Legislative Joint Auditing-Counties and Municipalities
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Order. Thank everybody for being here today. We'll get right to work. And first item on the agenda is an adoption of the minutes from the February 12th meeting. Do I have a motion? A second. All in favor say aye. Minutes are approved. Move on to item C on the agenda.
We'll get an update on the private reports from the water and sewer systems. Thank you, Mr.
Speaker 5
0:29
Chair. A quick update on the Delinquent December 31st, 2022 water and sewer reports.
We started out with 43 back in July, and we have received a full compliance of 21 of those 43, and reinstatement letters have been sent to the Treasurer's State, and their turnback has been reinstated. That is up three from the prior meeting. We picked up Bearden, New Door, and Plumberville from the last meeting. That completes my report, Mr. Chair. Any questions from the committee on this report?
That was just an update, so we don't need any vote on that. So we'll go ahead and move to items E
Speaker 5
1:18
and F on the agenda. We've got D, the 23 report. Oh, I'm sorry. I'm sorry. I missed that. Go ahead. Item D. Report update on the delinquent December 31st, 2023 water and sewer reports. Back in July, we started out with 64 cities that were delinquent with their water and sewer reports for over 18 months. We are now down, your handout says five, but we actually received Marvel's 2023 report yesterday, so we're down to four.
So 60 of the 64 is in good standing now. That completes my report, Mr. Chair. Mr. Committee, do you have
any questions on this report? Seeing none, we will move
Speaker 5
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on to item E. We were scheduled to have a discussion on noncompliance for municipal accounting code for the city of Fargo, which, with the chair's permission, would go ahead and present their report on pages 1 and 2.
But the mayor called, and he would request that we defer that report. He had a medical issue showing up today. Staff recommends we defer. So moved. Second. We
have a motion and a second to defer this to the June
4th meeting. All in favor say aye. Aye. All opposed? Motion
Speaker 5
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carries. The report will be deferred to June 4th. Item F. Discussion on noncompliance with 27.7207, which is misuse of street funds.
The city of Jericho was granted a payment agreement less than 10% allowed by the law back in February of 24. We did the 24 engagement, and they only paid 67% of the required amount. Jericho also called and said the court of treasurer is a schoolteacher, and she requested that we defer this until June to allow her to be here to discuss this. The staff recommends we defer.
Motion to second. All in favor, say aye. Aye. Any opposed? Motion approved. This will be deferred to the June
4th meeting. Okay, let's move on to item G, review of the reports. Thank you, Mr. Chair.
Speaker 5
3:40
We had 20 reports deferred from the previous meeting. We're going to go a tad bit out of order. We're going to jump to number two on the list, town of Biggers on page one. The mayor called, and he's a paramedic, and his work schedule
didn't allow him to be here today, so he requested that we defer. Staff would like to make one note that their one finding is that they're on the delinquent 2022 water and sewer list, and he is requested to defer to August of 26, which is his summer. That will push him past the deadline to be able to recoup his turn back that's being escrowed. But staff does, at his request, staff recommends we defer. Representative Layman has a motion.
Representative Carol Dalby
Unverified
4:31
I have a question. Yes, ma'am. Yes, you're recognized. Did y'all explain to him what that's going to do to his turn back, and he's still
Speaker 5
4:47
good with that and understands the ramifications? Okay, thank you. We'll do it again in June, that was just his request. Okay. So, Rep. Vladyman has made a motion to defer
this. Second. Rep. Vladyman, you second? Yes. Okay. All in favor, say aye.
Aye. Any opposed? Motion carries. We'll defer this to the June meeting. Yes. continuing on
Speaker 5
5:11
page two and three with the third report of the city of holly grove 2024 treasurer ruthie foster was requested to be here today she also requested that we defer to the june meeting staff recommends we defer second motion second all in favor
say aye any opposed motion carries this will be deferred to the june meeting
Speaker 5
5:34
excuse me pages three and five we have the city of strong 2023 and 22. we presented this report in the february meeting and the mayor howe was present but he was requested to come back to give an update so we'll go ahead and present this report again and then allow him to give his update on page three under the mayor receipts primarily from the sale of garbage bags stolen almost 12 thousand dollars were not deposited from january 1 of 22 through december 31st to 25. due to
multiple employees having access to the funds and a lack of proper control we were unable to determine the custodial custodian of undeposited funds the city utilizes solid waste funds to pay monthly dumpster rental fees on behalf of five private businesses in apparent conflict arkansas constitution October 12. Additionally, the city bills these businesses through the Water Department. However, it does not appear the Water Department transferred the payments received to the Solid Waste Fund.
This is a repeat finding. The city made the following payments totaling over $2,600 in apparent conflict with the Arkansas Constitution. $2,100 for food-related purchases that did not have a business purpose, $500 to the Gardner Alumni Association. This is a repeat finding. On page 4, the city was in noncompliance with accounting procedures for municipalities set forth in state law and other accounting procedures as follows.
Bank reconciliations contained errors and were not approved by someone other than the preparer. Pre-numbered receipts were not issued for all funds received. Cash receipts were not always properly posted or classified. Adequate sporting documentation was not maintained for all disbursements. The fixed asset list was established; however, it did not include all additions, deletions, and control totals contained errors. This is a repeat finding. Payroll taxes were not always paid to the IRS by the due date.
This resulted in penalties and interest of over $500 to the IRS. In addition, $2,700 in penalties and interest related to 2020 and '19 payroll tax deposits were paid to the IRS in '22. This is a repeat finding. restricted funds were deposited in the wrong accounts. Although Schedule 1 and 3 show cash balances of $158,000 and over $65,000 in the general fund for $23,000 and $22,000 respectively, the general fund owed the solid waste fund $168,000 and $157,000 as of December 31st of the same year.
As shown in Note 5 of Schedule 5, when the outstanding amounts were considered, the general fund had deficit fund balance of over ten thousand dollars and over ninety two thousand dollars as of december 31st of 23 and 22 respectively additionally thirty six hundred dollars due to the street fund from the solid waste fund as of december 31st 2022 excuse me 23. subsequently subsequent to the report date the amount due to the street fund has been completely repaid. This was a repeat finding as well. On page 5, street fund expenditures exceeded
appropriations in 2022 by $50,000 or 71% in non-compliance of code. This is a repeat finding. The governing body did not review the prior report and accompanying comments at the first regularly scheduled meeting following the receipt of the report in non-compliance of code. This is repeat binding. We have Mayor Howell here today to answer questions. Mayor Howell, if you'll approach the end
of the table. Recognize yourself for the record and you're welcome to present your
Speaker 39
9:25
response. Darryl Howell, Mayor, City of Strong. Just starting with those initial, can y'all hear me? Okay. On the garbage bags, we have those undeposited funds. We have created internal control forms that states where those persons receiving those payments, and then once they receive those payments, then that form, then they transfer, sign off on those receipts or payments to the person who will actually be making the deposits, and then they'll actually sign that over to the third person to verify
the amount to be deposited and then we have implement a person to actually place those in lock bags and then to be deposited at the bank. So we feel with those internal control forms, we have been doing that for the last couple of months and we've monitored that and then we're also following up with the bank deposits to make sure that those sheets match the actual bank deposits. So we feel as though we've actually corrected that. We're noting on the deposit
slips, whether it's garbage bags or fitness center or community center, which those undeposited funds came from. So we do have the documentation to make sure we're able to track that from the receipt all the way to the bank on the garbage bags. And then on the solid waste building. We have reached out to the county regarding those five businesses. The county has discontinued the building to the city of Strong, and they're going to build those
businesses, commercial businesses, directly for the building. And then we've reached out to RBS, which is our building system, and we've removed those buildings from our water bills so they will no longer be actually billed out of the solid waste. So with that, we have actually corrected that as well. And then on the non-business purpose spending, we did have the majority of that was for town hall meetings, and we had the back-to-school functions that we were actually supporting the school district. We did on that town hall meeting,
which was I think over $2,000 totaling food and other things, we didn't supply or misplace that signing roster, but that was primarily for a town hall meeting where we had the community come in on some things that we were doing in the community. So we were actually aware that those were not qualified appropriate spending, so we have discontinued that as well. We did receive the, you know, the statutes that would help us make sure we don't do that
again from the legislative audit during their exit interview. So we have those statutes to make sure that we're in compliance with that. And then on the accounting procedures with the IRS on some of the late payments, we have an action that's been for probably about four or five, four years, I think, now that we've turned those over to the CPA firm. And the CPA firm is handling that, so we haven't had any, actually, late payments from the IRS Yes, that says probably 23.
So that's been actually corrected. And then we actually engage the CPA firm to take care of our receding and posting to our actual account there in the computer. So that will take that from just doing it there at the office. And then we're actually doing the monthly check register to make sure that those supporting documents, I think we had a couple of documents that were not attached for a couple of payments, so we're actually doing that monthly check register to make sure we're able to verify all those payments. And then we have actually went through the
fixed asset list for 24 and 25, and we've actually added and deleted those that need to be added and deleted on the fixed asset list. And then on the restricted funds, of course, it was mentioned that we have fully repaid the street fund for those payment that was actually written out of the wrong account. And we have done a resolution and actually started the payment back to the solid waste from the general fund.
