Legislative Joint Auditing

In folks members thank you for being here today we're gonna get started. Fair by have their seats. Let's go. Folks thank you all for being here today. Ah members for I get started i'd like to introduce a german from centre cotton's office. Cameron. Bandy camera horror you better right back here just every he'll probably come around talk to you and try to get your phone number today good man. Here's grandfather was my baseball coach when I was growing up and I worked for him for about seven years before I went in the army in believe cameras covered the same cloth. The. With that i'm going to call us to order. First order of business is adoption of minutes of the august eleventh meeting. Is there any discussion seeing that do I have a motion I have emotion to have a second. On a favor in his past. Yeah. Next one is the adoption reports of the executive and standing committees. The executive committee. And I will take care of that one. We met thursdays september the seventh. Staff report to the committee the audit special investigative session in the shortest report scheduled to present it to the standing committees and the four legislative audit committee this morning in new business. The committee approved emotion from the standing committee or counties and this part is for staff to form perform certain procedures relating to the city of augusta with no additional business to discuss the mini was adjourned. The next meeting of this committee is scheduled for thursday october twelfth. Twenty twenty three and I move for adoption of this report do I have a second I have a second on a favor it has passed. The. The. Adam d. I'm i'm sorry. Paragraph two of the sea standard committee on county administrative representative john iraq. Earth thank you as chairman community bet yesterday and adopted minutes of the meeting here on october august tiers twenty twenty three the greatest also approved a request from the town of full to repay two hundred dollars each month rather than ten percent of general revenues as require bark so code annotated twenty seven seventy two or seven for money's old from the general fine to the street fine the committee reviews seven deferred reports in a hundred and seven current reports a facility from four energies for president to address repeat values our seven of the previously deferred reports for foul of the one hundred and seven current reports reviewed one referred to the governmental bonding board and I were referred to prosecutor attorneys and the attorney general. The commercial ninety three current reports and deferred fourteen so their officials can provide adequate responses to find his art our team the october made into address unresolved findings the committee voted to invite the current goal myer and city council to discuss their plan to improve city financial records emotion was passed authorized the committee chairs at their discretion to invite the mayors and city council members of four cities obtaining private audits to attend a future committee meeting and explain the lack of timely out is mister chairman a move for adoption. Members are have a motion do I have a second I have second all in favor then has passed. Moving on to standing committee on educational institutions soon to sell them thank you mister chair. The committee reviewed sixteen auto reports consisting of school districts and higher education reports for the physical year ending june thirtieth twenty twenty two. Representatives and the four city school district were present and answered questions from the committee or related to the findings in their auto report. The auto reports of the center point school district and he were spring's district were referred to the applicable prosecuting attorney. The committee filed fifteen current auto reports and one deferred auto report that were brought before it mister chairman I moved for the adoption of this report. In members I have a motion do I have a second I have a second all in favor. Yeah. Any opposed. It is passed. Moving on to state agencies senator brian thank you mister seven reports were on the committee's agenda yesterday one different report and three current reports with findings were presented the arguments all pbs had several issues related to procurement bidding and contracts in addition personnel time charge to grants from department education were not property reconciled to asis or properly supported the department education had a theft of property student dental loan forgiveness without requirements being met and documented disbursements to two teachers and education programs and receipts not timely deposited that stretcher the statehead for two fraudulent warrants that were not returned to the bank in the timely manner manner resulting in a loss to the state various agency staff members were present to report on how the agencies intend to address these audit findings and answer committee questions during the meeting the committee filed five of these reports the pbs and department of education reports were referred to the october meeting in order for committee members to ask additional questions mister chier I moved it after report. Members I have a motion to adopt the second I have a second all in favor in the opposed it is passed. The. Members moving on to adam d review of reports. The. We're talking again about. The last account he saw it waste in a believe mister douglas sir you here would you come on down. Thank you miss dentons were being here today and if you would please introduce yourself again. Thank you miss chairman craig douglas director of the county regional solid waste management district thank you sir appreciate you been here. The. Insurance will head with your presentation. Thank you mister chairman I report on the plastic county regional solid waste management district where the presented at last month's meeting and the committee deferred it until the day for further discussion. Just remind every one of our findings over about a five and a half year period the district paid three hundred and fifty five thousand five ninety seven to a contractor and a company owned by the contractor without obtaining