Legislative Joint Auditing-State Agencies

That will move to reports. Thank you Mr chairman today representing four ports that have findings and we also have four ports without findings in these are listed in the order summary on page one. Thank you can I get a motion to father reports with no findings. We have second. All Thursday I. Opposed. Thank you Tom when you're ready. Our first report today with findings of the auditor of state June thirty eighteen report and this report contains four findings. The first findings repeat finding. The AC is the administrator of unclaimed property for Arkansas citizens and held nineteen point four million dollars in unclaimed property in the form of stock aging thirty two thousand eighteen. During the prior audit numerous unclaimed property stock record remote is inaccurate resulting a claim is being either over paid or underpaid when collecting the property. The extent the heirs made it difficult to determine the number of daw number or dollar amount of total heirs. Then current you're testing we know that some of the prior heirs have not been corrected and discover the same types of heirs continue to occur the top affairs noted during our current you're testing our. The AC continues to make on document adjustments to owners accounts that are not reviewed or approved by management. For example the AC incorrectly made five adjustments to stock to the unclaimed property system that resulted in excess cash balances on over six hundred owners accounts totaling over thirteen thousand dollars. As of June nineteen Izard resulted in over payments to seventeen claimant's totaling almost four hundred dollars. They also continue to make adjustments to owners accounts that result in negative stock balances. For example may twenty third two thousand eighteen the AC back dated an adjustment on the counter April ninth two thousand thirteen resulting in a negative balance of fifty six shares of stock and sixty three dollars a negative dividends. This transaction will will result in negative dividends to continue being added to this account in excess stock dividends at other owners accounts to the negative shares removed. June thirtieth two thousand nineteen the negative shared remain in the AC records. The H. also continues to misapplied evidenced owners accounts an example here's in February two thousand seventeen dividends were misapplied over paying twenty one owners accounts a little over twelve hundred dollars under paying seven three other owners accounts. Inaccurate dividends continue to be applied during the current fiscal year. As of June two thousand nineteen five the owners of the over paid accounts of claim their property at a loss of the state of over four hundred dollars. The AC also continues not applied evidenced owners accounts in a timely manner our testing identified nine separate occasions which dividend replied over thirty five hundred owners accounts in excess of a year after the division occurred. An additional five instances in which devotees were applied to over seven hundred owners accounts more than two years after the dividend occurred. The I. see also still lacks adequate reconciliation procedures. The AC is contracted with an outside third party to hold unclaimed stocks the absence of a CPA used to periodically reconcile the eighties unclaimed property records to the statements of the holder of the stocks has resulted unaccounted for differences between the two. For example the AC had almost twenty five hundred extra shares are of Verizon stock on its books that were not on hand with a third party holder. Over a period of time this difference result in over forty three hundred dollars in excess dividends applied dollars accounts. The second findings also repeat finding. The asus correction of errors noted the prior audit did not actually restore owners account balances. During the prior audit we identified fourteen stocks that were roundly recorded is sold in the unclaimed property system. Before the age he was able to correct the the property was claimed by the rightful owner. The third finding what information is not removed from the unclaimed property system the eighties overriding the detailed history of stock transaction honors accounts. Overriding counts has the effect of removing the transaction history from the account including the transactions date amount and unique identification number. For example the eighty over a one hundred and thirty three dollars accounts that contain Verizon stock on September fifth two thousand eighteen and again on may seventh two thousand nineteen. These actions alter the balance of the owners accounts without explanation of some for supporting documentation. No less money on the auditor state that the AC calculation of excess unclaimed property transfer to the department vice administration was understated by over three million dollars that concludes our fines for the outer state. Thank you Tom we have the representation FOR daughter state please come up. If you can please say your name and title for the record. Andrea Lea auditor of state. Scott covert chief deputy auditor of state thank you do you have a statement on any of these funds for proceed I do thank you for that opportunity Mr chairman members of the committee as the state the auditor foremost in my mind is protecting the people's money and second is leaving this office in better shape than how I found it. This coupled with having sit sat where you are today I'm not happy being here but I am and I will readily acknowledge our shortcomings. But I also want to assure you that we have properly addressed them. No this all securities are accounted for and the process is more transparent and accountable than ever before it's humans we make mistakes in the person's involved here professionals that made those mistakes there was no fraud and know if that. As we have made these changes we've kept legislative audit in the loop. The personal changes that we've made the employee responsible for these errors has been reassigned. An employee was hired to focus solely on the management of securities. We hired a certified internal auditor to evaluate processes and procedures identify risk areas and provide ongoing monitoring of the unclaimed