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- October 5, 2026
Unknown speaker
0:00
Thank you.
Thank you.
Thank you.
Thank you.
Senator Jonathan Dismang
Unverified
2:30
Members, if we can go ahead and take our seats, we're going to get started.
Speaker 7
3:23
the room so we can go ahead and get started.
Senator Jonathan Dismang
Unverified
3:30
If you're not a member, if you could go ahead and make your way to the audience. And if you are a member and you need to have a conversation with someone that is not a member,
Speaker 15
4:00
Members, Chair Cesar Quorum, we're going to
Senator Jonathan Dismang
Unverified
4:12
go ahead and get started. With that, off the bat, I'm going to recognize Representative
Representative Jessie McGruder
Unverified
4:20
McGruder. Thank you, Mr. Chair. I just want to ask this morning that we have a moment of prayer. We lost Mr. Jesse Jackson, Reverend Jesse Jackson.
last night and we want to make sure we remember him today. Bow your heads. Father God, we come thanking you because we know that we are grateful to stand in this position that we are in today, Father. Father, we want to give honor to those individuals who have gone on, who allowed us to serve in this position. Father, we ask that you open up our minds, that we're able to receive the information that we received today. And we ask especially that you are with the Jackson family who lost their loved one.
These and other blessings we ask in your son Jesus'
Senator Jonathan Dismang
Unverified
5:08
name, amen. Thank you, Representative. Members, we'll do this just like every peer meeting. We're going to go through each section, all items, so B1, C1 and 2, D123. We'll come back, and if you have a question on an item, I will say essentially D1. Hit your mic then. If you have a question on D2, let us get
through the questions on D1 first. Again, so we'll kick things off with B1.
William Parrish
Unverified
5:35
Thank you, Mr. Chair. We're in Section B. These are various temporary appropriation requests. There's only one on the agenda. This is a letter from the Department of Labor and Licensing. It's for $273,000 in spending authority. This is to pay administrative costs for their enterprise licensing platform and supported by license and application fees. All right, thank you. Members,
Senator Jonathan Dismang
Unverified
5:55
do we have any questions on B1? All right. Seeing no questions, what's the wheel of the committee? We've got a motion
to approve. We've got a second. Any discussion on the motion? Seeing none. All those in favor signify by saying aye. Aye. All those opposed? Motion
William Parrish
Unverified
6:12
carries. All right. Section C. Thank you, Mr. Chair. We're in Section C. These are Infrastructure Investment and Jobs Act appropriation requests. First one, C1, is a request from the Department of Transportation. This is for $280 million in appropriation.
It's to provide the IIJA appropriation for the final quarter of the fiscal year Behind the request is a 20-page report showing all projects obligated with IIJA funds I'm sharing number two is on page 22 of your packet C2 is the last page of this packet This is a request from the Department of Commerce State Broadband Office is for a hundred and ninety five million in appropriation And to establish an extra help position This is to award broadband infrastructure grants to internet service providers as part of the Arkansas bead program
Online and on the screens at your desk is an almost 200 page report that shows colored maps of the provisionally awarded projects for the first tranche We also received some physical copies from the agency this morning and for the members of the committee. It should be at your desk The report details how 15 internet service providers serving over 51,000 locations request 126 million in grant funds Thank you.
Senator Jonathan Dismang
Unverified
7:17
Members, do we have any questions on C1? All right. Members, then we'll move on to C2. Do we have any questions on C2?
Representative Kavanaugh, you're recognized for questions on C2. Thank you, Mr.
Representative Frances Cavenaugh
Unverified
7:31
Chair. Could I have someone from the agency come down real quick? If
Senator Jonathan Dismang
Unverified
7:42
you could, just recognize yourself for the committee, and then you'll be recognized for your question. Representative Kavanaugh. glenn howie
Representative Frances Cavenaugh
Unverified
7:54
state broadband director thank you for coming down i have just really two quick questions on some of these proposed awardees or some of the ones actually not listed on the report
did they ask for any amendments on their contracts you know maybe about the speed that they had previously agreed to or any other conditions that had to be changed on the contracts right so you're
Chair
Unverified
8:14
asking about certain providers that may not be on the list today correct is that
Representative Frances Cavenaugh
Unverified
8:18
what you're asking on the list or
Representative Stetson Painter
Unverified
8:21
not on the list either one uh as far as i'm aware no provider has reached out with wanting to update their their project
Representative Frances Cavenaugh
Unverified
8:29
with different speeds or anything like that okay but they have not asked for an
Representative Stetson Painter
Unverified
8:35
amendment from the original agreement okay so starlink has uh sent
out to I believe most if not all the states that they have been provisionally selected across the country wanting certain adjustments to the grant agreement document and so forth. We have been strongly communicated to by
Senator Missy Irvin
Unverified
8:51
the NTIA at U.S. Commerce that we are not to consider that amendment. Okay thank
Representative Frances Cavenaugh
Unverified
8:57
you for that and the second question real quick is once the awards are made what plans do y'all have to
hold them accountable for their, you know, communication standards and the timelines
to actually finish the projects? What are y'all's plan for that? Sure. We
Representative Stetson Painter
Unverified
9:14
have a fully comprehensive risk-rated monitoring system, okay, that we're going to apply equally across every provider in this program. A couple of the protections include milestone disbursements. So providers are only paid when they perform actions, irregardless of how much money they have spent. So as they perform and build out they get paid out proportionately for the grant that's one way that we protect taxpayer dollars and as far as a the time frame itself under the prior administration
we were able to provide points and scoring based on projected time frames of build out under the current administration at the federal level which changed the rules of the program last year we were not able to score based on timelines so there was a four year build out time frame for of this program which we will hold them to it's been my prerogative to these providers the whole time I want it done in two years or less that that's my prerogative to them I don't care how small the project is or how large the project is
Senator Missy Irvin
Unverified
10:11
that's our prerogative we'll do our best to get
Representative Frances Cavenaugh
Unverified
10:14
it done and you'd have enough staff to be able to hold them accountable and you're not going to give out monies until they hit certain
Chair
Unverified
10:24
milestones correct okay thank you all right thank you representative Painter you are recognized for
Representative Stetson Painter
Unverified
10:31
questions thank you mr. chair Berlin I know we talked a little bit last time but I got just a couple of quick questions there are 15 companies out of the 21 that you that are presented on the award list what is the status of the other six sure originally
we had I think 20 was was the actual number that we had since that time we've We've had a couple of providers back out of their obligations under the program since that time. We're working with the NTIA to find a solution for those locations. And for three others, right, back in November, I mentioned to the greater body that this is an ongoing evaluative process. I will only bring forth provisional selectees when we are ready to execute a grant agreement
with them. And so we have 15 today in front of you that we are ready to execute grant agreements. They've met all of their obligations
Senator Missy Irvin
Unverified
11:22
and checked all the boxes to date. We continue to evaluate several others, and should those pass
Representative Stetson Painter
Unverified
11:27
muster, we'll bring them in the coming months. Okay, thank you. And my second question, what has happened with the recent defaults on the RDOF federal awards for broadband?
