Legislative Joint Auditing
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Speaker 3
0:30
Please take your seats and let's get started.
Representative Robin Lundstrum
Unverified
1:00
okay the chair calls the legislative joint committee meeting to order we have the adoption of the minutes
from september the 12th motion i have a motion and a second who said the motion and the second all right thank you gentlemen
all in favor any opposed motion adopted next we have
the adoption of the reports for the executive standing
Senator Jim Dotson
Unverified
1:40
committee senator dotson thank you madam chair the executive committee met thursday october 9th 2025 and adopted the minutes from the meeting held september 11th 2025 staff reported to the committee the audit and special reports scheduled to be presented to the standing committees and the full legislative joint auditing committee this month. Staff also noted reports that are anticipated to be completed soon. In new business,
no action was taken regarding the request for a special report on the Conway School District Maintenance Department. A request for a special report on selected procedures for the Hot Springs County Solid Waste Authority was approved. In other business, the committee reviewed information provided by staff regarding the population of acts with fiscal impact statements passed in the 2021 regular legislative session and the categorization of those acts by impact amounts provided. The committee voted to approve a special report regarding fiscal impact statements for acts
passed in the 2021 regular legislative session. The committee directed staff to review for accuracy nine fiscal impact statement amounts exceeding $10 million provided by the Department of Finance Administration, Bureau of Legislative Research, and Arkansas Sentencing Commission. Additionally, the committee moved to send a request to the Joint Public Retirement and Social Security Programs Committee to review the contract with Osborne, Carrero, and Associates and to review for accuracy the two fiscal impact statement amounts
exceeding $10 million prepared by Osborne, Carrero, and Associates. The committee also approved a calendar for 2026. With no additional business to discuss, the meeting was adjourned. The next meeting of the committee is scheduled for Thursday, November 13, 2025, or at the call of the chairs. There was also, after the meeting was over, There was a – we found out that the legislative council is where the referral for that needs to go to
rather than the joint public retirement and social security programs. So I move for an amendment to the chair report to substitute the Arkansas Legislative Council for the joint public retirement and social security programs committee within the report. And I think we have to adopt that amendment
before we adopt the full report. I need a motion to adopt that amendment. Thank
Representative Robin Lundstrum
Unverified
4:15
you. Second. Thank you. All in favor? Aye. Opposed?
Speaker 22
4:19
Amendment passes. All right. And I move for adoption of the chair report
Representative Robin Lundstrum
Unverified
4:33
as amended. All in favor, or excuse me, I need a motion. A second. Discussion. Or
Senator Ben Gilmore
Unverified
4:37
discussion, excuse me. Discussion. Oh, yes. Senator Gilmore? That's a second. Oh,
no, I'm on. Thank you. um so I guess I just have some questions so I heard that that report will then go to ALC um and I guess it'll go to the full ALC or go to a subcommittee or I guess we'll figure that out
when it gets there um so what is what is the scope of this study audit whatever it is of maybe can we have
Senator Jim Dotson
Unverified
5:01
some discussion on that so i'm sure so um the the presentation was brought forward a
couple of months ago earlier in the summer uh to look at fiscal impact statements that are provided to the legislature during sessions um and this is a look in arrears right look in arrears to see what
what statements that became acts and the the accuracy of those statements so you know if the the fiscal impact statement said it was three million dollars and it turned out to be you know two hundred thousand dollars it'd kind of be good to know the the accuracy or the uh get a range of how how how well we're actually getting a making our decisions on the front end um what what the impact results are um on acts that are actually passed and so we looked at the whole universe for
2021 and saw how many fiscal impact statements were totally done many of them actually I think the vast majority of them said zero fiscal impact most of them or a lot of them were education they were mandated for k-12 some of them for other committees there are a few that there was only nine in 2021 that exceeded 10 million dollars that were not retirement committee actuarial reports There were two that were in excess of $10 million
that were actuarial reports for the Retirement Committee. So the referral to ALC is just so the Bureau can talk to our actuarial and have them go back and look at those two reports specifically to say how accurate were we in our actuarial statements before these bills were passed. Okay. And I appreciate that. And
I guess I don't know that I
Senator Ben Gilmore
Unverified
6:57
even disagree in the sense of sometimes we get fiscal impact statements that are all over the place. And I think any of us who serve in the legislature understand that. Um, and I think we get some that in some regards, we, we probably think that agencies are maybe not friendly to our legislation and therefore provide fiscal impacts that therefore say that. Um, my only concern and the only reason I raise it here is, um,
My concern is, are we asking audit to get in the business of helping decipher policy if we are asking them to audit fiscal impact statements? Because fiscal impact statements are based on policy. And I feel like, you know, from my standpoint, I'm not sure that this is the scope of audit. I'm happy to hear chair's thoughts or anyone else that wants to participate in this discussion. but that's just a concern I have.
Senator Jim Dotson
Unverified
7:59
Well, the representative who originally brought this before the executive subcommittee is no longer a representative, so we can't exactly ask him, but Representative Lindstrom or Chairman, Chairwoman Lindstrom might be able
to answer it. I think the concern is not the policies.
Representative Robin Lundstrum
Unverified
8:15
The politics are irrelevant. If the fiscal impact comes back a million, and we're asked to make monumental decisions on the amount of money, Did it over the next three years, did it end up being $10 million or $20 million?
That's something we need to know as legislators so we can make better decisions or ask better
questions. The politics are irrelevant. This is simply the math. And then wherever the math leads, that's
Senator Ben Gilmore
Unverified
8:40
up to you all. Well, and I appreciate that, and thank you, Madam Chair. My thought on
it is if we disagree with a state agency, we get to disagree on a state agency and therefore hold them accountable in some way, whatever. I just think that oftentimes we do disagree when it comes to fiscal impact statements with an agency.
Are we going to have the same disagreement with our own staff at Audit? I
Representative Robin Lundstrum
Unverified
9:05
don't think so. They're just reporting the facts, and we can decide
Senator Ben Gilmore
Unverified
9:10
where that takes us. Okay. Well, and I think our state agencies would also say that they're reporting the facts when they do a study on a fiscal impact.
