the morning at 9:00 a.m. Thank you for your attention.