Arkansas Legislative Council (ALC)
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Speaker 10
2:00
All right, members, if you could go ahead and grab your seat,
we'll get started. All right, calling this meeting to order. Good morning, members. Glad to see everybody here. If we could, at this time, recognize Representative Les Warren for the prayer.
Representative Les Warren
Unverified
2:30
dearly father we thank you so much for this day we especially thank you for the season celebrating
the birth of christ and father what that means to each one of us we thank you for this incredible state that we get to come and serve we ask that you would guide everything that we do, that what we do will be pleasing in your sight. Father, we ask that you help us be aware of those less fortunate
around us, and especially during this season, so that we can look for opportunities to be your hands and your feet. Be with us now. We pray all these things in Jesus' name. Amen. Amen. All right, members, first thing on the
Speaker 20
3:23
agenda is approval of the minutes from the last meeting. I need a motion
to adopt. A motion, a second. All those in favor say aye. Aye. Opposed? The ayes have it.
At this time, we're going to recognize Dr. Carlos Silva for the presentation of the November 2025
Speaker 24
3:47
Revenue Report. Dr. Silva, you're recognized. Thank you, Mr. Chairman. Carlos Silva, Bureau of Legislative Research, and today we're presenting the November 2025 Revenue Report. That's the fifth month of this fiscal year. As we have a gross collections of $3.31 billion or $58.9 million above last fiscal year.
Today for those first five months, that's 1.8% above those first five months of last fiscal year. As we move down, we see the last line here. We have a $2.82 billion in net available for distribution. There's also $81.2 million above the first five months of the last fiscal year. And there's a 3% increase there when compared to those two fiscal years. As we look into page number two, we will find the cumulative deviation from the F&A net general revenue available for distribution forecast.
And you can see here we moved from $90.5 to $108.7 million. So we have an increase there above the forecast for this month as well. Still progressing all the way from our September number from $73.9 million. As we move from page number three and page number four, we're going to have our general revenue collections. And page number five and above, we have our special revenue collections. In general, there's not many movements here other than we have some of those extensions that start showing up on this month.
And when we talk about what is going on now in the nation and in the state, we start receiving some updates again from the federal government after we have some of the agencies while collecting data. And we saw unemployment in the nation has increased from 4.4 to 4.6. We also received the data from the CPI. It has slowed down to 2.7 for the headline and 2.6 for our core.
When you look into the state of Arkansas, we have data from September. That's what we have at our unemployment, 3.9%. But as you look into more detail there, we have seen that number of individuals working has increased by over 22,000. individuals so we still going to be looking to this we have some a gap on that data like I have said from the month of October now we have November we start receiving more data for the state of Arkansas and we keep the members updating in the new calendar year
thank you dr. silver members any
Representative Jim Wooten
Unverified
6:28
questions representative Wooten you recognize thank you doctor relative to the first page I noticed corporate income tax refunds are down and the the individual income tax refunds the last item are down is does that have to do with the change in the filing
dates that what what does
Speaker 24
6:51
this have to do as well is also the
percentage change that we have done right so we have changed the rates so now we have to collect
Representative Jim Wooten
Unverified
7:02
less so we're gonna have less as well on those it involves the tax
cuts in the late filing that's exact sir follow-up if I made there's a there's an awful lot going on into federal level that could have an impact upon us let's take for example and my question has to do with the forecast Relative to it, the economic measures, the farmers are receiving $12 billion.
That's just $50 an acre, and they lost $243, but that's money coming into the state. That's one. Number two, there's talk of a $1,500 to $2,000 per person check coming from the federal government to all of our citizens. The president announced the other night $1,776 per military person, and then we have the tariffs and impact of that.
And the last couple of times, and I gave you a break last month, I wasn't here and didn't ask you the question about the tariffs, But are you taking this money additional, if it comes to bear, into consideration in the forecast? And how will that impact our economic well-being? I can talk about the general. I cannot talk about the
Speaker 24
8:26
forecast, the forecast from the agency. So I can talk about the agency. You might want to talk about that. But if you look into the difference between the forecast and on the second page here,
we have $108.7 million worth forecast. But within the forecast, we have $185 million, a buffer, if you can say, right? So a total of $293 million. So if you end the fiscal year as of today, there's a $293 million above. You know, of course, we have six months to go. But if things continue, this trend, that's how much we
Representative Jim Wooten
Unverified
9:03
would have. Well, I realize what it says here, but what I'm asking is will this have an economic impact upon the economy of the state on the plus side, on the good side?
But yet, with the farmers losing $243 an acre versus getting only $50, that still impacts them. But my point being, will the per-person income increase with the $2,000? What type of impact will this have on our forecast? Do you know? Okay, so there's
Speaker 24
9:42
no computation on how that $2,000 would impact the state,
but we can expect that to be positive. We have some in the short term, some positive things that could happen within that that would impact this fiscal year? Yes, sir. So assuming that money would come out within this fiscal year, we have some positive impact here and we would expect this to move in a positive direction faster than what we have right now. But again, assuming that that come in within this fiscal year.
Representative Jim Wooten
Unverified
10:10
Will you take that into consideration and in the forecast? The forecast is from the agency, so we might need to talk to the agency.
But will the agency take that and should take that into consideration? - I don't think I can respond
Representative Jim Wooten
Unverified
10:26
apologize. - All right, Director Hudson, Mr. Chairman, could the director come forward? - Good morning, Mr. Hudson. - Good morning. - Merry Christmas, everybody.
Speaker 44
10:49
Jim Hudson, Secretary of DFA. I heard the question. We're going to present a
Speaker 45
10:54
revised forecast or an updated forecast. I don't know if it will be any different. Around February 1st, we have to do that in advance of the fiscal session. So at this time, I really can't speculate as to what the next forecast will look like. I will tell you that when we do compute the forecast, we look at actuals. We look at what's actually going to be happening. I think it can always get a little dicey if you're just paying attention to what's in the headlines
because some things just may not come to fruition. Generally, I think at this stage, I would say that I'm no less optimistic about what the remainder of FY26 is looking like compared to what the forecast we had for it in May when
Representative Jim Wooten
Unverified
11:42
we prepared the last forecast. But if it does come to fruition, then you will take that into consideration. That's a considerable amount of money at $2,000 a person, our $1,500, and then $1,776,
and then the $12 billion, our portion of that. It
Speaker 49
11:59
would certainly have a stimulative effect. The question would be when timing of that. Would it be hitting in FY26 or would it be hitting in FY27? Those are the things we'd have to look at. Thank
Representative Jim Wooten
Unverified
12:11
you, Mr. Secretary, and thank you, Mr. Chairman.
