ALC-JBC Budget Hearings (1:30P-4:00P)

Ladies and gentleman we're going to start our meeting if you would take your seats please and we will be a. Speaking with the Arkansas department of transportation and Billy parish will lead our discussion you're recognized. Thank you madam chair the budget presentation for the Arkansas department disputation it looks like this it's separate from the other manuals on your desk. The Arkansas state highway commission is responsible for maintaining and improving the state highway system including the planning design and management of highway projects and administering the state highway employees retirement system. The commission as five members appointed by the governor with the advice and consent of the Senate fourteen year terms the commission became a constitutionally independent agency with the passing of the mac Blackwell amendment that's a member number forty two back in nineteen fifty two on page one is the agency position usage report. On page two is apartments organization chart. On page three are there are defines our new findings. On page four begins apartments history. That continues to page five. On page six is their employment summary. On page seven are the state contracts awarded to minority owned businesses. And on page eight is that how we use our revenue distribution the bottom of the left column shows Arkansas how users produced seven hundred and twenty three point four million in revenue in fiscal year twenty primarily or about sixty seven percent that was from the motor fuel tax the next largest item was the vehicle registration fees making eighteen half percent of the total. The common the right shows with revenues were distributed about four hundred fifty nine point seven million with the state highway department fund which is sixty three and a half percent of the total. One page nine is the summer receipts for the state highway department fund and this is the main operating funding it's a mix fund it takes in federal revenue special revenue interest and transfers the funds collected one point one eight billion in fiscal year twenty the federal highway trust fund accounts for four hundred eighty point eighty four hundred eighty point eight million which is about forty one percent of the total how is the revenues account for four hundred point seven million and that's about thirty four percent of the total ACT one from the highway transfer fund or the proceeds from the Arkansas highway improvement plan of two thousand sixteen which includes twenty five percent of any state surplus in fiscal year twenty a hundred fourteen point six million was transferred to the department. The next large amount comes from ACT four sixteen funds the past the last regular session the increase in motor fuel in diesel taxes and additional registration fees on hybrids electric cars and the transfer from the restricted reserve fund pretty seventy two point two six million. One page ten is the department appropriation summary. They have twelve appropriation request six sections have changed levels the total authorized budging disc your twenty one is three point two billion the department request three point one billion an appropriation for fiscal year twenty two that's a hundred and five million less for about three percent decrease the department request two point nine billion appropriation fiscal year twenty three at the ten percent decrease for about three hundred five million the department also request three hundred and two positions over what was authorized in fiscal year twenty one that's my understanding that the positions requested to provide career opportunities for existing employees there are no plans to hire three hundred and two new positions AT back no new appropriations request for salaries and match in the personnel subcommittee they'll discuss the department's plans to create these career ladders. On page eleven is the operation section request and this section provides for the department's overall administration is supported by the state highway department fund. In fiscal year twenty one one point eight billion was authorized and the fiscal year twenty two the request is for one point seven billion that to six percent decrease. Does change levels of Kerr beginning on the professional fees line item in twenty one eighty five million was authorized request is for eighty million six percent decrease it's the same and twenty three. And in capital outlays what was authorizes one point one billion requesting twenty two and twenty three one billion that's a nine percent increase and a department the reason for these changes they want to align your budget with the actual expenditures. Looking at fund sources on the bottom of that page the fund balance going into fiscal year twenty was two hundred sixty one million the fund collected general revenue in the amount of seventy three point eight million that's the surplus for your twenty as a result of Arkansas highway improvement plan. Total revenue shows five hundred seven point six million special revenue shows four hundred fifty four point seven that's primarily motor fuel taxes and registration fees at four sixteen financial seventy two point two million that's the increase in motor fuel taxes and registration fees on electric and hybrids and the transfer from the restricted reserve fund. Nonrevenue receipts show forty eight point nine million those are ACT one how improvement plan proceeds outside of the surplus. The other one shows five point nine million that's mostly interest department spent. One billion fifty nine million in fiscal year twenty that leaves a balance of three hundred sixty six million going into fiscal year twenty one asked over the department about the fund balances in the prepared have an answer generally it's because of the way construction projects the nature of the record cost fiscal years that these fund balance or encumbered restricted by law for those purposes. On page twelve of the Arkansas for the how to construction improvement fund account program request and this is also known as the connecting Arkansas program. Is supported by an account within the state highway department. If you're twenty one one billion was authorized and twenty two the request is for one billion so there's no change level but in twenty three the creases two eight hundred million that's a twenty percent decrease and the change was due to bond issues the finances program mature in twenty twenty three and the commission Arkansas program will begin to wind down. Looking at phone sources the fund balance going to fiscal year twenty was eight hundred and forty six point three million the fund collected special revenues the amount of two hundred two point nine million that the half cent sales tax from amendment ninety one expires and twenty twenty three nonrevenue receipts show sixteen point five million those are federal grants reimbursements the other line shows ten point three million that's interest the department spent three hundred twenty five million fifty or twenty that leaves a balance of seven hundred and fifty million going into fiscal year twenty one. One page thirteen is state aid road system request. And this section provides funding to counties is supported by special revenue fund in fiscal year twenty one thirty four million was authorized and there's no change level for the biennium looking at fund sources the fund balance going to fiscal twenty was twenty one point seven million the fund collected special revenues the amount of twenty point three million those are from motor fuel in diesel fuel tax of one cent a gallon nonrevenue receipts show nine hundred and twenty nine point three as are not showing on thousand those are county matching funds of ten percent and the department's been eighteen point four million fiscal twenty which leaves a balance of twenty four point five million going into fiscal year twenty one. On page fourteen is the main street program of requests and this section provides funding to cities is supported by special revenue fund in twenty one was authorized thirty four million three is no change level for the biennium looking happened sources the fund ounce going into fiscal twenty with sixteen point two million the fund collected special revenues in the amount of twenty point three million again that's a motor fuel in diesel fuel tax once in a gallon nonrevenue receipts show nine hundred and eighty one thousand those are city matching funds at ten percent by cities over twenty five thousand population the party's been twenty three point four million fiscal twenty that leaves a balance of fourteen point one million going into fiscal year twenty one. On page fifteen is the Arkansas public transit trust fund program request and this section provides funding for local public transportation operations in fiscal year twenty one five million was authorized for twenty two the requested six billion a twenty cent increase in in twenty three it's the same as twenty two spoke to the department and the reason for the changes to increase available match for federal funds for local transit agencies the department found some agencies could not maximize funding due to limited access to matching dollars. Looking at fund sources the fund balance going to it's clear twenty was four point three million the fund collected special revenues name out of four point two million this is from a rental vehicle tax of five percent on rentals of thirty days or less nonrevenue receipts show a hundred thirty six thousand and that's primarily from federal match grants the department spent four million thirty five thousand fiscal twenty and I leave the balance of four point seven million going to the fiscal year twenty one. One page sixteen is the commercial truck safety education program request and this section provides funding for that program supported by special revenue fund in fiscal twenty one five million was authorized requesting twenty two is for seven million to same and twenty three and that's what the department they said they have an anticipated increase in program expenses to to larger projects in the pipeline the fund balance going to physically twenty was three point seven million the fund collected special revenues in the amount of one point nine million that's the first two million one a registration fee on class seven trucks or international plan vehicles with Kate tax departments been five hundred twenty seven thousand to secure twenty that leaves a balance of five point one million going to fiscal year twenty one. On page seventeen of the road and bridge repair program and this section provides assistance to counties in the A bill she'll with natural with active natural gas wells affected by heavy equipment it's supported by special revenue fund in fiscal year twenty one by the was authorized requests for twenty two is two million that's a sixty percent increase and twenty three it's the same twenty two. And this is due to the decline of natural gas extraction collections have been half what was produced in previous years looking upon sources the fund balance going the fiscal year twenty with a hundred and twenty thousand the fund collected special revenues the amount of six hundred forty eight thousand that's five percent of the natural gas severance tax proceeds department spent seven hundred fifty four thousand fiscal twenty that leaves a balance of fourteen thousand six hundred fifty eight going to fiscal year twenty one. One page eighteen is a no radio system and this section provides utility costs to towers and department of transportation property near Star City Arkansas. If this the twenty one four thousand is authorized your is the change over but for the biennium and supported by general revenue fund so there is the fund balance information. On page nineteen is the public transportation program and this request this section provides funding for those programs it's similar to the public chanted trust fund program however this section supported by general revenue fund and designed to assist public transportation dependent persons. In fiscal twenty one three hundred fifty thousand is authorized there is no change over the biennium. On page twenty two is the highly employees retirement system request this section provides for the operations of the highly employees retirement system it's supported by trust fund in fiscal year twenty one three hundred million was authorized there is no change requests are change level for the for the biennium looking upon sources senator the retirement system's the assets are