Representative Robin Lundstrum
Unverified
9:18
I would agree, but I also think we get physical impacts that are worst-case scenarios. Sometimes they don't turn out to be that. Sometimes they're best-case scenario. The bottom line is when you look back, you find out what the truth was,
and I think that's important for us to ask those
Senator Ben Gilmore
Unverified
9:34
questions. And one final, and I appreciate the latitude. Does audit staff have the capacity to do this? Yes, they do,
Representative Robin Lundstrum
Unverified
9:40
and, in fact, they have done things in the past that have really been useful, and I've kept a copy of one of their reports I thought was one of the best ones I've ever seen. They're just reporting the numbers. Where we take it is up to us. All right. Thank you, Madam Chair. Thank you. Any other questions? Senator English?
Senator Jane English
Unverified
10:02
I guess one of the same things along with my colleague here is I guess the other thing I've seen too is that sometimes the fiscal impact statements are huge, and it's almost like an attempt to make sure that we don't pass this legislation. And as it turns out, sometimes I had one with a $20 million fiscal impact statement, which would have been, if we had had less than a million dollars, I'd have been surprised.
So for me, it's kind of looking at both sides of it. Did we pass it or did we not pass it? What was that fiscal impact statement, pro or con? It kind of concerns me sometimes when we have just somebody out there deciding on on a figure And it's really
Representative Robin Lundstrum
Unverified
10:54
not based on anything Thank you, Senator English. I hope this will give us some Some truth
in that information Any other questions? Let's see Howard Beatty, Senator, or Congress, whoever
Speaker 7
11:05
you are over there, Beatty, you're up
Damn it, discussion i i think i
Representative Robin Lundstrum
Unverified
11:16
think i just turned him off light you back up again sorry yeah don't don't
Representative Howard M. Beaty, Jr.
Unverified
11:25
give him any ideas now now we're feeling the love thank you madam chair uh my my concerns are with audit going in to
um i guess uh audit the fiscal
impact statements, a lot of times those fiscal impact statements, the assumption that the agency utilized to prepare those, there are factors that affect and change over time, either through additional legislation that we run and pass through this body that could drastically change those numbers. So I guess my concern is when you get that fiscal impact statement, if you don't agree with it or you think that it's wrong, then that's on the member and the legislative body to
take those issues up with the preparer of that fiscal impact statement. I don't know what benefit it provides me after the fact and after we've enacted legislation to know that that estimate and that analysis was incorrect other than maybe lack of confidence. But I don't vote for legislation strictly based on the price tag of that legislation it's got to be good policy to go with with those numbers so at this point i i mean i think it's a waste of our resources to go back
and look at something that's two or three years after the fact to go back and look at what that agency or our department did to prepare on a fiscal impact statement we're living with it we know the real time a lot of times we know that there are other other areas dynamic scoring I thought we spent some money and expended a couple hundred thousand dollars on a software that would allow us to do some dynamic scoring are they going to go back and audit those as well I don't think we should be
Representative Robin Lundstrum
Unverified
13:19
afraid to audit anything the fact the more facts we have the
better judgments and decisions we can make. Um, but that's, that's an opinion
and you and I can disagree. Um, Senator by just to
Representative Howard M. Beaty, Jr.
Unverified
13:31
follow up, my, my comments were not made out of fear of an audit. My, my comments were strictly based on what we were, what the entire purpose of this was to look at the fiscal impact and the cost of, of actions we take. And I think this would be a waste of our resources of leg audit to go back and look at something that two or three years down
the road to see what the actual numbers are so with that i thank you for recognizing me in multiple ways
Representative Robin Lundstrum
Unverified
13:58
this morning you're just lucky today um senator love thank you
Senator Fredrick J. Love
Unverified
14:06
madam chair um i guess i guess i'm not gonna belabor the point but can i get a clarification of the the actual
motion that we're going to be voting on yes because i heard that it was an amendment but
but what what actually are we voting on so that I can speak to just adopting the report just adopting
the report okay so that it's the adoption of the report but I thought I heard senator Dotson say that there was an amendment in the report and I'm I'm asking if we need to amend it or if the motion is going to be to amend the report report or to
Representative Robin Lundstrum
Unverified
14:51
we're done with that yes
Senator Jim Dotson
Unverified
14:56
we've voted for the amendment to change the name of the committee from point joint public retirement social
security programs committee to legislative council that that the request by the executive subcommittee of of the agency for Osborne Carrero and associates the contracts through legislative council not through joint retirement committee so legislative council is who actually has to make that that final determination of their contract okay so carrero is
Senator Fredrick J. Love
Unverified
15:32
now going to audit the impact statements yeah the two impact
Senator Jim Dotson
Unverified
15:38
statements that became law based off their actuarial report in the 2021 session that exceeded $10 million. Their estimation of what it was going to cost, they're going to go back and look and see if it actually cost more than $10 million or less than $10 million. That's what we're going to ask them to do, which is outside the scope of their current contract with us. So how much
Senator Fredrick J. Love
Unverified
16:03
is this amendment going to cost for them to do this work?
Senator Jim Dotson
Unverified
16:11
i guess that's going to be a question they have to they have to talk to legislative camp this is just simply authorizing the bureau to go talk to them to see how much it will cost with as according to my understanding of it it probably won't cost us anything because we we contract with them for a certain dollar amount up to so many hours so it'll probably be included in their scope and uh but i don't know for sure the the bureau is going to have to negotiate that with them and then
bring it back to council for for final authorization and and for
Senator Fredrick J. Love
Unverified
16:47
them to do this report i guess what what are we trying to glean from this sir basically did
Representative Robin Lundstrum
Unverified
16:54
they give us accurate information how accurate was that it's a chance if they if they're doing their job they can brag all day long If our actuarial who handles our retirement is off a whole lot we need to know And we need to be able to ask those questions. No one ever goes back and says did we get it right?