property system both of those positions were unfilled in already in our office we did not have any new personnel added. We have made software changes given the niche nature of unclaimed property there only to commercially available software options for states the software that was in use at the time of these findings was built in the early nineteen nineties and lacked many controls and features that would have helped identify some of these potential issues in December of two thousand nineteen the office completed a six month conversion to a new software that automates the majority of securities work greatly reducing the potential for any human there the new software titled caps sinks directly with Arkansas building in bank be and why. Caps also provides many tools for monitoring on real time oversight alerting both the internal auditor and the chief of staff when certain actions are taken. We've also made policy changes the office is completing a comprehensive securities policy that will dictate the entire securities process at the very core of this policy is proper segregation of duties oversight and documentation the new policy addresses common security transactions in detail and provides general documentation guidance for situations that may occur less frequently again thank you for giving us the opportunity to respond today. Thank you ma'am offers all say I appreciate use constitutional office come in here every time I've been on audit you've come if you had to find it I guess my first question I'll start off with this do I understand it is this all comes down to the unclaimed property of stocks in in the proper Laul you were required to believe hold those stocks for three years before they would be done with their their died I believe the new law allows you to almost immediately transfer those into cash assets by selling the stock all is there any kind of policy consideration your office to do that is there any reason why you would prefer is there any logical reason why not to do that which would turn into a cash asset which is something you'll deal with every single day yes Sir thank you for that question absolutely we're looking for to doing that and and I want to remind you because this body you all passed a law that allowed us to do that and be assured that prior to us selling any security it has been unclaimed for seven years that is the longest in any state in the entire United States most get gets turned over to the state at three years and then they sell it three years it doesn't even get turned over to us for seven so I I that's an important point directly to your question yes that is what our plan is however with these audit findings we would put a hold on any selling of securities until such a time that we feel it's totally cleared up and audit of feels that we've cleared it up so no we are our future plan is to do that however we want to ensure that everything is properly in an order prior to doing that and and and Terry if that was the case then we're prior to levy A law these problems you have the dividends and trying to track down every number correctly absolutely and every state in the union is looking at us jealously that we're going to get to do that securities are not something that any state likes dealing with they're just they're just difficult thank you ma'am quickly many I think Senator Rapert did you job. Should you're recognized. Thank you Mr chairman appreciate that and thank you for coming in obviously and I was part of that legislation and so we worked on that issue I just wanted to ask because it is complicated and and so there was met reference made in here about using a third party I think for some of those holdings so just for education purposes here the stock that is this now in your care is that in custody with a third party do you use one individual third party or use multiple that the just happens to be the firm where the stock was abandoned or lost. Yes I'm I'm going to. The the the custodian in question is bank of New York Mellon that to primarily handles on claim assets from the country in addition to that we have several custodian's the handle mutual funds a bit of a different animal than is actually a stock rare working to consolidate all of those liquidation certainly be a key part of that process it it had company can turn over. Through whatever account they have established at the time it goes abandon we then generally work to transfer into a custodian that we manage in house all right so do you have because bank of New York Mellon actually owns Percy which Pershing is is one of the largest asset managers in the care in the world actually so my question is you know for instance jondo passes away he had an account at Merrill Lynch. Nobody is there to claim that for whatever reason so I was wondering just Merrill Lynch contact your office or but if in then you then have that stock transferred to the bank of New York Mellon is that the way it's happened correct at the end of seven years Merrill Lynch's responsibility is if they have not been able to find the owner themselves is there to turn it over to the state yes okay and then and and so in this situation we're because I'm very custom to that's what those clearing firms do is they make sure dividend to get paid if their stocks with the hills stock split so how is it that this just stuff just got lost the date it was our explanation on how you mean loss before turned on I'm sorry shouldn't use that word because this double meeting there the dividends that were misapplied in this situation when the findings. Was that a bank of New York Mellon issue or how did that happen is what I'm asking because because really this happens every day in America these firms that are holding these assets are taking care of these dividends particular StockTwits so how is it that in this case this got misapplied. So as when these findings happen we are under a different software system that did not communicate or talk to be and why so we since they're just two different we had a system that reflected what was being held to be and why and be and why now what we have in place is a database that directly connects and talks to be and why and and reconciles the difference and understands that if we say we have this