kept in investments and funds are drawn down as needed to pay for system costs the trust fund line shows a hundred and thirty million was collected to scare twenty this comes from investment income and contributions from employers at a rate of fourteen point nine percent of there's a the salaries of the employees any contributions from employees of seven percent of their salary. On page twenty one is the intermodal facilities grants program request and this section provides grants to existing intermodal authorities is supported by an account within the department's been operating fund in fiscal year twenty one five hundred twenty five thousands authorized there is no change level for the biennium looking at fund sources the other line shows five hundred and twenty five thousand was collected by the funny fiscal year twenty by code the first five hundred twenty five thousand interest on the state highway department fund is sent to this account. On page twenty to the transportation leave related research program request and this section provides grants to publicly funded institutions of higher education supported by miscellaneous fund it is the twenty one two million was authorized for twenty two requests is one point five million but it rebounds in twenty three back to two million and the department tends to allow the fund to accumulate a balance before paying out a research grant. Looking at the phone sources charge the fund balance going to fiscal twenty was one million the other line shows five hundred thousand was collected as clear twenty and again by code the next five hundred thousand and interest is sent to this research program after the first five and twenty five thousand since the intermodal facilities the department spent one point three million fiscal twenty that leaves a balance of a hundred forty five thousand go into fiscal year twenty one. Manager that is the budget request for the department right the Representative Meeks you're recognized for a question. They're a right way over here um question I have is on Page. Was this one on page eleven of. In that and it happens again on several subsequent pages but if you look at the the fund balance. On page eleven. The it shows that you know they'll be a in all three hundred sixty million dollar surplus and then it drops to forty three million and then it looks like it goes a hundred sixty seven million into the hole can you kind of flush that out for so far we're showing that declining in getting into a negative there I can speak generally but I've had to defer to the department four one I've been told these fund balances are restricted by law they are encumbered so they have committed them to projects that are coming in the future down the pipeline and that it has to do with the matching federal dollars and there's a matching pre that happens in between the state fiscal year ending in the federal fiscal year beginning but I would have to defer to the department give you specifics on what projects are being committed to and and how that's been done okay with that Is it just timing why there's a deficit order really going to be a true deficit their order I need to defer to the department for that. I think Kevin seven until sent okay. Well Basically when you look at the total expenditures for fiscal year twenty they spend one billion fifty nine million they were authorized one point eight in when you look at twenty one twenty two and twenty three you see there authorized one point seven this funding takes treated like they spend every penny of that and therefore it shows the fund balance going down I guess is could be viewed as a worst case scenario where they spend every bit of their. Corporation authority which is highly unlikely to the like okay let that that's that that that makes me more comfortable thank you madam chair all right to Representative Cavenaugh you're recognized for a question. Thank you madam chair over here and I'm not sure you can answer this and the agency might have to but a lot of these where it talks for the appropriation it just says operating expenses it doesn't break out the true expense but in our book that shows is the ten year history it shows that why don't we have that break out. A French the able I'll give you page they like page numbers sixteen. commercial truck and safety and education program did just ask everything for operating expenses but if you go back and look they actually have other categories instead operating expenses. Where the vast majority in the past they have spent their appropriation how come it's not broken out it that way and several other ones. Are you for any of the questions grants in aid and that it shows it shows operating expense grant in aid in capital outlay and then this is for the but it okay on the day. Senator rice you're you're recognized thank you. The staff could you direct me is there a break out on highway police budget in this. Budget. A no Sir not this budget and this appropriation request they do have internal budgets to figure that the I wish that be something just to get from the department thank you is there. All right let's call the agency and its seeing no other questions and the I believe vote represented Cavenaugh would have one for the agency. Anyone else this is this is your time. Right if you would introduce yourselves for the record. Good afternoon I'm Laurie tutor the director of the Arkansas department of transportation and I have with me today our chief fiscal officer Patrick Patton and I think he can best answer by Representative Cavenaugh as questions alternate over to him all right the Representative capp ninety one the state your question again yes thank you madam chair on page sixteen and this is just an example because it happens a lot throughout your request it's for the commercial truck and safety and education program you just have a big appropriation quest one together under operating expenses but your prior years actually break out other expense categories how come you're not providing that information to us for us to be able to make a decision based on what you're actually going to do that for make their appropriation request used for. Our appropriations are normally by the one line item and so that's that's how we requested when I go through the act that's how other represented in the bill and then the act is one line item so that's that's how we present. Follow up manager yes okay as someone looking at the budget then how do I know what you're actually going to be spending this on that you're requesting to actually have this appropriation for because you just a operating expenses and as it say it shows here you break it out for like grants or whatever you're asking for an appropriation of five million dollars your probe that you've actually actually spend is five twenty seven and you're asking that to go up to seven million dollars. And historically of only ever spent two point nine million of it but that is been three grants or other things there's really for someone who is budgeting it's hard to know. Really where this is appropriation is going to war because there's no information given to us but one big lump sum. We're we're planning on there some as Billy stated earlier we're planning on some projects in the in the pipeline for the commercial truck safety education program that we have in you know that have been piling up so we. that's that's the reason for the increase in the request we can provide more information we've just gone by the appropriation an ACT of format in the past for madam chair yes so if you're asking for this appropriation to be increased can you tell us is it going to be an operating expenses is that going to be and grants and aids are you doing capital outlay for this extended amount this amount of money I can answer that for this particular account and we have and fourth at four million dollars coming up in the next I think I think they just to prove this is for our forty west Memphis truck parking extension is one of the ward's for this funding to and increased truck parking for our big truckers on the interstate and then there's some of the small amount about three thousand dollars for a safety program to the Arkansas safety trucking association so am I have a list of how these these funds were distributed for what projects right here I'd be glad to show it to you so you're saying that you four million dollars is going to be for capital outlay for the for this year yes okay and then you've got three thousand dollars in grants a three thousand dollars for and other capital outlays for little safety program that was they applied for and we awarded the funding for this is an application. Type thing where they apply for it and then we have a committee and we award the funds and they use it for whatever whatever that the application was. And we get two million dollars a year and sometimes we get enough applications in this to spend the night and then sometimes we don't and it that funding will accumulate into the next year so that that pot grows and then we might get some good applications you know how it's kind of like it just goes from year to year it's not it's just the maximum out we might spend in that year if if I'm even explaining that correctly enter madam chair can I just make a request that when an agency. Our brains a budget to us that they actually match it up to where the expenses instead of having one lot son of operating expenses that they actually put it to where they're action for this appropriation to go to so that capital outlay its capital outlay that they're making that appropriation requests for because when you lump it all together and operating expenses it doesn't really tell us where it's going. Thank. A we've written it down and we will try to get that. All right. Senator rice you're recognized for a question. Thank of asking previous sessions On the highway police budget I suppose you have internal budget yes Sir is that changed any for this year in this budget and has it changed much in say the past three years we I can't I'll have to get the exact information for you know the that but I will say we have been trying to eat increase our crew complement we've been level one employees in that in highway policemen and we've been doing annex you know it a concerted effort to increase our numbers to reach the number you know to be fully staffed so I don't know if that's affected our budget from one year to the other Patrick. Again you can just get back to that and I on a little further and just say there there's been some concern and. From some neighboring states That. There. Highway police have been. More federalized. And I brought concerns at the impasse have it heard the. Concerns lightly but I I that's something I would like to see if if if there's been a necessary for changing in in budget and if so it is it justified origin just to get more federal money of federal regulations being enforced in those those type things is it really needed or is it just groove back to the the dollar right to that's why you get it so yes you can get back to me anytime on that okay thank you. All right represented to rectify recognized for a question yes so just a couple quick questions out what is the total spend of the highway department state and federal dollars. Per year about. The registar operations and construction projects just for the highway department is at that the question yes we're around one point one billion with that. Is that includes our connecting Arkansas program right. That's what I'm. Does the I'm sorry it does not include connecting Arkansas program its operations that federal funding it's ark normal construction program in our operating expenses is at around one point one billion dollars each year and then this proposed budget house the half cent sales tax only issue one being handled it's not because if if issue one passes it begins in July of twenty twenty three which is outside this appropriations budget. But if it passes will will get it in there for sure. Representative Dotson you're recognized for a question. Thank you madam chair over your. Them. Not looking through all these different things I'm just gonna start with this one on page ten. The employee retirement system line item. Yes shows you you spend a hundred thirty one million last year. And. That was the top single year expenditure in that line item for the last decade. But you're asking for three hundred million are we expecting a bunch of new retirees to more than double the amount of expenditures you think going forward in the next two years. It's is