That is a great question. That is a great question. So for any members that don't know, there is a separate federal grant program that is not administered by our office.
It's administered directly by the FCC at the federal level. It was very prevalent in Arkansas. A handful of those providers in Arkansas that are subject to that separate federal grant program have defaulted on some of their locations and notified the federal government that they will not be able to build out to some of those locations. And so, you know, although kind of in reality and practically and by the rules, it's not sort of our program to satisfy, I understand that it's politically it's an issue, right? And we have a job, and even though it's not our program and not our funding, we're going to do everything in our power.
to work with those federal partners and see if we can't find a solution
Speaker 49
12:24
for those folks. My last question, Mr. Chair, if
Representative Stetson Painter
Unverified
12:27
there's a, you know, I guess, is there a solution that's going to be with the leftover bead money? If so, do you know what that might
be? Yeah, it is. Everything that we have heard from our federal partners on this is that, look, Arkansas is in a great position because we ran such an effective, market-driven, competitive process. We have about $650 million in the BEAD program that is sort of excess funding, kind of left over, if you will, after we've awarded these infrastructure grants.
We expect guidance from U.S. Commerce about middle of next month, so middle of March. We expect U.S. Commerce to say, okay, states that have run a great program and you have extra funding, here is sort of a menu of options that we will let you look at and design a program for the extra money. Probably they'll give us about 90 days to produce a plan for them on that. So, again, in short, we expect guidance from U.S. Commerce probably middle of March with a 90-day time
Senator Missy Irvin
Unverified
13:16
frame for us to then get a plan back to them. Okay. Yep. Great. Thank you. Thank you, Mr. Chair.
Chair
Unverified
13:25
Representative McGruder, you're recognized for a question. Thank you. Thank you, Mr. Chair. Thank you,
Representative Jessie McGruder
Unverified
13:30
Mr. Howe, for all the work you're doing. We truly appreciate it. I'm trying to get an update on completion time for some of these projects in Critton and in Crouse County. I know we're very patient, but I do have constituents contacting me about their broadband service. So I'm just trying to see if we had an update on when it will be close to completion.
Representative Stetson Painter
Unverified
13:50
Sure. There's probably, off the top of my head, there's probably several grant programs operating in and around Crittenden County on the east side of the state.
Some of them likely are, as there could be others, that are direct federal programs. I will get an update for you on that. Yes, sir.
Senator Jonathan Dismang
Unverified
14:07
Thank you. Thank you, Mr. Chair. All right.
Senator Missy Irvin
Unverified
14:10
Thank you. Senator Irvin, you're recognized for a question. Thank you. Thank you so much. Just a quick question. If you have one that has been audited and they're not able to complete the project because of an audit, because they haven't really met their obligations as you've laid out, do you have a backup plan for that so that the project can still go forward?
Do you have a backup company, a backup plan, just to make sure that those areas are deployed, the fiber? Just talk to me how that would happen. Yeah, good question.
So in the BEAD program, to be honest with you, NTIA is still figuring out a lot of
Representative Stetson Painter
Unverified
14:49
this themselves. Okay. Right? And so if we went through the process two years from now and, you know, someone was not able to complete their obligation, right, NTIA has yet to date given us guidance on what to do next with that. It could be any combination of, okay, who was number two in the original bidding, talk to them about it, see if they can do it for the cost.
It could be, you know, we'd have to do something with the assets, right, if they built out half the network, right, we would need to do something with that. So NTIA would have to give us guidance on what to do
Senator Missy Irvin
Unverified
15:21
in that scenario. Okay, and at that time, if we do have to transition to the second one, then do you bring that back to us for an update or approval or anything like that? Okay. Thank you. Yeah, there we go. All
Senator Jonathan Dismang
Unverified
15:36
right. Representative or Speaker Evans, you're recognized for question. Thank you, Mr. Chair.
Representative Brian S. Evans
Unverified
15:41
Glenn, could you give us just kind of a high level definition of what, what the term broadband
Representative Stetson Painter
Unverified
15:48
serviceable locations means? Yeah. So broadband serviceable location or BSL for short, it's simply a occupied home, right? right, or business with electricity that is actually inhabited or in use, right? So it doesn't count land or empty facilities and so forth. Basically, in short, a home or business that's active with
Representative Brian S. Evans
Unverified
16:09
electricity. So then with that definition, what this means is through this round one,
we're going to use $126.1 million to service 51,566 new accounts? Yeah, 51,566 homes and businesses, correct. Okay, thank you. All across the state.