Thank you, gentlemen. Appreciate the answers. Members any other questions
Aren't seeing none that takes us down to item f1 administrative rules and recognized that representative Matthew Shepard
Representative Matthew J. Shepherd
Unverified
12:32
You recognize The administrative rules subcommittee met on December 18th the subcommittee filed a report from the executive subcommittee concerning the review and approval approval of an emergency rule. The subcommittee received agency updates on outstanding rulemaking from the 2023 regular session and filed agency's monthly written updates on rulemaking from the 2025 regular session. The subcommittee accepted the recommendations of the Division of Elementary and Secondary Education concerning the extension and repeal of rules pursuant to Act 781 of 2017
and Act 65 of 2021, and all rules were reviewed and approved as noted in the report, and I move adoption of the report all right thank you members
any questions on this item all right seeing none need a
motion to adopt the report motion the second second any discussion seeing none all those in favor say aye opposed the eyes have it that takes us down to item eight representative excuse me item seven hospital medicaid and developmental disability study I'm going to recognize
senator Jane English you're recognized thank
Senator Jane English
Unverified
13:38
you the hospital medicaid and Developmental Disabilities Study Committee subcommittee met Monday to hear testimony on the following items. Overview of current status of TANF, an update on reimbursement rates under the Living Choices Assisted Living Waiver by DHS. Subcommittee met again on Thursday to discuss the meant for more summit and the implications of benefit cliffs. I move adoption of the report. Thank you
Senator, members, any questions on this item? Seeing none, do we have a motion to adopt? We have a motion. Second? Second. Any discussion? Seeing none, all those in favor say aye. Aye. Opposed? The ayes have it. Lottery oversight reports can be given by Representative
Gordon Watkins
Unverified
14:26
Justin Gonzalez. You're recognized. The Lottery Oversight Subcommittee met on Monday. Her testimony regarding the Office of Arkansas Lottery Monthly Disclosures and Director's Annual Reports, Arkansas Division of Higher Education Scholarship recipients reports
and received recommendations from the Arkansas Academic Challenge Scholarship Program. The subcommittee adopted the annual report, and the report is attached. I move adoption of the report. Members, any questions on this item? All right, seeing
none, we have a motion. Can I get a second? We have a second. Any discussion? Seeing none, all those in favor say aye. Aye. Opposed? The ayes
have it. That takes us down to the peer committee, Senator Dismay. You're recognized.
Senator Jonathan Dismang
Unverified
15:07
Thank you, Mr. Chairman. The peer subcommittee met on Thursday, December
16th. The subcommittee received reports, reviewed requests, and approved the following, various temporary appropriation and infrastructure investment and jobs act appropriation. One item in the report is marked as held, C1, a $2.5 million fund transfer request by environmental quality for the used tire program. Another item failed to receive an action. That was F-14, a $7 million appropriation request by Agriculture
for the Maumelle Watershed Project were purchased. Both items have been pulled from consideration by the agency request. I move for adoption of the rest of the report. All right, thank you, members. Any questions? All right,
seeing none, we have a motion. Going to get a second? Second. All right, any discussion? Seeing
none, all those in favor say aye. Aye. Opposed? The ayes have it. review committee representative kavanaugh you're recognized thank you mr. chair the review sub
Representative Frances Cavenaugh
Unverified
16:07
committee met on tuesday and reviewed methods of finance
discretionary grants one rfq request and service contracts services contracts and received regular monthly reports one contract was held pending further information from the agency under out-of-state contracts contract number seven for out-of-state contracts, DHS, DCFS, with evidence change, was held until Legislative Council pending further information and discussion. Mr. Chair, on Tuesday, the subcommittee also received one
supplemental agenda item, Department of Commerce AEDC discretionary grants, which were subsequently referred to full Arkansas Legislative Council for review today. It is our understanding that there are some changes to the grant allocations and the revised schedule is on your desk mr. chair i move for adoption of the report including review of the dhs contract with evident change and the revised discretionary grant submitted to legislative council all right thank you for that report members any questions
representative rose you're recognized i'd like to make a substitute motion
Representative Ryan A. Rose
Unverified
17:13
that we put that evident change contract separate vote all right hang on to
that one second members any other questions on the rest of the report all right seeing none just one moment representative
rose your motion is to adopt the rest of the report except for the report that concerns evident change that's correct mr. chair all right all
right members you've heard the substitute motion we have a second move a second can I just for
Representative Frances Cavenaugh
Unverified
17:54
clarification mr. chair okay so is the motion that he's doing is he just wants a separate vote on evident by itself that's my understanding I'll let you answer that
question if you push a button Say again, Mr. Chair Representative
Kavanaugh, I'll ask your question if you don't care
Representative Frances Cavenaugh
Unverified
18:19
Representative Rose, are you just asking for a
separate vote completely on evident change? That's correct Okay, so it's just we'll do two different votes Okay,
thank you Okay, members, as I understand the motion, there will be two votes.
The first vote will be a motion to adopt the entire report without evident change. then we'll take a second vote on whether we want to review or not review evident change. Everybody clear with
Representative Frances Cavenaugh
Unverified
19:16
that? Revenant Kavanaugh. Don't we have to vote
on his substitute motion first? No, that is his substitute motion. Okay, thank you. All right, so the first vote, to be clear, the first vote we're taking is to review the entire report except for evident change. Is that clear? Anybody have any questions? Representative Beatty, you recognize.
Representative Howard M. Beaty, Jr.
Unverified
19:33
Just a point of clarification. Yes, sir. His motion was to have a separate vote. Do we not have to approve that motion for a separate vote first before
we can proceed to have two votes? No,
report without evident change and then take another vote, a separate vote, about evident change. But that's not what the member said.