beers are executing contracts the contractors currently wizz over paid two thousand eight hundred and eighty dollars for a duplicate services. The district director received seven hundred dollars and improper reimbursements and the district made contributions to sixty three thousand six forty five to charities and other organizations. And the district purchase two paintings for fifteen thousand forty six dollars in subsequently donated those paintings to the little rock convention and best for to bury and we question whether those expenditures met the purpose of silent waste management districts. Provided in arkansas code and whether they complied with the public purpose doctrine. And our report was forwarded to the six judicial district prosecuting attorney and the attorney general. The. At last month's meeting the committee asked the director to provide certain documentation that it shown on the slide and the documentation with smider standing with email to the committee members and it should also be in your package today. And mischeer the. District greater mister craig douglas is here to answer committee questions. The cheer recognizes senator hammer. Like him a shared good morning thanks for being here up to your far left over here i'm looking at your response it was provided to us and I want to ask you a couple of questions about it thanks for listing out where all the expenses went and also some of the explanation for why you chose to spend the money where you did the says will be recommended only after all recycling all of the recycling responsibility in programs are funded do you anticipate that you'll have the cash revenue to be able to continue to make donations such as what have already been made because you would have that kind of a surplus to do so no sir we don't anticipate in our next fiscal year budget to have excess phones we will have as our budget that was approved by our board will probably have an additional two hundred and fifty dollars at the end of the fiscal year plus we reduced our budget for the fiscal year by a hundred and thirty seven thousand dollars okay and the reason for the reduction was why I just savings that we have incurred with of through a salaries and through other programs we've consolidated with the county okay and then the last question it goes on says further board approved special projects and programs will be funded from administration revenue. The process and the policies by which the board will determine what special projects and programs yet awarded and which ones do not can you speak to that and give us an idea what the what those processes and what the policies are well weird we fully anticipate the that the board will want to continue to support those organizations throughout the county that engage in recycling education information and also community cleanups and pickups for instances was not it in my response such things as. Keep keep literacy beautiful keep sure would beautiful commissions those those types of things that do work in there commute in their neighborhoods and communities on a regular basis but those would all be presented to the board and approved and would based on legislative audit recommendations they would all have contracts before those no nations were made if the board approved and then having heard the conversations in here in the previous and just some of the things made sense then if you had it to do over again what there have been some that you had made donations too before that you would not interest paid making donations in the future because they go outside the scope of what you just stated as some of the donations that were made in seventeen eighteen and nineteen things such as kuwanis club the dun did not have a direct recycling impact I certainly think we would probably not make those donations in the future okay thank you thank you sure thank you thank you sir. Members are there any other questions. See now mission don't thank you for being here. Yeah. Members were now gonna. Take a special report on the arkansas state and public school employees health benefits mister danny lee. Are you here i'm sorry apologize. Yeah. Thank you mister. Argument code requires legislative audit to conduct an annual review of the employee benefits division ebd and the performance but the health and benefit plans the primary objective of this report was to analyze the fund balances for both the state and public school employee health and benefit plants at june thirtieth two thousand twenty two this year's report contains no findings. Administers the health and benefit plans for both the state and public school employees. Benefits are provided to self funding I met about which the state takes in contributions from both employee and the employer. Separate funds are set up for each plan to pay the health and pharmacy claims in the service reservoirs to prevent dramatic rating creases for. This exhibit which is found on page two of the report. Shows the planet roman for both subscribers in members for each plan. The term subscribers refers to both employees and retirees who are enrolled in the plants while the term members refer to subscribers and their qualifying dependents who are enrolled in the plans as detailed in this exhibit from fiscal year twenty one to twenty two the number of subscribers decreased by seven hundred and fifty for the ac plan and increased by eight hundred and forty one for the pse plan creating a net increase of ninety one for both plants. The. The first plan discussed is the arkansas state employee or a plan. As shown in the exhibit on the slide and on page three of the report. The ac plan had over three hundred and forty three million and fun revenue for fiscal year twenty two. State contributions provide a fifty nine percent of the total revenue. Subscriber monthly premiums made up thirty three percent while other revenues accounted for eight percent. Other revenues include performance guarantees penalties investment income pharmacy rebates medicare part d subsidies and figure savings. Schedule three on page thirteen other port and on the slide shows how the ac fun balance was affected throughout the year. The state contributed