Did we get it wrong? Are we getting good information to make good decisions? This is simply asking did we get good information to make good decisions? From somebody we've contracted
Senator Jonathan Dismang
Unverified
17:36
with Okay, all right, thank you Senator Dismain. Thank you. Could someone just state the audit, I mean, the motion that happened in committee in regards to auditing the fiscal impacts?
What is the wording of that motion that we're asking legislative audit to
Senator Jim Dotson
Unverified
17:59
undertake? Senator Dismang, I can't remember the exact wording of the motion, but the summation of it is there was a motion to have legislative audit look at the nine fiscal impact statements from the Bureau of Legislative, some of them from DFA, some from the Bureau of Legislative Research, and some from the Arkansas Sentencing Commission, to look at those nine.
And then there was a separate motion that was made to have legislative joint retirement committee talk to our actuary that we contract with about the two that they did. And so what we're talking about is after the meeting concluded yesterday, it was determined that ALC was the appropriate committee to ask that question of our actuary, not joint retirement. so that was the amendment to the report from the committee but there are two
Speaker 90
18:57
separate motions in the executive subcommittee yesterday
Senator Jonathan Dismang
Unverified
19:04
well the actual language of that motion I think matters a lot and so I would like the actual I think the members need to hear the actual language of the motion because for instance we said that we would be auditing these fiscal impact statements well we can't do that physical impact statements are based on assumptions and economic forecast and another a number of items they're not something that's
auditable I mean audits follow standard procedures and processes and are pretty clearly dictated on how we do that and so it what what the look at is different an audit and so maybe if it said audit we could you know kind of move along for that but in this committee today we've mentioned the word audit numerous times and related to these statements I'm a little bit nervous about heading this direction with the audit committee because I
think it's out of their jurisdiction I mean that historically that's what they do is look at historical things that have happened based on you know true hard fast numbers and now we're asking them to look at really policy as much as we are anything else um and so again if I could hear that language I think that would be incredibly helpful because if it's worded incorrectly we're going to be asking audit to do something
very political which I think we need to steer away from bear with us just a second and
while they're looking that up so then my question is
to staff how do we see ourselves carrying out reviewing or whatever the word is that's been in this motion for things that are I mean it's policy how things are going to impact in the number of people participating in a program or taking advantage of a tax cut or moving to the state of Arkansas because of something all of that is I mean that's economics and that is that that's not a science that
is someone making assumptions and so how do y'all if i could interrupt for just
Representative Robin Lundstrum
Unverified
21:15
a second they've been asked to take a physical impact statement that's a million dollars and look at it three years later and did it was it three million million dollars per year or was it nine million they're not asked to delve into anything political just apples to apples look at the numbers so if that's not clear then we need to make that clear so that we have good information so let's read the original
Senator Jonathan Dismang
Unverified
21:43
what why would legislative audit do that
i mean that's a simple request from but again there's lots of things that go into that i mean there's lots of i mean the economy impacts the revenues and we would not have known at the time that an income or data an impact statement was created what the economy was going to do three years later and so I don't know what why is it audits role to look at that and maybe not letting DFA present come back and say well this is what happened because again there's lots of
factors that go into changing what we thought on one day
Senator Jim Dotson
Unverified
22:27
to be the impact of what may actually happen three years
later. Senator Disping, to your original question let me reread what the committee the executive subcommittee directed staff in their motion to review for accuracy nine fiscal impact statements amounts exceeding 10 million dollars provided by dfa blr and arkansas sentencing commission and additionally the committee moved to send the request to the joint
public retirement committee to review the contract with osborne carrero and associates and to review for accuracy the two fiscal impact statements that exceeded 10 million dollars. The committee report as amended would change that from joint retirement to ALC to have ALC talk to Osborne Carrero and associates for those two impact statements. So those were the two motions that were made. As far as the reasoning behind I think part of the reason that audit is the one that is
looking at this is obviously the that's where represent former representative wing brought the the motion to audit to look at it could ALC do something like this with BLR potentially as far as what we've learned so far and this has gone on for a few different months within executive subcommittee because when we initially looked at this, the universe that we were asking, that was being asked of audit to look
at was huge. And so trying to get it narrowed down to, hey, what are we even looking at? Are we looking at, out of 1,500 acts during a session, are we looking at 1,000 of them that have fiscal impact statements, or are we looking at 100 or however many there are? And so initially we sent them back to, to, to do a little bit of research. And it came back that, uh, let's look at one session, a session from a few years back, 2021, and see how many fiscal impacts, uh, happened at
that time. And I think the universe was, uh, 240 ish. I can't remember acts actually had a fiscal impact. If I recall correctly, BLR put together 78 of those for education alone, 73 of which had zero fiscal impact. And so some of them were from DFA. Some of them were from Arkansas Sentencing Commission. Some of them were from, a large amount was from retirement, the actuarial.
And so looking at that universe, how many of them had zero fiscal impact? It was a very large number there's only i think 50 some odd that had anything over a million dollars worth of estimated fiscal impact and so we narrowed it down to just those that exceeded 10 million dollars in their estimate to kind of look at those those that had significant fiscal impact and say okay give us a report on did they actually have 10 million dollars plus fiscal impact or not and that's
kind of what's led us to where we're at today uh whether
or not we decide to move forward or not that's up to the committee but that's kind of
Senator Jonathan Dismang
Unverified
25:50
a synopsis in my opinion so then the question for staff is let's just say i mean i
don't know what we're talking about exactly but just say we're talking about the income tax cuts that we've done historically if that's going
to be one of the you know the impact statements that we're going to review to see how accurate they were uh in that I mean of course ours don't take into dynamic scoring are we asking I mean but the reality of
the world does take into account dynamic scoring and so when we look at it for accuracy or whatever we're going to call this review how do y'all see that playing out because again if we cut taxes three years ago we have a new president we have tariffs we have economic changes we have growth in the state of Arkansas. We have historically low soybean prices. We have all of these things that no one could have predicted when
they did an impact statement. So I just am trying
to understand how, what is it y'all are going to do exactly that you should be doing? Because that isn't an audit function. It's not a review function. It's a, you know, it's a look back on economic analysis I don't I don't know what what it is we're trying to accomplish so if you could walk me through what you think a report might look like and and what you're going to take into account to determine what's been accurate or
Representative Robin Lundstrum
Unverified
27:24
inaccurate I think the report is going to be a pretty simple report we're not asking for anything political
We're simply asking if the fiscal impact was a million, did it cost a million or did it cost 10 million? And if it would cost 10 million, then we need to look at what's the soybean prices, what was the economics. So this makes lots of sense. We have asked Bureau of Legislative Audit to look back at a number of different things over time and look at costs, look at procedures. It's not a political look back. It just gives us information so that we know if we're making the right decisions or maybe we should ask other questions. That's something the members can take that information and do with as they will.
