Legislative Joint Auditing

We're your seats we will call this meeting to order. I thank everyone for being here today. Our the first order of business or the the adoption of the minutes of April eighth two thousand twenty two meeting that everybody has seen are there any questions comments or concerns regarding those minutes. All right see and none without objection we will of the standard opted. next on the agenda is adoption reports of executive in standing committees Senator Colwell you're recognized thank you Mr chair the exec executive committee met Thursday may twelfth twenty twenty two staff report to the committee the audit special investigative and shortage reports schedule be presented to the standing committees and the full Legislative Joint Ording Committee this month in New business the committee deferred to the next meeting a request for staff to conducted twenty twenty financial audit of the city of Lake Village as well as future audits and other business there was a general discussion to subpoena the sheriff of Newton County to a committee meeting to discuss audit findings. We also discussed issues about east Arkansas planning and development districts with no additional business to discuss the meeting was adjourned the next meeting of the committee is scheduled for Thursday June second twenty twenty two I move for adoption of this report thank you senator any questions comments. Are we have a motion I have a second I have a second all those in favor adopting say aye All opposed no I understand about the thank you. next will be our report from the standing committee on counties municipalities representative Hillman you're recognized. German thank you Mr chairman of the committee met yesterday afternoon at one thirty the committee discussed the Newton County sheriff's office the sheriff's failure to appear in order to address the findings and Newton County on the nineteen twenty nineteen report staff sent him a letter with reference to the committees toward issue a subpoena for his appearance after the April meeting and the sheriff chose not to attend on may the twelfth the committee voted to recommend to the full Legislative Joint Ording Committee requested legislative auditor issue a subpoena for Newton County sheriff Glenn withers attendance at the June third twenty twenty two Legislative Joint audit committee. The Committee discussed the city of Cotton Plant and their non compliance with the municipal council law in April in a staff reporter that the city was attempting to correct repeat findings related to their accounting records and hire someone to help them but when the city vested. When the city was vested on March the tenth the findings have not been corrected the committee voted to wait until June twenty second our June second I'm so sorry meeting to determine if the records were brought into compliance with the municipal canon law because staff recently started the twenty twenty one engagement in the committee approved the request from Carcar offer to bill to annually repay two percent of the General revenues rather than ten percent of general revenues as required by Arkansas Code twenty seven seventy two oh seven for monies owed to the general fund. From the general fund to streak Fund acts on this request has been deferred had been deferred from April seventh twenty twenty two meeting and incidentally on that Committee the Crawfordsville will have their debt paid off in five years or less that was the reason that we made that A distinction. The committee room review ten report differed from April seventh meeting officials from three entities were present to address of the foundation of those three previously deferred report for filed the day the twenty nineteen Newton County report and six others were deferred to the June second. Meeting the committee reviewed a hundred thirteen current reports of the seven reports referred to the prosecuting attorney's official from five entities were present to address repeat findings and our current reports the Committee filed a hundred and ten current reports in the first three of those so that officials could attend June second meeting to address repeat findings. Mister chairman a move for the adoption of this report and then I will have a motion after that if that's permissible thank you representative of any questions or comments. On the report. Ciena have a motion may I have a second. I have a second all those in favor of adopting this report say aye All opposed no all right thank you Mister Uelmen you're recognized thank you Mr chairman I move to request the legislative auditor issue a subpoena to Newton County sheriff plan wheelers for going wheelers of parents on June third twenty twenty two at the Legislative Joint Alderton Committee meeting that would be the full committee this meeting. I'm I move that Mr all right thank you Sir are any questions from committee. I guess everyone knows what's going on may I have a second for the motion we have a second all those in favor say aye. All opposed no I thank you thank you Yeah I guess we move on to the next the next report will be from the standing committee on educational institutions representative berry you're recognized. Thank you Mr chairman standing committee on Education institutions met yesterday may the twelfth two thousand twenty two the Committee reviewed a total of seventy four audit reports which consists of fifty six school district reports thirteen open enrollment charter school reports and five educational Corp to report for the year in June thirty two thousand twenty one the audit report of the little rock school district was certified to governmental bonding board as well as referred to the apple prosecuting attorney the audit reports of the Bergman school district in Pulaski special school district were referred to the apple prosecuting attorney the Committee filed the seventy four current audit reports that were brought before it. At this time Mister chairman I move the adoption of this report thank you representative any question or comment on that report. All right may I have a second to that motion I have a second all those in favor of adoption say aye All opposed no thank you have a standard opted. next up is the report from the standing committee on state agency Senator Solomon you're recognized thank you Mr chair our committee had five reports without findings on the Committee agenda yesterday during the meeting the committee adopted a motion filed five reports and with that Mister chair I recommend we filed this report thank you Senator any questions comments. All right CNN may have a second to that motion. We have a second all those in favor adoption say aye All opposed no thank you the standard opted. All right we'll move to our special report for the day it'll be review of the implementation of a two percent salary increase for state employees for the period of February sixth two thousand twenty