Chair
Unverified
16:27
Yes, sir. Thank you. Representative Kavanaugh, you're recognized for a question. Thank you. When you said
Representative Frances Cavenaugh
Unverified
16:39
that and he asked that question, it's just something in my mind. Sure. So if I'm looking down at CNL Broadband Connect, they're getting approximately $3 million for $85?
Senator Missy Irvin
Unverified
16:52
Yeah, so looking at that list, they would actually, their requested grant amount is $965,000. Their match amount
Representative Stetson Painter
Unverified
16:59
that they committed to put up as a part of the project is that $2 million. So the total cost of the project is right around $3 million,
Senator Missy Irvin
Unverified
17:08
$2.9 million, $3 million. The grant funding for that is $965,000, and themselves are
Representative Frances Cavenaugh
Unverified
17:15
matching $2 million. Yeah, but I guess I'm wondering why is it costing $35,000 to get broadband to 85 customers?
Chair
Unverified
17:22
Yeah, so, again, good question. You know, for us, we're concerned
Representative Stetson Painter
Unverified
17:27
about the grant cost per BSL, right? So for that particular project, it was a little over $11,000 per location in that one. For us, we don't want to go in and, like, set a price cap or look at those things. You know, we run a very open competitive process, and, you know, CNL bid on those locations, and they were the best application for that area, and so they were the winner. Yeah, but what
Representative Frances Cavenaugh
Unverified
17:51
makes that, I guess what I'm trying to say is,
what makes that particular area so costly to get Internet to? Great question. Generally, there's a number of
Representative Stetson Painter
Unverified
18:00
variables to that. How dense are the locations? Are they closer together? Because if locations are closer together, it's going to be less costly to get to them. So if locations are spread out, that can increase cost. How far is that particular ISP from those locations? They have to build out further to get to them. That can increase cost. The type of terrain they're in, right? So if we're looking at granite or rock, it's going to be more expensive to build there
than it would be necessarily like in the delta, where it's less friction, right, when you're building. So a couple of variables
Representative Frances Cavenaugh
Unverified
18:35
that can influence that. Well, and this is just thinking, so if it's so costly to get it there and there's so few customers, have we in the process looked at financial viability if we're spending our money to get it there, have we looked at the financial viability of the providers to make sure they're going to be able to continue to provide those services? Sure.
Representative Stetson Painter
Unverified
18:56
One of the things that we've evaluated across all of our selectees in this 15 are our financials and viability. Yes, ma'am. we've drilled
Representative Frances Cavenaugh
Unverified
19:03
down into their finances to make sure yes okay all right thank you oh yeah
Senator Jonathan Dismang
Unverified
19:11
all right thank you we had a couple on everybody hopped off is that
correct no more questions okay all right thank you very much all right members we've heard c1 and 2 we've went through the questions what's the recommendation of the committee we've got a motion to approve items c1
and 2 we've got a second any discussion on the motion seeing none all those in favor signify was saying
William Parrish
Unverified
19:39
aye all those opposed motion carries section d thank you mr chairman section d these are appropriation and or fund transfer requests the first one is a request from the department of correction division of correction special language in their act allows to transfer among various capital improvements and construction projects after approval by the governor and alc the department requests to transfer 458 000 from the female work release program to the tucker
unit water treatment plant this is supported by general improvement funds that were released in fiscal year 2016. next item d2 is request from department of education division of elementary and secondary education special language allows to transfer up to twice a year after approval by the state CFO and ALC the department requests transferring 25 million from their school funding contingency and national board of professional teacher standards sections to the following 15 million to declining enrollment 10 million to merit teacher incentive, $200,000 to school recognition, and $16,000 to Easter Seals.
Next item, D3, is a letter from Department of Shared Administration Services. Special language in the Dispersing Officer Act at DFA allows the transfer after approval of the CFO and review by LC. Department requests transferring $229,000 from the Project Development Fund to cover salary and match for two positions at the Project Management Office. The letter explains the office is a cost recovery agency that's limited to charging for services provided. However, the positions at the office provide services that produce statewide value
and are therefore difficult to assign to a specific project. The Innovation and Project Development
Fund provides support for the responsibility of the statewide project governance, shared tools, enterprise reporting, and cross-department project support. Mr. Chair, those are all the transfer requests. All right,
Senator Jonathan Dismang
Unverified
21:24
thank you. Members, we have questions on D1. all right representative you are recognized thank
Representative Denise Jones Ennett
Unverified
21:32
you mr. chair is somebody here from the Department of Education let's
Senator Jonathan Dismang
Unverified
21:37
uh is your question educator D2 or D1 I'm sorry it's D it's
Speaker 76
21:41
D2 I'm sorry I'm gonna yeah hold on one
Senator Jonathan Dismang
Unverified
21:46
second we'll get there all right members do we have any questions on D1 all right seeing no questions what's the will of the committee we've got a motion to approve D1 we've got a second
in discussion on the motion seeing none all those in favor signify by saying aye all those opposed motion carries all right
d2 representative you are recognized for a question if you'll hit your mic one more
Representative Denise Jones Ennett
Unverified
22:08
time thank you thank you again mr. chair i have a question about the the decline enrollment if somebody can answer that when you have anyone from the department there we go
Senator Jonathan Dismang
Unverified
22:27
And if you could just recognize yourself for the committee and then representative, you're recognized for your
Representative Denise Jones Ennett
Unverified
22:43
question. Greg Rogers, Department of Education. Courtney Solis for Department of Education. Thank you. I had a question about the decline in enrollment.
Is that $15 million? How do you, how many districts are suffering
Speaker 88
22:56
declining enrollment? This year there's 152 districts that are on the preliminary list
Representative Denise Jones Ennett
Unverified
22:59
to receive declining enrollment funds. So how do you divvy up the $15 million between those school
Chair
Unverified
23:07
districts? How do you do that? There's a calculation in law for under 620-2305. We take the average ADM of the preceding two years, last year's ADM, and whatever that difference is multiplied by the foundation funding of this year. Okay. And I have one more
Representative Denise Jones Ennett
Unverified
23:23
question. So it's the $15 million, is that just a standard, or does it go up any, or is that just a standard amount each year?