We passed the resolution at our previous meeting. So we have started the payment back for those funds to the solid waste. And then on the budget, dealing with the budget over-expendence for the street fund, We have actually done amendments for 24 and 25 to make sure that we don't repeat that overage for the budgets. And we're actually doing the monthly budget to actual reviews to make sure that we're in line to make sure that we're not going over the budget monthly.
And we did actually do the review of the report from February at our past council meeting, So we'll be in compliance with that review following the first scheduled meeting. And we have actually met with the, in regards to the garbage bag, we did reach out to the PA there in El Laredo. So we're just waiting to hear back from him to hear further investigation regarding that. We met with the Municipal League.
Ms. Bush came down for about three hours and went extensively over policy procedures with us that would help us make sure we stay in compliance. We've spoken again with Legislative Audit, and they asked that we received all the statutes on some of the findings, repeat findings that we had. So we feel that we're in good shape to try to make sure that we don't have these repeat findings.
thank you mayor we appreciate all the work that you've done to try to rectify all these these issues do we have any questions from the committee members for
Representative Carol Dalby
Unverified
15:46
the mayor representative dalby i don't have a question but i didn't want to commend the municipal league for their work with this city sounds like unless you tell us differently it sounds like you've got them on the right path and we really appreciate you taking the time and and i I commend the city and encourage the city to continue to work with the Municipal League. If you have questions, reach out to Audit and reach out to the Municipal League.
They're there to help you. They're not there to do your business, but they're there to help you.
So thank you. Any more questions from the committee? Representative Rock.
Representative Johnny Rye
Unverified
16:21
Yes, sir. Thank you, Mr. Chairman. Once again, the income taxes from federal and state, that's been corrected. Yes, sir. Thank you, sir. any
more questions mayor thank you we appreciate you being here and presenting this report
do we have a motion to file this report motion second all in
Speaker 5
16:53
favor say aye any opposed report is filed thank you mayor thank you mr. chair uh continuing on page five we have uh 15 uh private water and sewer reports that were deferred from the previous uh meeting because we lacked proper responses if you'll uh jump over to page six real quick the thornton waterworks june 2024 private report we actually
received a good response for this report. Also, it's going to be referred to the prosecuting attorney, so I'll go ahead and present that finding. The following deposits of over $5,100 do not match the total of the corresponding daily receipt report. This report's been referred to the prosecuting attorney, and the Attorney General's office staff recommends we file
this report. Any questions from the committee? Without objection, we'll
Speaker 5
17:48
file this report. The two following it, the Van Buren County Public Water Authority 2024, which is a private
report, it's also been referred to the prosecuting attorney, but we have not received a proper response on it. And the same with the West Saline Water User Association, it's also been referred to the prosecuting attorney. But the remaining 14, including those two, staff recommends that we defer these until which time we receive a proper response. Okay. Do we have a
motion to defer these reports? Senator Johnson in a second. All in favor, say aye. Aye. Any opposed? Motion carries. We will defer these reports.
Speaker 57
18:39
Moving on to page 8, we have one report that has been
Speaker 5
18:45
certified to the bond board and referred to the prosecuting attorney in the Attorney General's office. It's Cajun County, 2024. Under the county judge, the county dispersed over $6,500 for meals, gifts, and door prizes for appreciation banquet for first responders, volunteers, and families. Although the county collected donations of over $3,600 for the banquet, additional almost $4,000 in county funds were dispersed.
In apparent conflict, the Arkansas Constitution, Article 12, Section 5, as interpreted by Attorney General 91410. Under the Sheriff and Tax Collector, the collector's office discovered and we verified undeposited receipts totaling over $4,100 that had been altered during the period April 10th through August 11th, 2025. Lee Frost, the employee responsible for receiving and depositing the funds, resigned August 27, 2025, and was charged with theft of property on February 9, 2026.
This report has been referred to the prosecuting attorney and the Attorney General's office. Staff recommends we file this report if there are no
Senator Mark Johnson
Unverified
20:01
questions. Coach Herr Johnson, you have a question? Thank you, Mr. Chairman. More of a comment, really. And I just, I'm not picking on you, Mr. Archer. I just, you're
the one up here so you get to answer the question. Yes, sir. That's what I'm here for. On the top of that page, the paragraph mentions Constitution, Article 12, Section 5. This is basically where a public entity uses public funds to pay some private bill,
even if it's something good like an appreciation banquet for first responders, volunteers, and families. If they enter into a contract with someone and have a public purpose, for example, and I'm going to
get one of my favorites was the Dolly Parton Imagination
Speaker 2
20:46
didn't have a contract. Everybody agrees with literacy and it's a positive thing and a public purpose, but you've got to have a contract.
Senator Mark Johnson
Unverified
20:57
How often do we see this type of thing? I mean... ...local entities that just because it's a good thing doesn't mean it's a constitutional purpose. I
think we need to wait a minute. We've got some mic problems. Okay. We're not on
Speaker 78
21:24
the record here. Let's take a brief recess.
Senator Mark Johnson
Unverified
21:34
Is that better? Okay, thank you. And I apologize for that. I maybe rang in too fast, Mr. Chairman. I'm sorry, Mr. Archer. Please go ahead for your answer. Article
Speaker 5
21:47
12, Section 5 also covers the part where you can't benefit a certain group. It's got to be for the public at large. Well, since this was just for those individuals and there wasn't a business purpose, It's why it was in violation of Article 12, Section 5,
and that's per the Attorney General's interpretation in 91.410. But as far as educating, you know, we usually, I mean, as
Speaker 25
22:12
you mentioned, we write this finding quite a bit, and that thread is itself. It's educational, as we explain it to them, you know, if we run across
Speaker 5
22:22
it. I guess for the county side, I guess we could work with the Association
of Arkansas Counties to somehow get the word out. If I could quickly follow up, Mr. Chairman.
Senator Mark Johnson
Unverified
22:37
And I appreciate you saying that. I see Senator Critcher out there. I want the same thing from the Municipal League. I know, Jake, you've probably done this whole thing a lot, but this is an educational thing, and who could be against helping the first responders, et cetera. But we need to maybe be a little more proactive, and you guys as well as Association of Counties are kind of in the vanguard of trying to get the word out to people. There's a way you can do these things, and there's a way you can't.
And I appreciate everything you all do to kind of help get folks back in line. But when we just see the same violation over and over again, I just feel like maybe we need to do something to reach out and say, hey, guys, you can't do it this way. You've got to do it a different way. So thank you, Senator Critcher, for everything y'all do and anyone from the Association of Counties here. Thank you for that, too. But maybe we need to think
up new ways to emphasize that. So thank you, Mr. Chairman.
Representative Jack Ladyman
Unverified
23:41
Thank you, Mr. Archer. Representative Ladyman. Thank you, Mr. Chairman. Mr. Critcher, if you don't mind, would you come down? I'd like to ask a question about your training. The programs, I know you guys have a lot of training. Is there anyone here from the county? I don't see anybody out there. And, Jack, I don't want to put you on the spot here, but I know you guys do a lot of training, and you have certifications for the mayor and for the recorder, all those things.
Is there anything in that training about this, you know, spending money for parties or support or whatever it is? Is that part of that training
Speaker 87
24:24
already or not? Well, yes, sir. Thank you, Mr. Chairman. Jack Critchell with the Arkansas Municipal League. We have two major events each year, our summer convention, our winter conference. We have workshops at each of those and several going on at the same time, 6, 8, 10, whatever.
But generally, the topics are whatever's, you know, the topic of the day. And actually, what's being discussed in audit dictates what those topics are going to be, whether it's street fun, whether it's, you know, accounting code 1459, repeat findings, whatever it is. But as Chairman Johnson mentioned, this particular one dealing with the Constitution is probably less familiar to city officials than a lot of them.
So I think I appreciate you mentioning that, and I think we need to see about maybe emphasizing that topic. So
Representative Jack Ladyman
Unverified
25:30
do you still have the certification like a clerk and
a treasurer, which is in more depth instead of
Speaker 91
25:37
when they get certified? Is there anything in that training? Yeah, thank you for mentioning that.
Speaker 87
25:43
We have what we call a certified city official, and it's probably, I guess, was introduced about six or eight years ago, and that requires intense training.
You have, I don't know how many hours it is, but it's, Mayor Bush would probably know, probably 40, 60, 80 hours, you know, given over the course of a year. When you complete that, you become a certified municipal official, and it covers, you know, a wide range of topics. Of course, what happens, you know, we have such turnover among our city officials because we have thousands statewide and they retire and get beat and decide they don't want it anymore.