two through April twenty second two thousand twenty two Mr Kirk over you're recognized. Sturch. Thank you Mr chair. This report is issued pursuant to a request approved by this committee for audit staff to review implementation of the governor's salary increase for state employees announced on February seventeenth of this year the increase was retroactively affected the February six and added to payroll disbursements on February twenty fifth. A timeline of relevant events. Is included in the pending say. For purposes of this report state agencies are classified by whether they are exempt or not exempt from the uniform classification and compensation act most agencies are subject to the compensation act are referred to as U. C. C. A. agencies agencies that are exempt from the compensation act are referred to as non U. C. CA agencies and are listed on the slide. Employee subject to the compensation act automatically receive their salary increases authorized by the governor however the salary increase could be implemented by other agents pursuant to Arkansas Code. It's going. It's close. Excuse me for a second while I get the. Back on track. Winston. Okay. The judges of this review work to review the timing and amount of salary adjustments for employees subject to the compensation act. Determine other agencies that it implemented the same salary adjustment and review the timing and amount of the adjustment. Determine adherence to Ark two applicables Arkansas Code by agencies awarding this two percent salary increase as well as by the office of personnel management. In February the governor authorized a two percent salary increase if February's February sixth for all executive branch employees the latest compensation act states No employee shall be paid at a rate of pay higher than the maximum pay level in the great assigned to his or her class Arkansas Code also states that employees already compensated at the maximum or their pay grade receive a salary increase as a lump sum in the last pay period of the fiscal year. Most state employees receive a two percent increase added to their base hourly rate employees for whom the increase raise their total salary above the pay grade were first given an increase up to the maximum of their pay grade then the remainder was giving in a one time lump sum up lump sum payment in the February twenty fifth payroll disbursement. Because Arkansas Code requires that such payments be made at the end of the fiscal year OPM reversed the payments in aces to correct the error and recoup the payments from these employees these one time lump sum payments are now scheduled for the last pay period of the fiscal year. Audit questions whether the salary increases initially paid as a lump sum and pay period for should be calculated as two percent of an individual's total annual compensation as stated in the governor's office press release this two percent increase is effective on February six according to OPM. The two percent lump sum is a one time payment and will not be received in subsequent years as a result portion amount would be two percent of salary for five months instead of the full twelve months to be paid in pay period twelve as a lump sum or to be added to the base salary. Therefore calculating lump sum payments based upon a four year salary was not authorized by the governor additionally pro rating the lump sum payments creates equity between the employees receiving the increase to the base hourly rate and those receiving lump sum payments. Effective the difference can be always those traded by examining to employees who both earned fifty thousand dollars per year. If the lump sum payments are not pro rated employee a who is paid the maximum for the pay grade receives a lump sum payment of one thousand dollars bringing total bringing total salary for the fiscal year two fifty one thousand. For employee be whose plate paid below the maximum for the pay grade the ALR hourly rate will increase by two percent with this increase implied from February sixth through June thirtieth employees be salary for the fiscal year will be fifty thousand four hundred therefore employee B. will receive six hundred dollars less than employee eight even though there compensation was identical prior to the application of the two percent pay increase. The information discussed in the next four slides is summarized in exhibit one on page four a two percent salary increase was added to the base hourly rate of over twenty two thousand employees subject to the compensation act resulting in a cost of twenty one point three million. One time lump sum payments totaling one point three million were made in error error to over twelve hundred employees subject to the compensation act in paper read for rather than in the end of the fiscal year as required by Arkansas Code to correct this error OPM reverse the payments in aces and recoup the funds and audit staff verified the reversals for accuracy and completeness. As previously mentioned according to OPM this lump sum payment is scheduled to be paid in the last pay period and will not be a recurring annual payment. Among the ten agencies not subject to the compensating compensation act choosing to ward the salary increase over thirteen hundred dollars thirteen hundred employees receive the increase their base hourly rate with a total cost totaling one point seven million. The lump sum payments totaling over one hundred twenty five thousand for ninety employees of the ten agencies not subject to the compensation act employees at eight of these agencies will receive a one time lump sum payment during the last pay period of the fiscal year however employees of the game and fish and the AG's office received lump sum payments in February of this year matters regarding game fish and the AG's office are discussed in the slides that follow. Arkansas Code gives game and fish discretion to authorize coals for its employees according to the minutes of the meeting held on February twenty fifth of this year the game and fish director recommended and the commission authorized zero percent to percent and five percent Kohl's based on job classifications effective February six. For all employees receiving call increases audit staff verify the calculations were accurate and complete. Additionally and pay period five game of fish may lump sum payments to two employees for whom the two percent salary increase would raise your total salary above the maximum for their pay grade. It appears that game efficient calculate lump sum payments based upon a proportion of each employee's annual salary from February sixth through the end of the fiscal year and not an entire year salary. Thirty six employees in the AG's office were paid a lump sum and pay period for. And OPM reversed the payments to these employees consistent with reversals for agency employees subject to the compensation act. Subsequently the AG's office requested