dividend actually gets applied correctly to the right property so it to further answer question so pre previously nineteen million transactions were being handed entered right and they won't be any longer okay thank you for your time thank you Mr chairman. Thank you any more questions committee. Seeing none I will entertain a motion to file this report. I have a motion we have a second. All in favor say aye. The opposed this report is filed thank you for your time thank you Mr chairman committee. Toner ready state insurance department. In our next report Mister chairman the state insurance department you mention June thirty eighteen report this report contains two findings. The first finding the AC fail to retire for assets totaling almost three thousand dollars in a timely manner. Additionally to assets totaling over fifteen hundred dollars could not be located for observation. The second finding review receiving procedure revealed that that the public employees claims division feather C. six checks totaling over fifty eight thousand dollars additionally the liquidation division fell to deposit timely three checks totaling over six thousand dollars Mr mat clothes are fines FOR the insurance department the term we have represented from the state insurance department. Please come forward identify yourself for the record and your position and your title in your name. New committee I'm Alan Kerr insurance commissioner for Arkansas. Courtney trailer assistant deputy commissioner for the insurance department. Thank you very much being here do you have any statements before moved questions. I can address the two findings that that would be appropriate to do at this time yes ma'am I believe would be okay on the first finding that had to do with six different assets we have been involved in an eighteen month long exercise to reconcile and come up with a better inventory process of our assets a we were have been in the middle of this process when the audit was done and I think there were they identified some items that we needed to clean up which we have done we have developed a sub ledger kind of outside of aces to give us a little more flexibility to how we can walk around and do an inventory and and really have more accurate location and specifically how those assets are assigned to people and so we've we've implemented that this year as well as identified one person that can control all of the assets in the entry into that system so I feel really good about the way our assets are handled today and I think it just took about a year and a half to get that completed. So there was also a couple of assets that were listed that were old that were prior to the asus implementation so they had old asset numbers when asus was implemented all of the asset numbers changed and so I think when those assets were retired we didn't have the current asset number it still had the old tag on there and so they're it just allowed for a couple of miss little mistakes like that so we've remedy that. The second finding has to do with cash receipts and it and it occurred in two different divisions. The insurance department has implemented a new cash receding system back in twenty sixteen and what that does is allows a it allows us to enter all of the cash receipts that we receive its would be considered a sub ledger as well but it allows us to enter that and apply it to the correct fund it requires three people to do that so you have to one person does all of the entry of the payments the second person verifies that batch they get the total and they verify that yes that's the right amount and then the third person does the deposit so there are three controls there we have implemented this new cash receding system across the two divisions that have been mentioned here and we don't expect this to be of a future issue we believe we've remedy that issue as well. Thank you ma'am any questions committee. Seeing none are intended motion to file this report that a motion center Dismang we have a second. I have a second all favor say aye opposed. This report is filed thank you very much for your time thank you thank you committee. Next we will Arkansas teacher retirement system. Thank you Mr chairman yes our next for is the Arkansas teacher retirement system this is their June thirty nineteen report and it contains two findings. The first finding the AC discover the benefits of two members had not been discontinued the time of their death resulting in over payments of over three hundred thousand dollars and seventeen thousand dollars respectively one of the death was not reported eighty are is by the member survivors and the other was not correctly entered into the AC system. These members were identified with the implementation of new procedures by a T. R. S.. The second finding the actuarial liability for retirement benefits is calculated based on information about each member in the system such a salary age years the service and contribution status. Heirs and this information have a direct impact on the amount of the liability. Our review of the asus member records reveal the following deficiencies. I compares the member record with the Arkansas health department death database identified over five thousand eighty are as records that had not been updated with the date of death. Forty one members identified as a CH percent to the actuary to be included in the calculation of the liability. The AC also use the default date of January first nineteen hundred and January first nineteen oh one when the member application was missing a date of birth. There were over nine thousand member record with the default date of birth. Our review of over twenty nine thousand member records from forty three employers revealed member date of birth information for twenty one records did not agree to information obtained from employer records. And also as you can see in the chart including the finding nine school district did not proper report their employees in a TRS covered positions as members of a T. R. S.. For these employees AT arrested not receive employer contributions the employee did not receive any service credit and the salary contribution amounts were not included in the actuarial liability calculations. Your term that concludes