Representative Ryan A. Rose
Unverified
20:10
in here? I defer to you procedurally, sir. My suggestion was a separate vote for evident change and retain all the rest
Speaker 100
20:17
of the review information in the initial vote. Yes, sir. Okay, so that's what I said.
The first vote would be to take up a vote on whether we want to approve the entire report without evident change. We'll take a second vote that will decide whether or not we review or not review separately
and on its own evident change. After his
Representative Howard M. Beaty, Jr.
Unverified
20:38
clarification, I'm good with that, Mr. Chair. Okay. Thank
you. All right, members. So the vote we're taking, again, is the entire report to be reviewed without evident change. That's the first vote. Everybody good with that? And we already have a second on that. So all those in favor, say aye. Aye. Opposed? The ayes have it. Report is adopted with the exception of the portion that contains evident change. Now his motion would be to take a separate vote on whether or not we want to review evident change.
Representative Rose, is your motion to not review evident change? Excuse me,
Representative Ryan A. Rose
Unverified
21:15
sorry. My motion was just simply for a separate vote. Okay. But I do have
discussion at the proper time. Okay, thank you. Senator Hester, you're recognized. My motion
Senator Bart Hester
Unverified
21:25
is that we do review the contract with evident change. Motion do pass. I think that's the
same thing Representative Rose is asking to review or not review.
Okay. So, Senator Hester's motion is to review the contract. Everybody understand that? That's the motion we're taking up now. We have a motion by Senator Hester to review the evident change contract. Do I have
Representative Ryan A. Rose
Unverified
22:00
a second? Second. Do I have a second? Any discussion? Representative Rose. Yes, sir. Thank you, Mr. Chair. Appreciate the latitude. We've discussed this kind of at length over the last couple of ALC meetings in November and December. The long and short of it is this
contract is additional scope and expenses to DCFS for new work from this vendor. As we discussed in review, this vendor has more or less, for lack of a better term, vertically integrated themselves into DCFS. They recommend and provide consulting to implement and provide tools. We pay them for the consulting, we pay them for the tools, and then we pay them to grade how the tools function.
This has been an expansion over the last several years of their scope and our reliance on them. now have 11 employees in the state of Arkansas. If you remember the Baxter County case with the 29 missed reports, we have discovered since the division has 341 other similar cases. Eight of those have been referred out and evident change and their practices have been right in the middle of all of this. The report's not entirely done. My concern is that we should not just keep throwing
more money while we're trying to figure out what the root of that issue is. I think that Director Wright and her capable leadership team can look internally and try and find some of the issues that are causing these problems instead of being completely reliant on an out-of-state vendor. Representative Bentley filed an interim study proposal to investigate the hotline and the call center and has a working group for that. I think that's going reveal a great deal. And the final thing I'll say is that when I met with the vendor, when we
interviewed in committee this week, they had said that they want to put their client, our state, in a position to where we don't need them, where we can fire them. But when I asked for an answer on an off-ramp, is there a plan for an off-ramp? They never would answer it because there's not a plan for off-ramp. The plan is to continue to deeply entrench themselves in DCFS and expand their contracts and their scope. So my suggestion to each
contract. Thank you very much, Mr. Chair.
Representative Frances Cavenaugh
Unverified
24:29
Thank you, Representative Kavanaugh. You're recognized for discussion. Thank you, Mr. Chair. Although I've always been a proponent that we need to do as much inside the agencies as we can, this is a problem with the hotline that we've been having now for years and years going into decades. We have lost children because of our inability to run the hotline correctly. I do not believe that it is something DCFS can fix internally because
DCFS has been part of the issue with the hotline. And I think for us to be able to know what the problem is so that Representative Bentley can move forward with her study. She needs outside eyes looking at what the process is in DCFS and DHS on the hotline. That's what this scope will do. It will actually start doing quality control already on the hotline. They already do the
middle and the end, but they don't do the beginning. Although I'm not a proponent to spend money recklessly, as my record will show, over the eight years that evident change, even under their other name, they've only spent $11.6 million, and I know I say $11.6 million only. So that's about $1.4 million a year that they've been paid for multiple services in eight years. In the scheme of things with DHS's budget and with the other contracts that are in there, that's not an
exorbitant amount of money. For me, if they can help us find a way to stop the problems that we currently have in our hotline, the $300,000 amendment is worth that. Because if we can save one child i'm glad to have spent that three hundred thousand dollars and that's my take on it sir thank you representative representative wardlaw you recognize mr i've been
Representative Jeff Wardlaw
Unverified
26:25
out of town all week
and i'm awful slow but i'm trying to read this and it shows total projected here at
5.7 million and some change we don't have to get that specific and under these amendments that Representative Rose just referred to, as he referred to their relationship, they've only spent 2.3. So I don't know if staff or department could answer that question, but it seems like we're on track with the current contract and we're not amending it outside of what we agreed to from the beginning. So I really don't understand the issue. Somebody could have.
Well, we're in discussion, so I can't get anybody to the table, But I can – Representative Kavanaugh has been dug in pretty deep. If she wants to respond to that, she's welcome to. And we can ask staff, our staff. Yeah. Give me just a second.
All right, Representative Ward-Law, staff says that you're reading from the contracts. That's also all the information they have as well, so they're reading
the same thing you're reading. Thank you. That was my point. Yeah, thank you. Well made. Representative Kavanaugh, you good? All right. Members, any other discussion points? All right, seeing none, we already have a motion and a second to review the evident change contract. All those in favor of reviewing the contract signify by saying aye. Aye. All those opposed? No.
the ayes have it thank you members that takes us down to
item 14 representative warren personnel representative warren push your button please thank you you're recognized
Representative Les Warren
Unverified
28:31
thank you mr chairman personnel subcommittee met on wednesday
december 17th and reviewed three growth pool requests, a miscellaneous federal grant, and four reports that required
no action. The committee also approved item four, the reassignment of 51 positions from the Division of Correction to the Department of Correction, shared services for the new recidivism reduction system. I'll be glad to answer any questions and move to adopt the
report at the proper time. All right. Thank you.
Representative Jim Wooten
Unverified
29:04
Members, any questions? Representative Wooten, you're recognized. Thank you, Mr. Chairman. Representative Warren, this has to do with the positions that were approved for the Agricultural Department.