that OPM reinstate the lump sum payments as a Cola claiming AG's discretion. Provided authority to make these payments. During a payroll cycle on March seventh OPM manually entered in aces the lump sum payments for these employees based upon the information provided by the AG's office and backdated the payments to February six one employee had the two percent increase added to their base and the remaining thirty five employees receive a forty percent of their current salary totaling over fifty seven thousand dollars as a lump sum payment and pay period five. As a result these thirty five employees will exceed their line item salary appropriation by over thirty seven thousand as of June thirtieth in conflict with article sixteen section four of the Arkansas constitution. Audit could not identify authority for an AG's discretion want some salary increase that would allow employees to be paid in excess of their maximum line on salary appropriation. The governor's announcmenet states that this two percent increase is effective on February six therefore if the AG's office work to award salary increases under the authority of the Arkansas Code it appears the AG's office should have calculated. Lump sum payments based upon a proportion not an entire year of each employee's annual salary and dispersals payments in the last period of the fiscal year. We recommend that OEMs you review Arkansas Code to ensure equity in implementing the two percent salary increase authorized by the governor all employees subject to the two percent salary increase should receive the correct amount. One time lump sum payments should be proportionate amount of the two percent increase in this person the last pay period of fiscal year. Lastly. Lastly we recommend game and fish should ensure lump sum payments made to two employees are based upon a proportion of each employee's annual salary. The AG's office should ensure employees are not paid above appropriated line item maximum salary amounts and only wore it increases according to Arkansas Code. Mr share this concludes our presentation relevant sections of Arkansas coding constitutional provisions are provided in appendix G. management responses from OPM game and fish in the AG's office are provided in appendix is D. E. and F. and representatives from these agencies are present to answer many questions I thank you Mr gore so as you just heard we have representatives from all three agencies of here of senator Hammer your first in the queue what the. Do any of those people need to come forward or what your query. But how about we get to just one of the agency's Ford and I'll ask questions per plot all three of them that's right we won that one if you'd prefer what were the three choices Isshin over opium the Office of Attorney General in the game and fish opium please okay if you please come forward. All. Your. Thank you for being here today if you wouldn't mind just remain standing as is our custom an audit we're gonna swear you guys in before you testify. Of if you're both please a state your name employer imposition into the microphone. My name is Kay Barnhill the state personnel director thank you metro seven the chief legal counsel for transformation insurance services thank you please raise your right hands. Do you solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god. Yes thank you. Thank you for being here today Senator Hammer. Thank you Mr good morning. Just in layman terms it sounds like we got the cart before the horse in the pay one out before anybody realized that there's a glitch in the law and it was just a an oversight not anything intentional is that a fair statement my mission anything yes Sir that's a fair statement okay do you think that we can clean this up when the twenty twenty three pay plan is presented or what we have to do to clean it up moving forward so we can get it done. I think we definitely can clean up the language you know in the uniform class and compact which is normally the during the next session every full session with the that act and I think the issue is well there's two issues at issue was whether it should on and going out early and having to recoup I'm employees back I think would rather change that language of the law but and also the law is very silent on the appropriation aspect of it in our position is that we can give it on the full total compensation of the employee okay show a difference of opinion is what we have here this morning and do you think can you get some legislation or something prepared so we could go ahead and get it cleared up in. And and void the Senate and the employees that had the money taken back are they going to get it they're just going to get it delayed that's what they want to make sure is not going to get it now but they're going to get it whatever the when the year kicked Center finishes is that right at this point what our plans are to issue the bonus payments back to the employees on the last pay period of this fiscal year. Okay all right thank you thank Mr and for clarity your intention is to to do two percent of the entire year salary yes. Okay. Why do you think that February sixth date is explicitly in that letter says it's effective this date if that date doesn't hold any meaning. When we drafted the letter we wanted to note to let employees know when they were gonna say the payment that's the only reason the February sixth date was in there so we put it in the letter someplace new that they would receive it on that February nineteen paycheck and so that's why we included that letter that okay that to me to make a lot of sense because you could just use the second date like you just said that was your intention to make let you know you get on this date you could just said this will be that date but. Mr Kerry do you have anything to. Yes Mister chair I did I would have to responses referred to the point of not of there not being any provision for pro rations the code section specifically says the governor may authorize a salary increase so so the salary increase depends on what the governor authorizes to Senator hammers question the governor the only language that we see that explains what the governor authorized is this language in the letter these pay increases are effective for the pay period beginning February sixth we're not sure how else to interpret the word effective. And then to the point that that that was actually just a day to let people know when they could expect it with a letter goes on to say employees will see these increases reflected in pay received on February twenty fifth wine clue that second date and specified that's when you should expect to receive it if that's not what you meant so we think February twenty fifth is the date that the employee should have expected to receive things the pay increase would have been effective that's the letter in the press releases own words effective February sixth. If I can to respond