there in case we do have a run on retirees it's the amendment we're at a hundred and thirty one million right now in order if we did have more retirees going out that would give us the The above. Appropriation to actually pay them out I mean how many retirees are we talking right now for this hundred thirty one million we've got what over three thousand in the retirement retiree pool right now and how many employees do you have a right at three the thirty eight hundred so the hundred percent of the department would have to retire this year in order to actually. Well and not everybody is being paid one for one dollar so some of a may have hired balances they may pull their drop out all together let me pull all their account balances out all together depending on their time with the department. I mean I guess what the average length of time somebody is serving at the department. Hello. I think it's around. Crystal dinner. A I don't know the average I know you you when you retire you get on the drop the you know you can be get on the drop it thirty years. Any you know you accumulate that funding in your drop account and then you have the option want to retire you can either pull all that drop money out or leave it and and so I guess this three hundred million just kind of covers that say for a hundred people retire next year I mean I'm just I'm just throwing it out there instead of leaving their money and drop it decide we're going to just pull it out because we can do better with our money elsewhere that just make sure we have enough there to pay those folks if they ask for your money on it's it's really just the gas. You know what could happen you rip we really don't we don't really don't know but that's the thinking behind it I'm sure I have a question for staff. It is the question is during the interim can the highway department come before peer in request additional preparation. Thank you. Yes Sir they can we have a various holding account that we created when we cut those appropriations two years ago that they could ask for appropriation authority from okay so if if there was an inordinately large number of of retirees that jumped in all of a sudden you would have something mid year that you can come back to us and ask for that sort of a and an emergency situation so do you still think you need three hundred million dollars in that line item. An email under those circumstances we can we can cut that back there's no doubt and if you feel like that that would be the best thing for our budget we we could we could reduce that to which would you be okay with like two hundred million just to be sure or at least what I think I would be much more in line and I would I would be. In favor of that if it if the department's fine with that and and the rest membership is that's your new request that would and we're glad that thank you. Representative Lundstrum. This great. Well there again thank you. Welcome to the department you may not be aware of this I'm over here I'm sorry. There was a bill passed in the last session before you became director and it's was house bill seven fifty and. It's ACT number seven eighty nine it basically says that and I'll just read the title to you and I don't expect an answer right now so no pressure but it does pertain to this topic an ACT to ensure that the General Assembly has adequate information to make informed decision on highway funding before each regular session and each fiscal session by requiring the director of the height state highway and transportation to provide information on various issues including without limitation on the location of contested routes the most dangerous transportation areas the expenditure per person of the state and federal highway funds in each congressional district and the number of miles of the state highway system that are in each congressional district and FOR other purposes and it goes on to request that information it's not in this report and at nine out I realize this is bringing it on you but before we make some financial decisions the whole idea of this bill was to give all of us the information we need on where our dollars are going to go. If we could get that information yes ma'am there's there's no problem with getting that to you that we were under that all this state I was under the impression that our our deadline was before that the session started in January and I've been asking staff winter we call that Lundstrum spill. Sorry. Yes we we do not gonna get that in there working on that but we had we didn't realize you wanted it prior to this we were putting it together and get to have it to the legislature and before the session started in January so if we've Mr if we misinterpreted what are our responsibility that's okay the big word in there is highway funding. So I've. That's fine if it's before regular session but. I guess I should have put it in there before budget session or before budgets decisions are made but I would love to see that information come before the. We will we will expedite and get that to you all okay no that's fine thank you okay thank you. Thank you a Representative Bragg. Thank you madam chair over here to your right of the state gives grants FOR sidewalks trails things like that are those federal state funds or work were they located in the budget here. And what you're referring to in fact we had a minute order today that awarded a I don't know about eight million dollars but what that is is it's federal funds with local match as we go out for an application process pride we go out for applications and local agencies apply and then we have a a group of a committee that looks at every application and makes recommendations to the commission on who to a to a war the project for the funds to but it's no state funds it's federal funds that can only be used for that root for that purpose and then the locals have to match those federal funds so it's it's if it's a local program that we administer and it's the only place you would see it would be the amount of federal you know there's a line out of a federal funds I think it was eight hundred and fifty million dollars in which is is inflated in case we can you know get money comes down from heaven from the feds and we need to spend it but anyway it's included in that amount and and we use it every year we we go through this process every year okay thank you. Representative would you recognize for question thank you Mr chairman. Right so that you own your appointment. Pleased with that. Commission made a wise decision. In two years the highway department has been. Selected as one of the lowest administrative cost of operations in the country is that still true. Yes Sir. My question today will deal with personnel other than this first question. There were you have budgeted or four hundred and fifty million I believe in the trust fund federal trust fund is that correct expended that. And. If the minute let me get out get with that. Okay thank you could you repeat the question and so I make sure I understand the issue what you what what the question is a lost it went from four four hundred and something up to eight hundred and fifty all okay for the federal portion of our budget yes okay so what happens is we get around for federal funding we get around five hundred million in in federal funding to spend each year. But there's been times over in the past where the federal government has given us a lot more than that up to three hundred million dollars more for instance the American of. A are a consumer to remember that anyway we got it was money that came down there trying to stimulate the economy. And so what we do is we think we know we're going to get around five hundred million that we do that eight hundred and fifty just in case the federal gives us a lot more money and we need it we need to go ahead and spend that money within a certain time frame so this is just anticipated the and curry yes at the at optimistic but not hopefully. Well I guess your wedding on Congress to make up their mind what they're gonna do. But this is not based on the current administration to desire to increase the infrastructure funding this is not well the right this is you're right I mean there's always that taught going on we never know what you know that's always a guessing game so we just put that to try to cover as soon. Next question has to do with the personnel matters. We we have a reporter in August with your agency. The chair of the the personnel committee for a healthy. We have a report that showed forty six ninety nine positions authorized. Three thousand six hundred and forty eight. budgeted and if the house in in forty nine and five thousand and forty nine vacant positions that were budgeted. The in your report today. You show for forty seven twelve which is not a big difference thirty seven seventy seven of employees of the. Budgeted but there's a difference here where we were we were told that you had vacant positions that were budget two thousand and forty nine you indicated or in your this booklet today two hundred and twenty six or budgeted eight hundred and six our own budget which one's correct. I'm pleading ignorance I'm gonna have crystal woods she's our division head of our human resources and she knows all things employees and so hopefully she can answer that intelligently I'm not sure how can. If you understand what I'm talking about so the the the script and see. This page. When we look at this page just a moment please. Okay. Okay the monthly employment summary those of vacant positions that are and feel that we send every month. it's a moving target a lot of those are. Your path positions that are not field a lot we have a fairly high turnover rate in our maintenance forces around the state which is the bulk of our work force and so those numbers are constantly in a state of flux. The measure would you what I'm after okay. You're not the only agency we're gonna as golem this question. This is a the thousand forty nine our budget. Is it. two twenty six either one. Is funded it A do you have the total salaries dedicated to those positions. Total dollars. It is. Jane your your average salary out there's about forty nine thousand dollars. Do you have forty nine thousand dollars committed two hundred twenty six times. I'm not sure where the two hundred and twenty six with the two hundred twenty six is what you say in your report that is budgeted but failed laughing I thing. and Patrick may have to answer the budget question. For yes we do have that in our south this budget it in there yes Sir okay. Then then you're asking for you've got two hundred twenty six two positions in your eyes can for three hundred and two all were yes Sir so the other thing comment was made this with another budgeting things what was the difference that would give you right now if it happened today that give you over five hundred positions. The. There being utilized yes for the about eighty percent of the additional positions that we're asking for our for career path that career ladders. What is a career path I mean for the highway department I understand but. You you gonna pay on something yes Sir they're not new positions are expected to be new hires their for existing employees to move them up and their job series so you're really you're reading three hundred and two to the forty six ninety seven. Yes Sir but they're not. They're not all expected to be filled at the same time if if an aside one moves to amend inside to than the man aside one position will not be back field okay limit will for a for a make these next statements of the Laurie I totally understand that job constitution established okay but do these numbers were you that the concern me from the standpoint. The. We have a thousand and forty nine positions. With the we showed their budget okay. Hello to support a but if you pay four hundred twenty dollars a month like other state agencies do that would be four point one million dollars a year. And then when you just look at the salaries based on forty five thousand in your efforts that already is forty nine this forty seven million dollars a year. The point we're trying to make is the fact that if the money is budgeted time the committee to those files in forty nine positions how many of whom have been vacant two years or longer. And. Not only that but this fifty million dollars or five hundred million dollars over ten years they could be utilized okay way construction and the re reconstruct or or a repair so. I guess what we're asking what I'm asking is that you will look at what you need actually