There were three of them, I think. But my question has to do, do you know, are we still holding an abeyance? Act 796, it covered those that have been vacant for over two and a half years. Are we still holding that hostage, if you will? uh relative to how it impacts the uh benefits of of employees
just a moment I'm just looking at it and providing information each session. Representative, that's OPM and
Representative Les Warren
Unverified
30:18
DF&A are the ones that have the oversight on that,
and they're supposed to be looking at it on a continuous basis, and that's all I can give you
Representative Jim Wooten
Unverified
30:40
Okay. Well, we passed that law. It became an act two sessions ago, and now we're holding it in abeyance. Are we still holding it and not enforcing the two-and-a-half-year that they can't carry forward?
Any position that's vacant for over two-and-a-half years, it has to be relinquished, given up? will have to get you in touch with
Representative Les Warren
Unverified
31:07
some other folks that can give you more details on that that's all I know on that all right thank you mr. chairman thank you mr. chairman
Senator Missy Irvin
Unverified
31:20
thank you senator urban recognized thank you mr. chair I just quickly wanted to express my appreciation for f12 the attachment I
appreciate them addressing that funding issue on behalf of the citizens I represent in Faulkner County all right
thank you senator members any other questions on the personnel report all right seeing none we have a motion can I get a second we have a second any discussion seeing none all those favor say aye opposed the eyes have it members that takes us down to item H1 this is Arkansas Children's Hospital and UMS Arkansas Infant and Child Death
review panel. We're going to need a motion to refer this review program to the Senate Interim Committee on Children, Youth, and the House Committee on Aging, Children, and Youth, and Legislative Affairs. We have a motion. Second. Second. Thank you. Any discussion? All right. Seeing none, all those in favor say aye. Aye. Opposed? You ayes have it. Takes us down to item two. This is a review of the partial equity ownership agreement with the Arkansas teachers retirement system and we're getting a motion to file as
reviewed with motion the second second any discussion seeing none all those in favor say aye opposed the ayes have it all
right that's takes us on item three this is department of AG this is just their report on the 2026 2027 biennium plan of work for the state of Arkansas water waste disposal and pollution abatement facilities i need a motion to give favorable advice motion second representative ladyman you want recognized can we ask questions on this discussion yep if the department could
come down i had a question okay we get someone down from the ag department good morning if you would
Speaker 128
33:30
just introduce yourself for the record you can um begin with the answers yeah chris call clasier director of the natural resources
division at the arkansas department of back yeah thank you for being here and I'm not opposed to the report I just had a question about
I was reading this and I think it's on page five where it talks about the Sparta and the alluvial aquifers and how that's being pulled down I know that's been a problem for many years but that's very important to northeast Arkansas well all of the Delta really You know, rice is one of our biggest exports, and that affects that. But I know that you all and a lot of people have worked to convert from groundwater to surface water for irrigation of all crops, but specifically rice.
And I just wondered how that's going, because this has been discussed and worked on for many, many years. So can you kind of give us an update on how that's going, where it's
Speaker 128
34:28
at, what progress we've made? Yeah, so I don't have the exact numbers, but we have two major tools that we've been using for that conversion. One, we have a state tax credit program that incentivizes on-farm storage, such as reservoirs, pipelines, things like that. So we have that program that's running all the time in the background. And then we've got the investments that we've made in the two large irrigation projects that, if they're fully functional,
they'll irrigate about 500,000 acres with surface water. So those are our two big tools that we've been using. And then we've got other partners such as NRCS that also incentivizes folks to convert. And so a lot of work going on. Don't have the exact numbers, but there
is progress being made. Well, I know some of the farmers in northeast Arkansas have done this. So what's the overall response by farmers in the state to completing these projects or working with the department?
Speaker 128
35:23
Yeah, I mean, overall, there's been a good response for that. Obviously, I mean, we're trying to market our tax credit program, for example, so that more folks are aware of that as a tool and a resource. We also produce an annual groundwater report each year where we're monitoring the actual groundwater levels, and then we push that information out, and that's meant to be educational so that folks understand more about the particular issue. Okay. Thank you for
that. Mr. Chairman, can I ask one more question? yep thank you on page 11 we're talking about the water and wastewater treatment
projects and you have four projects listed there and I know as well as a lot of people that we've got major problems with water treatment and primarily wastewater treatment in municipalities especially small municipalities but what I was wondering, uh, and I know we have limited funds, but I'm not sure that all of these small towns are aware of what to do or how to do it, uh, to get their problems fixed.
Yeah. So if there's a small town out there that, that maybe needs a water treatment system or expanded water treatment system, what is the procedure? I mean, where do they go? Can you just kind of tell us that publicly so that maybe there's people listening that needs to know that yeah you bet
Speaker 128
36:53
so if they're going to apply to us and there's multiple funders of water and wastewater but i would say we're primarily the the main one that folks go to what we ask of them is one that
they submit a water and wastewater advisory committee application and that there's a group of us that all fund water and wastewater that get together once a month to look at all of the needs make recommendations and this is just a preliminary recommendation so for example it may be that you need to apply to us or that you need to apply to department of commerce or you need to apply to usda rural development we also ask that they submit a project priority list application and that just allows us to rank projects so that we understand what are the issues that they're
facing what are their needs and then ultimately if if we're the ones that are going to fund them then we're going to ask for a funding application from them, just like USDA Rural Development or one of the other funders. The other thing that I'll say is we are actively presenting all the time to Water Wastewater Managers Association, Arkansas Municipal League, trying to get out there. We work with Municipal League regional folks so that when there are issues locally, they know to come to us.
and a lot of different other entities across the state we also have technical service providers folks that we work with so for example if a community may not understand how to go all the way through the application process we can call a technical service provider that can go out there and help them rural water association would be one of those communities unlimited would be another that can go out and actually walk them through the application process and get all their stuff in Well, I know there's a lot of
work that y'all have done, a lot of other people, Municipal League and others have done good work on this.
But it's still very confusing to a small-town mayor on where do I go. Yes. So what would you suggest as their point of contact if they've got an issue? I mean, should they come to Natural Resources? Should they go to Municipal League? What would you suggest for their first point of contact? Yeah,
Speaker 128
39:05
I would suggest that they come to us because we can steer
Speaker 128
39:11
Resources? Well, we're a division of Department of Ag. So if they'll come to the Natural Resources Division, if they'll contact us, I don't mind giving my business card.