to that When that letter went out at that time we were not aware or we have not looked into it as far as the lump sum payments right so that letter was on aware that the lump sum payments needed to go out at the end of the fiscal year so it truly was just a signal of. This is when the pay increases are going into effect this is when you should see it in your check as a signal to those employees but it was oblivious to the lump sum payment language about it being paid out at the end of the fiscal year. Mr. And Mister chair with response to that I would point out it whether it's an oversight or not the only language specifying when the payment was effective is the is the February sixth day. Maybe it wasn't oversight maybe it wasn't but all we have to do no one is that they were six state I would also point out the language about paying a lump sum payment is just is within the same subdivision of the code as the language authorizing the two percent increase so this is all right there together nobody should be surprised that the lump sum payment provision it's all right there with the authority for the governor to do this first place. And if I can respond respectfully I I agree it's right there in that language it was missed it should have been messed but I don't know that it's a equitable distribution of it to Pro rate for those employees they get the lump sum payment and respectfully as I think again the letter went out before. We we had thought through the lump sum payment being at the end of the fiscal year so again the the signal of this is happening on this date was just to let the employees know money you should see the money on this state in your check. S. S. members of Mr. F.. When this came about I think is like February's was it seventeenth came out on Thursday on Friday our office contacted OPM because we were we were told how the lump sums we're going to billion we questioned whether that was appropriate or not so I mean I feel like that there should have been some some sort of heads up at OPM but before the distribution was made that there were some issues with their. You're welcome respond if you have a response it. I know I know for me I was made aware I think maybe that Tuesday of the next week I'm not sure if of the holiday weekend or what the case was or why I was made aware on Tuesday but at that point the way our payroll works and I'm not disagreeing that yet you all reach out opium and on Friday at fully expect that I'm I can only speak from my point of view when it when it came to me some of our folks some of our employees get paid on a Wednesday right they they receive their checks a little bit early so by the time that we really got fully into it on Tuesday those that payroll at RT that ball it already been rolling and we couldn't pull it back at that moment. Thank you I'd like to speak to that inequity that you mention all ago I we just saw an example of how that that works in the other direction also so nobody claims of this plan is perfect to cross the board and they don't need to wait makes it exactly a good water no that that's even that's even an issue for this committee to discuss honestly well if if I can respond I would say that it's more equitable to give these folks the full annual. Two percent primarily because not built into their base right these two percent raises that these other employees get it's built into their hourly basis so it's going to carry forward year over year over year so anybody that stays on with state government be on February of next year they are going to see more value than these folks they get a one time lump sum payment not to mention how we have merit raises coming up in July those merit raises are going to for those folks to get it built into their hourly Saralee the salary. they're going to see that benefit of a tube or whatever percentage they get on merit raises on top of that two percent that they receive where as those folks to get the lump sum payments they don't see that benefit so equitably getting it built into your hourly pay is much better than getting this one time lump sum payment and it'll it'll way out both in the summer and anybody that's employed beyond February. Yeah I'm I will I will honestly give you this ground I I still disagree because those folks at the top have been benefit of these type things for years and years of these other people below and in so I think it's a wash but really that's not even an issue I don't think this committee to discuss we're here to figure out if we have followed the letter of the law or not and that's our that's our only responsibility I understand and if I can respond to that too I would say the letter of the law is is silent on this what the what the what leg audit is pointing to is a letter that just has a date and that I don't think that letter was intended to say we want to pro rate for this date or we're putting them out on this state because we want everything to be percentage wise based on this the letter was really just a signal of Hey guys you're gonna two percent it's going to be effective on this day look forward in your checked and it was done prior to knowing that the lump sum payments should have and I'm not saying that we should have known I'm just saying before we before we done our research well before knowing that those lump sum payment should go out at the end of the year so if we're looking at the letter of the law the letter of the law is silent on this in the past president we have done it both ways we've got a pro rated we've done it a full annual payments so there's nothing that. In the law locks us into doing a pro rated payment. He was very. All right I'm back where I was it doesn't use the word pro rated it does say that the the. Payment or the bonus will be what the governor authorizes and the only authorizing language we could find was the effective February sixth so I understand Mister rouses position our position is it's not unclear it doesn't use the word pro rated but it does turn on what the governor authorized and that's all we've got. You're recognized by mistake the governor's office intention was to do it on the total amount we never talked about preparation during the time that these decisions are actually made the intent was to give them a total compensation level yeah it. Who who knows intent honestly other than than the governor however it would could have been easily clarified with another letter if that was in so it's it's hard for us in this position to. To just assume. And can I add one more sure statement place of an example of that was Jeez we talked about the employee making fifty thousand dollars and what we set that employee making fifty thousand dollars or what was stated they would get a thousand dollar bonus because the two percent said they would get eighty one thousand dollars then we did the pro rated version if the total bonus was not a ward well the difference is one of