our finance with teacher retirement system they tell me we have represented from the Arkansas teacher retirement system. Can you say your name and title for the record. Yes signed Clint road executive director of the Arkansas teacher retirement system. thank you run grades that the director Arkansas teacher retirement system do you have any statements were moved questions yes Mister chair I would let me just start with I'll give a brief addressing of the two findings of first of all you know what I'd like please I certainly appreciate like it audit for coming in to be a member of the team up here legislate at all Arkansas teacher retirement they are with us eight months out of the year and very valuable part of our team to help find efficiencies and our procedures Exeter so with that I'll start with the the deceased members. That we locally we identified that we had made payments after they had had deceased up for the first one that was three hundred thousand dollars that was over a course of twenty years in doing some research about our current procedures of how we locate or how we notify you know become a notified of deaths of we were kind of. Obviously it was brought to our attention that our current process of using this national database AS and relying exclusively on that is not a hundred percent accurate obviously or it would have found these two individuals that showed up on this finding so as a result of that we've improved our processes we're doing a lot more out reach to try to verify that the fifty thousand members that we are paying benefits to our essentially still living and entitled to those benefits and So. You know essentially out of that this is an ongoing project that we started and that we are continuing these are two self reported over payments that we reported to leg audit for the one thing we started sending a benefit verification letter out last year to kind of help in this procedure and we actually got some push back from that from a lot of our members because thinking it was a scam more threatening or whatever and we actually have had a bit written up in the newspaper explaining what we were trying to do we left this case out of it about the over payment to this one person because of the sensitive nature of the individual so actually in my opinion this being part of the public record now actually helps that mission so we can communicate to our members that there's a reason you're getting a letter every year or every five years to say you know are you still with this in and entitled to your benefit one thing I point out to our members as I've had to address this over the months is that we used to get a verification the somebody was living every single month when they endorse that check and took it to the bank and now with direct deposit we don't have that anymore so it is actually got a little harder to find when people have died so with that in mind we have increased processes to make that much more full proof Both of these members are out of state so we're increasing our procedures for looking for out of state people each month we have lots procedures for in state you know we search the Arkansas Democrat Gazette probity worries we use the department of health Dave death database in order to verify it and we also use a national death database company to do that so if there's any weaknesses probably in or out of state recipients of benefits. the second finding really has to do you know I really focus on it's the cleanliness of our data accuracy of our data type finding with the biggest part being the members being properly reported from the schools the employers legislative audit was able to find these because they have access to a lot more data than we do it's not required for schools to send us information if they don't think that they are a member of the retirement system and obviously they make mistakes we are going to take a leadership role in this and work with the that Arkansas public school computer network apps gained and try to get some annual reports to clean this up and with that I'll take any questions. Thank you having first pressure Speaker shepherd. Thank you Mr chairman going back to these overpayments I guess I kind of have a two fold question on that is specifically how did this occur where these direct deposits over these actually checks that were made out and endorsed and then secondly what is what is being done to true attempt to recoup those funds because the obviously over twenty years and that's that's a significant amount of money and and I'm familiar with the fact that it's it's not uncommon for maybe heirs surviving spouse's to at after immediately prior eight merely after someone's death they may receive a deposit or a check they they don't generally they then go to an attorney or contact you to say what we do we keep it to we send it back but you know it's pretty alarming to have two instances that are fairly large amount so if you could speak to the specifics of how it occurred and then secondly what's being done to attempt to recoup those funds yes absolutely thank you for the question of both of these as I mentioned were out of state and they both are war with electronic deposit elect direct deposit so there was no hand written endorsement on a tech each month of. For the twenty something years that this one on every every single month these two members were sent to the national database clearance service and came back clean so we had no indication from that service that these members had died It took some extensive research And essentially detective work to actually find the death certificate for the for a couple for the three hundred thousand one. so. Was a secondary question. Okay the recovery yes so we did actually these are out of state law on the three hundred thousand one we've actually contacted the FBI up to do an investigation so we have started working with law enforcement we send a man letters obviously asking for them to pay it and then after that it this is the legal process of looking for assets going down the legal lien process. And and to start bombing the very first thing we do is since these are direct deposits there's an a CH clawback method we can use so as soon as we were notified of it over payment we