We have a couple of other people, actually have five other people in the queue, so if we could end with that
and go to the next question, I can circle
Senator Tyler Dees
Unverified
28:20
back to you, Senator. Oh, you're quick. Senator Dees. Thank you, Madam Chair. I think if it's appropriate, I would love to submit a substitute motion to take out anything of the report involving fiscal impact statements
and send it back to refer it back to executive committee for review. After hearing the questions and conversation today, I think it's probably wise for us to chew on this a little bit longer. So I would love to entertain a substitute motion to refer back to executive committee the portions related to fiscal impact studies. I need a second. Second. All right. We'll refer it
Representative Robin Lundstrum
Unverified
28:57
back and chew on it some more. Moving on. Oh, wait a second. We need to vote on that.
I'm sorry. Got a little ahead of myself. Those in favor? Those opposed? Okay. All right. Then we send it back. Thank you. We do
need to adopt the rest of the report.
Senator Jim Dotson
Unverified
29:19
I move with the exception of the part that was taken out, we adopt the
Representative Robin Lundstrum
Unverified
29:25
remainder of the report. Those in favor? And,
oh, excuse me, I need a second. Those in favor? Those opposed? All right, moving on.
Representative Womack, I believe you have a
Representative Richard Womack
Unverified
29:46
report for us. thank you madam chair the committee adopted the minutes of the meeting held september the 11th 2025 the committee was updated on the status of the december 31st 2022 delinquent private water and sewer audits five entities turn back funds have been reinstated after all required reports were submitted letters were delivered to the treasurer of state requesting restoration of turnback funds to 24 of the remaining delinquent entities that have filed a
December 31st, 2022 report or have provided an engagement letter stating that the reports for December 31st, 2022 and 2023 will be filed by the end of the 2025 calendar year. A motion was approved to recommend the full committee expunge the action taken at its July meeting to withhold turnback funds from the cities and towns that have not completed their water and sewer audits for 2022 and 2023. A motion was approved to
recommend the full committee expunge the action taken at a September meeting regarding the 43 affected municipalities that had not completed their water and sewer audits for 2022. The committee was notified that letters were sent to 23 entities with delinquent reports for december 31st 2023 indicating that their reports are to be filed before the end of 2025 officials from the city of rockport were present to address substantial non-compliance with municipal accounting law the city provided documentation of corrective action and the
committee filed this report the committee approved a motion to notify the state treasurer that the town of Gilmore has complied with Act 709 of 2021 and to request the release of the town's escrowed street revenues. The committee reviewed eight deferred reports and 141 current reports. Officials from six entities were present to address repeat findings. Four previously deferred reports were filed and four were deferred. Of the 141 current reports reviewed, 13 were referred to
prosecuting attorneys and the attorney general, and two were certified to the governmental bonding board. The committee filed 134 reports and deferred seven reports to allow officials to answer questions or provide further information at a future meeting. I move for adoption of this report. I
Representative Robin Lundstrum
Unverified
32:13
have a second. All right, any discussion? Representative Leidyman. Thank you, Madam Chair,
Representative Jack Ladyman
Unverified
32:21
and this may be a question for staff, but I believe we need a motion to expunge that vote outside of the report.
Representative Robin Lundstrum
Unverified
32:31
Is that true? That depends on the body. If you want to leave the report as is, that's what has been recommended, or you can make a motion to expunge. That's up to this
Representative Jack Ladyman
Unverified
32:44
body. So if we vote that the motion as is, then all of everything in the motion is approved. Everything in the motion is approved. Mr. White.
Speaker 122
32:58
Thank you, Chair. Speaking on the parliamentary thing, the situation here is the recommend that what is in the chair report
and what happened in the standing committee yesterday was a recommendation to this full committee. If the desire of the body, so adoption of this report is just the adoption of that, there is no action that's taken. If this body desires to make that motion, then that needs to be taken up separately
Speaker 123
33:26
and be made. All right. If I understand you, then
Representative Jack Ladyman
Unverified
33:31
we're just approving the recommendation, so a
motion would need to be made separate.
Yes, sir. Representative Leitman, that's correct. Madam Chair, I have a motion at
Representative Robin Lundstrum
Unverified
33:45
the proper time. All right. We have a motion on the floor. Let's get the committee's report accepted, and then we can move to your motion. Do I have
a second on receiving the committee's report? Second. All in favor? Aye. Opposed? All right. Now we need to accept a motion if we want to. Senator Love?