full year passes those employees making fifty thousand the ones that were had the lump sum payment would have only gotten four hundred dollars they would be making fifty thousand four hundred were those that had it added to their salary would be making fifty one thousand so my thought is that we're punishing the people at the lump sum level of the pay grades and they would not get the complete bonus pain. Okay understandable of. Of residence Springer you're recognized. Good morning thank you Mr I don't I I'm looking on the posting for the agenda and documents I do not see Mr covers slide presentation of the review of implementation of a two percent salary increase is that read the slide presentation available to members it's. I know that this not that I would like to have a copy of that she will under their of the review what institution yeah. The review that he went over all that information is in here but we can get you that but but all that is yes I would like to have a copy of what he summarized no problem. Senator Hammer. Thank you but you know obviously disagreement in the room but what I want to know is for the employees are kind of caught up in this wonder which way is up what are we doing to communicate to them so they've got a clear understanding of of where we are moving forward okay Senator Hammer I did communicate with every employee that was impacted by the lump sum payment I sent each employee that we had email addresses on we may not have had but if their email was it isn't the asus system AS in each one of those employees the letter saying first of all we're having to take your bonus back I followed up with the second letter to each employee saying this is the amount your bonus will be calm the end of the fiscal year now I have not third at sent out any other correspondence sense because our position was we were gonna get the total compensation law. So based on anything that's been discussed here today is there any reason that they should expect to get it. As you have sent out the second letter saying they would get it. I mean right now they are anticipating getting the full bonus the bonus in the full year and I would like to clean up the majority of those employees over have seven hundred sixty seven hundred plus a grade six and below nine hundred and some employees are grades nine invalid we do have employees at the higher level but the majority of employees and acted by this decision all right the lowest grades of the state pay plan. So what's your purpose to point that out a mission it would you well it's just going to really hurt people we had one lady I think mention in our response to I heard from and I heard from a lot of employees I canisters of we. And we had one lady who had gone during all this it was further complicated by snow day also the weather was bad so there was a delay in some of the employees getting the information so someone employees had already gone out and spent their bonus because I got it on Wednesday that one ounce Bennett Wednesday night and that I was sending out correspondence late Wednesday night saying don't but they can go to work the next day so they didn't see the email that you couldn't spend this money so someone has been hit by the time they returned to work it's just a really negative impact on those people who may have spent if they thought they were getting five hundred they may have spent the five hundred now they're gonna only get maybe a hundred based on the five twenty six zero sizes trying to point out the situation there. Okay all right thank you. Senate Chesterfield. I thank you Mr how did you recoup the money taking it out of their salary going forward or what we would get the money the next paycheck would to tell you the whole amount only but we yes for most employees who took the whole amount for those employees who are not going to be clearing any money we divided that into four pay periods. If they got a five hundred dollar bonus yes ma'am and their next paycheck nine they were five hundred dollars short yes ma'am. That's why we work so hard to communicate with us employees as well as writing them the letters personally and if somebody body Nicks situation track tension we try to work with us so if. That's a huge hit all at once one time it was yes ma'am and for those who are making the least. You get five hundred dollars out of a paycheck whatever it was a cheap whatever the amount was yes ma'am. Eight well it's too late to read litigate that but it would seem to me that we would have at least pro rated over several paychecks rather than having that that kind of deleterious impact on on people of every time yes but thank you for. All represent right you're recognized. Thank you Mr ma'am how long and and what is the beginning date and ending date for this two percent. The two percent was affected February six and it will stay in employees who are in a graded positions that will stay in their salary for the rest of their tenure at state government for those that work we see that as a lump sum I think that's the issue we're talking about we would have given it for the whole year where I think audit's recommendation is we only give it five twenty six of the year follow please Mr. In most cases don't we usually go a year and instead of a small period like this yes are generally this is the only language left in the uniformed classic compact that allowed for two percent increase of the governor's discretion the governor trying to respond to inflation and other issues at that time thought he wanted to implement because we have the appropriate surplus to pay for it and so it's very unusual that comes in the middle of the year normally increases come at the beginning or the end of the fiscal year bill well after this period though ma'am of April twenty second with these folks seeks to get the two percent owner on their checks not all employees and graded positions that are not at the maximum will continue to get two percent adjustment within their checks if they were at the maximum yes if if we pro rated that amount it would stop at that particular point in time looking up so if if this goes past the mid point of the year the folks that are making more than fifty thousand dollars a year to do they cease to get any kind of a raise at all. The next of race is scheduled for state employees or the performance raises were based on the performance during the fiscal year that's a scheduled to go in place the first appeared in the next fiscal year so those employees will get those races well but that will go on top of the two percent that they received in February. So actually this this two percent will continue on. Yes Sir continues on thank. Senator you're more you're recognized. Thank you Mr so just out of curiosity I heard a lot of back and forth here did did anyone bother to reach out to the governor's office for for clarification on the letter. Yes we have spoken with the governor's