And if they contact us, we'll get them all the information that they need to apply. I have a person on staff that works with communities every day just trying to help them through that process. All right. Thank you very much. Thank you, Mr. Chairman. Thank you, Representative. Senator
Chair
Unverified
39:33
Payton, you're recognized. Thank you, Mr. Chair, and I think I'm probably going to want to ask
Senator John Payton
Unverified
39:39
Secretary Hudson to come to the table. All right. And I may embarrass myself, but if I understand this correctly,
Arkansas Natural Resources Commission is asking to borrow $48.5 million. They call it issuing bonds. And I'm sure that these infrastructure projects are needed and necessary and probably warranted, But my question to Secretary Hudson is, why do we have to borrow the money? We've been running surpluses, and as a state, why wouldn't we budget this in a way that we don't have to borrow the money by issuing bonds? It just seems like we're running up our credit card debt instead of paying our way.
So can you speak to that? And evidently this is an act that was passed in 2007, which back then I don't think they were running big surpluses. So they probably had a reason to give this borrowing authority. But I guess my question is, since Secretary Hudson typed a letter here saying that he doesn't think he'll put an undue hardship on any agency to borrow this money, would it put an undue hardship on the state to pay it out of our surpluses?
Speaker 44
41:05
Well, obviously, you know, Jim Hudson, Secretary of DFA, you know, that's a policy choice to make between the General Assembly and the governor as to how we're going to allocate our surpluses. This is a longstanding bonding program. As a, you know, percentage of our overall budget, size of the state's budget, you know, Arkansas is one of the least indebted states in the nation, one of the most well-reserved states in the nation. So this particular bonding program that is a general obligation bond that's very targeted, much like, you know, highway program is, it does not strain our resources.
We do cap the amount of the state's budget that goes to debt service for this at, you know, roughly $15 million. As I looked at it and we had our folks just kind of do the cash flow analysis and figure out what the payback would be on bonds being issued, consistent with historical levels of issuing bonds, it would not stretch us. It would not impair the
Speaker 150
42:05
state's budget, would not take money away from state agencies,
Senator John Payton
Unverified
42:09
so we can meet the obligations. Okay,
and so when you say that Arkansas, compared to other states, our debt service, our indebtedness is not out of line,
have you compared that to specifically states that have a balanced budget amendment? because, you know, I don't see how we can call it a balanced budget when we spend more than we took in and we do it by borrowing money. So we don't spend more than we take
Speaker 45
42:36
in. We don't do that. That's not an accurate statement. Well, if we issue bonds, then
Senator John Payton
Unverified
42:43
it's because we need the cash flow. We issue the bonds in order
Speaker 150
42:49
to be able to provide capital to fund these projects,
Senator Jimmy Hickey, Jr
Unverified
42:53
but that's not, you know, the state spending money on the issuance
Senator John Payton
Unverified
42:59
of the debt, the general obligation bonds. Okay. Well, I hope we don't teach our citizens to budget
Speaker 69
43:07
their personal budgets that way, but thank you.
Senator Reginald Murdock
Unverified
43:11
All right, Senator Murdoch, you're recognized. Thank you, Chair. Going back to the previous representative that was speaking with Mr. Cloclasier, And I'd like to echo what he was saying, but also publicly give credit to you and your entity for your involvement.
As you state with communities, you've been in my district, specifically Health and West Health. You come down and met with us on some very publicly and some tough issues. So I did want to say thank you for that. And that though there is still the need for those lower capacity situations, there's also a presence. and I want to thank you for that.
Thank you, Senator. Representative Leiterman, you're back in. You're recognized. Thank you, Mr. Chairman.
Secretary Hudson, Senator Payton touched the thought when he asked his question. So if we issue bonds, is there a cost to the state for the cost of money, you know, interest, whatever you want to call it, the cost of getting that money, does the state
Speaker 158
44:22
pay for that? The state pays for a portion of that. Some of these bond
Speaker 44
44:28
proceeds are used to generate loans to local systems.
Mr. Coaklezer can speak more to what the relative mix is on that, and they pay those loans back. Then we get, obviously, money coming back in. That can go toward the debt service as well. But we have allocated roughly $15 million of general revenue on a recurring basis. It's not something new. None of this is new. This has been going on for quite some time that we use to both pay for the debt service and
Speaker 45
44:53
to also issue grants as well for water projects. It's a combination of both. Well, I'm not opposed to the bond, but my question here is, you know,
if we're borrowing money and paying cost of money and we have a billion-dollar surplus, Why don't we loan our money and get that cost of money into our state accounts? We just passed a bill for an energy bill to allow one of our major energy suppliers to do something similar to that, and they came to us and said that they would save a lot of money by reducing their cost of money. You understand what I'm saying?
Speaker 44
45:34
I understand what you're saying. You know, it's all just a question of choices and how you want to use the capital. That money that we have in surplus is not just sitting idle, it is being invested. And we're generating rates of return to the state for that, you know, I think in excess of $400 million last year. So, you know, I don't know that we're going to necessarily get that rate of return if we start generating some loans, which may very well be impaired loans in some cases because sometimes these folks can't pay the loans back.
Right. I understand. I understand the risk, and I understand the income that we're getting already. I just say that I think we ought to be
Speaker 44
46:15
mindful of that idea. We're very mindful, I think, of how to best utilize the capital. And I would say that the creditworthiness of the state of Arkansas is exceptional. We just had an increase in our rating by Standard & Poor's. So I think we get a very attractive rate to borrow for these bonds, to issue these bonds under. and it is a much better
Speaker 45
46:34
rate than any of these local municipalities could secure standing on their own.
Well, that's great, and I know you're right about that because I talk to people from other states,
and they look at Arkansas as a good state, somebody that they can
Speaker 45
46:48
follow. And partly because we have those reserves, and so by not spending the reserves and having the reserves in
Speaker 166
46:55
place, they look at that to assess the adequacy of our capital reserves and to gauge what our creditworthiness is.
Thank you, Mr. Secretary. Thanks, sir. All right, members, I have one more. Senator
Speaker 168
47:05
Hickey, you're recognized. Thank you, Mr. Chair. Excuse me, my voice is not real good.