the. And and and so we can have a true representation of exactly how the money is being allocated to our construction to salaries or whatever. Thank you thank you crystal it's not me it's not been not intended as criticism I understand. Yeah He Patrick is going to respond of go over one clarification on A think on on this report. Moving from left to right you see the four thousand seven hundred and twelve authorized interact. Then you see how many filled budgeted. How many are on field budgeted to get to our thirty nine oh six which is our total budgeted positions. The eight hundred and six the says on budgeted. maybe I maybe I should change the title I didn't know if we had that latitude. But the un budgeted total is the difference between our budgeted positions of thirty nine hundred. And the forty seven twelve. Understand the and that eight hundred positions is not budgeted for what I'm talking about well I'm Tom from your standpoint what I'm speaking of is a two hundred and twenty six okay this budget. If you if you use those numbers you're talking about the. Four hundred and twenty dollars a month annually you're you're talking about one point one million. And if you still talk about the salaries being committed you're talking about ten million dollars of funding in the reason of reason bring it up. Even even though you're constitutionally established we we are to be good stewards of our money which I know you all are but there's things like this that have been built into the budget year after year after year. And we were we we is it just all non budgeted today. In state government is three hundred and six million dollars. Three hundred and six million. A year. Thirty five million dollars a year of four hundred and twenty dollars per employee for insurance. And those are things that we need to look at we were just hit two weeks ago with the nine suspected unanticipated thirty nine million dollar deficit in our insurance plan. And we're just not addressing those things fast enough we don't need that to happen. and I'm I'm operation to you all but the people of Arkansas or giving us five point six billion almost six billion dollars a year of their hard earned money and we just need to be sure is being used wisely and and by the fact that you all are one of the most efficient the minister AT really run the agency the highway departments in the country you're doing that but this is this questions like this that we need to look at and then you and then asking for three hundred and three hundred and two positions more. A we will we will definitely look at that two hundred and twenty six to see if if if. What is key to do is look at those that have been empty for over two years and they're still contained in your budget we we certainly will we thank you yes. Thank you madam. A have you. Representative house you're recognized for a question. Thank. Thank you madam chair of. This my question questions. And really a statement for your confirmation or. Correction. Of goes back about seven years when occupy the same position Representative was alluded to a few minutes ago those funded but on field positions are partially funded by federal funds is that correct. Yes some of our positions we. They charge their time to a federal job and the federal financial guidelines tell us we just can't take federal money and put it into the state. Transportation department retirement system directly can we. Could you restate that I'm sorry federal the federal financial rules the fiscal rules that we operate under you can't take federal money straight from the government and put it into the to the. Retirement system can you. No Sir is that right Patrick. Okay you can take that money and put it into positions that are on field and paid the retirement fees dues contributions out of those positions and that's okay with the feds is it not. That I'm not sure and sorry I can I can answer that I don't know that the the thank you positions that you're talking about that Representative was talking about that are funded they do pay an amount into the retirement system do they know they do not they're not they're not they're not funded they're just. Send the funded ones well there funded and they're part of our budget but if no one's in it there's no expenditure there's nothing it's just it just sitting there is the title to we put someone into that title and we start paying that person that's when things start kicking in but if they're just sitting there is the title and funded and and field there's no transfer of any kind of funding. Do not members of a purchase. Yes ma'am I'm state can. Okay I'm sorry for not and you know it I found that to be true with a Persian teacher so I was just won't just make sure the job operated under the same federal rules to say okay well not sure about that but I do know if there's no one in that title there's no transfer of any top funds anywhere it's just on paper. Thank you very much manager. All right of. Representative McCollum he's. Is sitting in sixty number sixty you're recognized thank you madam chair Senator hammer actually that okay that's fine okay thank you. First of all with regards to of what Representative Lundstrum was talking about well go would you put out a do or plan one would be as it currently is and then the other one would actually be with or without the half cent sales tax because you could put out a plan but is that absent sales tax not actually going to have a direct impact on the plan that you would put out as far as the projects that are slated to be done Hey yes and we can do that we can do one with issue one. I sing in one without issue when passing I'm not sure exactly what all the information is in that report and if it does has scheduled projects in there you know for the future then we'll we'll definitely will do to reports for you this year if you would like to see that I just like that be helpful for if nothing else us as legislators that if that doesn't passed we can identify the projects that will be cut because that funding will not be available if it goes way so I would appreciate that the second thing is. In lowering the retirement appropriation as the discussion was while ago with that in any way shape or form limit your actuary or your investment of side from being able to manage their investments the way they need to or with that have a direct impact on that you know no I don't think you will but if it does and we'll come back in the mid term or whenever we can come back as I don't think it's going to affect this but there is you're right and I think they're it is kind of a pass through it comes in and goes out through the year is that correct so and if. Hopefully agreeing to two hundred million hasn't hamstrung our retirement system if it has out we'll come back and ask for additional procreation might be something you might want to consider to a check with the one that manages your investment because I would I would hate for us to do something to have an adverse effect as far as you know hopefully everything goes back up and if the retirement system funds go back up but I would hate seeing adverse effect because of that the the other thing is on the positions the the conversation the positions while ago I'm looking I'm taking my questions off information provided on page twenty four the handout. And in nineteen ninety three we're at fifty three hundred and forty four positions we've kind of gone downward the base of projections to twenty twenty one and twenty twenty three were were actually cycling back up yes Sir and then there's a good explanation for that we cut a lot of positions because we went to performance based pay and we took out a lot of career ladders for our employees and as crystal has said before no good deed goes unpunished and even though we thought we had done something good it the employees feel like they can't move up in their careers at the department and so we're going back to having more latitude for it A so that employees can not only do they get. Rating graded before there were receive any kind of raise but they also have the the at the next step available form so say if they're great seven. And they're like I'm gonna work really hard and I'm going to get that grade nine kids that is the next level for me and it it it's really good for morale and we've we realize that through and send employee engagement surveys in how they have of you know we have one police feel about how we've tried to change things so we're going back and adding some of those positions so that we have those crew letters and I will say we've been going to an efficiency review and in one of the recommendations from that review is to provide those career ladders to our employees to increase morale and their ability to think they can advance their careers at the department into eight in retention okay then the last thing I guess I would ask is looking on page twenty three am I correct in interpreting that the positions that are being added are in those five that are listed on page twenty three the executive administrative planning design and operations are those where the majority of the new positions are being assigned in order to create that yes by the and most of them are in the operations branch but eighty percent of the positions of those three hundred into positions are just for career ladders is that correct crystal yes additional want to see the agency get top heavy because you mentioned about turnover rate at the bottom you know out in the operation and maintenance A I would hate to see the agency get top heavy in and I recognize and appreciate what what's being done but at the same time if we if we don't address the turnover rate at the bottom like we have that problem with other agencies we're just spending a lot of money you know retraining people all the time and that's just observation well and I think that's the the philosophy behind having those crew letter so we can keep people on board and that that constant turnover which cost the state so much money is curtailed because we have some things in place to stop hopefully alright thank you thank you Mr. Senator rice you're recognized for a question this followed up on represent Lundstrum and center hammer's request. And I did understand I guess like you did the the session budget the. It is required for that in in what we're asking for some pre budget documentation but what Senator hammer session farmers with the half cent. It is passed are what it looks like you it's not. Nothing's going to change until after the sunset of twenty twenty three. So are we are we are you is what you're going to need what I just want this clarified are we did what Senator hammer warning A hypothetical what this year's budget is adding a I have seen it. and then taking what I have seen is that what we're asking for because it's not going to change this this budget with what happens November for. This fiscal year correct that that's correct I would just say clarify I don't you did a bunch work at night so this not what we won't. Clarify what they're wanting a hypothetical addition and subtraction what it will look like our. Actually and if I mission what I'm hearing tell me well correct me if I'm wrong I just interpreted the request so the issue is the legislature could see the difference issue one or they have since sales tax being extended past twenty twenty three will make make to our overall highway program in the projects that can be done it was more of an informational saying that you are asking for a bit is that correct is that what is Senator hammer if you clarify the. Senator hammer you're on thank you Mr chair senator rice and Mr what what I'm trying to get at is that if you give out a list because you plan your projects out what coming years out do you plan your project. A will it to about four five years right so whatever you give us it's just my intent that it's factor beyond what it will look like with and without it because if you give out a list and there's that expectation I will gets Roach done down in sling county or west pledge county and then that have sent goes away and those are not able than I've kind of given expectation not gonna be able to deliver on but if you're planning that far out I would just like to see that incorporated into whatever were given because yes I I I know it will not sunset to twenty three but your planet projects two to four years out that's going to have a direct impact one way or the other and I think that could be critical for communication to our constituents. Yes Sir Senator rice is at. Thank you