over two hundred and two million and subscribers paid over a hundred and fourteen million in monthly premiums. The reimbursement of claims expense the manner to over two hundred and fifteen million to the health care providers and a hundred million for pharmacy claims administrative cost to the plan were almost twenty million. Subscribers paid in additional thirty six million to health care providers and eighteen million to pharmacies for copays. Co insurance and deductibles. This information is also provided and exhibit three on page for. Exhibit four which is provided on this slide and on page for the report shows the total changes and claims in administrative cost as well as premiums in other revenues for the ac planned for the past five years. The increase in revenue was primarily due to additional legislative funding through employer premium contributions as well as subscriber increases. The. As shown and exhibit five on page five and on the slide. The acon balance increased to thirty eight point seven million at the end of the fiscal year. The phone had a declining rate of seventy two point eight percent in fiscal year twenty one. Compared to the hundred and seventeen point nine percent growth rate in fiscal you're twenty two. The funds growth was primarily the result plan revenues exceeding expenditures about seven point seven million. A two point two million decrease in the actuarial avianar or occurred but not reported claims. And accounting adjustments. Schedule for on page fourteen shows a health informacy claims about plan type. Shown on the slide is the portion of the schedule related to the ac plan. For fiscal year twenty two health and pharmacy claims. Paid from the phone totaled over two hundred fifteen million and a hundred million respectively. Factors contributing to increases from the previous fiscal year included the rebound of elective care postponed into cover nineteen and an increase of two point five million in claims over two hundred fifty thousand dollars. The next few slides will contain information regarding the public school employee plan or pse. The exhibit on the slide and on page six of the report shows that the pc perhaps had almost four hundred forty million in phone revenue for fiscal year twenty two legislative phoning provided thirty seven percent of the total. Contributions from school districts and matter to twenty five percent. Subscriber monthly premiums made up thirty three percent and other revenues delivered five percent. Other revenues include performance guarantees penalties investment income pharmacy rebates and ficatax savings. The. Schedule far on page fifteen of the report and on the slide shows how the psy fund balance was affected throughout the year. The state contributed just over a hundred and sixty three million. Premiums from school districts provided over a hundred nine million and subscribers paid over a hundred and forty six million in monthly premiums. The reimbursement of claims expense a manner to over two hundred and eighty seven million to health care providers and seventy nine million performance he claims administrative costs slightly exceeded thirty two million. Subscribers also paid an additional eighty three million to health care providers and twenty four million to pharmacies for cobas co insurance and deductibles. This information is also provided in exhibit seven on page seven. Exhibit eight which is provided on page eight of the report and on the slot shows the changes and claims in administrative cost as well as premiums and other revenues for the pse paper plan for the past five. As shown an exhibit none on page eight and on the slide the pse fund balance increase to almost a hundred and thirty four million at the end of the fiscal year. The fund had a growth rate of fifty six point two percent. In twenty two compared to the twenty eight point six declining rate in fiscal you're twenty one. The phone to growth rate was primarily due to the fifty five million in additional legislative finding and increases and subscriber premiums. Shown on this line is a pc portion of scheduled for on page fourteen of the report. For the current fiscal year health and pharmacy claims. Paid from the phone total two hundred and eighty seven million and almost seventy nine million respectively. Factors contributing to increases from the previous fiscal year included in increase of over thirteen hundred covered members and the rebound of elective care postpone due to cover ni. Schedule on page sixteen provided list of the individual health claims exceeding two hundred fifty thousand. You're in the fiscal year twenty two for both plans. The ac plan had twenty two members with claims totally twelve point one million approximately three million more than the prior this will you. The piece the pse plan had twenty members with claims totally seven point two million a decrease of approximately three million from fiscal year twenty one. We tested these claims for accuracy and time when it's an eligibility covered procedures payment amounts in case management services and noted no material discrepancies. We also reviewed the twelve members of the ac plan and eighteen members of the p as he planned with cumulative claims exceeding five hundred thousand we tested these claims for accuracy and timelines of case management services and noted no discrepancies. And what and twenty two the cumulative health and pharmacy claims exceeding five hundred thousand. Totaled twenty eight million a decrease of five point six million from fiscal year twenty one. Entered into various contracts with outside vendors to assist in providing insurance benefits for planned participants scheduled seven on page seventeen of the report and on the slide shows administrative costs by vendor and a brief description of the services provided. Yeah. Administrative costs totaled almost twenty million for a participants and over thirty two million for PAC participants. The. Schedule to. On page twelve of the report provides a monthly premiums for each plan available to subscribers shown on the slot is the portion of the schedule related to the ac plan. The. Subscriber premium contributions told a