One other thing, of course, we'd have to pay a higher interest rate on the bond. Senator Payton does have a point, but we also have origination fees and things to that of issuing those bonds, right? Yes, sir, there are origination fees with it
Senator Jimmy Hickey, Jr
Unverified
47:27
and underwriting fees that go with it just like any other bond issuance. sure so it's really more
Speaker 168
47:32
than the rate we also have to take that into account and like i say senator payton does have a good uh a good thought there that i'm not for sure that and i don't know
about loaning the money but you know if we've got the money and we can uh uh you know i don't know that it makes a lot of sense for us if we can get if we're not going to get the rate that we're putting it out for plus the origination why we wouldn't just look at look at doing this on most of our bonds. So, again, I kind of agree with Senator Payton on this. All right, thank you, Senator.
No other questions. You guys are excused. Thanks for coming down. Members, we have a motion
and a second. We've gone through this. All those in favor signify by saying aye. Aye. Opposed? The ayes have it. Noted. All right, members, the only thing left on here is several reports. I'll give you a second to take a look at those and see if you have any
questions. senator hamper you have a question thank you i'd like to get
Senator Kim Hammer
Unverified
48:39
insurance commissioner to the table please for number
Chair
Unverified
48:43
four we get someone from interns department down please
if you would just introduce yourself for the record and we'll get started
Speaker 179
48:58
with the questions good morning daniel holland arkansas insurance department pbm
Senator Kim Hammer
Unverified
49:02
division good morning to your far left over here just question about your about your letter that you put out um is it uh is it in rule 128 that requires you to collect one year's data uh in order to provide the report i'm just
refresh my memory whether that's a requirement or if that's just something that y'all have decided
Speaker 182
49:24
one year's the time frame uh well it you know i think
Speaker 184
49:28
rule 128 started where we had reporting for half of a year and then we got reporting for the other half this next round of reports that we'll get from 2025 after rule 128 had passed after we had issued some corrective action plans to plans that seemed to be deficient um and now that's while we're analyzing the data that we
receive in March I don't think there's anything in the rule
Speaker 182
49:54
that has any kind of requirement on a timeline like that for a certain report is that what you were asking
Senator Kim Hammer
Unverified
50:01
if there's a timeline for a report okay and I note in your letter that you have already determined that there are some activities that reveal that some of the PBMs are reimbursing under NADAC is that correct that's correct okay actions that have been taken against those PBMs would include what as of this
Speaker 184
50:22
date? So when we get complaints from pharmacies that are against those PBMs paying
under NADAC, we issue penalties, possibly get consent orders. There hasn't been a like a large action under rule in 28 taken. It's just enforcement of the NADAC statute. When we get the rule in 28 reports in March, our hope is that those deficient plans have increased their reimbursement rates so we can determine how many plans are actually deficient and then target any kind of administrative action to those plans once we get that info what would you
Senator Kim Hammer
Unverified
50:57
anticipate that the time frame between
the end of march when you'll have one year's data will be before you will
actually have a across the board application of all the pbms it'll
Speaker 182
51:12
be a shorter time frame than what we've seen so far Everyone, and by everyone, I
Speaker 184
51:17
mean health plans and PBMs are more familiar with what's happening. There's more consensus across the board on what is actually being reported and what Arkansas is looking for here. So I don't think it'll be a situation where we need, you know, six months to a year again after we get the March data.
It'll be pretty quick. It's a little bit hard to say how long it takes for our consultants to look through and compare the transactional and reimbursement data. But I would imagine, you know, once we get the data in March, it'll take us two or three
Speaker 191
51:54
months to review that, and then we'll have a final number of deficient plans that are
Senator Kim Hammer
Unverified
52:00
still operating in Arkansas. Okay, last couple quick ones. You've got two on the back that are refusing to cooperate. I noticed Navitus and Express Strips, at least my interpretation of the way your letter is written, is that these have objected.
Have they turned over the information at this time
Speaker 182
52:17
as of right now? No. So Navitus has turned over some information. It's just a portion of the plans that they represent. They don't think
Speaker 184
52:25
that Arkansas has jurisdiction to get that reporting. So I've asked our consultants to go ahead and start analyzing what they do have. and give me those results while we kind of figure out this self-funded plan problem.
Speaker 182
52:39
For Express Scripts, we're working with them. Hopefully, we don't have to resort to administrative action or subpoena to get that information.
I think we'll probably be able to come to a resolution, but as of today, we have not gotten what we're seeking.
Senator Kim Hammer
Unverified
52:54
Anything prohibits you from suspending their ability to operate because of their lack of cooperation? Not at
Speaker 182
53:00
this point. It hadn't risen to that level. they are cooperating. We just have a disagreement about this one particular issue. Okay, last
Senator Kim Hammer
Unverified
53:07
thing I'll say is budget hearings are coming up in April. I hope you'd have that report finalized before budget hearings and before the budget when we have the fiscal session coming up. A lot of
pharmacies have been strung out waiting for this and I would just encourage you to get that report once you get it. Don't make it three months and push it past the fiscal session would be
Senator Mark Johnson
Unverified
53:35
my encouragement, and I appreciate it very much. Thank you. Thanks, Sarah. All right, Senator Mark Johnson, you recognize? Thank you, Mr. Chair. Senator Hammer covered some of the things I'm concerned about. In one recent report, I won't say the last report, you brought up some information about PBMs that basically just didn't even register with the department. And to call the
I was trying to find a word to describe the relationship between the state of Arkansas and the PBM industry, and troubling was the only one I could come up with that I would use in a public forum. But I'm concerned if a plumber or a lawyer or somebody went out and tried to do business without properly being licensed through the state of Arkansas, I like to think that those boards would come down hard on them. And it seems at this point that the insurance department has not been real strong with them.
And that troubles me. We're not talking about a million-dollar industry. We're talking about a multibillion-dollar industry. So the longer we're delayed, to Senator Hammer's point, the more money these people make off the backs of the consumers and the pharmacists in our state. So is there some reason why this is taking, I think the Rule 128 went in, what, 14 months ago, 16 months ago? I don't know. Last year. It was in 2024. I know that.