Senator Fredrick J. Love
Unverified
34:08
God damn it. thank you madam chair so I thought by I thought by accepting the committee's recommendation then we
Speaker 131
34:19
we would have already we didn't need a separate
Representative Robin Lundstrum
Unverified
34:24
motion yes sir we do need a separate motion we're just accepting the report the report doesn't have any standing for expungement
if we want to expunge then that this body has to decide that separately
do you need to chew on that for a second then
Senator Fredrick J. Love
Unverified
34:50
come back in line well I'm here's the thing is is if if the standing committee is the one that made the initial action in the first place so if they're expunging if they're expunging that by accepting the report that means by default we expung it that's accepting report so there there should not have to be a separate action no sir um they don't have the
Representative Robin Lundstrum
Unverified
35:10
report authority to override what this committee did in the last meeting what did this
Senator Fredrick J. Love
Unverified
35:16
okay all right the light bulb just went on i
Representative Robin Lundstrum
Unverified
35:19
saw it all right um wait a minute
Senator Fredrick J. Love
Unverified
35:22
hold on though by accepting the report though we accepted the report by the full committee we did not
take an action when we when we initially accepted the report to to to uphold the the taking of the turn back we did not we did not make an act we just made the action of accepting the report so
now they're making an action to actually expunge what they did and so by accepting the report then that that should expunge the action hang on
Representative Robin Lundstrum
Unverified
35:53
just a second they made a recommendation it has no standing in this committee other than they made a recommendation this committee made the vote last time so it would be this committee that chooses to expunge if they choose to do that if they don't choose to expunge then the turn back funds would stay turned off and um
Senator Fredrick J. Love
Unverified
36:15
the process would keep working okay but madam chair it's in the report so by accepting the report then right that should
Representative Robin Lundstrum
Unverified
36:23
that's the recommendation in the report it's just a
recommendation okay thank you okay
Senator Mark Johnson
Unverified
36:36
senator Johnson thank you madam chair and and senator love we talked about this in the committee yesterday and our council is white explained to us that the the counties and municipalities committee did not have that authority to expunge the action of the full legislative joint auditing committee it had
to be done here today or at another time but today is when we're gonna do it or not do it but it might be if I could ask madam chair to have miss Wyatt sort of repeat her statement yesterday to clarify it for senator love and others that might because I because I didn't know until she did
Speaker 146
37:18
yesterday okay all All right, we can do that.
Speaker 147
37:22
Ms. White. Thank you. Thank you, Senator Johnson and Madam Chair. Senator Love, a subcommittee's actions are
Speaker 149
37:30
either accepted, adopted, or rejected by the full committee.
A subcommittee's actions don't become effective until they're adopted by the full committee. A subcommittee doesn't have the authority to undo an action of this full body. This full body in July took action with regard to these 43 municipalities, and this full body took action against those 43 municipalities in September. Therefore, in order for this full body to take action to undo or expunge any of that, this body would have to vote. The only thing that the subcommittee did yesterday was make a recommendation to the body to do so,
but it could not act for the full body in
Speaker 151
38:12
that capacity. Senator Love? I'm sorry.
Senator Fredrick J. Love
Unverified
38:19
okay the initial action was predicated on a vote taken by the subcommittee is that not correct
Representative Robin Lundstrum
Unverified
38:26
that's correct but this committee has authority over all those
Senator Fredrick J. Love
Unverified
38:30
committees okay i understand that but the initial
action we upheld by adopting the report that's what we did so then we referred it
back the initial action is predicated it's the initial action of the subcommittee and so I'm by accepting this report then we should be accepting the action of the subcommittee I'm confused by the fact that we keep saying that it's the the body is saying by accepting the report that
Speaker 154
39:00
that is that's the will of the body I understand
Representative Robin Lundstrum
Unverified
39:09
the confusion unfortunately the motion was made to
recommend it does not it does not dictate whether this body chooses to act or not it just is a recommendation okay all right
Senator Ben Gilmore
Unverified
39:27
thank you thank you sir senator Gilmore thank you madam chair and and for staff and council the action in July was it a recommendation from the subcommittee in the form of a motion as of
Speaker 148
39:39
the report my recollection senator Gilmore is that it was a action actually passed out of the
Speaker 149
39:43
subcommittee and then was adopted by the full committee therefore it became effective at the point of adoption by the full
Senator Ben Gilmore
Unverified
39:50
committee correct yes sir that action that we're talking about was it similar to the action taken yesterday to use the word quote recommendation my recollection senator
Speaker 148
40:01
Gilmore from the July meeting I believe it was senator Kroll that moved in the subcommittee and in his motion was to
Speaker 149
40:07
withhold the turn back of the 44 municipalities at that point in time we believed it to be 44 correct um and that that was the nature of his
Senator Ben Gilmore
Unverified
40:16
motion almost verbatim if i recall correct so in the report that was read in this in this body was that a
Speaker 164
40:27
recommendation he did not say recommend he said it and
Senator Ben Gilmore
Unverified
40:30
neither did and neither did Representative Ladyman, I don't believe Yes, sir,
Representative Julie Mayberry
Unverified
40:34
I believe he did specifically say Recommendation Only because the
Senator Ben Gilmore
Unverified
40:42
council Thank you, thank you, Representative Would you turn him on, please?
Representative Jack Ladyman
Unverified
40:47
Let me try that Yes, he's on Thank you, Madam Chair Would you restate that, Representative? Yes, I will, Staff My original motion yesterday Was a motion To expunge And I was, by legal counsel, I was told that it needed to be recommended and not moved.
So I changed my motion because of counsel. Go ahead.
Speaker 122
41:25
to help clarify the situation, if given the latitude, you know, since the september meeting there was the attorney general opinion that was issued and provided kind of a route for this body to take a desired course of action our our recommendation is that this body would kind of follow that ag opinion as literal as possible to make sure there's no ambiguity
at all and there's there's no questions or concerns as far as the action and the desire of this committee We're trying to assist the committee the best way possible. Our understanding, and we consulted with others as well, is that a standing committee cannot undo the action of the full committee, which
Speaker 173
42:10
is why that action needs to occur in the full committee. I hope that helps
Representative Jack Ladyman
Unverified
42:16
answer your question. I'd like to add a comment. That's all it is. But this is the legislative branch of government.
We have our own rules. I don't believe we should take opinions from the executive branch in our rulemaking. And to me, that's what's happening here. We went outside of our legislative branch to the executive branch to get an opinion on how we operate. I don't believe that is the way our system is established. That's just a comment. Thank you. That was not requested
Representative Robin Lundstrum
Unverified
42:50
by us. It was actually requested by the treasurer to make sure that they were following the law.