ma'am chair. All right All right represented at Cavenaugh you're recognized manager I have a motion at the proper time. We have a couple of others on the queue so let me let me go to them and we'll come back for that motion right of Representative Beck you're recognized for a question. Thank you madam chair of this very quick question where's a half cent sales tax that sunsets where is it coming into the revenue stream right now because it. As Patrick any take that yes page twelve. It's got its own fund Page twelve yes page twelve is the connecting Arkansas program for the repayment of bonds and and projects and and the usage of the half cent sales tax. Right thank you. Term Representative Dotson. I was just gonna make a motion to property number thing represent Kavanaugh's in Q. before me all right the represented lady. Thank you Mr chair. Until this is done right in front of you this is a repeat of questions been asked about the asset sales tax but and I'm looking at page twelve and I think what you referred to the two million five million is the effect of the half cent sales tax right now and that's extended out to about that ended in January of twenty three is that correct. No Sir it ends at June thirtieth twenty twenty three it into their end of the fiscal year in the fiscal year yes so that's in the the impact is to earn five million of my question down below there were talks about the state aid is that the funding for cities and counties yes Sir okay so that shows thirty four million actual was eighteen million authorized thirty four million in projects and out through the next two years. can you tell me how that would reduce if the absent sales taxes not renewed that thirty four million it will not be reduced what will be reduced is their turn back funds so there's a different it's a different and it's completely never comes through our budget it's it's taken off and given directly to the counties and cities as turned back doesn't come to your department at all now so you have no idea what that number is we know the numbers we can get that for you and we've got to I report that shows the amount each city and county gets for the for the half cent sales tax each each I just like to know what the total impact is on the counties and cities if we can get that we can certainly do that we've got that thing thank you. All right a committee just remember that some this goes through personnel so this is not your last opportunity to ask questions all right to a Representative Cavenaugh. Thank you madam chair I'd like and make a motion that we defer any action on this item until the requested information on expense allocation is given. Alright let me just as one question before we do that how long do you think it would be before you could get that information. We think we can get it within about two weeks don't you think and. Will we will still be here but to dispose. Think that something to consider so would you ladies and gentleman of the. Committee you've heard a motion that is on the table does anyone want clarification. All right seeing none. Of all those who are in favor of this motion say aye. All those opposed. All right motion passes. So we will visit with you as soon as you can get that information to us okay thank you alright ladies and gentleman next on the agenda and I will ask you to look at the clock we have of the public employees retirement system then the teachers retirement system disability determination and Election Commission all on still on the agenda so with that Mr Parrish would you give your report. This is the public employees retirement system system. Thank you madam chair. The public employee retirement system is in manual one. Any begins on page one hundred sixty six. This agency administers a statewide public employee retirement program FOR certain state county municipal and some school district employees April third Mister state police retirement and judicial retirement system's the director service still seek treatment straighter is responsible for covering the latest issues for state and local government employees. As stat shot from their financials they have eight point seven billion in assets. Almost forty six thousand working members with an average salary of thirty nine thousand. Thirty eight thousand retired members with an average annual benefit of fifteen thousand eight hundred and unfunded liabilities of two point four billion with the project the pay off to twenty four years that puts refunded level at eighty sorry seventy nine percent. Pages one sixty six through seven shows the contracts were to minority owned businesses and employment summary and publications. One page one hundred sixty eight is the departing appropriation summary the system has six appropriation requests with eighty one positions three sections have a change level this is requests one billion fifty nine million each for each year the biennium and exactly recommendation provide for the agency request the system is funded by investment income and contributions from employers at a rate of fifteen point three two percent of an employee's salary and contributions from employees at a rate of five percent of salary for those contributory members. On page one sixty nine is the public employer timing operations requests and this section provides for the administration of the system it is supported by the apers trust fund. Page one seventy is the of the appropriation summary if it's clear twenty one hundred forty one point six million was authorized to request for twenty two is a hundred forty one point seven that is less than one percent change but is about seven three thousand increase in twenty three against about a seventy eight thousand dollar increase but still listen one person change those changes begin with the regular salaries line item was authorized in twenty one was a little over four million request is four point one twenty two and four point one two five and twenty three. Personal services matching was authorized to one point three and twenty one four twenty two that's one point four again one point four and twenty three and this can be attributed to salary a match adjustments made in the current biennium our request to continue the next biennium. The next line item has a change is capital outlay A twenty one fifteen thousand is authorized but for the biennium the agency requested zero by line item that's because in capital expenses that occurred in the previous Bynum are ninety two for the next biennium so they don't need to carry that preparation for. Looking at funding sources at the bottom of the page retirement systems operate differently than traditional agencies the system assets are put into investments to produce revenue for the system and funds are drawn down as needed to pay benefits refunds and system administrative expenses the trust funds of the system that was a pain account so you'll see zero balance and fell matches the year's actual expenses. Page one seventy one is the state police retirement operations request this section provides for the administration that system it's supported by the state police retirement trust fund a snapshot of their financials they have three hundred and thirty seven point seven million in assets four hundred seventy working members with an average salary seventy three thousand that's for those in tier one and fifty three thousand for those in two two seven hundred and thirty five retired members with an average annual benefit of thirty nine thousand unfunded liabilities of the hundred eighteen point six billion with the projected health care to twenty years that puts their funded level at seventy four percent. They're funding from the best in income and invest in income employer contributions of twenty two percent of an employee's salary driver's license reinstatement fees card title fees in court fees and transfers from the insurance premium tax. Page one seventy two is there appropriation summary. In twenty one there authorized that thirty million twenty eighty five thousand there is no change level for the biennium. On page one seventy three is the Judiciary time operations request this section provides for the administration of that system it's supported by the judicial retirement trust fund the staff for their financials is they have two hundred sixty seven point three million in assets hundred forty working members with an average salary of a hundred sixty eight thousand a hundred forty nine retired numbers within averaging a benefit eighty nine thousand. They have unfunded liabilities of twenty three point eight million with a projected payoff creative thirteen years that puts her funded level at ninety four percent. They're funded from employer contributions at twelve percent salary employee contributions of six percent for those in here one in five percent for those in tier two and transfers and the state central services and constitutional officers fund. On page one seventy four is the preparation summary and there is no change level was authorizing twenty one is a point six billion the requested to move that forward. On page one seventy five is the first cash request this is the public employee retirement cash and this section allows payments by direct deposit it supported by a cash fund. Page one seventy six there is no change level with authorizing twenty one was eight hundred twenty five million requests in for for the biennium. On page one seventy seven is the state police retirement cash and again this request allows payments by direct deposit it's supported by cash fund. Page one seventy eight is there summary in twenty one there authorize it thirty two point five million there is no change the changeable for the total request however there is a reallocation among line items. Four twenty two twenty three the request movie one point five million from benefits not employee to re funds reimbursements and this is so that they can allow members to receive either a warrant or direct deposit on those refunds. On page one seventy nine is the judicial retirement cash requests and again is to make payments by direct deposit. On page one hundred eighty is there summary and similar to last request there is no change of overall but there is a reallocation of two hundred fifty thousand from benefits to re funds to allow to allow the members receive a warning direct deposit on those refunds. Manager that is the apers budget request. All right thank you a we do have we just a minute. All right there no questions. From the committee. Does anyone want to speak with the agency. All right seeing none do I have a motion for executive brick. All right to have a second okay all those in favor say aye all those opposed no. All right motion passes. Now we're going to do teacher retirement and we have an executive and we have a audit finding that was in the two is earlier and A someone that's a believer you coming up to do the okay eaves a state your name for the record please. Thank you madam chair. Don Morgan legislative audit field audit supervisor. Yeah agency had two findings. The first findings related to benefit over payments the ages Arkansas teacher retirement system discovered the benefits of two members had not been discontinued at the time of death resulting in over payments of three hundred six thousand and seventeen thousand respectively. The second finding relates to there's a member debtors records. We had four issues with these dental records. The first issue identified five thousand and eighty four eighty or us records it had not been updated with the date of birth. The second issue there were nine thousand three hundred thirty five member records with the default date of birth. The third issue. The date of birth information for twenty one records did not agree to information obtained from them for your records. And finally we had nine school districts that did not properly report twelve employees and a TRS covered positions as members of a T. R. S.. Madam chair that concludes the findings. All right Representative Cavenaugh you have a question. Yes madam chair over here to your left. this over payment at three hundred and six thousand dollars how many years they can continue to pay this. Of. They they found this the server payment the death was in and nineteen ninety five so if paid it until. Recently. Two thousand eighteen or something like that. yes ma'am. Thank you. I have a question of do we ask for the money back that was the. The overpayment yes ma'am the agency is in the process of trying to collect that they've sent out demand letters to the family or state