Arkansas Legislative Council (ALC)

Members your mood you're saying we'll get started. We apologize for the delay in this. Need for the executive meeting this morning. First up but if you had a chance to look at your minutes of a motion. In a second. I have a motion and second second I'll favor I minutes or adopted next up doctor senate has revenue report. The representative. Welcome this morning if you will identify yourself for the record you're recognized thank Mister chairman Carlos Silva legislative economists bureau of legislative research and today I have this September twenty twenty two revenue report on the first page we gonna have a gross generation used for this this fiscal year up to now so the first three months the fiscal year. We have a two thousand and eighty three million dollars and we have some deductions we got to make their own collected checked yes the reversals claims and tax run as we pay and we have a adjusted value there at two thousand and eighty million dollars there is an increase of a hundred twenty six million or six percent sixty four percent above last fiscal year to date as as we take it out on the off the top to gonna have one thousand eight hundred fifty million dollars for available for distribution there the seven point three percent above last year up to this month. And and your second page. You're going to see a documented deviation from on the the forecast and in this month we have a hundred seventy four million dollars they're above forecast does not mean a surplus is just above the four class up to this month and that's something that's been going on around on neighboring states we have looked into neighboring neighboring states and they also been consistently have revenues above forecast. As we move forward to Page three you gonna see a comparison for September twenty twenty two to twenty twenty one a percentages therefore on that third column and the same thing you gonna have for the first three months to a fiscal year twenty twenty two and twenty twenty three and a percent change in last column as we move through pages three four and five that's going to be a generation you and from page six to page ten we're going to have the select the special revenues and with that I'll take any any questions. Thank you Sir the question for doctor civil. Senator Hester you're recognized. Yeah. You know we keep hearing things like we're expecting a potential slowdown in the economy are you seeing any indications in our our budget I mean I'm. A. Seeing any indication that has a question. Are you seeing okay are you seeing any indications of any slowdowns anything to from the current collections. Thanks for the question center so as we look right now we we following the as we have seen on page two we above forecast does not really majors low down there something that we have seen throughout that the neighboring states that they're all or some of the concerns that we have seen everywhere and that the people to dance. reports that we follow regarding slow down but we have not seen then the current forecast in on the current numbers we we keep a close look to it and we follow all the indicators closely to understand what's going on and I can keep up day if you see any major changes and I've I've only been doing this ten years but like it is we're a hundred seventy five million above forecast and we're we at a year over year. Do I need to check with the with Kevin Anderson on that on that number I don't have in front okay I'll get yeah so yeah we Okay got it yeah. Is this far as the revenues were at this time last year versus where we're at this time this year I don't have the exact percentage but we we definitely have growth like for example we have eight hundred and sixty four million dollars above forecasted above what we actually have an order saying. So that's that's pretty telling in itself pretty telling you Sir thank you. Thank you and and after sale of a the is there any historical lag time I mean the figures the figures what what company and but in industry retail industry I'm hearing and saying cross of region and across the country a construction of consumer spending how how long is there anything factored in your analysis that the you're saying that yes so so the numbers receive come point point direct from the FAA but we do follow those indicators and we do have some notes here on regarding that at the national level we have seen a change from goods or services and and that is that trend out there we we follow those indicators closely and I can get if there's any specific they want to take a look insurance Pacific industrial be happy to look into it but you're correct there is some lag between the information received and what really happened State. Thank you for that I have a question seek nineteen. Representable you're recognized. Is that that is that's just collections this is just money coming in. To the his report reflects our general revenue tax collection yes Sir doesn't have anything to do with internal earnings and does not have to do with the investments the treasury has and those interest earnings this this is just to show you what we're collecting from other entities for general revenues especially you have any idea of what the we we Robert his or and and DFA have put together a report for you Sir thank you Mr chairman thank you thank you. Senator Hammer you're recognized thank you Mr morning. On page six can you give an explanation about the big swing in the natural gas severance. We