Speaker 91
26:28
So it's a constant. And that's a voluntary program. People don't
Speaker 87
26:33
have to take it. That's true. Nothing mandated at all. All right. Thank you. Thank you, Representative Leitman. Are there any more
questions on Calhoun County? If not, then without objection, we
Speaker 5
26:56
will file this report. We have seven reports that are being referred to the prosecuting attorney in AG's office,
starting on pages 9 through 11. We've got six regional solid waste management districts, Review of Selected Policies, Procedures, and Transactions, July 1st, 22 through December 31st to 23. We have staff member Charlie Camp here to present this report.
Speaker 96
27:25
requires legislative audit to review selected procedures and policies and transactions of Arkansas's regional solid waste management districts.
For this report, ALA randomly selected six districts for review. The locations of the state's 19 districts are shown in Exhibit 1 on page 2 of the report. Arkansas Code Annotated 86704 requires the districts to obtain an annual audit of their financial statements from a private CPA firm. The 2023 audit reports for the Craighead County, Southwest Central, Faulkner County, Southwest Arkansas, and Pulaski districts contain no findings.
The 2023 audit report for the Benton County District contained one finding relating to segregation of duties. The Benton County District responded that certain procedures were changed and compensating procedures were implemented. For the Pulaski County District, finding number one, the following payroll items were not properly approved by the Pulaski County District's board. A $1,690 increase in the Waste Tire Coordinator's contracted salary for the period July 1st, 2022 through December 31st, 2022.
A contract for services with the former Chief Financial Officer at a rate of $150 per hour for a total of $7,298. and bonuses paid to employees in December 2022 and 2023 in the amounts of $2,599 and $3,682, respectively. Finding one was referred to the sixth judicial prosecuting attorney and the attorney general. Finding number two, a review of credit card disbursements
towing $43,294 revealed purchases of $17,213 dollars or approximately 40 percent did not have proper supporting documentation at the time the payment was made. Most of these purchases appear to be business related based on the vendor or review of other related documentation. Per the district, it is their practice to not remit or maintain receipts such as gas, meals, office supplies, etc. ALA recommends the Pulaski County
district obtain and maintain supporting documentation for auditing and accounting purposes for all credit card purchases. Additionally, personal expenditures totaling $129 on the district credit card were refunded by the executive director on August 19th, 2025. Finding number three, all contracts for services were not properly approved by the Pulaski County Board in non-compliance with Arkansas Code 86704. ALA recommends that all contracts for
services be approved by the board and approval be noted in the meeting minutes. Finding four, ALA noted the following issues related to car allowances, personal use of Pulaski County District vehicles, and cell phones. Adequate documentation in the form of a mileage log was not maintained to support the Waste Tire Coordinator's car allowance tolling $3,270. Additionally, the car allowance was not included on the employee's IRS Form W-2.
The district provided four employees, including the executive director, with vehicles that are used for personal and business purposes, including fuel. The executive director and one other employee noted on the district's employee representation regarding use of company vehicle form that they did not have another vehicle available for personal use. Although amounts were added to the employee's IRS Form W-2, adequate documentation in the form of mileage logs was not maintained to support business and personal use of the vehicles.
In addition, the district paid for Sirius XM services in the vehicles. Though approved by the district's board, payments on the executive director's personal cell phone bill by the district were not included on the employee's IRS Form W-2. ALA recommends the district contact the IRS for guidance regarding documentation of car allowances, vehicles provided for business and personal use, and cell phones. Finding five, competitive bids were not solicited for the cost of billboard advertising, CFO
services, public radio advertisements, and hazardous waste recycling in the amounts of $71,280, $48,029, $37,357, and $48,861, respectively, in non-compliance with Arkansas Code 86704 and 1422104. Finding six, Pulaski County District did not establish an electronic funds payment system with written policies and procedures for internal accounting controls and documentation for
audit and accounting purposes. Other issues. The Pulaski County District expended $312,977 in public monies for advertising, which appears to be excessive in comparison with amounts expensed by the other districts in this report. Exhibit 3 on page 5 provides total advertising expenses as well as advertising costs per person based on the population for each district, as noted in the 2020 federal census.
Additionally, as noted in a prior report, the Pulaski County District had a contract with a vendor that required the vendor to repair and maintain district-owned equipment located at the vendor's facility and used by the vendor. However, the district paid for maintenance of the equipment from the district's maintenance and repair capital fund. Included in the district-owned equipment used by the vendor were 46 24-foot tandem axle trailers purchased by the district in fiscal years 2010 through 2016 at a total cost of $248,295.
Subsequent to the issuance of the prior report, the district closed the maintenance and repair capital fund and sold the 46 trailers to the vendor for a total sales price of $4,600. A separate sale to a second vendor included a box truck, forklift, ramps, and a shrink-wrapped turntable for a total sales price of $2,500. Detailed descriptions and purchase prices were not available for the items in this sale.
For the Faulkner County District, finding number one, our review revealed the following payroll items that were not properly approved by the Faulkner County District Board. Payments tolling $31,541 made to an employee's family member. Bonuses tolling $3,682 paid to the director, office manager, administrative assistant, and recycling route drivers. And salary and wage rates. A similar finding was issued in the prior report.
Finding number one was referred to the 20th Judicial District Prosecuting Attorney and the Attorney General. Finding number two for the Faulkner County District, accepted accounting practices provide that all income be formally receipted by use of receipts pre-numbered by a printer or an electronic receiving system that accomplishes the same purposes as pre-numbered receipts. The Faulkner County District did not issue pre-numbered receipts or retain documentation for revenue received. A similar finding was issued in a prior report.
Accepted accounting practices provide that adequate supporting documentation and approval be maintained for all disbursements. The Faulkner County District did not maintain supporting documentation and indication of management approval for all disbursements. Additionally, timesheets were not maintained for all payroll disbursements. A similar finding was noted in a prior report. The Faulkner County District did not establish an electronic funds payment system with written policies and procedures for internal accounting controls and documentation for audit and accounting purposes.
A similar finding was noted in a prior report. For the Benton County District, finding number one, the Benton County District did not establish an electronic funds payment system with written policies and procedures for internal accounting controls and documentation for audit and accounting purposes. Finding number two, bid documentation was maintained for waste tire disposal services tolling $64,850 in noncompliance with Arkansas Code Annotated 86704 and 1422-112.
Management responses to the findings are contained in the body of the report. Pulaski County District response is included in its entirety in Appendix A. ALA issued no findings for the Southwest Central, Southwest Arkansas, and Craighead County districts. Mr. Chair, this concludes my report. All right, committee, do we have
any questions on this report? Senator Johnson. Thank you, Mr. Chairman.
Senator Mark Johnson
Unverified
36:50
These are troubling, but the one for Pulaski County is especially troubling for two reasons. One is the dollar amounts we're looking at, and second, living in Pulaski County, I just expect larger counties with full-time staffs to be a little bit more attentive than I do small counties with part-time staffs or someone that's essentially a volunteer doing this. Is there anyone here from Pulaski County Solid Waste Management District that could answer questions?
If not, then I'm going to ask we defer until we can get someone here to answer that, Mr. Chairman. But I end up saying these other things or the other counties, yes, we want to take a look at this. I did ask the Faulkner County judge regarding the issue in Faulkner County, and he explained to me that it seemed to be a documentation problem if they felt they could correct. and I'd love to have them have the opportunity to do that.
But the Pulaski County District, especially the issues related to advertising, and when you have $248,000 and some change dollars of equipment that sells for $4,600, that really got my eyebrows up. I know you probably couldn't buy a forklift, forget a
box truck and all that. You couldn't even buy a forklift for $2,500 that
runs. So, again, we need to get some answers on this.
They may be perfectly adequate answers, but if there's no one here from Pulaski County Regional Solid Waste Management District, at the right time would have a motion to defer.
the committee? I've got one. Representative Rye. Yes, sir. Thank you, Mr.
Representative Johnny Rye
Unverified
38:50
Chairman. Boy, just like Senator Mark is saying, it doesn't look good at all. Do these folks actually know that they have messed up this bag?
Speaker 112
39:03
That's why I want them here. Thank you, sir. So I believe Senator Johnson
has a motion to defer this until the June meeting. I had a question. I'm sorry. I didn't
Representative Jack Ladyman
Unverified
39:18
see you. Representative Ladyman, go ahead. Thank you, Mr. Chairman. I have a question for you just on finding two for, this is for Pulaski, where it talks about the credit card, the receipts for gas, meals, office supplies. I think this was on the P card.
But so the credit card bill that shows purchases is not adequate for that? No, sir. The code requires that they have
Speaker 96
39:45
documentation, which would be the individual receipt that they received when they made the purchase. Just the plain credit card statement is not adequate. Is that because there's not
Representative Jack Ladyman
Unverified
39:56
adequate information on the credit card statement? There's not adequate detail as to what
Speaker 96
40:00
was purchased on the credit card statement. What kind of
Representative Jack Ladyman
Unverified
40:04
detail is not on the statement? Do you know?