office okay and care to share any of the conversations are well obtained like OPM thought it was for the total compensation their intent was for the total compensation for the year okay is that in writing anywhere that could have been submitted to legislative audit. Not in writing to my awareness I know in our response we did put in there the governor's intent was for that to be annually but we don't have direct writing from the governor okay and certain into legislative audit then there's you all receive nothing stating that. The governor didn't intend for that to happen either right correct. Okay. I think we're going to clear that up pretty quickly I think the thing going forward is we're going to fix this right. What a nine point out that the in this past session you did you all struck the language for that two percent so that's not a that's not a thing going forward that that language in the code has been eliminated. You have a and that's I would argue over here but but a letter from the governor should have been clear I would think as to what his intense war so. What concerns me going back to what with the center Chesterfield stated of recouping those funds in lump sums is problematic. And I would argue unfair to some of the employees considering that mistakes were made and recruit so going for we need to figure out a better solution to that and again it just troubles me that this could have been I think solved a little more quickly and and the greater understanding had Perhaps OPM gotten better clarification from the governor's office in a perhaps in writing so that it would have put all of our concerns to rest. The do you agree with that. We have very does does OPM agree with that statement that the I think more clear understanding could have been reached. Well as I think the it could have been more clear of this idea was presented to the governor from us and and the departments and you know it's on us to make sure that we fully inform the governor of every aspect of the code and we didn't make him aware that the lump sum payments needed to be made at the end of the fiscal year perfect that's what I was getting at yeah so and you in a lot of ways this this messes are as for not not doing enough research and doing a deep enough to dive into this before we put it out there great thank you for stating that. Senator Hammer. Thank you I'm just curious when it came to the decision about grabbing the lump sum back in it And as water and bridge can't do anything about it but what were the internal conversations and who were who was involved in the internal conversations about deciding to take it back in a lump sum verses maybe ease and it over the remaining period of time toward the end of the pay period so as not to make it such a shock on the employees and and senator Hammer we we did not we we did in some instances take it back over a number of pay periods at my my understanding is that we reached out to those employees and worked with them to make sure that either they could you know they can absorb that being pulled out of their check or a in other instances if we needed to to space it out over one or four different checks we try to work with those individuals I mean for example we we I know of an employee that just because of the way there check is garnished and and the with holdings that they have that the the lump sum payment they received was about two of their paychecks and so one we can even pull that out and one paycheck we wanted to but to we try to work with that employee to make sure that we didn't put them in an untenable situation moving forward so we we had a several situations like that we did try to work with them but there are a lot of instances where we were able to just pull it out in one check. So there was dialogue with the employees in the peer in the time frame between the time you communicated with him Kate and actual withdrawal began to happen is that if I understand that correctly. Thank you Mike John okay thank you yes there was correspondence with the employees employees that notified us that they had a special need we tried to address and then we also identified I think thirty nine employees who would not clear a hundred dollars if we take it all back at one time so we put those employees that or pay period payment plan as well we just get that from OPM just reviewing this shows or any money that's still being withheld errors at all clear now the money has cleared now and our intent was to restrict that money into I'm sorry say that again the money is clear now right all the money that you need to a with help from the employees so I'm hearing you say you work with the employees yes and that and that if they had financial difficulties you try to work with them in a payment plan over a period to pay periods in order to not take it all one time unless they said it was okay right. All right and and as of right now there's no money being held any longer because you for coop did all right the money's been recouped so okay issue is now the money we're gonna re award the employee three what was the total amount maybe maybe it was report and missed it I have it here let me look that up just. The total amount was one million three hundred fifty thousand dollars seven hundred nine all right thank you Mr. Thank you. that's the last question in the queue anybody else got a question before we let these folks go. Narasin not I appreciate your tennis of the AM and working through this issue what someone from the Attorney General's office comport ourselves one question that I love this reporter I'd like to ask. Thank you I'll just remind stand employees of yeah would you a state your name employer and position for the record. Good morning Mr chairman M. as Brian bell and I'm the chief of staff for the attorney general's office thank you Sir please raise your right hand do you solemnly swear or affirm the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god I do thank you thanks for coming here today it's on page six of the report where I just I've called this yesterday and last night In the top of top of the second paragraph there the LA could not identify authority for an AG's discretion. That just seems on honestly looks kind of made up can you provide. Some background where that discussion came from I mean where you would argue it comes from sure so has the number one I think it should be made clear I think you all saw the list we are exempt from the class compensation acts I want to make sure everybody understands that before we so before we start this process. Our position is bad that we have regularly given raises and and bonuses to employees throughout the history of this administration as well as other attorney generals so again I I would go back and say we have have the authority we have had have historically done this over the seven year history of the attorney general's. tenure in office and have never felt had an audit