don't have any major understand what that's the difference there are going to take a look on on that specific want to get back to you. Okay if if you don't mind please thank you. You saying no more questions thank you Jehlum FOR your testimony. The members elected up a culture Richmond Wardlaw has the executive committee report. The subcommittee met on Thursday October twentieth and adopted procedures for the health insurance benefits fiscal impact process in accordance with Act one twelve of two thousand twenty two a copy of these procedures are attached to this report the subcommittee also met again at eight forty five this morning interviewed and adopted the emergency rule from the office of Arkansas lottery regarding their operational and retail rules I move for the adoption is report Mister chairman and be happy to answer any questions. Not seeing any questions I have a motion and a second about. Second one favor I. Boast. What is adopted next we go to administrative rules represented the you're going you know that. You're recognized thank you Mr chairman administrative rule subcommittee met on Thursday October twentieth the subcommittee received agency updates on outstanding rulemaking pursuant to act five ninety five of twenty twenty one. The subcommittee file the October monthly written updates pursuant ACT five ninety five in the subcommittee file the written notification by the department of agriculture Arkansas bureau of standards providing an update on its rulemaking delayed the litigation is not been resolved all rules reviewed and approved as noted in the report and I move adoption of the report. Seeing no questions have the motion I have a second or not rules report second one favor I. Opposed like to know. Report is adopted representative gray you are recognized to give the peer report. Thank you Mr chair therefore subcommittee reports on the agenda the first three reports show the subcommittee gave final approval on a R. P. as a request the last reported from October seventeenth where the subcommittee received reports reviewed items in approve requests for appropriation and fundraisers several of the items are held in the report I move adoption of the report and after adoption of the report there are more items for consideration on a supplemental agenda. Okay members I have a motion and a second from center run all in favor aye. Posed that is past her. Great you're recognized you hit your button again I wrote okay go ahead I move to suspend the rules to take up the supplemental agenda. Members you have a copy of supplemental agenda in your pocket I have a motion to suspend rules to take that up all in favor aye. Posed. The the first item on the supplemental agenda item a is a request from the department of education for the authorization to begin the process of promulgating rules for the distribution of the school safety set aside funds as required in act three of the third extraordinary session of twenty twenty to a representative from the department is here to answer any questions. I'm at the proper time a vote to authorize the department to be in promulgating rules. Okay I've got a motion is second on favor I. Posed you may just one minute. Represent wouldn't you have a question on that one. Accepts the proposal or or as a part of the education here to answer questions. Okay representative with this is authorization to start the process do you want to bring the all right thank you Mr. Thank you will. Except to the approval on that the representative gray you're recognized Phoenix motion all right the next you items B. one and B. two U. R. request from the department of energy and environment one of fund transfer from the restricted reserve fund for the used tire recycling and accountability program and to you for spending authority to a cash appropriation to distribute the funds in August A. L. C. referred these two items to J. B. R. and legislative audit for their review legislative audit has informed us that their report will not be ready until the beginning of January given that time frame for receiving the report along with the immediate need for these funds the A. L. C. cochairs of places items on the supplemental agenda for consideration today as part of my motions on these items I will move that legislative audit continue its investigation as requested in August and provide its final report to the Joint Budget Committee in January at the proper time I have to motions. One is I move approval of B. one the restricted reserve fund transfer for department of energy and environment and I move review of B. two the cash appropriation for the department of energy and environment and that legislative audit will continue its investigation and report to joint budget in January. Okay members we have questions Representative or steamy Senator Hammer you're recognized thank you Mr appropriate to ask a question about about it this time or we in discussion on the motion. We are in discussion I did have a second I have a hard but I didn't call it yes we have a motion the second question is approved thank you I may have just not heard it but could we get an explanation from represent great as to what was the dollar amount or is it in the report paperwork here somewhere that's gonna be appropriated and will carry us all the way through is it sufficient cares all the way through to the general session when we can pick this up an address that then. Yes so this is that I did not say it it's a million dollar appropriation it's my