and they have also these were out of state employees both of them and they have hired a law firm to. To file legal in some complaints in the legal process. All right. A is there anything you can tell us about the the findings in port see the agency response but is there anything of extra that we should know that would not be in the response on the overpayment this on the other payments or even the findings in general to the the findings down below. Most of those we have to audit the member data records because that's what the actuary uses to you know to do the pension liability to calculate pension liability they have to look at salaries age and all that and so of those like five thousand records we found that had the wrong date of birth. only forty one of those members were actually sent to the actuary because those are only those were the ones were vested not the majority of them were non vested like substitute teachers to then I working working full time. So it sounds like a lot but it's it's not as bad as it looks on their alright thank you I have some questions in the queue of Senator hammer you're recognized thank you madam chair I noticed that it says that successful recovery occurred at least one case. During the recent years of the of the two cases which one was that. my misreading that. I didn't think they had collected. Then the agency response agency response last line of what we were just handed out. Does not one of these two cases this just in one case in recent years they've had some other overpayments in previous years. Do you happen to know well. I don't see where that. Comment is reflected on the handout that was given to just you know that the. That three hundred six thousand. Is that one case but sell for Senate cumulative total of several cases that is one case okay so do you know how much over payments. In total say in the last year there have been or do we have a history about the total number of over payments I do not have I don't have that information agency may have that venture away for the agency please. Thank you all right the Representative Richmond. Thank you madam chair. On this over payment of three hundred six thousand dollars that that it appears that it occurred over several years I think you said that to this happened. And you're trying to reach somebody trying to recover that who who is actually trying to recover those funds. The agency is trying to recover those funds they have. They have hired a law firm in Tulsa Oklahoma. To and they have filed complaints. The track record of these funds do they know who was actually spending this money because I mean after you know I can understand that you know thirty seconds after somebody dies you might not know they're dead but you know fifteen years or so I think it's going to venture become evident that the family members that. Yes it's my understanding that the daughter did not notify the agency of the death. And does the agency have any options as far as pursuing any criminal. Action on this I would think so I don't and I don't know for sure okay unless the agency thank you very much the manager. Representative McCollum. Thanks thank you madam chair of here. A can we know the names of the following of the two school districts that didn't yes Sir they are listed in your and the findings of the table on the next page was forced missed school district Pulaski County special school district fair bill school district north little rock Bryant biz Markie Charleston Melbourne and will Thank you. All right of. By Representative Beck you're recognized. Thank you madam chair quick question of. All of its curiosity had after however many years it was house it discovered that. We were paying someone that had been passed away three years on I'm not sure how they found the three hundred six the seventeen thousand they found they were. A research. I want to say a I thank there's a third party research. The business was trying to show them new procedure they could use to find find this because they look at the health department know that. It is just a new. Procedure and they found it and uh shown in this so. A. All right thank you. There was someone on the queue that we. Knocked off the key so I have two names I have a vote Representative the. Cavenaugh and Representative wouldn't if you on the Q.. Just get back on the key and will recognize. Or a Representative Cavenaugh you're recognized thank you madam chair do you have any details on how all this retiree was when they actually passed away A do not. Because we don't have any that something like an estate to the okay thank you so much thereof all right and Representative will then we can go to the agency. Did the of right here on. Right here okay. Did the agency discover this or that day so are the general fund the agency did but it was to a new procedure yes. Further it have they have they have they discuss this with in the the prosecuting attorney or anyone else following up on represented regimens questions I do not know the answer that the. A seeking to a probably the I don't know if you have or not okay thank you madam chair thank you if you call the agency in. I'm sorry yes we we got kind of carried away here with all of the finding so Mr perish if you would. Thank you madam chair. On page one ninety two the menu one is the budget request for the teacher retirement system. Is agency administers the pension fund that provides survivor disability in age and service benefits for public school teachers and other school district employees. steps are their financials they have seventeen point six billion in market value seventy seven thousand working members with an average salary of thirty nine thousand fifty thousand retired members and survivors with an average annual benefit of twenty three thousand five hundred if unfunded liabilities of two point two billion with a projected pay off period of twenty years that that the map on the level of eighty percent. On page one ninety two shows the contracts awarded to minority owned businesses and employment summary and publications. On page one ninety three the department appropriation summary the system has to appropriation requests with eighty seven positions both sections have a changeable the total authorized budget in fiscal year twenty one is one point eight five billion this is to request one point eight nine billion in fiscal year twenty two that the two percent increase about forty five million dollars this is request one point nine four billion in fiscal year twenty three that's a five percent increase or about ninety five million dollars and the executive recommendation provides for this agency request the system is funded by investment income in contributions from employers that forty percent of an employee's salary and employees six percent of their salary and on the that the rates will increase annually and a quarter percent into the reach fifteen percent from players and seven percent for employees. On page one ninety four is a first request is for teacher retirement system operations this section provides for the administration system it's supported by the teacher retirement trust fund. On page one ninety five is the preparation summary. In fiscal twenty one two hundred forty seven point nine million was authorized for twenty two request is two hundred forty three point three million that that two percent decrease overall and in twenty three another two percent decrease at two hundred forty three point three million the changes begin to the regular salaries on item was authorized and twenty one four point forward the request is for four point seven to seven percent increase that carries over twenty three other four point seven request. The next one items personal personal services matching well as authorized in twenty one was one point four million three questions for one point five million in twenty two and in twenty three it's about a ten percent increase each year and this can be tricky to salary matching adjustments made in the current biennium that a request to continue into the next biennium. The next change level occurs when a discount buyout plan was authorizing twenty one was fifteen million three question twenty two for ten million a thirty three percent decrease in the same in twenty three is wasn't twenty two. the party explains that this is to better align the appropriation levels with actual expenditures. Looking at the funding sources chart this is similar to the other retirement agencies since the masses are put into investments and to produce revenue for the system and funds are drawn down as needed to pay benefits refunds and system administrative expenses the trust funds of the system act more as a paying account so you'll see a zero balance and funny matches years expenses expenses. On page one ninety six is there a cached requests this section allows payments by direct deposit and supported by their cash fund. On page one ninety seven is that a summary in fiscal year twenty one one point six billion was authorized for twenty two the request is one point six five six billion that the three percent increase and FOR twenty three to six percent increase at one point seven billion and the the the system explains this is to allow for annual increases in retirement. Manager that is the budget manual for the teacher's arm system all right of Senator hammer is this is your question for Mr Perisher for the agency. All right all right. This spring in the agency please. Hello four seasons for. The. If you would come to the table please and state your names for the record. Our. Thank you Mr. Yes Sir. thank you Clint road in Arkansas teacher retirement. All right. Coach Carter CFO Arkansas teacher retirement okay Senator hammer you're ready thank you Mr chair of. One of the questions is the on the audit finding there were over payments to that were mentioned one was three hundred six thousand and the other one was seventeen thousand can you update us on the recovery of that number one and then number two. In the last. On off last year two years if you pull off top your head what's the total amount of over payments outside of these two that have been paid out. So for the all star on your last the last questions forces summary of over the last couple years so these to represent them then the major Balkan that but I would want to add this year we've added we added one more to the list of individuals that we had found that we had over paid after they had deceased. That would have much better news than these two in the sense that the family members did not withdraw that money out of the bank account and we were able to recover that with no effort so and that was about twenty two thousand. So total with a give us about three three fifty or whatever. And that's the only three we know of at this time but I will add that we are actively researching a doing a really deep dive into our retirees and looking for these types of over payments particularly if the retirees are live outside of Arkansas. Okay and then the other thing I'd like you to give us an update on because what if five got my fax right I think it hit the fund like five percent the lawsuit involving the seven hundred and seventy four million dollar loss can you update us on that and how is that having the impact on the on the fund. Yes so currently there there was an investment that you know really took a hard hit in March when the markets the concern with the the final result of actually yes the divesting out of that investment and taking substantial loss loss of roughly seven hundred million dollars And that's part a lot of questions and a lot of A issues that ultimately resulted in us filing litigation. in regard to that matter Invest the current state of that I would want to go into a whole lot of details as far as the discovery and all that it this point but it is expected to be a multiple year process in order to go after that. On a recovery that. Thank you Mr chair. Of the Representative Richmond. Thank you madam chair concerning the the over payments No three hundred six thousand then the others on that that you right now you're as I understand you're in the process of trying to collect those over payments and and get that money back is that correct that is correct what about the referral to the prosecuting attorneys or anything like that is that is something that is being considered as well because. You know for that many years and they realize that the relative have passed on I do believe yes the very first thing the very first legal action we took was contacted the FBI. That was across