finding until this year. I think that it's our understanding and speaking with our auditors that this was triggered because of an improper coding of OP when we notified them that the Attorney General would be giving a two percent increase as well as bonuses to her employees as we have historically done. Okay souls I guess maybe I'm not smart enough to understand yours can you point me specifically to that. To the AG's discretion. I think this is a coding issue it out for OPM is what they're coding it as we have what we communicated to PM is. Originally they had a coded as a governor's discretion and we said no you have this coded incorrectly. We are not subject to class and compensation we want you to code it As You have normally for the last seven years when the Attorney General decides to give raises and or bonuses. Okay. Yes I do have some of the. Thank. Thank you Mr chairman I I first want to point out. When when it said that this is being done before you need to distinguish. You've got to remember this about the AG's appropriation that appropriation act sets maximum dollar amounts for each position most appropriations that you do say like this employee will be GS eleven percent for we will be in S. C. O. two in the AG's there are actual dollar amounts. Associated with each position okay so you've got to start with that understanding. When the AG says that they have given raise before before we got to be sure we're comparing apples to apples if you had a maximum of a of a hundred and somebody was making AT and they raise them up to mining we have no problem with that that's not the issue but if they were authorized by you guys to be at a hundred thousand dollars a year and they went to a hundred and ten that we would have a problem with and that's the problem that we have today and I'm if the committee would indulge me I wish you would look at the language so you can see this for yourself if you have the report turn to page G. one. It's at the very back of the report page G. one the very last appendix. Nineteen four sixteen oh one the regular salary procedures and restrictions act. Go down to that paragraphs B. two it's the next to last paragraph on that page. For any position authorized by the General Assembly for the benefit of any agency. For which a maximum pay level as set out in dollars again that's the AG's appropriation a maximum pay level set out in dollars. It is the intent of the General Assembly that the position is to be paid at that rate of pay not to exceed that maximum during any one fiscal year so you have made it very clear if you set out a maximum dollars they cannot pay more. If you would go over them to the next page. The very top that second full paragraph starts with a capital C.. An employee authorized by the General Assembly shall not receive from appropriated or any other funds or any other sources compensation in an amount greater than established by the General Assembly is the maximum pay. Unless specific provisions are made there for by law. That's our problem with the AG's office they have not or they cannot yet tell us what that other provision of law is that let them do this they make reference to the AG's discretion but they never tell us what the basis for that discretion is is it in the constitution or the code or some court decision we've not been provided with that but we would love to have it that's our issue with the AG's office at this point. Would you have a response would you like to that I think my response still stands as historically we have given raises we have not increased salaries above line item Max for any of the reasons that we have given and we have given bows bonuses historically to those and never had an issue with audit on this. So. So you're not arguing that maybe it's been done wrong in the past it's just I mean I didn't hear and other than that I think that I think fundamental to what we have said is that there are some things in the statute that are unclear you heard OPM addressed that earlier could be more clear absolutely and I think we have said that. I think we have a disagreement on a legal interpretation with pledge audit. Reasonable attorney's can disagree and I think that our interpretation is entirely different than what you have been set forth today. There is no way that we are prohibited from giving bonuses. And I think that we have follow the law follow the constitution and stayed within our appropriation in fact are appropriation we're expecting about one point six million dollars in salary savings this year so we are well within our procreation and for her to determine to give raises as well within her authority. Yeah unless it as we read in the code it crosses the line. Which which we have not and I would also point out to I think one thing that would be very helpful there is no definition of salary in the code. So taking a basic approach to that if you look at the definition of a salary in Miriam's Webster dictionary salary is a rate paid for a yearly out across a period of time we are not exceeding that. Your say that again I'm sorry to his lessons we we are not exceeding our salary line item Max's and have room within our procreation after discussions with our CFO we have more than enough and are appropriation to or the bonuses that she does. Okay or compensation the. Yes Sir Mr mon well I again I think and I don't have words in response my house but I think what you're talking about is the total appropriation for the salaries and what we're focusing on ourselves individual salaries that are set out. Per person that has been determined by the General Assembly is that correct. I think I understand what you're saying and line itemized allergies will not exceed the line item Max salaries. When you say line item Max salaries are you talking about per position are you talking about the total procreation per position. But that day it again at this time it may not but if you continue to pay those individuals according to the plan it appears to us that at the end of the fiscal year that will be over I'm. Thanks again after discussing with our CFO that is not our calculation or what we see on tracking. All right of. Hi Mister Monte committee that that that is just a matter mass you can do the math yourself that's not a it's not really up for debate of senator Hammer you're recognized. Thank you didn't did you all take any money back from any of your employees. We did not actually and one of the one of the analysis is that we look at again as we are specifically exempted from the C. CA and notify the API that they had coded incorrectly we were not seeking raises based on the governor's authority about the authority of the Attorney General to award. raises and bonuses to employees okay and let me give you an analogy got some in making ninety thousand two percent of that ninety thousand did you have any that would win over what would have been there their budget salary. With