Chair
Unverified
23:32
So we have an appropriation line item in public school fund for $23 million, and we're projecting that we need about another $10 million in there. We put a little bit more in there in case our preliminary is off. But last year, the appropriation is $23 million. We spent $24 million last year on declining enrollment, and we're thinking somewhere between $28 million and $30 million this year. All right.
Senator Jonathan Dismang
Unverified
23:56
Thank you. And just to make sure that I'm clear, we're paying for kids that are not actually in the classroom just to make sure that the districts have an ability or a time frame, runway, whatever you want to call it, to, you know, stabilize their funding situation.
Correct. Okay, thank you. All right, Representative Lane
Jean. Greg, I'm over here. We
Representative Lane Jean
Unverified
24:19
were talking over here, what is the total number of school districts today?
Chair
Unverified
24:26
uh there are 260 uh traditional schools and open enrollment charter schools and 150
Representative Lane Jean
Unverified
24:32
of them are declining uh 152 are receiving declining enrollment funds okay thank you all right thank
Senator Jonathan Dismang
Unverified
24:42
you members do we have any other questions on d2 all right representative ray
Speaker 99
24:50
just a quick question how long do the districts receive the declining enrollment
Chair
Unverified
24:56
funds so it's based off the calculation it's always rolling so we're looking at the preceding two years from the last year's ADM to see if they're having a decline and so that calculation goes on that so if a district is declining
Speaker 83
25:10
they could receive the funds each year if they're having that decline that keeps going on so it's two
Senator Jonathan Dismang
Unverified
25:16
years yes okay thank you all right thank you senator
Senator Joshua Bryant
Unverified
25:19
you're recognized for question thank you mr. chair what is the minimum number of
enrollment that has to decline before it triggers the ability for them to ask for declining enrollment it
Chair
Unverified
25:30
really depends on what's happening in the preceding two years in the last year if they're having if the average declining enrollment is going down those last two years and then it continues to go down that third year then they get whatever the difference is that adm they get that amount of declining enrollment so would that trigger
Senator Joshua Bryant
Unverified
25:47
even at two students a year for the last three years where that trigger yes
Chair
Unverified
25:52
it could if their average if their average
Senator Joshua Bryant
Unverified
25:54
alien membership was going down that much yes okay do you know what the average declining enrollment is for the 152 schools like some schools say six to 800 is that I don't I don't have that I could get that but I don't have that on with me today all right thank you all right members we have
Senator Jonathan Dismang
Unverified
26:12
any other questions on d2 all right seeing no other commit questions on d2 what's the will of the committee we've got a motion to approve we've got a second any discussion on the motion seeing none all those in favor signify by
saying aye all those opposed motion carries d3 all right that's
right d3 do you have any questions on d3 all right seeing no questions what's will the committee we've got a motion to approve d3 we've
got a second any discussion on the motion seeing none all those in favor signify by saying Aye. All those opposed? Motion carries. Aye to me. Thank you,
William Parrish
Unverified
26:50
Mr. Chair. We're in section E. This is a budget-stabilizing trust fund loan request. It's from the Department of Shared
Administration Services, Office of State Technology. Arkansas Code allows the Office of State Technology to borrow from the budget-stabilization trust fund after approval of the governor, but only after the governor obtains advice of ALC. The office requests $4.7 million to implement a new platform for information technology service management, portfolio management, and centralized change management, consolidating IT tools, and assessing executive branch applications in an effort to consolidate licenses and modernize applications.
The letter says these activities would result in cost savings, improved security, and efficiencies. Mr. Chair, the action for this item would be to advise the governor on whether to approve the loan.
Senator Jonathan Dismang
Unverified
27:36
All right. Thank you, members. Do we have any questions on E1? Senator
Hickey, you recognize for a question on E1. Okay,
Senator Jimmy Hickey, Jr
Unverified
27:44
I guess my question is going to be is the cough savings, do they have anything in writing that's going to show that it's going to fully cover the $4.7 million or are funds supposed to come from somewhere else to pay the loan back?
Senator Jonathan Dismang
Unverified
27:59
Do you have anyone from the agency that wants to tackle
that? All right, and if you could just recognize yourself for the committee, and then Senator Hickey, I'd probably be best to restate
Speaker 108
28:20
your question. Thank you, Mr. Chair. James Caldwell, CFO of Shared
Speaker 109
28:24
Administrative Services. Jay Harton, Director of Office of State Technology.
Senator Jimmy Hickey, Jr
Unverified
28:27
Okay, I'm up here, and I'll restate the question as the chair asked me to.
First of all, of course, I understand that we do this from time to time. So you got four, but in the end, it's a $4.7 million loan that you're getting from us. So how are you going to pay it back? It says cost savings. Is it going to be repaid fully with cost savings, or is there going to be other funds, or are you going to be trying
Speaker 110
28:54
to get a higher appropriation, or what? How are we going to do that? The cost savings we expect to come later. We don't have an actual number projected. A lot of that's probably going to come through the consolidation of different applications.
throughout the state. Currently, OST has a loan from ADFA for some equipment we had to buy a few years ago. That loan ends right before we'd start paying on this one. So it runs through our rates just like everything else. So it shouldn't have any impact on the rate because this loan is actually lower than the previous loan. But it'll be recovered through rates just like everything else. OST is cost recovery. So everything we do is recovered through the rates we bill the departments okay so i and i heard what you said
Senator Jimmy Hickey, Jr
Unverified
29:39
with it being lower however from my standpoint
i'm gonna use a term like evergreen is it a loan that's that's what i'd call evergreen because if you have that now but you're just rolling it over and we're never fully fully fully paying the thing off is
Speaker 110
29:55
that actually the case with this no because it was these are for specific projects so that previous loan was for a data center modernization project okay this one is to improve jay can speak better to what this
Speaker 113
30:09
one's for right so this is for our um i spoke to it at the it communications
committee but this is for our implementation of a product called service now so it's how we deliver our it services to the other 15 departments and which of course then impacts the constituents because they'll be more efficient on how they are able to do business. And to James' point on the application, we don't know exactly how much we're going to save. We did back in November, we asked all the departments to report all their major applications.