state borders and the FBI has conducted at the or thorough investigation and that I mean if. Common knowledge of this I mean probably common knowledge but you know the FBI has declined to press charges and it's particularly due to an age issue but that is not stopping a TRS from continuing to actively pursue this a particularly in civil a civil remedy which we're trying to see some type of judgment against property make center and that that's for currently worked you know focused on. Okay and just a question about you know the retired teachers association whether or not do they ever provide any type of information to you guys about okay this particular member of our association is passed away or anything like that yes I mean a lot of particularly if a member if a retiree lives in Arkansas is which we receive information of you know a member that's the seized multiple ways and one of the reasons I one of the ways is the community actually contact the you know whether it to a fellow teacher from where they used to teach except or a family member and sometimes you know the retirement association So what we know what we determined in this analysis is really we need to focus on our out of state retirees I'm comfortable that the the multiple processes we have to learn of a river and an Arkansas retiree passing. Is is adequate but the out of state I do not think it is and that's what we've done We started a program to actually send out a benefit verification letter that has to be notarized and return back to the agency and what we're really focused on right now send those letters out of state retirees. we're in the middle of that process. we sent out about four thousand letters in July we got about an eighty eight percent response rate on that were were sent out a second batch for about four hundred or so and eventually that process will be and. In which we don't get a response they're benefit will be suspended. And that usually generates phone calls to the agency. And we were solemn one at a time until we have a list of suspended accounts that the. You know we we thoroughly research to try to see if there really is an actual deceased member that. Okay okay I don't know if you can tell me now but can you tell me the if the. This particular one that's the the three are six thousand. Where the where they happened to be living in Oklahoma yes okay the figures thank you very much. All right thank you A senator rice and then we're going to Representative gray after that. Thank you on the audit findings says agency used to default date of January first nineteen hundred and January first nineteen oh one when a member application was missing date of birth information there were nine thousand three hundred and thirty four member records with the fault. Date of birth. How do you have nine thousand. All birth date are insufficient birth date to how is this used in any actuarial. Diagnosis. Approved by your another word how does that not grabbed the lab built the up if if it's showing that top birthday of my. Our is it not used so are thank you for the question and and let me first of all the the biggest issue that often have found the second finding is that I feel like we did a poor job of separating our when I call I torment members from our active liability assessed members and. These nine thousand members predominantly these are dormant members these are members that you know when legislative audit ask for everybody that we did not have a date of death on that included everybody that had been refunded that help was not vested doesn't have a liability to the system. And essentially breaks down to like four hundred we have a total of like four hundred thousand records. Two hundred fifty thousand of those are dormant records but there's no actuarial liability whatever whatsoever to the. And these are really old old records all records of eighty or answer permanent records therefore for teacher from nineteen thirty seven are still in our system. And. That's the best but predominately what the six there was a few cases where we we identified a couple of hundred of these that I really work concerned with it ran entailed some old records. That a member still had some contributions on file you know fifty hundred dollars or so. And when that member actually does we owe that to the there are state. And this audit will help us identified a couple hundred people so it was really good to a do this exercise but like to save these numbers don't reflect the real problem it does not affect the actuarial valuation. Thank you for the information do you have a way moving forward for next time to to break that out for all the so the bill have that information yes absolutely that is a project that we have implemented this year so anytime that legislative audit ask for large and census data we're going to break it up into active or what I want to call non dormant members because active has a special term in our system so non dormant members means there's a liability to the system does should be really really. analyzed closely for data accuracy. The dormant records of the primary thing I would ask is that they wanted that record to make sure that we collect correctly classified in the storm thank you for the clarity thank you Mr. All right Representative gray. Thank you madam chair I'm up in the top row. And this is more just to a question probably something I should already know and on the appropriation summary it's you know you've got refund slash reimbursements can you explain to me what that actually is. So for download best refunds for For contributions that teachers pay into the system. most of our teachers are have to be contributory due to the nature of their of their job in our contract. But anytime eight a teacher of fully terminates from a terrace employer and does a plan to return back to work they're entitled to get a refund. So it's essentially the refund of the contributions day themselves paideia it's not a refund of the lawyer okay no benefits anyway it's just a refund of what they've already paid right and it actually forfeits all been future benefits that were hooked to those contributions so in it is a net gain to the system in the sense of liability because it relieves liability to the system okay thank you. All right Representative Tosh you're recognized for a question. Thank you madam chair I'm right here in front of the. Correct me if I'm wrong but it's my understanding that the teacher retirement system is the only system and apply here you making reference to binding deficiencies is fourth may be old for payments or I guess in some cases to not likely but even UNDERPAYMENTS that would probably be brought to your attention but it's my understanding of all the retirement system's here in this state that the teacher retirement system is the only system that has a clause in it that is called the No look back in other words if there's a if there's a discrepancy that is final and that the system cannot go back and correct that this is the scrapping discrepancy after five years is that true in and do we not need to address that problem I think I I did try to address that problem in twenty fifteen and we did to some degree but I still think you have the five year no look back is that correct in is that creating a problem for you that is correct that is the the five year look back at the statute of limitations of roughly five years that was implemented eight two thousand nine and two thousand eleven maybe There are exceptions to the five year look back to you know if you know if it's a particular agree just situation to a particular member there's always a member appeal process in which the board could actually resolved on a case by case basis but the general rule is we enforce a five year look back to make first you know material corrections to the record. Follow up madam chair and I understand that I understand what you're saying but you know and I know that over the course of a. Of the teachers of state thirty year career I mean. They do whatever motion about ever state employee does state trust the state they don't really look you know they they get a statement says that you've got ex number of years or whatever you got this in the retirement system but the when they really notice a problem or the our problem is discovered it is when they go when they go to retire when I get ready to retire nay and then they're told a you've got twenty nine years of service and the teachers thank in thank you know I've got thirty years and then that that air is is discovered what about their it's too late because the five year look back is already passed and even though it was no fault of the teachers all all or or even the school system it was just an error in the entry of the dad or whatever the mistake still exist right and there's no way to rectify that mistake based on that five year no look big back period would you agree with that so far out completely agree with it as far I mean I do agree with exactly with your statement as far as it's often it retirement when the rest of the member discovers these errors We do have a a manifest injustice process that we invoke from time to time in which we look at the specific case for that member and try to come up with a fair you know. If it's if ever the committee that decides it looks at something that says you know this is manifestly unfair if that gives is the ability to sidestep the five year look back and come up with a separate remedy. Last question is that something we need to work on would you. Something we need to address are you happy with the the way it's set up now all I'll be honest I'm not a hundred percent happy with the way it's set up right now it is and it is part of my legislative package for this upcoming year I'll be glad to visit with you to address the issue yes okay I don't think they would need to and you know I tried to do that and I wanna be obtained infirmity it yes Sir but it didn't cover the whole right whole you know everything that could occur under that system and I need to try to do something that thank you madam chair at the alright thank you ladies and gentleman we have three more people in the queue and we have a couple of other agencies so it's getting late A all right to next is Representative would. I have a question did you did you say the FBI had refused to prosecute. That is essentially the well yes do you do you know and I'll do you know who cast of checks who to who receive those payments yes we we know from the yes. Yeah refused to the one. They give you a reason it's after the fact there are alot of it whether they refused to do it officially comes down at the they did want to press charges against an eighty year old lady. Okay Senator send you with your mask what what did sorry it officially came down to that they didn't feel like that they wanted to prosecute an eighty year old lady. But that again I will add that does not stop doing remedy do we have any other remedy to get that three hundred sixty two three hundred thousand back with. Legally besides you know we're telling them and turning to a law enforcement agency or judicial agency right we currently have retained counsel in Oklahoma to represent HRS in trying to get this back to civil remedies you know we're trying to get in and a judgment but you know that will take a little bit of time to a to a chi there has to be assets in which to get a judgment against but we we are pursuing the three hundred six thousand aggressive with the way the prosecutor who ever did this. Have you explored that I mean we are eight state it still can help with the attorney general's office it's been reported to you know the attorney general's office as we require U. S. code the pursuant to burst prosecutor well the the first thing we're doing this the the civil remedy. Is it what we're currently percent. Three hundred six thousand and that part of the country that's a lot of money yes Sir it is. Okay pursue personnel for just a second you have a eighty seven the. Position seventy three fill fourteen vacant so those positions have been vacant for the past For two years. Well it. You know current all right currently our practice to have positions for various reasons you know as far as for two years for movement through. A lot a couple of the positions particular the higher positions are set as set there for succession planning. And you know we just went through leadership transition so those may actually be vacant for or wall until we see the the real need to try to bring other people up through the through the ranks That's my best