the two percent with the with the raises no Sir on the bonus increases. I'm in. Again bonuses are treated differently a salary there is a very distinct difference between the two bonuses are a one time payment based on performance or other indicators which would not affect the overall line item Max so for those that received the bonus it is a one time payment that. We feel like we have the authority to award. Okay so it would be a one time payment and would not continuously affect or raise their salary so you had some employees that you gave the one time payment to and did you have other salaries and other employees that you applied it as a two percent increase across the board yes Sir cross and I guess one of my questions is how do you determine who gets to the bonus versus who gets it added to their salary based on I didn't get that of OPM we looked at where they were and their salaries and look to where they were in relation to their line out and Max to see if they could get a two percent raise across the board or whether or not a bonus was more important appropriate for their employees it in place have a feed back into that because based on testimony while ago it would seem like some might figure out it would be better in the long run form to get one application where as others might want it that way or is that just an executive decision as to what who got to get what it would be an executive decision as to who got what the feedback that we got from our employees was gratitude I think that for those that you have worked with our office our staff work incredibly hard to defend the state defend the laws of the legislative body and also defend the state in action so I think they were very appreciative of what we could do within our budget was there any plug in play and that's term I'm using when you look at it because employees didn't have any input in it where you saw that we need to do this in order to keep them under their salary cap and did that going to any of the decision making process where you guys chose as to who got what. I think that there was potentially some of that and also looking at work performance for personal as well okay our thank you Mr represent Gonzalez. I thank Mr I guess my question is is more for audit because I'm failing to see how. This bonus going over the the line item maximum is different than what we just talked about with OPM where's that the they were given the two percent they had to take them up to the the maximum first and then everything else was bonus on top of that so it exceeded that as well correct. How is this different. Transall. G. R.. G.. One one. I the authority to do this. Twenty one five to eleven B. two provides for how you deal with somebody who's at the maximum how you do their lump sum payment. So everybody else follow this code section. The AG is saying we're not subject to this code section so they are not claiming the benefit of being able to use it. But they're not pointing us to any other code section that allows a allows them to handle the lump sum payment this way so OPM. More or less follow this code section but the AG's office is not claiming that it applies to them does that does that answer your question. This is somewhat so if. Because they're claiming that they that they don't fall into this uniform class fake classification of compensation act is but if they wore following this you're saying what they're doing would be appropriate if they work well our first full meet let me I think there's probably two parts to my answer first of all if you look over on the other page twenty one five two oh four. Under tool for a yes they are exempt from U. C. CA but if you look down at the one about for five lines from the bottom. Even though they are exempt they could take advantage of twenty one five to eleven to approve this salary increase so even though they're generally exempt there is a way that they can in the law that they could have taken advantage of the governor's announcmenet. And so yes then if they had if they had taken advantage of this authority which is all that we could find that they could have used. We would still have the issue about paying on a full year as opposed to the effective date of February sixth we would also have the issue of paying in February instead of the last pay period which is what the code provisional Laos but those are different issues are issue at this point with the AG's office is okay if you're not using this what are you using and we still haven't had a citation to anything other than it was the eighties discretion. So they could simply tell audit that Hey this is the code or use an and then the the problem will be no different than the rest of the problems with with OPM yes Sir. Okay. I guess that's all I have. Okay. So we're just which kind of circling back to you can you point us to the. In in so in a I think it's such a simple answer that even I can understand I I think the simple answer is our constitutional authority to give raises and and in our appropriation we are not prohibited from doing this. I mean except it says in again I think that there is a fundamental difference and the interpretation that leads audits attorneys have brought forth we have had multiple attorneys reviewed in our office and again reasonable attorney's can disagree. Okay so just a curiosity as an attorney how would you how would you suggest that we I mean think this needs litigated in order to get an answer. I think the most simple answer is fixes in the next general session to address the gaps the I think we see at PM has addressed today I think they do there do need to be statutory fixes and I don't think anyone is disagreeing with that. Okay but to answer this question what I mean that today at what would be your recommendation as an attorney to if if our client that we get that answer is it is it litigation. I don't know that litigation would be appropriate or necessary for this I think this is a legislative audit finding in which we disagree with the findings of audit just like any other agency has in the past It's just a. Our interpretation is different and again I don't think litigation would be necessary for this well then typically that's how reasonable attorney's a disagree with. What would written answer is not I don't think so not not on is not on an issue like this okay. Our. Anybody else so I have a question or comment. She will. Mr Norman do you or Frank anything to okay I thank you for being here today I appreciate it thank you Mr chairman will be excused yes you're recognized thank you of. With no further questions or comments of that will move on to the next item on the agenda and that is that our next meeting of Legislative Joint audit committee will be held June second and third two thousand twenty two. is there any new business and these come before the committee today. All right so you know we will stand adjourned thank you for your attendance.