And currently that list is sitting about 5,000 applications across the 15 departments. We got this from the spreadsheet and everything and the idea from North Carolina who at one point when they went through it, they had over 3,000 applications and now they're down to just under 600 applications. So we know we're going to see the cost savings. We're just not sure exactly. A good example is we know that there's probably 8 to 10 different grant management systems that everybody's paying a different licensing.
It's not a common platform, so that's one of the first ones that
Senator Jimmy Hickey, Jr
Unverified
31:29
we're going to try and tackle. But what you're telling me, though, is cost savings is not going to fully pay this because I heard you say that there's going to
Speaker 109
31:40
have to be an increase in the rates. Is that correct? No.
Speaker 113
31:43
Well, so what James was alluding to, previously we had a data center monetization project that we had gotten a loan from ADFA on. that ends so that that project's complete the payoff of that loan will end in june and so we
won't be pulling any money off of this loan until july 1 so and this payment back will be less than what we are currently paying for adfa
Senator Jimmy Hickey, Jr
Unverified
32:09
what are you what are you what are you using these funds for this this loan these these this specific 4.7 million dollars what are you
Speaker 113
32:19
using those loan proceeds for so these proceeds are for the implementation the rest of the implementation of service now which is the enterprise portfolio management system the business continuity and
disaster recovery module and then also our governance risk and compliance from a cyber security perspective which were all put in our requirements of act 480 and act 489 and that's fair okay so we've got we've got what
Senator Jimmy Hickey, Jr
Unverified
32:44
we're going to do with the funding but then the payback of that where where are the additional funds because you're getting 4.7 million dollars where are the additional funds going to come from to pay that back and i've already heard that it's not in cost
savings because although we put that in here we don't truly know what they are which is a little odd to me but that's another another thing so where are the funds going to come for to pay this back and then how long is it going to be before
we have a zero balance on that back to the budget
Speaker 110
33:23
stabilization trust fund for that it's the under the code it's a five years is the maximum time we can pay it back so it'll be a five-year payback period based on the projected loan payment we
won't have to increase the rates over where they are now because we're going to offset that extra what the other loan we have. That's the only reason I mentioned the other loan is because we won't have to increase the rates because of this one. Yes, it's a cost, but it's replacing another cost, basically. So there's no increase to the rates just because of this loan. And you're paying the other
Senator Jimmy Hickey, Jr
Unverified
33:56
one out of your appropriation? Yes. So you're just going to be paying this back out of your appropriation? Yes.
Senator Jonathan Dismang
Unverified
34:04
So the way that I understand it in talking to staff, They have a loan that is maturing. It's going to be paid off. Its monthly payment is $100 a month, just making it up. And so now they're about to take out another, you know, $4.7 million five-year loan whose payment is going to be $90 a month. Sure. Everything that they have is a pass-through from an agency. So right now they're divvying up the $100 a month amongst the agencies, and that's part of the bill that's sent to the agencies. Moving forward, they'll be divvying up a $90 bill amongst the agencies,
and that's who will be paying for it. Right. So essentially you had an old
car, you've paid off your old car, and you're buying another car.
Senator Jimmy Hickey, Jr
Unverified
34:45
Yeah. It's just, as I call it, an evergreen loan for however you're going to do it because at the end of this time, where are we going to be? I guess the one issue I have, I'm not saying I have an issue with your thing, but we're sitting here trying to allude that there's cost savings and things like that. But maybe there is maybe there's not whenever you come in here before me and we don't know what those cost savings are
But we're alluding to it in here It makes it appear like we're going to pay for this whole thing with the cost savings and that's not the case at all All we're doing is using state funds To pay to pay a loan back that we're giving you So anyway, thank you. Mr. Chair. Like I said, I think we got where we need to be I just I want to make sure that we
Senator Jonathan Dismang
Unverified
35:29
fully understand what's going on. Thank you All right, thank you. Members, do you have any other questions on E1? All right, seeing no other questions. Senator, you're recognized for a question.
Senator Missy Irvin
Unverified
35:39
No. So just from staff, do you need a motion to not just approve it but to advise? It's to advise. Okay, so I'll make a motion to advise. All right, we have
Senator Jonathan Dismang
Unverified
35:50
a motion to advise. Yeah, advise the
governor to approve in accordance with the letter that's been presented today. Oh, goodness. Now we're going to back that off. I would like for you to make a motion for favorable advisement.
Is that right? Favorable advice? All right, favorable advice. Senator Irvin has made a motion for favorable advice. Do we have a second? We have a second. Any discussion on the motion? Seeing none, all those in favor signify by saying aye. Aye. All those opposed, motion carries. That was a new one. All right, we're moving on to the review section. We'll go through all of F. We'll take them one at a time.