send it directly to the bank account the bank to try to get that money back to. Speaker shepherd said just one follow up and your answer actually props this question if they were coming back as she ran these reports is as if there was not the getting to say they they were deceased then what prompted you to even look at these two names and. If if if it's just a matter of I mean it sounds like potentially there could be tens or hundreds of individuals that potentially protect the out of state individuals who may very well be deceased that we just don't have knowledge of is that correct that is essentially correct and that was an alarming fact when I learned that last year I was notified actually by a vendor who was helping wanting to help. Some feel this capacity and the Larry this is this sick they gave us is essentially. If you're only relying on a national database type search your only probably ninety nine point nine or ninety nine point nine nine percent accurate. Which sounds really accurate until you apply to fifty thousand people and ninety nine point nine nine percent accurate means there's five people were overpaid you know by my count we found to I'm still looking. FOR move on up I think that's important so can you explain to us the benefit re certification now and how that working Senator implement and that one third the stop gap soon and checks to make sure somebody actually is alive in the system and what would prevent any kind of fraud so if I get that it I'm a spouse the seasonal just fill it out and send it back as or any kind of checks on that could explain it to us well the primary check we have a it is it has to be notarized okay so you know obviously there's waste of fraud that also but it is a letter that we send out and it has to be notarized in order for us to to be satisfied with that answer and if it doesn't if they don't get back with an assortment of time what happens then so the next step what they would done so far this is a work in progress we're trying to work out the procedure between the infirm enough you know quite frankly we got all a lot of the complaints we got from the process is that it felt threatening because we were informing them if they didn't send this back we would suspend benefits and remedy of that way of but we got like an eighty five percent response on the first seven thousand we sent out so arguably it they may have been just strong enough to get a good response We sent a second response out we've got about fifty percent response rate are out of this the eight owners so they didn't come back the first time. All of the out of state member the deadlines actually Monday for them to get that back if they're out of state. We are we're doing an extensive deep dive into those members to try to verify that they're still with us doing doing lexis nexis search is like Senator so the movie interview here so if the they don't meet the requirement deadline because I imagine if we have people in our districts who are getting these letters who are legitimate they'll be calling us to figure out what's going on to the next step is you do more of it in depth analysis investigation on those people who do not meet that time line right ambience multiple we sent the letter out multiple times we send it out twice so far and you know only after we were you know we don't wanna overshoot by suspending a lot of people's accounts and causing harm that way but we don't want to you know let this leader any further so Monday we're gonna focus on fifty individuals that are out of state that have not yet responded and that'll be kind of the first action we take on that thank you Senator Rapert used other question. Yes Sir you're recognized thank you and a Speaker shepherd did it as several questions that I had and I appreciate your answer to that. In all the discussion when I have not heard you say is any mention of the social security master death file. Eight it's my understanding that master data file is part of the the PBS service that we use every single month. Right that you're now using right but what we were I mean that's that was the so you were yes yes it because it's been out there since nineteen eighty and then I'll most of the insurance companies find the the folks anyway right and so I just again it is what it is and I'm glad to know that you are presenting it I was concerned that you work for saying it so yes we have that absolutely but you know obviously we hope you're successful in that so Mister chairman I would hope that you would ask for an update on this even after each filed in going to I think that the I think the committee should know what is your resolution was our success and being able to recoup any of that gladly I think so to come back explaining that after you've done the whole process you county more would be a proactive step I think appreciate Representative yet question. Yes thank you Mr chair Sir could you explain to me basically it because it's been over twenty years if the account it would was there More than one person on the account. No Sir it's it was the member it is eight it was the member the end themselves that was you know and we have. Many individuals on our payroll that are over a hundred years old so it you know there's no real concern. What with the account not be dormant if the if the direct deposit goes into the account thank you and have an authorized signature to withdraw the account. I mean. Right. But that's not information that we get I mean as far as know what we we know when it's been deposited but we don't have any access to with with with the bank not know who wish drumming with yet Israel's and so forth the bank would know who who would withdraw from Mecca yes yes Sir and and they do know who was making the cross okay so like I say there is criminal legal matters following up on this so yes. The more questions committee. Seeing none I will entertain a motion to file this report. We have a motion we have a second. I have a second all favor say aye. Any opposed. The report and file thank you German thank you next we have the Arkansas department of workforce services report. Thank you Mr chairman this is the department or for services June thirty nineteen report it's also got to findings. The first finding