hundred and fourteen point seven million and increase of nine point seven million from the previous year. Monthly active in retiree contributions increase five percent for twenty two planet. Wellness program participants experience a twenty five dollars reduction in the wellness discount from fifty dollars to twenty five dollars per month. The net effect that the premium increase and the willness discount reduction. Was an increase in subscribers out of pocket monthly premium payments ranging from nine percent to forty nine percent. For plan year twenty two. Additionally there was a two percent decrease in the number of participating subscribers along with a slight shift in active subscribers from the premium plan to the classic and basic plans. This lied contains a portion of schedule to that shows the premiums for the pse plan. Subscriber premium contributions total hundred and forty six point seven million. A thirteen point three million increase from the previous year. Premium contributions total four hundred nineteen million for fiscal year twenty two and that increase a seventy two million from the prior year. The increase was primarily do to twenty million in additional legislative funding from act one fifty four of twenty two. And thirty five million in restricted reserve funding. Additionally other increases were due to eight hundred forty one new subscribers joining the plan primarily retiree subscribers join the medicare employee only plan while a number of active subscribers enrolled in the premium plan dropped and the number enrolled in the classic in basic employee only plans slightly increased. As disclosed on page nine of the report. Ebd has contracted with two new entities to provide benefits to members. Effective january first two thousand twenty three ebid began providing an additional coverage option for medicare eligible retarians through united health care under its are benefits group medicare advantage plan or mapda. Additionally ebd contracted with nebadis. Hell solutions for pharmacy benefits management effective july first two thousand twenty three. It is anticipated that these changes will create savings to the site. However the amount of these savings is unknown at this time. This concludes my presentation agent agency representatives are here to answer committee questions. Yeah. Members are there any questions. And senator hammer you are recognizer thank you mister chairman i'm one of purchased a staff first but maybe we can get somebody represented from the agencies to the table of staff can answer they'd be okay. Yes sir. Show a few and i'm just trying to interpret the report and if i'm misinterpreting it police straight me out if you took the fifty five million out of the equation that was put into the plan to help sustain it would the plan have been on a pattern. Two show. Savings. Through what we're already in place at that time by. By increased participation or the other two three things that I heard mentioned in the report. They may be there so question for the agency but i'll defer to the chair. It's good. Okay we're going to call the staff up that thank you. Mr wallace are you here. Great walls. Mr johnson. Yeah. If you're great identified sister yeah great while this director of employee benefits division. And forgive me a joined as director of this february so i'm gonna have to reach back to a little bit of my historical knowledge of serving and the treasure's office and the statement of finance when we were reviewing some of this information and I think if I understand your question correctly sir I there would not have been there would have continued to be a deficit without the increase additional funding provided by the state at that time the trajectory that ebd was in would have continued to operate in a in a deficit so it needed those additional influx of resources plus the changes that were made of from the seagle recommendations with a new medicare advantage plan and the pharmacy benefit manager change. The. The number the number of participants. That have opted. Out of the medicare plan for the retirees. Are you what are the trends right now do you know or I know we got enrollment coming up or too early to say well the trends that i've experienced so far it's staying about fifty fifty at anything that's a big approximation I am hopeful through open enrollment in the education campaigns and awareness that we're going to roll out that we can see that trend better towards the medicare advantage plan but right now it's staying between that you know sixteen thousand fourteen thousand kind of split if I look at the raw numbers. And watch the fund balance as of today. I would have to get back to you on those numbers I know we are sitting at healthy reserves for both AC m PSE PSE has a greater reserve it's probably turning more at a fifty something percent reserve and assist is trending at something around a thirty something present percent reserve but the exact wall numbers i'll have to follow up with you on that later okay so those reserves were they trending upward. So if we put in the medicare change in january and i'm i'm not sure about the statement about the contract based on other things were said in other meetings. That said that july first twenty three the contract was in place with navigators but based on comments made another committee meetings i'm not sure that's an accurate statement and i'd like you clear that up if you would but if if the phone was increasing towards a healthy balance the only thing that would have been in place prior to july first would have been the change that we made two the year to the medicare option is that right wrong where what am I missing no that's correct but there were other financial initiatives that were going on with premium premium changes and there is been a five year plan we're in year two of it to really realize those reserves control spending and really reassessed kind of the influence and outflows that's all feeding into the reserve balances that were sitting on right now and that I inherited as far as the to go to the navigators agreement there is an agreement in place the rfp baffle were awarded those essentially are the