Regardless, I think we're getting off in a rabbit hole here. We're going to get to a vote. Well, the treasurer is part of the executive branch as well. Yes, sir. I agree. But we're trying to get to a vote on your motion. So let's – I'll take the rest of these questions, but I think we can get to where you want to go if you'll just let us hang in there for just a
Senator Kim Hammer
Unverified
43:20
second. Senator Hammer. Is this discussion on the motion, Madam Chair? I mean, it needs to be discussion on the motion, right? We will
Representative Robin Lundstrum
Unverified
43:26
discuss the motion once we get to that motion.
We're still in the which rule do we take at which time. So if we could get to the motion and get past this, we will get to discussion. All
Senator Kim Hammer
Unverified
43:37
right, so we don't actually have a motion on the floor right now that we are confined to have discussion on a motion. The only
Representative Robin Lundstrum
Unverified
43:42
motion we have on the floor is a motion to accept this report from this committee. That's it. We're not making a decision on whether or not to turn back funds. Have you
got a second on that motion? Wait, just a second. We've got some confusion, and I'm sorry.
We have voted on the committee report. We have a motion. I have
not made my motion. Okay. Let's make that
motion now. Wait. We got an objection. Point of order. Senator Gilmore was so just
Senator Ben Gilmore
Unverified
44:26
for clarity I don't think we've settled and again I hate to belabor the point but I don't think we've actually settled this because I think we are arguing semantics of what a recommendation from the committee is so a couple of things the actions
taken in a subcommittee and then further adopted by this body then set policy however you want to say it maybe I'm not using the correct terminology but that action comes in a form of a motion that is read which has been read and then the adoption action taken here then adopts that action of the subcommittee. Correct. Okay so we agree on that. What I think is interesting is now we're saying it was just a recommendation. Well then was Senator Kroll not to invoke his name but was
Senator Kroll's action in July, just a recommendation. So I think that's the question. And what I heard the representative say was he was given guidance to change his motion to include the word recommendation. In September, we were in committee, and I literally asked, would this be an expungement action? To which now the AG's office has said that was the appropriate action to take. So I think we just need to slow things down for a second. figure out what is the proper path forward and and i just think that we have to be very careful here
because then what's the point of the subcommittee's meeting we should just do our business here in this body is there a response to
Representative Robin Lundstrum
Unverified
46:05
that i'm no there's not i'm just listening and i'll take it all in we just need to follow the procedure madam chair yes could
Senator Kim Hammer
Unverified
46:14
I go back because you gave him a point of order when I had the mic can I come back now
yes thank you and maybe this is a dialogue between chair and the staff
there to just help me get clarity in my mind there was an action that was taken previous committee meeting of which a decision was made based on what happened then and then there's the audit report or the attorney general's report that has come out and then yesterday there was a action that came out of the committee including a recommendation and listening to the discussion it seems as though there's a conflict between what was determined in the first meeting and what
was determined yesterday that it was okay for one but it was not okay for the other because we were advised the subcommittee could not have greater authority than the overall committee and so it needs to be addressed in here in my tracking right or not sooner hammer I think we're off track so much I'm
Representative Robin Lundstrum
Unverified
47:20
not sure which way is up what we need to do
is we need to accept the report which we've done and then we need to move on to the motion I think I think otherwise
we just interject more confusion. Senator Dotson. Thank you,
Senator Jim Dotson
Unverified
47:40
Madam Chair. Senator Hammer, I was in the meeting yesterday City County Local Subcommittee and did ask the question very specifically and directly to ensure that we were doing the right thing. The subcommittee did not have the authority to expunge the action of this committee. The subcommittee had the authority to recommend to this committee that we take up expungement and so consequently um it was very
clear and it was even asked what is the vote threshold before before finalization it was a simple motion which if we'd taken up a motion to expunge it would have been a two-thirds vote within the subcommittee it was a simple majority motion to recommend to this committee to take action so that's what was adopted in the report was a recommendation to this committee to take up the question of expungement so it put it on the agenda for today but council also
it was asked and answered that that whether we pass that out of committee yesterday or we didn't pass it out of committee yesterday that that recommendation motion we could still as this full committee take up the action the actions of the subcommittee were were kind of irrelevant with it regards to whether or not we took up that action today separately I'm sure
Senator Kim Hammer
Unverified
49:14
thank you right then my question is because something was said in all this discussion was the committee advised of that after the decision was made or was that inserted into the discussion while the decision was being made because I kind of got the impression of something that was said a while ago it was after that decision was made that then the committee or somebody was advised hey you need to know this was all that contained into one conversation during
that committee meeting discussion I was there for part of it had leave so I don't know it
Speaker 188
49:51
was before the vote it was before the vote yes it was before
Senator Jonathan Dismang
Unverified
50:02
the vote okay thank you and senator dismay thank you I do think it's important that we
kind of clarify how we're going to move forward with this type of vote I went back and looked you know the motion that senator Kroll made was made in committee and it was a purely an adoption of the committee report is how we got to where we
are today with an expungement so i mean to everybody's point in the room there was not a separate vote in the full legislative audit meeting on the friday it was just an adoption of the report if it was it was not on the agenda and y'all would have had to suspend the rules to have that vote and i don't believe that that happened and so if i mean because this would be very different than the procedures in what we accept in legislative council. All
any committee can do is make a recommendation. You are correct. They have no authority unless it is delegated to
them by law to make a final action. So there is no legislative council committee that can take a final action on anything unless we've allowed them to have it because of an emergency issue or whatever it may be the same is true for this committee you're absolutely right but when you adopt the report you're adopting the recommendation which you're adopting the recommendation to expunge now
that's a different and what maybe should have been noted was when you made to vote on your committee report there was a different threshold for adoption because there was an
expungement involved but I don't I don't understand how we're going to move forward if this is now the procedure that what the committee does is only recommend and then we take separate votes we don't do that on any alc committee and if odd it's going to take that position what is that going to mean for contracts and everything else in the future i don't know so i do think the question needs to be settled okay representative duke