Is there any reason why it seems to take this long to do this? And when you say they're being cooperative, yeah, they sit down at a table and drag this out over a period of time. And while that's going on, you know, the cash register is running on their part. Would there be any way to recoup their ill-gotten gain once a final determination is made that indeed is
Speaker 182
55:30
ill-gotten? Yes, let me address the first part about the unlicensed PBMs.
Speaker 184
55:35
So from what I know, AID had never found a PBM that was operating without a license in previous years. We found these two in, I think it was September of this year, you know, we issued notices of public hearing to both of those. Both of those responded, and we're working on a consent order, and, you know, they're going to pay a penalty for those activities that they conducted while they were unlicensed. We're certainly not going to let that go or not penalize a PBM who's operating in Arkansas without a license under the PBM LA.
I can assure you that that will not happen. And the very month that we found those PBMs doing that, we started that enforcement action. As far as the timeline for Rule 128, you know, some states, they just say, all right, you know, this is what a cost of dispense is going to be here across the board. Or maybe they limit it to a certain classification of drugs for Medicaid and federally regulated plans. CMS does that. In Arkansas, you know, our concern with the passage of Rule 128 was making sure that we didn't increase health care costs for Arkansas residents unnecessarily.
So to address that, we did it this way, and we look at each individual plan, which there are thousands of, and then each PBM that those plans hire. And then we take in a tremendous amount of data to make that assessment. So it's a tradeoff, right? so if we're going to keep cost impact or we're going to keep that as low as we can we have to do it this way and we have to take in all this data analyze it and then make individual determinations for health plans and pbms uh that that process just inherently takes longer than just saying
all right it's you know 10 50 across the board cost to dispense um but you know i think uh the insurance department and this body as well felt that this analysis was the the best way to address the problem without creating unnecessary cost impact to Arkansas residents, and that's what we're doing. And it does take a while, and I certainly understand the importance of this, and I understand the desire to have this happen quickly. I can assure you we're working as fast as we can, but it does take time. Well, this is
Senator Mark Johnson
Unverified
57:59
an industry that if they don't like what the state
of Arkansas does as far as regulating them their answer is to sue us they didn't like the vertical integration uh ban that we put on that was Senator Hammer's bill which I was proud to co-sponsor and so when it passed when the governor signed they decided they'd rather than comply they would sue us so I'm I'm just not real uh sympathetic thank you Senator for to for an industry that when you say we're sitting at the table, we're negotiating this, if they come in with clean hands and want to negotiate, that's one thing.
But they don't have clean hands. Their hands are very dirty on this. So I ask you to do whatever you can, both for our local pharmacists and our consumers, to expedite what you're doing. Thank you. Thank you, Mr. Chairman. All
Senator Reginald Murdock
Unverified
58:53
right. Thank you, Senator Murdoch. Thank you, Chair. And a lot of my concerns were voiced by the previous two senators. But just knowing from people that have worked on this for many years, I'm right here in front of you. Look right here. There you go.
That's worked on this for many years, that it's been a problem. And we, as a legislature, we gave the teeth, the stick, to the AID to protect us in this situation. The legislature a few sessions ago did that. So it's our hope that we would be expeditious in making sure that the intended users at the end of the day of this is being affected are our constituents and our small businesses.
So we really, really need that to be taken care of in an expedited fashion, as the previous two senators mentioned. So we're patient, but we're also pushing. So we really need help and really need to make sure that these things are taken care of and that they are complying. Because some of these are just compliance issues, and they're just deciding not to do it. And because the information that you're getting will help you determine whether they're playing ball fair, which we are constantly being told that they're not.
So please help us help our citizens. Thank you.
Yes, sir. Thank you. Thank you, Representative Wooten.
Representative Jim Wooten
Unverified
1:00:17
It looks like you're the last one. Thank you,
Mr. Chairman. I'm going to try not to use my coaching voice, but we've waited and waited and waited on y'all to do something out there. Now, are we going to have to take more action, get more stringent? Do you not have the people?
Do you not have the capability? Do you not have? What is the problem? They're yanking our pharmacists around. They're yanking our constituents around. And we keep asking y'all to help us out, and we don't get any help. Now, what's the problem? Why can't y'all give us a report on the number of agencies, on the number of PBMs that are creating the problem? Well, it's not
Speaker 182
1:01:06
just limited to the PBMs creating the problem.
So Rule 128 asks for data from PBMs and from plans. So we have to incorporate both of those together. there's not necessarily a problem right now with with implementation of rule 128 or with pbm enforcement actions aid is in we've done more enforcement actions this year than we've done throughout uh the history of the pbm la or any of the pbm statutes um and we're going to continue to do that and i imagine that's going to grow every year um since we've we've kind of revamped
everything this year but the amount of time that this takes is it's just it's part of the rule and it's part of the the way that this rule was passed we want to take in the data before we make these decisions and we want to make sure that our approach is very targeted and doesn't unnecessarily increase costs especially you know in 2025 where there's a ton of uncertainty and there's just increased costs across the board so we need to be very exact about how we do this and that's what we're doing as far as what we need we're we're right now we're going to hire another attorney
to help me I took over the entire division once our some other employees resigned so once we get that additional help I think our enforcement efforts will at least double probably more but I don't think that hiring anybody else is going to make this go any faster when it comes to rule 128 this
Speaker 184
1:02:39
is just kind of what the rule requires that's what we're doing and we're trying to do it to the best
Representative Jim Wooten
Unverified
1:02:51
of our ability well the question about employees Oklahoma I understand
has twice two times as many people working on it as as we do in Arkansas maybe three four times right and and but but my question the next question is if i may mr chairman is how many pbm's are we talking about pmbs how many are we talking about well um i guess
Speaker 184
1:03:20
there's there's around 70 that are licensed in arkansas as far as pbms that are
contracted with health plans that we found paying below nadac i think we're we're talking about seven or eight i don't have that in front of me but it's that's a an accurate ballpark um but it's really the you know we have to look at the plan and
Representative Jim Wooten
Unverified
1:03:47
hard to i think does that answer you have the legal you have the legal capabilities be able to yank their chain and get the message to them they they're dealing they're they're yanking the chain every day on our
pharmacists every day delaying payment, overcharging them in fees. We had one situation where we fined them and they still consistently violate the law. Why can't you yank their chain? Why can't you get their attention? Do we need to do something from a legal standpoint, from a statute standpoint to put to give you all the capability to deal with the situation i would say we are dealing
Speaker 184
1:04:37
with the situation um it's a it's a problem that's happening across the country um the federal government runs into the same problems that states run into um i understand that it's very frustrating and i certainly understand where the pharmacists are coming from i believe what they tell me um and i see that bared out in the complaints that we receive but we do have to to do this a certain way and and pbms are um they get protection of the laws just like pharmacists do so we have to follow the law um and that doesn't it doesn't happen very quickly unfortunately
i understand where you're coming from and and i certainly want these things to move as fast as they can but uh there's only so much i
Representative Jim Wooten
Unverified
1:05:22
can do to speed this this these processes up Dr. Harris, do you have any comment? We've had this conversation going on
Speaker 209
1:05:32
four years, if not longer. Jimmy Harris, Insurance Commissioner. Yes, Representative Wooten, we hear you, and we are taking a very careful data-driven approach
to make sure that we identify the plans that are actually deficient take proper action against those plans yes this is very very frustrating it's frustrating for us it's frustrating for pharmacists it's frustrating for for for patients I have 100% confidence in the direction that our PBM division is headed I have a hundred percent confidence in our personnel as late as
yesterday afternoon. I was reviewing attorney applications. We are actively looking for an additional litigator. Daniel's very, very good, but yes, we need help, and we're going to get help. We're going to complete this analysis. I understand it's been going on a long time. We have another exam going on. I think we're going to have a really clear picture after the first of the year.