Speaker 96
40:07
The statement just gives the dollar amount and the vendor. It doesn't tell what they purchased at all.
Representative Jack Ladyman
Unverified
40:14
It's the date. Okay. Thank you.
Senator Mark Johnson
Unverified
40:23
Yes, sir. Senator Johnson, you're recognized. Thank you, Mr. Chairman. Mr. Kemp, under finding two on page nine, it says, per the district, it is their practice not to remit or maintain receipts such as gas, meals, office supplies, et cetera.
Is that in compliance with the law? No, sir, it's not.
Okay. Well, again, that's why we need to get them up here to answer some of these questions. Thank you, sir. Thank you,
Mr. Chairman. Any more questions from the committee? Okay, I believe
Senator Mark Johnson
Unverified
40:58
Senator Johnson, do you have a motion? Mr. Chairman, I may we defer this to June, and we also ask our whatever the next appropriate meeting that staff would tell us. It'll be June, according to Mr. Archer.
We also want to invite them to come answer some of these questions. I have a
motion and a second to defer this report and request Pulaski County to come speak. Okay. Everybody understand
the motion? All in favor say aye. Aye. Any opposed? Motion carries. Thank
Speaker 5
41:35
you, Mr. Chair. On pages 12 and 13, moving on to continuing with reports filed with the prosecuting attorney in the AG's office,
we have Nevada County, 2024, under the Treasurer. We have five unauthorized withdrawals totaling almost $12,000 were made from the County Treasurer's account in May of 2024. The bank discovered a little over $10,700 of the unauthorized withdrawals, and the funds were recovered from the bank. County personnel discovered a little over $1,200 of the unauthorized transactions upon completing the bank reconciliations. However, it was not reported to the bank in a timely manner, and the funds were not recovered.
Under the county judge, Nevada County entered into an interlocal cooperative agreement on November 15, 1993, with the City of Prescott in accordance with the Arkansas Code for the operation of a compact station and Class 4 landfill. Following terms of the agreement were not properly executed. The agreement was not formally renewed on an annual basis. The board did not hold meetings or provide the county with monthly financial statements. The chairman of the board did not properly supervise operations. Invoices and timesheets were not properly approved prior to payment.
The board did not submit detailed written statements to the county with its respective share of tipping fees. Instead, the board requested 50% of total amounts owed from both the county and the city. A letter detailing the percentage allocation of expenditures for capital outlay and operational costs were not provided. We were also unable to determine if fixed assets purchases and operational costs were proportionally shared between the city and the county. Payroll expenditures totaling almost $75,000 were dispersed to six employees without a contract
or other documentation authorizing their hourly rates. Based asset records were not properly maintained. This is a repeat finding. I believe we have the county judge, Mike Ortwell, here today. Excuse me. That's okay. Judge, if you'll identify yourself, then you're welcome to present your response. Uh,
I'm new. I guess I need to turn this thing on.
Speaker 125
43:59
I'm new, and this stuff got brought to me. The treasurer that we had, he passed away when they hacked the account. That's all I got out of that. They hacked the account of the bank, supposedly got all this rectified. As far as the, uh, I think there's one on there you asked me about on the, uh, When we buy a piece of equipment and you trade something in, according to my auditor, my state
auditor, she said they need to put on their trade in, on the invoice. So that's being done now. And as far as the landfill situation, I've got it already passed, we've already voted It's in place, and the committee is no longer there. They had a seven panel that never met.
And anyway, the quorum court and the judge now, we've redone an interlocal agreement with the city. They signed off on it. They passed it. I voted to approve it. We voted to approve it, and it's done up now and filed. i don't know what else
Speaker 32
45:27
to tell you got any questions senator kraut so it kind of sounds like you've got
Speaker 129
45:31
the interlocal agreement and you're working on getting everything done for the landfill and then the treasure thing you've you've
from what my discussions with you you're kind of taking care of that all right okay and i
Speaker 119
45:47
have a copy of the interlocal agreement with me if you wish to look at it any more
questions from the committee seeing none judge we appreciate you coming working on these issues and and presenting this report to us thank you for being here without objection we will file this report
thank you judge you're good okay thank y'all yes sir on page 13 of the city of salem 2024 This is a private report.
Speaker 5
46:19
It's also been referred to the prosecuting attorney and AG's office. During our audit, we were notified by the city that certain bank transfers and invoice payments were not approved by city officials. There are no questions. Staff recommends we file this report. Without objection, we will file this report.
Pages 14 through 16. with the City of Briarcliff 2024 and 2023 under the Mayor and the Recorder Treasurer. On March 15, 2023, the City disbursed $200,000 to the Briarcliff Water and Recreation Improvement District bid, a Suburban Improvement District, to avoid having uninsured funds in the account due to exceeding FDIC limits. On February 10, 2025, the City Council approved loaning
over $97,000 of the $200,000 to the bid to purchase an excavator in noncompliance with Article 12, Section 5. Subsequently, on June 26th of 25th, the $102,000 in remaining funds were returned to the city. On page 15, under a court of treasurer, of the over $4,700 and over $15,000 in credit card payments tested,
supporting documentation was not available for over $1,100 and almost $900 in 24 and 23, respectively, in noncompliance with the Arkansas Code. Without adequate supporting documentation, the validity of these purchases could not be determined. If there are no questions, staff recommends we file this report. Does the committee have
any questions? Without objection, we will file this report.
Speaker 5
48:21
Page 18, we have the Compton Water Association 2024, which is a private CPA report. The association did not provide reports on customer adjustments, and there were no supporting documentation for debit card transactions selected for testing. This report has been filed with the prosecuting attorney in the AG's office. Staff recommends we file this report. There are no questions. Does the committee have
any questions? Without objection, we'll file this report.
Speaker 57
48:51
Continuing on page 18, Montgomery County Regional Public Water Authority,
Speaker 5
48:56
2024. Another private report. While engaged in testing disbursements other than payroll expenses, it was noted that the bookkeeper was paying themselves extra paychecks over the agreed upon amount approved by the board. A review of all 21 payroll checks paid to the bookkeeper resulted in finding nine extra payroll checks totaling approximately $9,500 for extra salary expense being paid to the
bookkeeper during the year. This finding has been referred to the prosecuting attorney in the AG's office. There are no questions. Staff
recommends we file this report. Do we know if this bookkeeper still has their
Speaker 5
49:42
job or not? This is a private report, so we did not do this report. So I could check on that, but I'm not, at this time, I can't answer the question. Okay. Any more questions from the committee?
Speaker 142
49:58
Is this relative to a couple of months ago that we turned it over to the prosecuting attorney? Does this have to do with that case? Well, the one you're referring
Speaker 25
50:14
to is the city of Mount Ida. And this is not the recorder, treasurer, or the mayor that was referencing those findings. But this individual also works in the office at Mount Ida. That's my understanding.
Speaker 142
50:28
So it's all kind of related to what we've already heard with the mayor's office? You can
Speaker 25
50:33
draw that conclusion, yes, sir. Just a different pool of money. Keeps getting buried
Speaker 105
50:39
and buried. Yes, sir. Thank you. Well, this has
been referred to the prosecuting attorney and the AG, so it will be investigated and actions taken. So if there are no more
questions, then we'll just go ahead and file this
Speaker 5
50:58
report. All right. Starting on page 19, we have five reports with repeat findings.
We have the city of Camden, 2024, under the mayor, Common said the absent records were not maintained in accordance with the city's policy manual. This is a repeat finding for previous four reports dating back to 2019. I believe we have Mayor Charlotte Young here today to answer questions. Mayor, if
you will approach the end of the table and identify yourself, and you'll be welcome to present your response.
Speaker 147
51:38
Charlotte Young, Mayor, City of Camden.
Speaker 149
51:49
This is my first term. As you said, that did date back, and I understood when coming in that there was an issue with this. So we did purchase Easy Time Clock and some software that we understood was supposed to rectify the problem.
However, when the auditors came back, that did not do what they were looking for it to do. So we are looking into different software because we want to fix this. We don't want to be out of compliance. And we are open to any suggestions that would help us get it done as quickly as possible. Well,
thank you, Mayor. Thank you for working on this and trying to get it rectified.
And the Municipal League, of course, is available for assistance with any issues that you may have. Do we have any questions from the committee for the Mayor? Seeing no questions, we will go ahead and file this report. And, Mayor, we appreciate you coming and talking to us about this. Thank
Speaker 5
53:13
you. Thank you very much. Continuing on page 19 and 20, we have Johnson County, 2024, under the Treasurer's tax collector.