during our testing of capital project disbursements it was determined that the ACA paid about twenty thousand dollars over two fiscal years two coming which was owned by an individual who was also a lobbyist for information technology service management company. The purpose of the twenty thousand dollars was to obtain independent assessment of the software produced by that IT company. As of June two thirty of two thousand nineteen the age it's been a total of nine point four million dollars since fiscal year two thousand fifteen on the development of a case management software package for the temporary assistance for needy families program. The majority of the cost for the software were paid to the IT company in the continue to the project was based in part upon the independent assessment. The second finding in October two thousand eighteen the H. C. executed a one point eight million dollar contract with A nonprofit organization to provide father good programs called Arkansas better dads using federal ten of grant funds. Our review the AC documentation supporting the reimbursement payments to the organization revealed the following issues. The eighty paid fifteen thousand dollars and duplicate reimbursements for building depreciation and other general administrative expenses because the organization charge these items both direct and indirect costs of the program. The organization also received another fifteen thousand dollars for ten transactions involving related parties of the organization without appropriate disclosure of potential conflicts of interest in accordance with the code of federations. The organization was reimbursed almost five thousand dollars for Speaker fees and other costs associated with an annual men's ministry retreat hosted by different entity. There was no clear evidence or recognition within the retreat brochure or the other entities materials at the retreat was sponsored or supported by Arkansas better dads the agency or ten. Mister chair that concludes our fines for workforce services thank you can any Representative from Arkansas Fortner workforce services come for. Please state your name and title for the record please good afternoon sure Reese children's director of the division of work for services. Brian Hicks assistant director for financial department workforce services. Phil Harris assistant director for ten. Thank you do you have a statement before we go to questions. We provided the information and our response in the report findings I will be glad to go through those briefly with you in order to give you a better understanding of our response in the first finding as reported there was a a lobbyist that was a that was the. Was involved in the service management company of as an individual that that on the company however that was not something that that we were aware of nor was that the person that did the work as a project manager as described in the information that's provided in our response our relationship with the senior program manager the information that's provided that was provided is thorough is in line with what I project manager would provide in this agreement and he provided the summary as required with recommendations for this project. The second item that includes of three findings with Arkansas better dads the first item agency pay deeply and duplicate reimbursements for building depreciation and other general administrative expenses the response to that was that we have the we operated under the allowable direct cost straight however the budget the pre budget allowed FOR six percent plus depreciation so overall we did not exceed the limit however there were two there were duplicate of charges as indirect and also as direct the second item included transactions where parties had a conflict of interest with Arkansas better dads we've worked with those with that entity to make sure they're aware of the process that they should go through in order to dissolve any of potential conflicts in the future and if we've done training with that organization also the third item reimburse for Speaker fees and other costs related but but that there was no clear evidence or recognition in the program I will tell you that that something that I have that I realized on a regular basis at the Arkansas department of career and cost much of frustration on my part when we is state agencies fund programs and we're not recognized in any of the publications or information about those programs because I believe it's important that that the role that this body plays in them the agency plays in making sure that those programs are conducted properly and that they receive the proper recognition is very important so unfortunately that happens all of the time. On we have notify the Arkansas better chance program and will work with our other recipients to make sure that date are aware of the importance of of recognizing the agency we're open for any questions thank you. The question committee. Go ahead represent okay under the recommendation is that the agency we could any of the the improper cost is that been done or is in the process our as Brian Hicks to speak to that because while it it was found to be a to put it showed up as being a duplication it wasn't actually an overpayment. The the depreciation was included in the audit period. The point that the original intent of was to limit the indirect to six percent am by allowing them to have the full two percent that's allowable that will allow the time to recoup the depreciation so. They haven't re paid it but we're going to read Cooper from future payments. So I will be able to questions so this one organization it my understanding is that it's a church correct that receive these funds. Yes Sir that is correct and. Is there any con the conflict of interest part I'm trying to Dobbin that furthers anybody with any organization that has a direct conflict that would come into play that is associated with that church this is a large amount of funds they seem to be getting. No Sir not not that we're aware of. Okay So there's nobody. Any organization how did just charge get picked us soon to follow up on that to receive these funds. this was a request for proposals solicitation through SP office of state procurement. they