So I'm looking forward to presenting that to everybody here. Thank you. Thank you, Mr. Harris. Thank you,
Representative Jim Wooten
Unverified
1:06:57
sir. And thank you, Mr. Chairman. Thank you. All right,
members, we've got two more in the queue. Those will be the last two for this
group. Representative Ladyman, you're recognized. Thank you,
Mr. Chairman. Well, this may be off base. I hope I'm not, but what we're talking about here. But the act, I believe,
said that the pharmacies could not lose money.
In other words, they wouldn't be charged more by the BPM than they can sell it for. When you're doing an analysis on that, do you take into account the cost of doing business for the pharmacy? I mean, they've got to make – if I've got a business and I sell a product for what I pay for it, I'm not going to be in business very long. And I'm looking at a text I got here yesterday, a pharmacy up in my area of the state, been in business for 50 years, a family pharmacy. They closed the doors yesterday.
Last year, we had a fairly large pharmacy down in South Arkansas that did the same thing. You know, these are parental businesses that have been around a long time. Something's going on. If they've been in business, operating, making a profit for 50 years, they probably know how to make a profit unless they're restrained by government or regulation. So we do need to do this speedily, but I think we need to make sure that when we're looking at this that we put in the formula
what does it cost this pharmacy to dispense this drug that they're buying. They need to be, you know, at least be able to charge for their cost because they're still selling at a loss if their cost is not covered. So I just put that out there, and I understand it's a big problem, and I think we're probably maybe doing better than some other states, but we're not doing good enough, and I appreciate what you all are doing, but we need
to really, really put a lot of emphasis on getting this done.
Speaker 179
1:08:58
I appreciate that, and that is something that we talk about. I talk to a lot of pharmacists about that. We've learned quite a bit
Speaker 184
1:09:04
about what those costs are on the pharmacy's end, so that's certainly something that we have learned about and we will consider. Thank you. Thank you, gentlemen, for coming down. Members, I'll give you
just a second. Any other questions on any of the rest of the reports? Seeing none, I'm going to recognize Senator Filippo for a point of
Senator Scott Flippo
Unverified
1:09:27
personal privilege. Oh golly it's my turn already. I feel like I just got in the queue. No you were skipped a few times. This is moving. So yeah I was going to have a motion to adjourn but before I do that a point of personal privilege my good friend and seatmate Senator Rice made the cardinal mistake of telling me today is his birthday. So I would ask you all to join me in extending our best wishes to Senator Rice on his birthday.
Or as he likes to call it, Medicare Eligibility Day.
All right. Happy birthday, Senator. Members, seeing no other business, have a Merry Christmas, and Happy Holidays. We're adjourned.
Agenda
A. Call to Order.
B. Roll Call.
C. Approval of the Minutes of the Last Meeting, November 21, 2025
D. Presentation of the November 2025 Revenue Report – Dr. Carlos Silva, Legislative Economist
E. Report of the Executive Subcommittee — Sen. Ben Gilmore, Rep. Les D. Eaves, Co-Chairs
F. Reports of Standing Subcommittees:
G. Reports of Interim or Special Committees: (none)
H. Review of Communications:
I. New Business: (none)
J. New Interim Study Proposals and Interim Resolutions: (none)
K. Business Carried Over: (none)
L. Adjournment.
Documents
Speakers
Speaker 2
Speaker 7
Speaker 10
Representative Les D. Eaves Chair
Unverified
Representative Les Warren
Unverified
Speaker 20
Speaker 24
Representative Jim Wooten
Unverified
Speaker 44
Speaker 45
Speaker 49
Representative Matthew J. Shepherd
Unverified
Senator Jane English
Unverified
Gordon Watkins
Unverified
Senator Jonathan Dismang
Unverified
Representative Frances Cavenaugh
Unverified
Representative Ryan A. Rose
Unverified
Representative Howard M. Beaty, Jr.
Unverified
Speaker 95
Speaker 98
Speaker 100
Senator Bart Hester
Unverified
Speaker 108
Representative Jeff Wardlaw
Unverified
Speaker 117
Senator Missy Irvin
Unverified
Speaker 128
Representative Jack Ladyman Chair
Unverified
Speaker 142
Chair
Unverified
Senator John Payton
Unverified
Speaker 150
Senator Jimmy Hickey, Jr
Unverified
Speaker 69
Senator Reginald Murdock
Unverified
Speaker 158
Speaker 166
Speaker 168
Senator Kim Hammer
Unverified
Speaker 179
Speaker 182
Speaker 184
Speaker 191
Senator Mark Johnson
Unverified
Speaker 185
Speaker 209
Senator Scott Flippo
Unverified