We noted the following issues were in noncompliance with the Arkansas Code when reviewing cash. Bank reconcilations prepared by the Treasurer were not accurate. The bank activity and bank balances for numerous accounts did not agree with the Treasurer's summary of fund activity, resulting in $204,000 in unrecorded revenues and $150,000 in unrecorded withdrawals. This is a repeat finding. Calculations of excess Treasurer's Commission was not prepared or distributed in a timely
manner. This is a repeat finding. We have Treasurer tax collector Melanie
Coel here today. Treasurer, if you would identify yourself,
Speaker 152
54:05
you'll be welcome to present your response. Melanie Cowell, Johnson County Treasurer, Collector. On the Treasurer's Commission, I have done that. On the funds, there was a grant that I had put in the big bank account
that made the extra monies not showing in the accounts. And then, was there one about the interest for the collector? Yes. I have talked to the guy that does our final tax settlement, and he is helping me with that. And I also have somebody helping me with the bank reconciliations. And I'm working hard to try to not have repeat findings and be in compliance.
Treasurer, there was over $150,000 in unrecorded withdrawals. Could you just explain to us what those withdrawals were for and why they
Speaker 156
55:14
were unrecorded? I'm not sure about, it says withdrawals? Yes,
Speaker 152
55:22
unrecorded withdrawals. That may have to do with the Forster-Davis grant, I'm not sure.
Speaker 5
55:29
Mr. Chair, we have verified that that was the grant activity that the treasurer was referring to. It was the Forest Davis grant, that those expenditures and revenues were posted to the Summative Account
Balances. Thank you. Okay, thank you. Any questions from the committee?
Treasurer, do you have anything else to say? No, just thank you. Okay, thank you for being here and presenting your response. We appreciate it. Thank you. Without
Speaker 5
56:16
objection, we will go ahead and file this report. Continuing on page 20 and 22 with repeat findings of the town of Gilmore, Mayor Bruce Delaney was invited here today, And he called and had a conflict and asked for this to be deferred until June. Staff recommends that we defer this to his request.
We have a motion to defer. We have a second. All in favor say aye. Aye. Any opposed?
Speaker 5
56:44
Motion carries. We'll defer until June. Continuing on page 22, City of Grubbs, 2024, under the Mayor and Recorder Treasurer. Although Schedule 1 of this report shows a balance of $16,000, it was brought to our attention that as of 12-31-24, the general fund owed a significant amount of balances owed to the IRS.
Shown in Note 4 of Schedule 3, when these outstanding amounts are considered, the general fund has a deficit fund balance of over $30,000. As of the report date, the city is in negotiation with the IRS for a repayment plan. This is a repeat finding. We have Mayor Candace Miller, and is the Court of Treasurer Southern here today?
Speaker 164
57:32
Yes. So if y'all will identify yourselves, you'll be welcome
Speaker 165
57:36
to provide your response. We've each wrote out a statement.
We've also, all of our work that we've done, we've made a packet for you guys. Would you identify yourselves so we know? Hello, my name is Candace Miller. I'm the mayor of Grubbs. I would like to start off with
Speaker 168
57:55
an apology to everyone. I am not your typical mayor or politician. Before taking office, I worked in the medical field for over 20 years and a bookkeeper for Rosalind Foods. I have had to educate myself on the proper procedures, and I continue to learn.
I do welcome all audits. I want to make sure we're doing everything correctly. If there is a finding, we will do our best to fix it as soon as possible. I was urged by the citizens of Grubbs to run for office and fix the town. In 2022, we won the election, and the entire administration of council and mayor changed in 23. We knew the town was in a mess, and we had prayed and asked for an audit. We didn't realize just how bad it was.
We soon learned that our town was out of compliance with just about every agency in the state of Arkansas. I quit my full-time job and the security I had to focus on my hometown. For the first year, I did not take a salary. The town had no money, so I lived on my personal savings. I gave my word that I would dig our town out of this horrific and absolute chaos that we were in. In January of 23, IRS agent Eugene Chisholm came to our town and informed us that we owed $97,959.93.
This was for non-payment of taxes during years 2017 through 2022. He stated that he could seize all property and take the town. I explained that we were all new and pleaded with him to give us time and we would take care of this. Action was taken by the council, our citizens, and myself. From January to March of 23, we paid the IRS $71,661.99.
This covered the principal. This was done by a lot of hard work, fundraising, and donations. Every one came together to save our little town. The remaining $26,338.01 was for interest and penalties. Our IRS agent suggested we make an offer in compromise. The agent stated that since we had done so much in such a short period of time, that this step would be the best way to resolve this.
He said it was likely that the IRS would write off the remaining amount or settle for a smaller dollar amount. He told me and the council members that were present that day the amount that we should offer. The process has been a nightmare. The IRS denied the offer, denied the appeal, and since that notice, I have tried to get our town moved back from Offer and Compromise Unit to the Collections Department. I have been told by two different agents
that our town must be moved to Collections before we can talk with anyone and make payment arrangements. I have reached out to Congressman Crawford's office in 2023 and 2026 in hopes that they could help us. As of today, they have not had any positive results. When I could not get anyone to answer me from the IRS, I drove to the federal building myself. This is how I learned that our agent had retired and not been replaced.
I then asked for a supervisor and contact information. Chris and I both wrote a statement, and that's what I just told y'all guys, and made copies of everything that will support this statement. It is important that we resolve this, and we are doing all we can. During all of the IRS, they continue to add interest on top of interest. I recently learned that as of 3-9 of 26, our total has now grown to $41,175.
This is an outrage since we have done all that we was asked to do and we followed the direction and waited on the IRS. This will continue to grow a daily interest. On 3-11-26, I received a call from IRS agent Wiseman, ID number 1-0-0-0-8-5-5-6-4-4. He stated that he had gotten my messages, and he apologized for not contacting me sooner.
He stated that the shutdowns and all that is going on has really got them backlogged. He stated that he had a form that I could sign and he could release me from the unit back to collections. He stated he could not email this form to me, but could fax and drop off a copy in the mail. No form, I worked late last night, and no form as of 10 p.m. was received. We did have three other findings during the audit.
Two of those were corrected in 2025, and the last one on the John Deere tractor was corrected in February of 26. Also, as we have tried to fix these horrible issues that our town had, I have battled two major floods due to the Cache River. Thankfully, we have overcome the floods for now. We are in compliance with the USDA, and our water audits, rate studies, and water rates are as they should be.
As soon as the IRS allows us to be placed in the collections department, we will make arrangements to pay this debt. Our town, the council, and I will be so thankful to be able to put this nightmare behind us and move forward. Thank you, Mayor,
for that report. It was very detailed, and we appreciate that and appreciate all the work. It sounds like you've really ran into some brick walls on this issue.
And you mentioned you talked to Congressman Crawford. Yes. You
might want to also consider reaching out to Senator Bozeman and Senator Cotton's office and
Speaker 168
1:04:19
try to get them to help you. I did, actually, before we came down here. Wiseman did call me back because I have been a pain of thorn, let me tell you. When I went to that federal building, those people were shocked because I told them, I ain't leaving until I get a number. And like I said, I'm not your typical politician.
But Wiseman did tell me that the facts that he tried to send got kicked back, and he is sending me the form by mail, and he said we should have it in two or three days. And I was really frustrated because we should have gotten this a long time ago because we had it paid down to $21,000. And in all of this donut that we've been in, it's actually doubled. So it's very frustrating because we've worked our tail
Speaker 165
1:05:10
ends off, you know, to dig our town out of years of years of mess, you know.
Just my personal opinion, I think this highlights kind of the inefficiencies and incompetency of the IRS. So thank you for sharing this with us. Yes, sir. Thank you, Mr. Chairman. Mayor,
Senator Mark Johnson
Unverified
1:05:29
this is another example of why I tell people that if you want to find true public service, look to small-town mayors. And I'm grateful for you stepping forward and your new council to deal with this. I don't think I could do it. I can't think about Grubbs without thinking about my friend, Senator Critcher, who is your predecessor as mayor.
Speaker 175
1:05:51
Well, I don't have a staff. I'm out on the tractor. I'm on the mower. I mean, it's just pretty much me, Chris, and my council. I
Senator Mark Johnson
Unverified
1:06:00
guess it's not a surprise, let me tell you, that negotiations with the IRS tend to be quite
one-sided. And we feel you're, we have empathy with you and all that. It's
Speaker 168
1:06:11
just really frustrating because we want to do everything correctly. I've got Jackie on speed dial, so I'm all about doing everything correctly. But let me
Senator Mark Johnson
Unverified
1:06:20
follow up on the other recommendations that, you know, to reach out to our two senators' offices sometimes.
and I, having worked on congressional staff a long, long time ago, I know that it doesn't hurt for them to be getting three sets of phone calls
rather than just one. You know, in the federal government, the squeaky wheel will get grieved a little. That's what
Speaker 168
1:06:43
I've been told about this Cache River, so I've been
Senator Mark Johnson
Unverified
1:06:46
squeaking along. Yes, ma'am. But I
thank you for the effort you've put into this. Someone once said, the last person you want to borrow money from is the IRS.