understanding with discussions would be Q. that it is about six hundred fifty thousand catches up for quarter we recorder tape and then the additional three hundred thousand we hope will fill the shortfall for the next quarter but they're getting ready to pay the quarter that ended September thirty that they should pay end of October so we're very hopeful that this will get us through until the legislative session where you guys can address any issues in the tire program at that time or thank you thank you Mr. J. saying no more questions on the. I have a motion center Chesterfield second from a representative Wardlaw all in favor aye. Opposed the buses the representative gray you for your. Number two. Okay you did you did emotional number to. Yes okay. This section I need a second for the motion. A number two I have a motion and second all in favor aye. Post. Okay that it passed thank you members. Thanks to. Number ten for review Senator Flippo you're recognized. Thank Mr men review subcommittee met on Monday and reviewed methods of finance discretionary grants and services contracts all items reviewed with two exceptions first the first. The L. C. reviews of committee adopted a motion not to review the in state contract for department of health with the Arkansas foundation for medical care on page sixteen of the test packet additionally an in state contract for Arkansas teacher retirement with Arkansas capital corporation was held for later information and eighty R. S. has since revised the contract reflected new total of seven hundred twenty thousand dollars the new revised contract is attached on page twenty nine of this packet I move adoption of the report and review of the revised contract with teacher retirement and the capital corporation. I have a motion and a second. I've got a question from representative Cavenaugh you're recognized. Mister chair we able to ask questions about the up Arkansas teacher retirement contract at this time. You can ask the Senator Flippo present to your question I'm I'm I'm fine with that. Okay representative Cavenaugh. Mike Wallace my question is this on this contractor taken it from four years to two years. But there was some questions about prior that this administration taking away funding from prior contract that our current leadership at teachers retirement was not aware of and I'm just wondering if they did any more due diligence to find out whether or not why that funding had been pulled prior. And on top of that my question is I understand that this is becoming because of a law that we passed that said that they had to have a contract. But this contract. Has some concerns so if we don't review this where does this put teachers requirement teachers retirement. Mister miracle is a vital part in a health. Thirties retirement gives me. A person cannot another question was not directed at me correct correct okay just one minute teacher retirement will be coming up later let me. See if we need him up and down on. Yes. Yes just one second. The Senator Flippo let me ask you do this normally we we we don't bring people up after that and would you withdraw your motion temporarily be happy to Mr okay that motions withdrawal of second withdrawal that second okay if they TRS will come up now we're glad questions going to be asked again members Norman motion on the table we don't don't call agencies up but with the motion being withdrawn will do that at this time. The German will introduce yourself and then representative Cavenaugh you are recognized. Thank you Mr chairman Clint Rhoden Arkansas teacher retirement system. Rob graves Arkansas teacher retirement system way over here to your right thank you Mr chair. You heard my question when we had talked about this earlier in the week we have brought about this contract had been the funded up prior earlier time in this administration but y'all were unaware of that. And I didn't know if you all had had time to look into that and find out why we chose to do fun to contract with someone we're about to contract with. He yes represent we we have had a chance to do some more digging into that situation and I will that ride going a little bit more detail okay thank you. I yes Sir thank you representative we we had a little time to look into that we found no instance of a contract being the funded we did determined that I think around eight years ago or so the company had a a loan of some type out from the state for some projects and that loan was repaid to the state in full is is our understanding. We have not been able to determine any prior contracts that were D. funded we've we've attempted to look at their if there's something out there that maybe we need to be looking at a different spot we can certainly do that but we haven't come across anything yet. Okay. Vaught Mr. From what I've understood is that a and two thousand and fifteen there was some issues that arose and The administration had ask to get their money back and the wind down the state's relationship. With them. Are you aware that. Are that get represent only thing I'm aware of and I don't know if that's this a similar I don't know what we're talking about again there I think it is I understand around eight years ago there was a loan from the state the company the company pay the loan back now as far as what drove that if that was the normal repayment time or if there were other circumstances I I can't speak to that that this I don't have knowledge of the twenty fifteen transaction. I would just