Representative Hope Duke
Unverified
52:02
thank you madam chair i guess i have a little i don't know frustration is the right word for this i appreciate the discussion we're having but it seems like some of this discussion should have happened before we had the vote on the report because if i was in the meeting and i went back and watched it again last night and had pretty good clarity on the fact that it was going to be a recommendation to the committee to expunge it and then there was going to have to be a motion following that separately and so then we're having this discussion now when I mean I don't know how
many members were in there how many people had it time to go back and watch it but now we're having a discussion after we voted on the reports which might have changed how some members might have voted on this and it also kind of brings to me like I guess my question for staff is we are so far away from that vote can what can be done procedurally as far as roll call and and those types of procedures when we had this happen the last meeting whenever we got in the middle of a discussion and then we came back and roll called and could we do so what does that look like because that this discussion right now I would have liked to have seen happen beforehand if we
were going to question what the committee was told yesterday was the proper procedure in which to do this because I do think that was all relevant information to people as they voted on that report so I guess that's kind of my thoughts on that but I would also like to know and also on the expungement I mean I'm not a freshman anymore but I'm not as great on rules as some of you guys in the committee as well the I think that had an impact there too is I guess the committees can expunge I think there's a
lot of muddiness here on whether they can come back and expunge what we did as body as well. So, I mean, my personal opinion, I think these are all great points. Probably should have happened before. We voted on the committee report, so we all had that clarity to begin with. But at this point, to at least keep clarity to everybody, because there was one discussion yesterday and recommendation, and my understanding was it was a recommendation, not let's expunge it. Those are two different things. I think there's a point to be made as far as how we've done it procedurally but at this point things are just so muddied i think the best way to keep it clean
is to let the representative make his motion and vote on it that way as well so that at least it's clean and then clean it up moving forward or i guess let go back and i can do that go back and vote on this again or give the opportunities for roll calls or whatever need to be done or people to have the opportunity to understand they were voting for expungement when they voted for that report because if you listen to that meeting yesterday that is not what you thought was happening in the adoption of that report today so that's if staff could speak on as far as the procedural process when we're this far minutes why is the voice from that original vote
Speaker 164
54:54
miss what thank you representative duke so the vote threshold to pass a chair report is a majority and the vote threshold needed to expunge the action of the committee in july or in september would
Representative Julie Mayberry
Unverified
55:10
be a two-thirds of the members present or authorized alternates present and that's why it was our recommendation to the subcommittee to make a recommendation only because that vote threshold is different and there again it's our belief based on our rules your rules of this committee
and Mason's manual that the subcommittee does not have the authority to undo an action of the full committee and that's why we made the recommendation that we did.
Representative Hope Duke
Unverified
55:37
Okay and I think again that clarity if we were going to be voting adopting that amendment was
going to have the expungement on it then there needed to be clarity of what the vote was for that and that because it is a higher threshold so again I think it kind of goes back to I think that this is there's a lot of lack of clarity on what was going on here I operated on what I thought the meeting what
recommendation was yesterday I think we should just proceed with this vote and on his motion so that we all know what we're voting on and have clarity on it and have the different thresholds that we recognize are needed for these two different votes. Thank you. Thank you. I
Representative Robin Lundstrum
Unverified
56:16
think there's some wisdom in that. I would ask that we do move on and get to the actual vote because that's going to be where the real discussion is. And I do think
we need to review this and spend some time looking at the rules and the proper procedure to make sure that we do have some clarity on this particular issue.
If it's all right with the body, there's three people left, I would ask that you just make your comments short, and then we move to the actual
Senator Mark Johnson
Unverified
56:47
motion. Senator Johnson. Thank you, Madam Chair. I appreciate the discussion. I don't think it's that critical how we get here, but I think it's important that we not set a bad precedent. I see this situation as analogous to when a bill is introduced, and bills are constitutional.
the constitution recognizes bills committees which are formed by the two houses of the general assembly are not in the constitution and if a bill goes to a standing committee and that committee is basically sending a recommendation to the floor saying do pass or do not pass or the rarely used thing without recommendation that is exactly what it is a recommendation and the full house
and the full senate must pass that for it to move forward and then it goes to the other house and goes through the same procedure but again the constitution didn't create those committees we did that by our own rules and that's fine that's a good procedure it appears that this is analogous to that the difference being that the statute that allows this full committee to make that to send that information to the treasurer and instruct him to withhold these funds
the language in that statute probably is what governs now on one hand I think that representative Duke's point was exactly right we can go ahead and do this and it's clear and i like that on the other hand i see what some members are saying that we may be setting a bad precedent here now i think it's important to the staff clarify the language in the statute that that causes this committee to send that information that to the treasurer saying
don't send out this turnback money if once we know that i think we we can go forward without a with a clear distinction. I don't think in the whole scheme of things it makes a difference. I'm going to vote for the motion because I see it as a way to clear things up based on the advice, the advisory committee, the advisory opinion from the Attorney General. He didn't tell us what to do. He gave us advice based on his reading of the law.
But I think we need to know what the statute that gives us this authority to direct the treasurer to withhold the funds says. And once we know that, then I think we can resolve this without either setting a bad precedent or doing something else that we might regret later. I just wanted to ask that. So if Ms. White would be able to just tell us, am I right on that or am I way, way off base? So I'll just leave it up to staff. Thank you, Madam Chair.
Representative Robin Lundstrum
Unverified
59:49
thank you staff is pulling that information right now bear with us just a second
Let's take a five-minute recess and we'll get right back to you.
Unknown speaker
1:02:18
That's why I'm cool. That's really what you got right there. That means you want to be here. Thank you.
Speaker 231
1:03:48
I'm going to tell you what they said. They don't have to do that. They don't have to do it.