So if you owe them, they can charge interest on interest on interest and penalty. Yes, that's what we're doing. And I encourage you to
not back off because someone, sometimes you can get a hold of the person that's actually what I call the hot button, the person you can talk to that can help maybe waive some of these penalties and all that. But, again, thank you for coming and telling us this story and helping us to understand and to the extent that we can,
we'll do everything we can to help you solve these problems. I appreciate it. Thank you, Mayor.
Speaker 54
1:07:35
Thank you, Mr. Chairman. Committee, do you
Representative Johnny Rye
Unverified
1:07:40
have any more questions? Representative Rye. Yes, sir. Thank you, Mr. Chairman. But hats off go to you. I mean, you started out 0 and 100, and they were going to cut that down to 90. Isn't that right? 97,000.
Speaker 168
1:07:53
When he showed up and said he was fixing to take the town, 97,000 and something. I've got it wrote down for you guys.
Okay, but you paid 70. From January to March, we did fundraisers. We worked our tailings
Speaker 165
1:08:05
off. We paid $71,000 in just a few months. Well, I surely hope that
Representative Johnny Rye
Unverified
1:08:10
they let you pay that balance that's around $20,000 or $30,000 and still that
$40,000. Right. I'm hoping and praying. Because that's
Speaker 175
1:08:18
hard for a town the size of one. Yeah, we are 301 people. So, I mean, I rely on my farmers and just good citizens. I mean,
Speaker 168
1:08:30
we have banded together to turn this town around.
And I need to get it fixed so I can go back and make
Speaker 47
1:08:38
a normal salary. Thank you, ma'am. Thank you,
Mr. Chairman. Any more questions from the committee? We appreciate you ladies being here and all the work you put into this. I think
you have our support on this. We hope you get these issues rectified. Reach out to Senator Cotton, Senator Bozeman's office, and of course Municipal League will back
you up as well. So without objection, we'll go ahead and file this report.
Speaker 5
1:09:04
And we thank you ladies for being here today. Thank you. Thank you, Mr. Chair. Continuing on page 23 under reports with repeat findings for the city of Sparkman 2024 under the recorder treasurer, monthly financial statements were not prepared or presented to the city council in noncompliance to Arkansas code. This is a repeat finding. We have recorder treasurer Rita Feit here today to answer questions.
Ms. Feid, if you'll identify yourself, you'll be welcome to
Rita Feid
Unverified
1:09:58
present your response. Okay, my name is Rita Feid, and I'm a recorded treasurer from the city of Sparkman. My finding was on not giving our council a financial statement every month.
I had managed to get a person to help me do that. Well, guess what? She's not there anymore. And so I am in the process of getting this all started again, And hopefully, I'm going to follow it through because I'm going to keep my eye on all of it and make sure that it's done right, and I'm going to do it right. That's the one that's going to keep the eye on, is me, because I'm going to.
I have called our software solutions, and they have agreed to help me do this. Are there any questions from the committee? Ma'am, we appreciate
Speaker 6
1:11:01
your attention to this and ensuring us that
you're going to get it taken care of. We appreciate your work on it. We appreciate you being here today. Do you
have anything else for us? No, that's it.
Rita Feid
Unverified
1:11:20
We've had a lot of problems this month or this year, so I know how it is. But I'm going to work on this right now as soon as I
get back. Thank you, ma'am. Without objection, we'll go ahead and file this report. We appreciate
Speaker 5
1:11:40
you being here today. Thank you. Thank you. Thank you, Mr. Chair. On page 23, we have four reports that have findings without proper responses. These are all private reports. Three of them are three separate reports from Bearden Water and Sewer Department for 24, 23, and 22.
The other one is the Cushman Water Department for 25. Staff recommends we defer these until which time we have a proper response.
We have a motion to defer and a second. All in favor say aye. Any opposed? We'll defer these to the
Speaker 5
1:12:14
June meeting. Pages 24 through 28, we have 18 reports with resolved findings. Staff would allow for y'all to look through those a little bit and if there are no questions, staff recommends we file these reports.
Does the committee have any questions on any of these reports? Seeing no
question, without objection, we'll go ahead and file these reports.
Speaker 5
1:13:13
Pages 29 through 30, we have 56 reports with no findings. recommends we file these reports. There's no
question, since there were no findings on these reports, without objection we will file all
Speaker 25
1:13:32
of these. Mr. Chair, that brings us to item number H which is the Cross County
Speaker 5
1:13:37
Rural Water System. It's back on page 1 of the synopsis. This report was a private report
that had no findings but the committee requested that we defer it to give the operator, Mr. David King, the opportunity to come and address questions. And I believe Mr. King is here today. Mr. King, when you get down there,
turn your mic on and identify yourself. And if you have a statement, you can go ahead and make that. If not, then we'll ask for questions from the committee.
David King
Unverified
1:14:17
My name is David King, I work for Cross County Rural Water System. When I got this letter for her to come down here, I called and tried to find out what this was all about.
Speaker 195
1:14:37
And I was told it because we hadn't done a post-door audit since 2004.
David King
Unverified
1:14:47
i'm the fourth manager of this company i just started in 2019 and i didn't know i had to do this i mean we do a audit every year uh year end audit but i didn't know i had to send it to the anywhere to post it or whatever but i did we have sent them all in i think we only have one that
Speaker 195
1:15:13
we We can't find this in 2006, and I'm still looking for it.
David King
Unverified
1:15:22
But I don't know if there's anything else y'all need to know. That's what I was told about I need to be here for.
All right. Thank you, sir. Do we have questions from the
Representative Kendra Moore
Unverified
1:15:43
committee? Representative Moore. Thank you, Mr. Chair. Mr. King, thanks for coming down today. Long story short, I represent Woodruff County, District 61.
And the reason you are here today is because since June of, well, really since June 28th of 2023, I have been getting a multitude of constituents reaching out, wondering why their water was brown. And they reach out on almost a weekly basis on the poor water conditions that they are having to drink, bathe their children in, that they have to do their laundry with.
And the water at best looks like iced tea and at worst looks like motor oil. I understand. And so going through this and talking with folks at Natural Resources and asking Leg Audit, because since 2023, the state has awarded cross-county rural water nearly $7 million for water projects. And the fact that legislative audit has not received an audit in 23 years when you're receiving state funds is highly concerning.
Mr. Chair, if I may continue, in June of 2022, you received a
Speaker 202
1:17:10
loan of almost $900,000, and this is about when the- Okay, but y'all got
Speaker 204
1:17:15
me down here on the audit stuff. I wasn't prepared
David King
Unverified
1:17:19
to, I didn't bring all my information on all the money stuff.
Speaker 195
1:17:25
But to answer your question, yes, we did receive a loan. Yes, we are in
David King
Unverified
1:17:33
the process of doing the projects that loan is going to be paying on.
We have until December of 2026 to get that done.
Speaker 195
1:17:44
Now, they granted the loan in 20, or we applied in 22. I think it was. We couldn't apply during the COVID. In
David King
Unverified
1:17:59
either 2021 or 2022, we applied. They denied an ARPA loan. We immediately turned it into a grant to start this project.
Speaker 195
1:18:09
They extended it six months before they okayed it. So that put us back another six months before we could even start the projects. And I got that all in timesheets, you know, dates. Uh, uh, but I wasn't prepared
David King
Unverified
1:18:30
to talk about this. I was prepared to talk about this. That was, I was told. Sure.
Representative Kendra Moore
Unverified
1:18:36
And Mr. King, I haven't asked a question yet. I was just setting background for, for my line of questioning, um, which the main question
is if you didn't know that you were supposed to perform these audits on an annual basis and report them to legislative audit um what kind of training do you actively seek out on an annual basis or what kind of oversight do you have to grant you those guidelines um to provide the basic necessities of limited government and making sure that everything is well you would think that the previous manager was the past at home you
David King
Unverified
1:19:17
know but uh i had no clue so i was doing
what they were doing and evidently you know this the third one he didn't have no clue and he was in it for 10 years or so uh i
Speaker 195
1:19:36
mean i apologize but but i got everyone i got them sent in within a week
David King
Unverified
1:19:46
of when y'all requested them. But as far as me going to any government scrollings, no, I go to the
Speaker 207
1:19:52
conferences, the water conferences every year to keep updated on all that. Member Senator Moore,
Speaker 209
1:20:15
do you have another question? Thank you, Mr. Chair.
Representative Kendra Moore
Unverified
1:20:20
As a follow-up, it was my understanding that Arkansas Rural Water Association has been on the ground helping you these past two weeks.
Have you ever asked for their help in managing a water crisis such as this before? I talked to them
David King
Unverified
1:20:35
individually. I never had a whole crew like this come in on that well or any of the wells, but I talked to them all individually. Thank you, Mr.
Speaker 93
1:20:53
Chair. Senator Wallace, did you have a question?
Speaker 211
1:21:00
Thank you, Mr. Chair. Mr. King, thank you for being here today, sir. How many members are on your board, and how long have you been on the board?