say this contract has I have real concerns with it with our history with this organization and I realized I put out into our if queue rather than R. F. P. that also brings up to concerned and I realize you're responding to that because of the law that we passed that says that you have to have somebody to overlook these. I won't say more risky but they are more risky investments and that these are the only company that actually responded to this RFQ. And so if we chose not to review this contract where would that put Jhalak. Well what month for Monday's meeting and let me apologize representive I misspoke of a this initially I think I mentioned this is our third attempt at a solicitation the initial attempt was in our P. and I did not recall the the difference in our in our queue at the time but we did try this first author an RP zero response then so it sort of evolved into an RFQ little bit different second time no response we continue to work with S. P. trying to get some interest in the solicitation and again after you know this third attempt we we received one applicants as far as I'm not familiar with the law that requires I know that you know we worked with the legislative audit legislative audit council or board all work together trying to feel this. This determine need for the system so as far as if if this does not get reviewed. We would Continue to try to work through the the the issue and come up with a solution acceptable to everyone okay follow up on this contract what are the terms for termination what other grounds for termination on this contract. I believe it's a standard state contract for the contract can be terminated by either party with written notice at any time and for staff this is just question if we chose not to review this contract where would that put teacher retirement. I think again we would you know there is a need there so we would continue to work with all parties as P. R. board this body and try to come up with the acceptable solution for everyone okay I'd like to see if our staff could answer my questions. Okay represent Cavenaugh I would defer to the agency on that one because if you do not approve the agency would have to resubmit that request to Legislative Council it would be referred back to the review subcommittee they need to start back over the process with Legislative Council okay. Thank you I just being on I say I know the job reduced it to two years but that still leaves me some little concern with our history with this particular organization with our other contracts so I appreciate it thank you. Senator Hammer you're recognized thank you over JI left morning. On that subject matter let me ask you if we don't review this are there any current contracts other any current investments that would be placed on hold or jeopardized because you didn't have what the law required to move forward. Of the thank you senator we we do have a I'll call temporary vendor employees to sort of that was put in place basically under a sole source type procurement is intended initially to be about a six month contract so we do have some coverage in that area right now however you know with we have been seeking a longer term solution it was initially the vendor working out right now to fill that role was initially hired under a six month contract we have to come back and extend it as we continue to have to go through additional R. if Q. processes but we do have some coverage there now however we are hoping to find a long term solution for at least a couple year period without having to keep extending the current relationship a few months at a time. The current temporary fix that you have vendor did they not bid on the contract if they didn't do you know why not no Sir they did not bid on the contract it's. It a lot of the reasons we were hearing not just from this vendor but from other vendors even nationally we even during the second architect we we attempted some national advertising to try to generate interest. And you know some of the some of the issues we were hearing from potential vendors or or basically the the just the scope of the the mandate involves a of a wide array of potential opportunities right it could be a I'm still out some examples people maybe where it could be a steel mill in one part of the state one week and maybe a parking deck somewhere else the next so and often times these deals have some sort of the Arkansas related deals will have some sort of Other Arkansas involvement right I think we're all familiar big river steel in there were there was a lot of other Arkansas incentives in place so we were really hoping for somebody that had some understanding and experience in Arkansas related opportunities and investments however that was not limitation to any potential better in anyone across the country could put in a bid for this but I think the answer to that question Senator is it it really is just the scope and sometimes the. Of localized expertise that might be needed thank you Mr. Mr. I have led to to ask you one question relevant to teacher retirement but not on the subject to be short but I think it would be important for them to make a statement for all her interest if you would please. A short yes thank you. Recently came out the paper the jail had like I forgot a billion a half dollar lost the reality is in that statement that was made that announcmenet comprised also I think roughly seven hundred million dollars and regular monthly distribution to our retirees so the image