William Parrish
Unverified
36:41
Thank you, Mr. Chair. We're in Section F. These are cash fund appropriation requests. First one, F1, is a letter from the Department of Labor and Licensing, Division of Labor, Wage, and Hour. This is $200,000 in appropriation. It's to cover the increase in payments made to wage and hour claimants. after violations have been found in the Fair Labor Standard Act and Arkansas wage and hour laws supported by client deposits. Next item F2 is a letter from Auditor States for 15 million in appropriation. This is to meet projections for the unclaimed property claims. F3 is a letter from Parks,
Heritage and Tourism Division of Heritage. It's for 8,000 and spending authority. It's to utilize a grant from the Walton Family Foundation for an after-school
and summer program at the Delta Cultural Center. Let's share those with all
Senator Jonathan Dismang
Unverified
37:26
the requests all right thank you members we need questions on f1 any questions on f2 and
f3 is there any objection to reviewing items f1 through 3 or no objections the items have been reviewed section g mr. chair we're
William Parrish
Unverified
37:46
in section g this is a miscellaneous federal grant appropriation
request there's only one it's from the department of education career and technical education is for a 1.1 million in spending authority they have a grant from the u.s department of education for the college and career coaches program to assist students for a post-secondary education or careers
these funds will be used to expand the program for rural districts all right thank you
Senator Jonathan Dismang
Unverified
38:08
members we have any questions on g1 seeing no questions is there any objection to reviewing item g1 all
right g1 is reviewed without objection section h thank you mr chair we're in section h
William Parrish
Unverified
38:22
This is pay plan appropriation and performance fund requests. 14 agencies request $3.8 million in pay plan appropriation for regular salaries to match. Most cite the salary adjustments that came from implementation of the pay plan within Class and Compact. Labor and licensing and the Real Estate Commission also cite the need for extra help positions. There are four agencies that show a total of $28 million in transfers from the performance fund. The transfers are also related to pay plan implementation.
Senator Jonathan Dismang
Unverified
38:52
all right thank you members do we have any questions on
section H all right seeing no question is there any objection reviewing section H there is no objection section H has been reviewed
William Parrish
Unverified
39:06
section I thank you mr. chair we're in section I this is the proposed budget manuals guideline the Department of Finance and Administration submitted formatting changes for the budget manuals for the upcoming biennium most of the changes clarify titles and more clearly state fiscal years. If members have any more questions, someone from DFA will be able to
Senator Jonathan Dismang
Unverified
39:24
go through that manual. Thank you. Any questions on I-1? All right, seeing no questions. Is there any objections to reviewing I-1? Seeing none, item I-1 has been reviewed. Members, we're at reports. Do we have any questions on the reports? Senator Hickey, you recognize
Senator Jimmy Hickey, Jr
Unverified
39:44
for a question? Yes, whenever you say reports are we
doing the I also I want to do I I want to talk about the Medicaid trust fund I guess that's I six
Senator Jonathan Dismang
Unverified
39:57
I already excuse me. Oh, that's a L. Yeah, no glasses today understood Yes, we have anyone from DHS can
ask your questions on the Medicaid trust fund or maybe DFA However, you'd like to split well, I'd like
Senator Jimmy Hickey, Jr
Unverified
40:10
DHS and then I'm gonna ask DF and a something too. So Okay
Senator Jonathan Dismang
Unverified
40:44
all right if y'all could just recognize yourself with the committee and then you'll be recognized for your question senator
Senator Jimmy Hickey, Jr
Unverified
41:03
dhs secretary jim hadson secretary dfa okay thank you my favorite report as y'all
know uh let you slide last month because i was tied up on a couple other things but okay back on this medicaid trust fund we passed this legislation
to try to at least keep a grasp of where we were i think we all knew we had a large balance in there maybe that we were using a lot of that money but that we were going to pay it down to a certain number and it looks like to me that of course that according to the report we've had this thing back from 2022 that we had a balance of 660 million in there and is this for seven months ended this this report as that it'd be as of the end of january yes sir okay i used seven months
but i wanted to make sure because i didn't see that on there so so and then now as of the seven months for this fiscal year we're down to 394 million and of course i extrapolated that out and put that you know looks like to me that's about round numbers about 13.8 million dollars a month that were declining so it looks like to me that's going to get us somewhere oh down to 325 million by the end of this fiscal year unless there's some things that are cyclical in nature
or timing or seasoning so could you tell me have you run any numbers and and believe that's going to be about where we're at or or is there something that we don't know as far as timing coming in from the feds or other
Senator Breanne Davis
Unverified
42:45
cyclical type things i'll begin and secretary hudson will um chime in so we do run projections we look at stuff every week when we pay claims and we are currently running um with
our aop to not have any alarms on the budget i do think um i don't know what was the number that you said again just to make sure well
Senator Jimmy Hickey, Jr
Unverified
43:05
now right now of course you're at 394 million as of the seven months ending in this fiscal if I you know just divide that out which I don't I understand it's not exact it looks like to me that we're going to get down to about 325 million
at the end of this fiscal year all things being even so I don't
Senator Breanne Davis
Unverified
43:25
know that all things can be even I think
it will be a little bit lower but not very much um we do spend more in the fourth quarter
Senator Jimmy Hickey, Jr
Unverified
43:34
lower than the 325 or lower than the 394 that you're
showing right now lower than the 394 okay so anyway i think i think my point and as a lot of us know i'm not the only one in here on this stuff again i know that you know at the end of the fiscal year in 21 we're at 504 22 660 23 688 and then we're down to 579 491 394 and now we're going to be lower than that
it's obvious that we're spending it down and again i think we knew we were spending it down but at what point are we going to say and how much money are we going to say that we want to maintain in that trust fund and then my question to dfna is for this budget how much are we going increase that so that's that's kind of where I'm heading because we've been watching this and it looks like to me that this this alligator here is about to show up a little bit yes
Speaker 143
44:36
sir I mean I think we were all agreement that we've
been spending it down we knew we're gonna have to put some additional capital in the trust fund sooner or later we have a hundred million dollars in the set-aside right now that's not been touched that will have to come in at some point. We'll have conversations, the governor obviously will, with leadership as we're working on the budget and see where kind of Medicaid, you know, factors into that in terms of any additional monies that we want to set aside for that. But, you know, the path of spending in terms of just the cash burn rate, you know, it's going to keep drawing that number down. So we need to look at
not only from a cash perspective, but from an expense perspective as well. And what are all the things we can do potentially to mitigate the speed of the cash burn but we we can't continue to spend it down and not
Senator Jimmy Hickey, Jr
Unverified
45:26