Speaker 195
1:21:16
I started in 2019 as the manager. But prior to that, I started working in 2002 at this company
David King
Unverified
1:21:24
and worked my way up. But it never was anything about management. You know, it was always out there fixing a leak or whatever.
We have five members on the board. uh all of them has been through the uh uh the board certification school and i i
David King
Unverified
1:21:52
the board now for two months a new guy but the rest of them have been years that they've been
Speaker 211
1:21:58
on the board follow-up how often do you have elections and
Senator Dave Wallace
Unverified
1:22:04
and how do you post those notification of elections? We have them every
David King
Unverified
1:22:09
year. And we put it in the minutes, and it's
Speaker 211
1:22:15
open to anybody to look at. Do you make it public to the knowledge? I'm sorry, do you make the knowledge of the election time public to your customers?
David King
Unverified
1:22:28
Nah. Okay. When do you do? do we need to in
Senator Dave Wallace
Unverified
1:22:36
my opinion you do okay yeah i mean that's that's just me right now i went
David King
Unverified
1:22:41
to one board meeting before i took over as
manager so i'm i'm agreeing at it thank you sir we had legislation last session to require that the board members of the water authorities their their contact information be made public i carried that bill due to an issue in my district um we may need to explore some legislation senator wallace on uh making sure that the
that's a public notice that's posted when there's board elections coming up for the for the water authorities um who else
Representative Mark D. McElroy
Unverified
1:23:26
had a question or senator mcelroy yeah Thank you for being here. I used to run a water company myself. How many customers do
Speaker 79
1:23:34
you have on you? Over 5,000. 5,000. I've got six different
Representative Mark D. McElroy
Unverified
1:23:39
counties. Do you have laborers that work with you?
Yes. Are they all licensed? No. No. I've
Speaker 219
1:23:48
got two that's in the process of getting their license now.
Representative Mark D. McElroy
Unverified
1:23:54
The water discoloration, have you checked with the health department? Yes. The health department has come out and
David King
Unverified
1:24:01
tested. Everybody that's complaining, well, I ain't going to say everybody, but most of the
Speaker 207
1:24:06
people that have complained about dirty water, they come out and they go into their house and they test it.
David King
Unverified
1:24:15
But there's only one thing they test for, is the water safe to drink? And if it's got chlorine in it, it's safe to drink. And they have not sent any bad results back on that, but yes, there is discoloration to the water. And we've ironed out what, well, prior to Arkansas River Water coming in, we already had $4.2 million granted to us, and we just now started the paperwork.
Speaker 207
1:24:52
It was located in December of 2025, but we just got started with the paperwork on it, and we have a year there that we've got to go back and forth with our southern natural resources, make sure everything is in
Speaker 195
1:25:09
compliance before we can proceed to bid and move on with the projects. And
Representative Mark D. McElroy
Unverified
1:25:15
you're working with that grant money to try to get the discoloration out of the water? that is going to be cleaning this plant.
Speaker 219
1:25:25
This plant was built in 2007. It's got real high manganese, and
David King
Unverified
1:25:29
it's going to clean it completely from the top
Speaker 195
1:25:36
to the bottom. It's adding this acid drip we got approved
David King
Unverified
1:25:42
by the health department. That's what this grant we're doing now is, and then we're applying for another grant do a second clarifier which will give it quicker uh longer fallout time before it goes to the
Speaker 195
1:25:59
customer we work we're working on one clarifier right now and it's moving too fast they just don't have the time to
Representative Mark D. McElroy
Unverified
1:26:08
fall out well it sounds like you're working on it and i know the people will be glad when you get it worked on
Speaker 222
1:26:17
thank you so much mr chair representative
Representative Johnny Rye
Unverified
1:26:21
ryth and and Representative Beatty. Yes, sir. Boy, that looks terrible. It really does. And here's what we run into.
Senator David and I have been complaining for at least six or seven years because Lepanto, Arkansas, has got the same color. And, you know, these folks live about 30 miles from Truman, And they're taking their clothes from Lepanto all the way to Truman to wash their clothes. And I don't know about this heritage money, but I'll tell you this much. They need the help. We all need help. They need the
Speaker 195
1:26:59
help. Every water company in our Delta needs help.
That's right. Thank you, sir.
Representative Howard M. Beaty, Jr.
Unverified
1:27:09
Representative Beatty. Thank you, Mr. Chair. Again, how long have you been with
Speaker 195
1:27:15
the water district? I started working there August of 2002, and I become manager in February of 2019.
Representative Howard M. Beaty, Jr.
Unverified
1:27:25
How long has the water had the issues that you
David King
Unverified
1:27:31
have now? Forever. On high demands.
And what I'm saying, the high demand is when they have a fire and they get water out of our water system, It stirs the water up when you have a real cold sparrow like we just had. People run their water in their houses,
Speaker 207
1:27:55
drains their tanks, and it takes us a week to fill back up after they turn their water
Representative Howard M. Beaty, Jr.
Unverified
1:28:01
off. What is, and you said you had 5,000 users on this water system?
Yes. And is this problem system-wide? Yes, this is system-wide.
David King
Unverified
1:28:10
And I go from Cache, Arkansas, all the way to Cotton Plant, Arkansas. But I've got three different water
Speaker 207
1:28:19
plants that take care of all that. That's why
Representative Howard M. Beaty, Jr.
Unverified
1:28:23
I asked if this was system-wide that you had problems.
Speaker 235
1:28:27
Yeah, this is system-wide. There's only maybe 1,000 live hunters, something like
Representative Howard M. Beaty, Jr.
Unverified
1:28:32
that, in Woodruff County. Yeah, and in fairness to you,
my reason for weighing in is not so much directed at your water system specifically.
I've got a system in my district that's having the same issues, and my phone's ringing, so I know members that get a lot of calls about water and about a water system or a city or a town that can't take care of the basic needs for their constituents and their residents. And then we get the call to step in and take care of that. My question is, the issues and the money that you have now, is that going to solve the problem for these 5,000 residents?
yes yes you you've got you've got folks now and experts say this would solve the problem
David King
Unverified
1:29:18
according to an outside chemist and i don't use a i don't use like a company chemist you know that sells chemical according to him if i can get the ph under control before it hits my filters these people will not have to worry about dirty water i mean
Representative Howard M. Beaty, Jr.
Unverified
1:29:36
i someone Warren sent me the photos of that water, and that's almost exactly the same that my folks are dealing with down south.
I guess my question is, you've been there since 2002, do you drink this water? I drink it
every day. Oh, Lord. I've been to Iraq, I'll drink it. Well, thank you, thank you for your
service. I know it's safe, I know it's safe. Then the other side is, you drink
Speaker 207
1:30:09
that water. How do you feel about paying for
Speaker 195
1:30:13
that water? I understand. I understand totally. You know, I have, back in 2023, no, take it back to 2022,
I spent $70,000 rebuilding them filters at that Morton plant. And it
David King
Unverified
1:30:24
only got me this long because the water has gotten so bad under the ground. And I didn't have $5
Speaker 207
1:30:34
million to clean out everything. I just bought me a couple of years. When
Representative Howard M. Beaty, Jr.
Unverified
1:30:40
do you anticipate this project being completed? If we
Speaker 207
1:30:44
can get the money started, you know, and they give me the go-ahead,
Speaker 243
1:30:49
we have a year to have it completed.
Speaker 207
1:30:54
Who is we? Cross County Rural Water and whoever the contractor is. Arkansas Natural Street Resources. When they tell me I can go to construction, that's after the bids and everything, then they have a year to get it completed. All right. Thank you. You may have
already mentioned this, and I missed it. What is the source of the water? Is it from wells?
Yes, it's from groundwater. Okay. And what is exactly causing the dark color in the water?
Speaker 207
1:31:26
Manganese. Okay. And one of the grants that we just got is
David King
Unverified
1:31:31
a new grant they come out with. It's something, sometimes manganese contaminant grant, I think is what it's called. And that's strictly for manganese removal. All right.
Speaker 167
1:31:47
Thank you. We've got several questions. First I saw was Representative Berry.
Speaker 142
1:31:51
We'll let him go. Well, if I may, with all due respect to the problems, With all
Speaker 142
1:32:13
that I'm listening to you with water and the
customers, but have we gotten off of audit on to something else?
Do we need, I mean, I know that there's problems and I respect that, but I think we've gotten off of audit issues onto something else.
Speaker 75
1:32:41
Well, thank you, Representative Barry. We are discussing issues on why the water
system has not been fixed with the money that's been granted, so I think we can tie that back into audit issues. Next question I saw was Representative Springer.
Do you still have a question? I'm
Speaker 222
1:33:01
good. Okay. Representative Rythe and Representative Leitman.
Representative Johnny Rye
Unverified
1:33:04
Yes, real quick. Let me ask this, sir. Do you think that the piping, how long has it been since y'all had new pipes? And when was this established that you have now? This
David King
Unverified
1:33:16
grant that we're working on right now was for an acid feed system to lower the pH and new piping. And what we've done was, the reason for the new piping was because our pipes go underground, over to a clarifier, back up, back and forth.