were the only organization to be it on on that solicitation we place the solicitation back out again for another. Period of time forty five days I believe and they were the only organization to be it on thank you Senator Bledsoe. Thank you Mr chair I just wondered if you would go through some of the things that to this bitter dad's. program does have no with tenant funds sometimes there are you know a transportation in baby sitting and all of that so we to just go through what this really does. yes ma'am senator the gist of better that is responsible father who that this is part of a a national initiative that tennis A is a part of and. By many states have fatherhood initiatives we started this one here the roof the focus is non custodial fathers as well as custodial fathers and engaging fathers in caring for their children economic empowerment the more we can equip fathers who are non custodial that helps with child support payments and and helping them to care for the children even though they may not be a part of that household other a key elements of our fatherhood initiative include training we do have a curriculum that we are working with a community of faith based organizations to carry out that training that it's teaching them anger management Parenting skills life skills continue with the the the list goes on and on those are just a few of the key components of of our father who that initiative there is a media awareness campaign again the idea here is to engage dads and those who are existing debts as well as those who are going to be dads in the near future to take responsibility of for their their children whether they are again in the home are not in the home and and be responsible so that's up I'll just cut short their. Follow up yes. well I certainly support something like that and I think that's very needed in today's world but to how many day adds participate in this particular program. well I won't be able to give you the that look the latest statistic I will tell you that over over fifteen hundred have accepted what we call the the better dance challenge that's a challenge that Jett that basically men commit make a commitment to being a better dad and so statewide we've we've had that kind of response we had a summit back in June I believe of last year we had a turn out during the day a portion of that there is about three hundred fifty a ten that during the day in the evening we had a another three hundred attended and so the then the numbers continue to grow this program got off to a little bit of a slow start but it's it's it's taken off and we're beginning to reach actually is really a read statewide and and get the word out joint that sense good up do you have any way of measuring whether it successful is it by just betus patient or do you have been each marks. We do have benchmarks and one of the things that we are are currently doing as we are surveying of those who have participated we're reaching back out to them we have created a database of of names and emails and addresses and we're using that to survey and and just determine the impact of the program we also have testimonials from dads that have been impacted by the program and and we've seen the change in the we have a video testimonials as well as written testimonials and we're collecting those on a regular basis thank you for that information and it sounds like something we could all supports thank you. Represented recognized. Thank you Sir let me ask you one and look at this executed a one point eight million dollar contract how long was this the duration of this contract. One year. Okay and and these reimbursements are there there's funds being spent if I'm correct that this total here would be reimbursement outside whatever those particular programs that. The the managing of those programs is that correct would would. When you say to the reimbursement that that's what okay if the programs one point eight million what I'm trying to find out is this reimbursement to the organization what what would be those charges. Or what would those reimbursements be covering. Well they could be in a number of things Sir those could be supply as a travel training cost and I mentioned earlier curriculum that that amend develop many of the organizations that we're partnering with our teaching that curriculum that requires meeting space if if it's not already there requires of other other logistical cost to carry out that training and so that could be a a a number of budget items that would fit into that okay what what okay beyond that then with the one point eight million dollar contract. how how's that money being spent besides those what I'd call Mr administrative items there what else is going in at that that's a large sum of money okay all respond if I may of when the proposal is sent to our agency or in this case it was the RFLP there are certain things that were outlined in that contract as to what they were required to deliver and then the day in a reimbursement in a in this reimbursement first reimbursement contract they had to put into their budget an outline every single item that they were expending going wanting to expend funds for and then and before those and then we do training on the federal laws around Hannifin what's allowed and what's disallowed and then in order for that item to be reimbursed they have to submit that information to us and then we determine at that time is it was in the the proposal if it was on allowed cost and then whether or not it could be reimbursed so some of the things that they did were not allowed to be reimbursed. Thank you Senator Rapert. Thank you Mr chairman you made a reference and so it is that of a bears asking question You mention a lobbyist is involved in this particular entity is that right one of the owners of the company as a lobbyist however that's not the individual that the agency worked with and they were not aware that this individual was a lobbyist the person who is one of the owners of the company was not disclosed and in my communications during our audit meeting there was discussion about how a state agency is supposed to know that because they're the procurement process there's no trigger there's no way to know if if there's a relationship