of the teacher retirement system potentially having such a significant loss was not actually a accurate depiction is that a fair statement or not yes centered I'd say that's a fair statement I have I have to actually recently the responded to that type of question in a newsletter all of our members explaining that anytime you see a headline it requires a little bit more explanation and your explanation is right on only half of them. Deduction at a reduction in assets was due to investment losses which resulted in about a minus four percent reduction and in this to down market that was actually a very good performing performance at that put the eight eighty first position in the top twenty of percentile of investment returns learn though it was not lost but because most pension systems lost something in the double digits are thank wrecked thank you thank you thank you Mr. Representative Cavenaugh you're recognized I have a motion at the proper time Mister chair. Mr your motion I make a motion that we referred the ATR S. contract to review and subcommittee and then adopt the rest of the report. Okay I have a motion I understand that in a second. I have a discussion on the motion just a minute. Senator Hickey recognized just just questions for staff did I not understand you to say that we could refer that back to review with them help without them having to go back to the process. No if the I'm sorry Senator Hickey no if the committee chose not to approve the contract then okay I have to start but they can this committee can revert back to reveal okay and that there's no deadline or anything like that so that's good they're they're gonna be able to bring it back next month that they need to. Yes Sir it would automatically be on the agenda for review next month thank you ma'am. Okay I have representative Cavenaugh from motion to send this back review with the. Senator just for you you're recognized for a question may I see the. The paperwork that the representative keeps referring to. I'm I'm familiar with that. Any representative Cavenaugh I would be so kind as to share her research with the rest of the committee I think would be helpful. The fourth you know I'm not going to vote against the motion but I need to see what's. Representative Cavenaugh the. Ishi understand what your request a written Cavenaugh you're recognized yes I'll be glad to for it to the staff feels Committee can have it thank you so much there was to. Members of got a motion I have a second. I have a motion and a second re referred this part only back to the Committee on favor I. Opposed. The ayes have it Senator Flippo if you will. Promotion include the adoption of your reports and Flippo. Okay Senator Flippo I'm told that that that were good on. And I came up one of my hearing aids bad today and it is a little harder here for. Okay members the personnel committee did not meet because of the budget hearings we're going to ask Mister Tony Robson come up and give their report if you give them your attention thank you at the gym for being here Mr option you're recognized the report personnel issue thank you thank you Mr chairman she said the personnel committee did not meet this is a request from the university of central Arkansas they request to pay over two percent salary adjustment in order to pay a seven hundred dollar one time bonus to all of their employees at the at the university Mr chairman that's the only request. Okay members any questions for Mister Roberts. Seeing none I think Senator Sheffield motion of second and second all in favor aye. Post a personnel report is approved thank you Mr Robson. We have a report from representative Stephen Meeks on the intermedius the state agent governmental affairs representative makes you're recognized thank you Mr chairman a House or Senate state agencies and governmental affairs committees met on Thursday August nineteen twenty twenty one and Tuesday September twenty twenty twenty two to discuss the election technology study pursuant to act for twenty one of twenty twenty one the committee heard testimony regarding the feasibility of biometric technology involved tracking as well as concerns for the secretary of state's office I'm move acceptance of this report. I have a motion and a second on favor I. Boesch. The record is it adopted. Okay members we're going to the. Report on the Arkansas teacher retirement system. Mr road if you don't come. Back up. Recognize Senator just for you thank you Is this something that Rick will require a motion and a second well we just accepting the report this will require we we've got along teacher retirement got a in the in your packet okay require motion in which thank you so much. you're recognized him. Please identify yourself again just for the record Clint Rhoden Arkansas teacher retirement system rob graves Arkansas teacher retirement system. You have presentation. No Sir these are I have some information I can I can present and try to answer any questions following if that's okay. You just give us a brief. Presentation because. Sure these these two investments for a review to prove that the September twenty six regular a TRS board meeting to a one is Greenbrier six such a private equity investment of up to thirty million they focused primarily on logistics aerospace defense and transportation companies Should I pause there for questions on that are present summary for the unit going present and present be to the name forgot questions will cover both of okay thank you so to be