respond in some way sure and i mean i think the time to respond though was before maybe maybe before now and of course we've known this is happening so back to my original question though and i heard what you said there about the the money we have so is our intention to just put this in another account and not actually put it in a budget and just to give it to dhs as they need
it with another set aside i can't speak to
Speaker 146
45:51
any intentions at this point we're still talking
Senator Jimmy Hickey, Jr
Unverified
45:54
through the budget okay so what is what is our ideal as far as a as an ending balance on this thing from year to year what what are we looking to have because like i say we've been at 660 688 and there's probably an argument that that's too much. I will say that. But what have the discussions been on where we need to be? Is it $400 million or is it going to be the $350 million
or is it $200 million or what? I know that's subjective, but surely we've had those conversations. We don't have a recommended number
Speaker 143
46:28
at this point. Again, that will be part of the conversations about preparing the budget and what, if any, additional capital needs to come in on top of the $100 that is still there and has not been moved in the trust fund yet. You're just talking about in the set-aside that we've done. Yes, that's correct. But it's dedicated
Senator Jimmy Hickey, Jr
Unverified
46:49
to Medicaid. Yeah, I understand, which gets, and I heard your conversation to Representative Kavanaugh last month
about the balanced budget. I'm in agreement with her that it's not all things being equal, you put all your debits and all your credits in, And so me and you don't exactly agree on some of that, because I want it, I personally want to see it, I personally want to see it where it's in the budget. And I understand we can't be exact, especially with this thing, but so I guess this is a start of conversation for the budget hearings. I will definitely be wondering if we've come up with a number of what we want to maintain
in there and to try to make sure that how much money is not in the budget, that we're just putting in some set aside or you know that too so that we're all as that word
we like to use very transparent yep that's uh we'll be speaking to it in the budget process thank you secretary has in thank you miss man all right
Senator Jonathan Dismang
Unverified
47:44
thank you representative kavanaugh you recognize hold on thank you
Representative Frances Cavenaugh
Unverified
47:51
mr chair um my question is as we're looking at this trust fund are you
projecting any real changes to our medicaid rate so that we know are y'all projecting that when you're looking at what we might have to put in there are we looking down the road to see what might actually happen to our rate or you know what we're going to have to actually
start matching are we looking at all that when we're projecting what might be in this trust
Senator Breanne Davis
Unverified
48:15
fund yes ma'am if you're referring to the f map that changes every october one we do have a tentative number for that and we do build that in we have a range usually that comes from the federal government of what it
could be and we do try to look at those the high and the low of that
Representative Frances Cavenaugh
Unverified
48:31
range and that'll be used when y'all determine how much we might have to put back into the trust fund I guess that's that will be one of the many factors I'm assuming that
Senator Breanne Davis
Unverified
48:41
y'all will be using when you're looking at that it is used for our expenditures that then will come part of
Representative Frances Cavenaugh
Unverified
48:48
the cash flow discussion for for the trust fund And when we're looking at our expenditures, do we have any sort, I know you don't have a way to really kind of know this, but you might have a feel for, are there any real expenses that you think that we're having some health crisis with in the state that's going to raise those expenses up?
Are you seeing anything that's alarming, that's going to make us have to pay more out than what we originally had thought?
Senator Breanne Davis
Unverified
49:17
As far as crisis, I think as we work through our rules, that will also determine certain things.
Speaker 154
49:26
Okay. All right. Thank you. All right. Thank
Senator Kim Hammer
Unverified
49:29
you. Senator Hammer. Thank you, Mr. Chair. Over here to the right. The full ramifications of everything that we passed during the last legislative session or kind of tagging on to Representative Kavanaugh,
things that may have come up unexpectedly that may attribute to the declining balance, have those all come into play and been put into place, or is there anything looming out there that you would identify that's going to be taking more money out of the balance? As of today,
Speaker 135
49:59
we have not implemented all of the rules from the acts
Senator Breanne Davis
Unverified
50:02
of last session. We are working with CMS and this body to get those implemented. Those could have some impact. To the best of our ability, the Medicaid program will try to function with the current balances as we implement those.
Senator Kim Hammer
Unverified
50:17
So do you have a price tag that goes with about how many pieces of legislation that you have not processed
the rules for yet are still lingering out there? And have you calculated what the price tag is that is associated with those? I don't have an exact price tag. We
Senator Breanne Davis
Unverified
50:37
have over 10 outstanding rules that we are working through with CMS because they've asked some questions, and until we solve those questions and they approve,
it would be hard for me to finalize a forecast of those expenses.
Senator Kim Hammer
Unverified
50:51
Chances of that happening before fiscal session would be what, nil to none? It's a
Senator Breanne Davis
Unverified
50:55
50-50. I mean, we meet with CMS every other week via conference call, and in between we send information back and forth. So we are working on it daily. okay senator hudson
Senator Kim Hammer
Unverified
51:06
you look like you want to say something well i
Speaker 163
51:08
just think it's you know i think since you bring up the you know kind of the mandated benefit side of things it is an important topic
Speaker 143
51:16
for us to be mindful of that anytime we pass something that says that medicaid's got to
pay for something there is it's a direct impact on the cash balance and the trust fund and so there are things that you know we'll be want to be mindful of as we go into session next year about increasing the spin rate coming out of medicaid it's okay when we when we solve this problem we got to solve it both from you know cash coming in but also managing the cash going out
Senator Kim Hammer
Unverified
51:40
okay well just sooner than later when you know the price tag on those things thank you i'm
Senator Jonathan Dismang
Unverified
51:49
gonna senator ervin just a second but we also had the big beautiful bill and that additional
funding that's coming into the state you know i mean i'm assuming there's going to be a lot that's going to happen in conjunction with those additional fundings and actually our current medicaid spend possibly especially with program implementation and in that sort of thing may not be the day
to have that conversation but when we get into the budget meetings i believe it will
Speaker 143
52:14
be for sure i think generally some of the concerns that you know potentially representative kavanaugh raised in terms of just health factors that are out there in the state you know chronic diseases there's a lot we're going to be able to do with that billion dollars
over the next five years to hopefully drive down claims costs not only for Medicaid but also for private insurers
Senator Breanne Davis
Unverified
52:35
as well. And may I add that that those funds and monies that will be distributed cannot be used for rate increases and they cannot supplant anything that's currently in place. They will have to be used for outcomes and new new things.