between the companies that is listed as a vendor or an individual that applies is has a relationship with the another company and is a lobbyist rather than other than us as we submitted to legislative audit we would do those reviews by just searching the secretary of state's website but there's no there's no process in place for that to Arkansas better dads is its own entity. ACT. Or yes Arkansas better dads is don't entity but the conflict with the lobbyist was with the was for the project management okay project. Findings and I did for it what was the name of that county. It was S.. S. three yeah is three enterprises doing businesses SNS personnel management what is public business of the you know the name of the lobbyists. yes Sir. That we we just for just we asked legislative lot of audit not to include that in the report I will disclose it if I'm if I'm required to do so. I just ask a simple question is public business you know I just wondered who it might be his name is Sylvester Smith or thank you. Thank you to finish this up so. The way I understand it is the sole per company made the software that this. Nine million point one force going into and there was a independent assessment done. To the software to make sure it's a viable and usable forts rolled out in the conflict is that the lobbyists was associated with the people doing the independent assessment on that so it's almost as if. The company that did the software was assessing itself is that a correct statement or is it is that where the issue came into effect. Well the finding was in it was not in the fact that the person who did the odds TV contract and set up the system was the same person that did the did the and the project management and coordination which the term is used independent evaluator but that person was really used as a project manager and liaison between D. I. S. DHS and D. W. A. us to make sure that the project was completed on time and that it fulfilled all of the requirements in the contract so so the the finding was that the individual that did the project evaluation or program our project management was working for a firm that had a lobbyist as one of the owners of that of that firm or that company associated with the software company that came up with the dish that's where the conflict and right there yes there there is yes that that does that does exist between the company who did the software and the company that did the the evaluation I will say however that just in reading through all of the reports which is what I've done since I wasn't there I will tell you that I would have no question if this was occurring today or just reading back if it had occurred Deering mob Directorship at department of career ad based on his assessment based on his reports based on the recommendations and the findings and the and the the the shortfalls I guess you could say I would say I would say that the evaluation was fair and it was also not biased. but again I was not there when all of this was done so I wasn't witnessing for it first hand but I do see that what he said in the recommendations that he may are in line with where the system is today thank you Senator Rapert recognized as one of clarification when I asked that question did I understand you correctly say that you had asked specifically for that name not to be included in the report. Yes Sir I ask that that I didn't think that that was relevant because that exist probably in multiple contracts and multiple agencies and I felt like it was only fair to to the individual and to other individuals that are probably in that same situation but we as a state agency directors or not I'm not aware of that if we're not familiar with the aid that entity and or the lobbyist sure so so it wasn't it wasn't to protect that one individual even though that was you know that it was so that it would we would focus more on the fact that there's not a way to check that for as an agency director. and so I can't say that that didn't happen in other contracts that we enter two entered into that career education because I did not do that search because that was not something that was you know that was required and I didn't realize that it wasn't part of maybe the process in the procurement process so that's that's why I asked right well I just wanna make sure that I heard that correctly I just think it's interesting I don't know that legislative audit needs to be taking direction from the entities that they're auditing about what we do or do not include in our reports that's not really an issue for you that's just a editorial comment you know for legislative audit additionally gets a good practice for us to be taking our direction from the entities that we're reporting on but I do appreciate you bring it out in the fact is of naming that person that does not necessarily mean that there's anything wrong right it's just a fact but I think what you are highlighting is another aspect in another realm that might be worthy of the legislature looking at to prevent situations where their parent conflicts of interest they could very well lead to inappropriate actions and again not stating it about the situation at all so make that clear because I'm sure this not be competed but I will tell you that you have just identified an opportunity for correction and that needs to be looked at that we need to do something to protect ourselves in for many instances the best thing to do is not to ever allow the appearance of evil and I think that this is an instance with all of the disclosure transparency that we as members have been trying to do to clean up Arkansas this might be an area where we need to add to disclosures for folks that are lobbying this legislature for funding and getting contracts that they at least report that that they have submit. Distance so was chairman thank you thank you the more question committee. Seeing none I will entertain a motion to file this report. We have a motion center but so do we have a second. Second center each house there's a I. Any opposed. The report is filed thank you thank you thank you chairman thank you members of the committee. With that we are done with the pores the last item will be new business the next meeting will be held June eleventh two