existing governing documents and contract that we are operating in that went into effect in july first of this year that is the normal alc review process that went through ebd oversight committee over there that's the normal procurement contracting process that is that is in place and that was followed with the navigators agreement with share let get back in huge you don't know yields other members but i'd like to get back in q. Representative mix you record that yeah i'm some kind of follow up on the senator hammer's question so the phone balancing you know on all these were were trending down we put in that extra reserve which which boosted it up kind of looking at our congratulations on a clean audit by the way let me start with that definitely needs to be it's very nice to clean it that definitely needs to be acknowledged we appreciate your work on that so back to my question so we've seen these are verb balances were going down we've added that up going into the future do we see you know we've bumped it up it's going to continue to go back that decline every get to place where we're going to stabilize with these new programs or what at what are we seeing going into the future so some of the legislative initiatives that have been passed recently have set target reserve rates for ebd it's sixteen and fourteen percent for ASC and PSC we my goal would not to be close to that I want to make sure that we we stay healthy above those target rates but yes it's gonna even flow as we see claim experience you know some years there might be quite frankly more pregnancies or something that drive more costs to the medical claims that we pay out I would also see an ebb and flow when we come and we get more individuals in the mean the medicare advantage plan and on that what that does is it takes our outstanding liabilities that are attributed to our plan in shifts them over to united health care so we alleviate that liability on our plan which then does go and help our reserve balances at the end of the day so you're expectation is over time we should see a a flat flat lining of it instead of that continual decline right I would like to get a very predictable flat line on the reserves which then would increase a very predictable premium proposal and a predictive. Predictable request when we come to the legislature on this five year initiative that we're working with right now the goal at the end of the five years would would be able to sit there and say our actuaries are coming in saying that there's a six percent medical increase that the plan is going to experience of the year so we would come to the legislature and say we need that six percent we would come to our members and premiums we would need that six percent it becomes a very predictable manageable number that way you're not having these shot numbers of oh we've got to have an influx of fifty some million dollars to sustain the plan we get something very healthy very predictable and very manageable for the taxpayers and the members are some thank you thank you mister. And sent to hammer you recognize your like you are looking at the report on page eight it's exhibit eight and it covers the years twenty eighteen through twenty twenty two between years twenty twenty one and twenty twenty two it shows a claims in administrative cost or leveling out what the premiums and other revenues. Are they had a pretty steep incline. The is any account members any that attributed to the fifty five million dollars that we put in or is this just through a management of the plan that we see that the claims were leveling off but premiums and other revenues should if I would interpret your right you correct me from wrong would be contributing to the growth in the reserve. You are correct though it would be a mix of the increase of state funding they increase in premiums increase in additional revenues that were becoming all of that would would be attributing to that that growth do you member what occurred between twenty one and twenty two. That. What I would interpret is our money out and our money in the county in the direction that we wanted it to be the money in there was a substantial influx from state additional state revenue that was provided by the legislature at that time to shore up the reserves and the balances of that in in my summation probably would be the greatest increase in where the revenues came during that time period so wasn't from the. Management of the plan it was from the influx of the money I would think that there were some initiatives on the management i'm just not familiar with those because I was not in depth on what those levers would have been done at that time okay and that I guess my last question do you see anything or if you read anything in this report that you disagree with as in your position respectful of they got it the job that they do which we all have great respect but is there anything in here that you would like to point out that you do not feel that maybe it's a complete picture we ought to know some some additional information on not at this time I don't feel like I would be equipped to to challenge it I don't have enough historical information to operate on to to challenge any of the anything that has been mentioned in here okay thank you thank me. Members are there any other questions here nob miss norman has come in yes thank you mister chair i've just like to say that this is a report that we do every every year and in the future if there are items that you all feel like or areas that we need to look at if you get with staff on the front end those are items that we can put in the report and hopefully provide that's what we're here for is is free on the serve you and make sure that you're getting the information that you need to make good policy decisions so if you have ideas we'd appreciate you getting with us and visiting with us. Thank you sir. Members are there any other questions. The. See known this adam has been reviewed. Moving out of the business will meet again the twelfth of october and the thirtieth of october twenty twenty three members are there any new business and they would like to address. Seeing none we are adjourned.