explanation. Do you know what is causing. Carter Curtis says the numbers on the. Was costing you in and retirement and the. Salaries. Well as a anon feel position as is not A bill give you that the actual number of those thirteen nine we actually were up to seventy four field so just to give you know okay that's what the the thirteen nine field is a base salary of seven hundred and four thousand which is budgeted but not obviously not spent so. Other than the a. Insurance match coming which you know you pay rent which were there there's no there's no other calls it eighty thousand a year. I have to look I don't I don't remember the exact. Max on those but the somewhere between. But that would be the only costs associated with those. We're looking at the end okay we're not attempting actuarially affect anybody's retirement system or in if What we're looking for is exact budgeting. And and not having money allocated then maybe could be you somewhere else so this could evaluate those positions of fourteen a thank you the seven is amended by can for two years or longer. So the money could be of properly you know. Utilized eight you may need but I'm just asking you to look at thank you madam chair thanks Sir. Thank you a Representative Cavenaugh. Thank you madam chair over here to your left. Going back to the three hundred six thousand over payment you overpaid this for twenty three years. After twenty three years what made you catch. So a centrally we at any given time a terrace has about thirty members that are on the retirement pay roll that are over one hundred. Those members we start DO in deeper dives into the investigation Not I mean and all the cases of all the research of those thirty members you know we were able to prove that they were still alive this when it reached the point where we could not prove it and we eventually found a. An obscure reference to a cemetery marker on of a website called findagrave. And that's what led us to the bread crumbs to try to trace this into this a record that had never that you know this these records are still sent to our death on A database clearance company every single month and they come back and still alive but at a certain point we do we just keep doing more more research into and that's how we discovered this one part madam chair. Yes that was my question so how old was this person supposed to be when you found out. So I don't know exactly about a hundred ten I think and you know so up to that point that was the oldest member of the system and it it didn't mean that we didn't I mean we were looking every you know. Out of place and never did find a record we have lexis nexis lots of people search tools and it just kept coming up with no death records But I think at this point we have a member that is one hundred six years old which is confirmed still be alive so it's not out of the question but once we reach a certain point it gets to where. No answers still not good enough we just keep taken and that's how we eventually found this this record and then we in this particular case did where the benefits were paid did it get changed the two continue to go to the same address or was that address change of that bank account changed. It had at best I remember the aid that there'd been no recent changes it had been that way for a decade or so. Cell but I have to research it directly to get that answer okay thank you. Eight of Senator hammer. Thank you Mr chair back on the refunds and reimbursements that Representative gray was talk about Lago when you remembers do they get the benefits of the investment on the money that was placed with you say if they retire after four years or do they just get what they put in back there they get an interest rate and that interest rate has changed over the years but if it's not a direct tie to the investment returns it is a set in interest rate that we pay on top of the contributions it is certain window time that they have to do that in is it a set number of years or is it just before they reach of what is a twenty eight years before they going to drop right so so it is not I have a question for somebody to require you know even just a half of a year service and and have a fifty or sixty dollars for the contributions and you know like I say these are permanent record so I can hang on to that records active for could be twenty years and at any given time they can ask for a refund and in the course of that member at when a member actually ties I think statutorily we have five years in which to locate the state in which to pay that out. And that starts the process that eventually it'll be forfeited if we can't find the appropriate person to pay it out to. A. Okay then. I guess we're account would where I'm going with that is an I know in the year that were in and some of the teachers that have got my ear you know this may be their last year and I'm not sure they're all going to be hit the retirement so are you making any calculations or I know it's kind of a tricky question but because you're you're reimbursements may go up so with the appropriation level you have you feel that's that's good enough at this time I do center you know I I've gotten the question about I mean literally every single week this summer trying to get projections of increased retirement service center with teachers there is a lot of. Talk in conversation around that as I'm sure you're aware but overall our retirement serve really been a average or kind of below average for the last three years so we're not currently see in it but that is why we have these extra path and our budget because at any given time there's eight thousand retired eight thousand teachers that are eligible for retirement or is normally we only have about two thousand a year retire so. I think the path that we have in there are sufficient is the ultimate answer all right then lasting would you give me an explanation what the discount buyout plan is. Okay we know the skis me we know very sasine. Okay so the the discount cash buyout plan is what we call our cash program it is essentially the same refund process that you're talking about except what you've been inactive for over a year it's an enhanced incentive to get a refund you know if you're not going to use the benefit we pay roughly a third of what the liability issue that the member has to the system. So it's a win win you know if if the member needs the cash they can get the cash and the it frees up liability for the system are thank you the amendment thank you all right the ladies and gentleman there no other questions up we will dismiss the three to issue and the we will then go forward with the a motion so if you wouldn't mind just going out in the lobby. Thank you. Ladies and gentleman you have heard the questions in the explanations of. I need a motion for the executive wreck not have a motion to have a second okay all those in favor say aye. All those opposed motion passes we're going down to disability determination. And missus walls will present. Thank you madam chair and the disability determination FOR the Social Security Administration is in manual one on page eighteen so to the friends of where you've been looking for the last little while and and it's levels in the legislative fiscal analyst for the bureau of legislative research disability determination process Security administration is responsible for the determining the eligibility of our Kansans for disability and other payments in accordance with federal so securities laws they have one appropriation of approximately fifty three million dollars that is one hundred percent federally funded and four hundred and twenty nine authorized physicians. If you will turn to page twenty one. A it shows the appropriation summary for their operations appropriation which is their only appropriation the total if they currently have is a little over fifty three million dollars and in fiscal years twenty two and twenty three they're requesting and nine point five million dollars and nine point five million dollar increase to sixty two point five million dollars and that includes a an increase of seven point one million for regular salaries two point two million for personal services matching and hundred fifty thousand for capital outlay. And the agency says that these increases are for the cost of an additional ninety two positions that they requested to be restored during the next biennium they ask for them is part of personnel in July of this year and they're requesting that they could be continued in subsequent fiscal years and the executive provides for the agency request and then this concludes my presentation and I'll be happy to answer any questions all right to senator rice. Thank you The. Agency continues to do of additional states work for the federal government and federal government pays far is any that changer to same states before the change occasionally I'm I'm not certain how to ask the agency I'm sure that they have a debt listing of who their do they are still doing other states and as far as I know yes thank you hi would you like for us to bring in million of. He doesn't care about his wanted to that ladies and German so I see no other questions of I need a motion for executive brick all right and second all right all those in favor say aye all those opposed no all right the motion passes now our last agent okay Hannah night will be presenting and we will see him from the Election Commission. You're recognized thank you madam chair hand the night bureau of legislative research. The board of election commissioners budget request can be found in your manual starting on page twenty two. The election commissioners mission is to provide reimbursement to the counties for state funded election expenses while ensuring fair and orderly election procedures. The department appropriations summary can be found on page twenty four. The board has a total of three appropriations agency request an executive recommendation is about eight point five million each year. Funding for the board consists of existing fund balances general revenue and judicial in prosecuting attorney's filing fees. The first appropriation is the nonpartisan general elections appropriation and can be found on page twenty six in your manual. This appropriation is funded from judicial in prosecuting attorneys filings fees the agency request a continuation of the fiscal year twenty one authorized appropriation and the amount of one point six million dollars each year to cover expenses of the board and local County Board of election commissioners to conduct state supported elections the executive recommendation provides for the agency requests they're interchangeable. The second appropriation is their operations appropriation and can be found on page twenty eight. This appropriation is funded by general revenue through the miscellaneous agencies fund. The agency requests and executive recommendation for fiscal year twenty two and fiscal year twenty three is a little over six hundred and forty seven thousand dollars this is due to salary and matching adjustments made in the current biennium which the agency has requested to continue into the next biennium. The agency is also requesting to reallocate two thousand dollars from their operating expenses line item to their conference and travel line item. The agency states this is to accommodate the additional expense related to the two attorneys requiring continuing education and to allow more than one staff member to attend the national election director's conference each year. The third and final appropriation is the election expenses appropriation and can be found on page thirty. This appropriation provides reimbursement to the counties for the expenses of state supported elections this appropriation is funded by general revenue to the miscellaneous agencies fund. The agency in executive recommendation is six point three four million each year which is a continuation of the fiscal year twenty one authorized there are no changes levels this concludes my presentation madam chair. Right thank you there no questions on the queue does anyone have any before we a. Take a motion. All right I have a motion for executive Rick have a second all those in favor say aye. All those opposed the motion passes I have one thing I I just want to remind you that we meet tomorrow morning at nine but that we only go to the lunch hour it's not we don't have an afternoon session so with that. and everyone clean your trash up please though use definite transient in chemistry your desk thank you so much meeting adjourned.