We kept clogging up underground. We'd have to asceticize it, get it out, and we'd be shut down for several hours. And we put the piping up above the ground now, so when it leaves a clarifier to the filter, it's all above ground. We can access it easier. So we've done away with that
Speaker 207
1:33:58
bad piping, I'd call it. Well, committee, the reason I asked
Representative Johnny Rye
Unverified
1:34:02
him this was the one that I was speaking about has not had new piping since 1903.
Representative Jack Ladyman
Unverified
1:34:11
Thank you all. Representative Ladyman. Thank you, Mr. Chairman. You said your source is groundwater wells? Yes, sir. How many wells you got? There's two right there. You said you had one clarifier? Yes. So do you just have one plant,
Speaker 207
1:34:33
or you've got different plants? I have three different plants, but they're
David King
Unverified
1:34:39
in different locations. This one that's making the orange water only has two wells.
Representative Jack Ladyman
Unverified
1:34:45
Okay, so your other two plants, you don't have that
Speaker 240
1:34:49
problem. Is that correct? The one up in Amigan,
Representative Jack Ladyman
Unverified
1:34:52
I do. Okay, one of them has a problem, the other two don't with the coloration.
Speaker 235
1:34:57
No. Is that what I heard you say? No, sir. We have three
David King
Unverified
1:35:02
plants, one in Amigan, one in Woodruff County, and one in Cross County. The one in Cross County has got high calcium, the one in Woodruff County has got manganese, and Jackson County has got manganese. Okay. You
Representative Jack Ladyman
Unverified
1:35:13
mentioned if you get your pH under control, you know that certain metals drop out at certain pH.
Yes, sir. And it's very important that you maintain that pH within that range for manganese. I don't know what it is, probably pretty high. But are you able to maintain the pH that you think you need? With the acid drip, we will.
Speaker 208
1:35:35
You will? Okay. Now, the way we were built when they
David King
Unverified
1:35:39
built these plants was we raised the pH with classic soda to make the stuff drop out in the clarifier. But just as soon
Speaker 207
1:35:46
as it leaves the clarifier, it was supposed to be hit with CO2 to drop the pH back down.
Speaker 195
1:35:57
So it wouldn't drop out. But the CO2 system never has worked. Okay.
Representative Jack Ladyman
Unverified
1:36:02
So a lot of these metals won't drop out until like 11, pH of 11. Are you able
to get that high with your current system? We were, and then
David King
Unverified
1:36:14
we had to drop it back because we were dropping too much out, clocking the filters up almost weekly. And we're only
Speaker 219
1:36:23
running about 8 1⁄2 right now until we get this acid drip going.
Representative Jack Ladyman
Unverified
1:36:28
Okay, just one more question, Mr. Chairman. So you're going to get a second clarifier with this current grant, is that right? Is that what you said? We're trying to on another grant. Okay, my point is, is the water always dirty, or when the flow slows down, does it clear up any? It'll clear up. So you've got a capacity problem. Right, right. And this new clarifier, is it on this grant or the one you anticipate you're going to ask for? The one we're going to ask for.
Okay. Well, it sounds like you've got too high a flow for your system, but it sounds like you're working on it the right way. So thank you for
Representative Kendra Moore
Unverified
1:37:13
answering my question. Thank you. Professor Moore, do you have a question? Thank you, Mr. Chair. And kind of getting back to the reason we're here regarding the audits, you answered the question that one of my colleagues asked about public elections.
Do you also publish when the board is meeting and where that will be? I haven't, but I will be. Do you know
Speaker 204
1:37:42
if your board does? I mean, I post everything for the board. Because I want
Representative Kendra Moore
Unverified
1:37:47
to be clear that some of the ire here may or may not be necessarily supposed to be directed towards you because you have a board that you answer to. I know.
while you are the boots on the ground, the buck stops with you as far as day-to-day operations go. The simple fact is Woodruff County is one of the smallest and most rural counties in the state of Arkansas, clocking in at about 5,800 people. Since the year 2000, there has been a 33% loss of population. And these people, of that 5,800, you have, what, 1,000 meters of? Including families. And the reason this is so important is because people in Arkansas should not have to realize and think that they live in a third-world country and have third-world water.
And I know that you're working hard on this, but, Mr. King, time is of the essence, and more importantly, the placement of public funds is of critical importance. and the fact that you don't have public elections of who your board is and the fact that in the past, people were not notified. These customers, which are captive customers, they are not notified when the board meeting is
to be held accountable for the nearly $7 million that you have received in loans and grants over the past, well, since 2023. It is paramount that you are held accountable to your consumers. Would you not
David King
Unverified
1:39:27
I had the money in hand. I don't have that money in hand. It's sitting in that Arkansas Natural Resources account. I submit a pay request when the contractor submits a pay request.
They send me the money, they put it in my account, And within three days, I've got to get it wrote to that contractor. I don't save that money until that contractor gets done with his jobs. Senator Clark, do
Senator Alan Clark
Unverified
1:40:05
you have a question? I'd like to address the chair, if I may. Just some information.
The law that has forced this gentleman and others to be here, y'all were helpful in getting passed just a short time ago, about four years. Senator Love, when he was in the House, was crucial, as was Speaker Evans' predecessor in his district. We spent six years working hard on this, and you would have a lot more.
I get the phone calls, too. You would have a lot more if we had not forced, and it wasn't to hurt people. If we had not forced that you couldn't, 85% of over 700 water districts in this state were upside down financially, and most of them didn't know it. They weren't putting the money aside for pipes. They weren't putting the money aside for pumps, et cetera. They didn't know to. And that's why we required the education on the business side and on the physical side of how to run the plant. And now the question is, is the money there?
The money will be there because they're going to be raising the money themselves. And we also gave ANRC the teeth to do something if the locals won't. Obviously, this man is working and trying, but ANRC can come in and consolidate people, close people down if they need to, but you cannot imagine how much worse it was going to get if not for y'all's actions. And I should mention the Municipal League and Jack Cricketer.
Without his help, we wouldn't have got it done either. But I just want to thank all y'all for getting it done. You're probably going to see more people here before the Audit Committee, but it's going to force us to have the water that we need to have, especially in these poor rural areas. And which comes first, when we talk about economic development, the chicken or the egg, you can't get the factories there if you ain't got the water. And you can't get the water there if you ain't got somebody to pay for it. So, again, thank you for your indulgence, Mr. Chair, but I thought that would be helpful.
Thank you, Senator. Any more questions from the committee? if not then
sir we're we thank you for being here we thank you for your work on this issue and uh did did was this report filed we need we need to file this report okay so if there are no more questions without objection we will go ahead and file this report all right thank
you sir for being here that brings us to the end of our agenda i thank everybody for their patience and their hard work
Agenda
A. Call to Order by Chair 66666666
B. Adoption of Minutes of February 12, 2026, meeting
C. Update on Private Reports – Delinquent December 31, 2022, Water and Sewer Reports
D. Update on Private Reports – Delinquent December 31, 2023, Water and Sewer Reports
E. Discussion of Noncompliance with Municipal Accounting Law – Fargo
F. Discussion of Noncompliance will A.C.A § 27-70-207 Misuse of Street Funds - Jericho
G. Review of Reports (Refer to the Synopsis)
H. Cross County Rural Water System
I. The next meeting of the Legislative Joint Auditing Committee will be held on June 4, 2026.
J. Adjournment
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - COUNTIES AND MUNICIPALITIES, Mar 12, 2026 | Agenda | 3 | Official source ↗ |
Speakers
Representative Cameron Cooper Chair
Unverified
Speaker 5
Representative Carol Dalby
Unverified
Speaker 39
Representative Johnny Rye
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Speaker 57
Senator Mark Johnson
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Speaker 67
Speaker 2
Speaker 78
Speaker 25
Representative Jack Ladyman
Unverified
Speaker 87
Speaker 91
Speaker 95
Speaker 96
Speaker 109
Speaker 112
Speaker 125
Speaker 32
Speaker 129
Speaker 119
Speaker 142
Speaker 105
Speaker 147
Speaker 149
Speaker 152
Speaker 156
Speaker 164
Speaker 165
Speaker 168
Speaker 175
Speaker 54
Speaker 47
Rita Feid
Unverified
Speaker 6
David King
Unverified
Speaker 195
Representative Kendra Moore
Unverified
Speaker 202
Speaker 204
Speaker 207
Speaker 209
Speaker 93
Speaker 211
Senator Dave Wallace
Unverified
Representative Mark D. McElroy
Unverified
Speaker 79
Speaker 219
Speaker 222
Representative Howard M. Beaty, Jr.
Unverified
Speaker 235
Speaker 243
Speaker 167
Speaker 249
Speaker 75
Speaker 240
Speaker 208
Speaker 198
Senator Alan Clark
Unverified