our is JFL six other private equity investment of up to thirty million this company to also focuses on the similar focus with defense aerospace maritime companies again both these were recommended by a terrorist investment private equity consultants and approved at the last board meeting. Okay I have questions Senator Hammer you're recognized thank you tie in the conversation we had previously with what we're doing right here with that firm that we would have been hiring had any. jurisdiction to review these investments are they totally unrelated. Senator know that that prior circumstance was only for direct investment of Arkansas related companies this is private equity we have a separate investment consultant for that asset class. So the consultant that you used to oversee these is there a larger pool to select from as far as companies that would do the same thing And were under contract with them to review these is it is similar situation just not you know not apple apple comparison is that correct we have a contract with a one particular vendor that deals that reviews all of our private equity investment decisions okay thanks. Okay saying the no more questions members of take a motion. Motion to approve a second I have a motion second approve all in favor on a and B. say aye. Posed those are proof thank you jim again thank you. members of moving on down to four see if there's any of these others if you have questions on we can bring those up the on the the next one that requires motion is division of rules services. if the the director would come up. This call will here. Somebody here for them. Welcome if you hit your mac and recognize so use your name you're recognized to present. Jim Hudson chief of staff partner commerce. Back a Caldwell director of world services thank you. Mr Miyazawa's give us an overview of the group is in the road you be good mentality members have any questions. This call will do. So for the rural community grant program we are recommending. Twenty three grants to be approved. And for the role services Walker grant programs we're only recommending that everyone is approved we only received three applications this cycle. Two of which were not eligible for funding one their LMI was too low and then the other one the application was incomplete. Take any questions from the region Lanny Fite you're recognized. No question. a representative makes you're recognized okay I'll throw want to recall you said one of the applications was incomplete had been completed would have been eligible for a grant recipient is and and is that something you could work with that and try to get that taken care yes we did actually reach out directly to them it was missing several resolutions that are required for that grant and it was just a matter of time of getting everything and that we have spoken with them and have encouraged them to apply for the next cycle okay so you didn't just brushed aside you are working with them to try to get that taken excellent thank you just as a general comment to represent makes for all the members for this grant program longer CDBG grant program we work real hard to do outreach to the counties to the local planning development districts to encourage applications given technical assistance with the weapon are to train on it it's it's a little bit of a pushing strings or thing at times but we're committed to do whatever you do to get the communities to apply because he's a great grant programs. Thank you representative make Senator Hammer you're recognized for a question. Thank you just to refresh my memory on the volunteer fire departments that you give grants to the request ISO rating in the grant application we do yes Sir and you get that I do. J. reason you can't release that to the legislative branch under any restrictions imposed upon you by so not at all I could I could produce a report and send it to you it has just not been reported previously or included on the report but I would be happy to supply that to you all right I'd like to get that please okay thank you you're welcome if you will send that to staff it euro and we'll get that out to members certainly not seeing more questions remembers that I have a motion. I have a motion and a second to prove. That all in favor aye. Post thank you for being here today thanks thank you. Members with with in not seeing any others we have one more item on seven a secretary white if you come on up former army Human Services we'll. Listen to your report. Thank you for being here today and you're recognized. Thank you Mr chairman mark white department Human Services we have are a monthly report on the status of the a rate increase for assisted living facilities that rate increase part of what was required to implement that is an amendment to the waiver that is a promulgated document so we do have to run a rule promulgation to do that we're in the public comment period right now that ends Monday last four we have not received any public comments will proceed with that the next steps will be able expect the rule come to you all for review in December and of course we awaiting approval from CMS for the way permit itself and with that be happy answering questions. Members you have any questions for secretary what. I don't think I've seen him sitting at a table at the board wouldn't let up. Thank you senator good job thank you for being here today we appreciate your report by pleasure. Members thank you for being here she know where business we are journey.