Senator Jonathan Dismang
Unverified
52:49
But I'm assuming it's going to work a lot like it did when we implemented
the private option later on our home whatever we want to call there were current expenses that were being paid at a lower match rate in Medicaid and those you
know through a process were adjusted to be part of the new program or we ended programs or whatever we did because they were covered otherwise. I'm assuming there's some of those things that are going to happen which hopefully will ultimately lessen at least at the end of the five years
the burden on our Medicaid state dollar contribution. Senator I think there's there's
Speaker 143
53:25
going to be a whole bunch of initiatives that we're going to be able to fund with the federal money to establish an ROI over the next five years. And once we determine there's a positive
return on that investment, then we can look at turning on the payment factors in Medicaid to be able to control those costs using
Senator Jonathan Dismang
Unverified
53:45
Medicaid funds. All right. Thank you.
Senator Missy Irvin
Unverified
53:48
Senator Irvin. Thank you. I think it's a good reminder, talking about just kind of the schedule and the flow, if you don't mind just repeating like refreshing us about the the flow of those revenues and the value of the medicaid trust fund but how it changes based on timing of the year and why it's
important that it's you know secure but but there are times where there's an ebb and flow but do you mind i think it's just a good time just to have that refresher from you about this as a utilization tool
for that revenue as it relates to either the beginning of the fiscal year, the change in the FMAP, et cetera. That's my first question, if you don't mind. I think it's important just to state that when we come to the Medicaid trust fund so that we understand why it's in place and the utilization of it. Thank
Speaker 135
54:42
you for the question. So the Medicaid
trust fund is a compilation of many different funds. Some
Senator Breanne Davis
Unverified
54:47
of them have very specific uses that are used for quarterly payments to providers. The providers put up that state match through those funds. So there is some ebb and flow every quarter of those funds. And we try to match those funds and spend them within the week to two weeks that we do obtain them because we're holding those monies for those providers. In addition, the carry forward account and the soft drink
account can be used for any funding in the medicaid program as as needed and so we do use that on a quarterly basis depending on large expenses that are either due or after we have used our sgr and other funds that's in our paying accounts or things if we need additional monies that's when we use the trust fund so on a quarterly basis it does ebb and flow quite a bit Thank you for that. And
Senator Missy Irvin
Unverified
55:42
then my next question is, it is going back to what Representative Kavanaugh
stated, but we did see, we do have to respond legislatively, which we have done, you know, legislatively, particularly when it comes to labor and delivery. So, I mean, that's something that, you know, I just want us to be very mindful as we're having these discussions with Medicaid, that it's not a one-size-fits-all approach. There are critical health concerns and issues in the state of arkansas that we together have come together executive branch and legislative branch to address um and so but there are other areas where we have said you know what we're good
and that needs to remain flat rate solid rate whatever so i think it's really important just to have that discussion that and recognize you know we did that particularly with labor and delivery because of what's happening and we know that um those rates have to be adjusted you know for labor and delivery so that we don't lose any more, you know, delivering units across the state. So I just, I wanted to add that because I think it's an important discussion point and I'd love to see, you know,
changes that we've discussed to help make this trust fund more solid, you know, as far as hospital assessments and things like that. So I think it's just a good point of discussion, but I appreciate the fact that we came together to say, rates have to be increased for labor and delivery so that women can have healthier babies
and healthy deliveries. So I just wanted to add that to the conversation. Thank you for letting me,
Senator Jonathan Dismang
Unverified
57:19
Mr. Chair. Absolutely. All right. Thank you, members. Any other questions on this report
or any of the other reports? All right. Seeing none with that, I think we've concluded our business for the day. Thank you for your attention and time. We are adjourned. Thank you.
Agenda
A. Call to Order
Items for Approval
B. Various Temporary Appropriation Request
C. Infrastructure Investment and Jobs Act Appropriation Requests
D. Appropriation and/or Fund Transfer Requests
Item to Advise Governor
E. Budget Stabilization Trust Fund Loan Request
Items for Review
F. Cash Fund Appropriation Request
G. Miscellaneous Federal Grant Appropriation Request
H. Pay Plan Appropriation and Performance Fund Requests
I. Proposed Budget Manual Guidelines
Reports
J. Biannual Report
K. Quarterly Reports
L. Monthly Reports
7. Infrastructure Investment and Jobs Act Report
M. Other Business
N. Adjournment
Documents
Speakers
Speaker 2
Senator Jonathan Dismang
Unverified
Speaker 7
Speaker 11
Speaker 15
Representative Jessie McGruder
Unverified
William Parrish
Unverified
Representative Frances Cavenaugh
Unverified
Chair
Unverified
Representative Stetson Painter
Unverified
Senator Missy Irvin
Unverified
Speaker 49
Representative Brian S. Evans
Unverified
Representative Denise Jones Ennett
Unverified
Speaker 76
Speaker 88
Representative Lane Jean
Unverified
Speaker 99
Speaker 83
Senator Joshua Bryant
Unverified
Senator Jimmy Hickey, Jr
Unverified
Speaker 108
Speaker 109
Speaker 110
Speaker 113
Speaker 48
Speaker 135
Senator Breanne Davis
Unverified
Speaker 143
Speaker 146
Speaker 154
Senator Kim Hammer
Unverified
Speaker 163