Speaker 235
1:03:53
They just don't have to do it. They don't have to do it. They don't have to do it. They don't have to do it. They don't have to do it. They don't have to do it. They don't have to do it. They don't have to do it. They don't have to do it. They don't have to do
Speaker 207
1:04:17
it. They don't have to do it. They don't have to do it. They don't have to
Speaker 227
1:04:32
do it. They don't have to do it. They don't have to do it. They don't have to do it. They don't have to do it. They don't have to do it. Thank you.
Thank you.
Representative Robin Lundstrum
Unverified
1:07:12
members begin taking your seat staff is passing out a copy of the actual legislation for your review and I would remind everyone this is not the only order of business and we need to move
along so if you've got a question get in
the queue if you've not please let's move along Thank you.
members if you'll just take a minute to actually read the bill the guts of the matter are section 1c and then we'll move on so
if you're in the queue if you could get out if you don't have a question stay in if you do
Senator Matt Stone
Unverified
1:09:30
senator stone I believe you had a question I do I won't audit to explain to me
why the original motion that Senator Crowell made to withhold the turnback funding was made not as a recommendation but as a statement of fact and then it was affirmed in a vote by this committee. Any legislature has the power to ask for something to be pulled out and voted separately. So why did
this have to be made as a recommendation instead of representative layman's original vote because what happened is audit forced this out to a separate vote instead of allowing a legislature to make that decision which would raise the vote threshold for this bill to be or this title to be passed can you explain
to me why Kroll's Senator Kroll's motion was handled differently from representative
Speaker 122
1:10:48
president in the way legislative audit has operated is that those actions of the standing committees are included in the chair's report and when approved by this full committee or actions of the full committee in this situation there was a different threshold that was
Speaker 123
1:11:07
provided via that AG's opinion and via the rules for that approval Senator Stone I disagree with
Senator Matt Stone
Unverified
1:11:22
that I'm not an attorney but I just know that we're breaking precedent and for what reason I don't know
but it has occurred to me that Alders is forcing this out to a separate vote and that's what the legislatures have the right to do is to pull it out and it should have never
been I'm saying representative Lateman's vote our motion should it ever been changed yesterday I mean I'm just thinking back you know Senator Gilmore got counsel and was told that he couldn't make a motion to expunge a vote and then the AG turned around and overwrote that advice. So I'm just wondering what we're doing, our advice and what we're coming in here. I'm a little bit confused about what's going on. The purpose of audit and the purpose of the legislatures. So I'm just real cautious about what kind
of precedent we're setting. Okay. Thank you. I mean does audit answer to the legislatures or to the legislature's answer to audit because that's what's at stake here if we're not careful thank you sir
Senator Jonathan Dismang
Unverified
1:12:28
um senator dismay in my question is in some ways i mean how
do we reconcile that because the way that i look at this particular issue it is bigger than it's difficult and let's just move on because all any subcommittee can do is make a recommendation and we adopt those recommendations
in the in council for instance we don't utilize the argument of different vote thresholds because take rules committee it's a wonky set of you know circumstances that you have to go through to pass a rule or adopt a rule right and inside that same report there may be 15 other things with a different vote threshold but at the end of the day when we sit down in council we said we adopt the report we adopt the report we adopt everything in it whether or not the threshold was one or 20. It's all the same. So I don't understand some of the logic of where we are. I mean,
originally I heard that the vote for expungement needed to happen in this full committee. It did not. All we did was adopt a report. Now there was a recommendation for expungement that we adopted and I would agree that's expungement. But now we're saying the opposite can't be true. And I I think it's imperative that the legislators of this body make a determination of how things are going to look moving forward and set that precedent, or you're going to fight this every single time that you have a meeting
that something semi-controversial comes up. That's my opinion. So I hope that you all are able to get a reconciliation as difficult as it is to have the conversation and not just punt this to the next
Senator Steve Crowell
Unverified
1:14:15
meeting. Senator Krul. So in July, when I made the motion, did we withhold the money immediately?
Representative Robin Lundstrum
Unverified
1:14:24
Upon the Friday meeting, I believe we did.
Senator Steve Crowell
Unverified
1:14:28
Okay. So when this committee voted to give the money back in September 12th, why is the money not given back
Representative Robin Lundstrum
Unverified
1:14:39
immediately? My understanding is the treasurer asked for an attorney general's report. At once we voted to send that to the treasurer, it became a
shall. In the bill, section 1C, line 1, 2, 3, 3, given notice of the fact the treasurer of the state, who shall then withhold turnback funds, he wanted clarification because the law goes to shall, and he
wanted to know if that was the correct procedure.
Senator Steve Crowell
Unverified
1:15:09
so right now on the books we have a past motion to give these cities their money back is that correct this body did vote for that so and we also have an outside opinion the attorney generals that said we can do that no sir
Representative Robin Lundstrum
Unverified
1:15:29
we have no sir we do not the attorney general position is that we have to vote to expunge that vote if we want to do the turn back funds.
Senator Steve Crowell
Unverified
1:15:44
So that, okay, I'm just trying to get clear that if we make a decision to do something that
somebody cannot do it and ask for an opinion,
Representative Robin Lundstrum
Unverified
1:15:56
that's what happens, right? Well, let's back up just a second. That it
Senator Jim Dotson
Unverified
1:16:06
was a separate, go ahead. Madam chair thank you as I understand it Senator Kroll there's two separate motions
the one you made in July which according to the law was the one that
gave notice to the treasurer of state the one that was made last month in September is not in accordance with the lines of the law there's nothing in the law that says hey we can pause this till December like the motion that was made in September and I think that's what as I understand it the AG's opinion was referring to was that we have the authority to expunge the July motion that gave notice but we don't necessarily have the authority under the statute to
to pause the action from July uh like what happened by this committee in September so I think that's that's the the difference we're talking about uh expunging the July motion and rescinding the notice that was given to the treasurer thereby freeing up the treasurer to to uh not follow
the law uh where it says they shall withhold because there would be no notice at that point, technically given.
Representative Robin Lundstrum
Unverified
1:17:30
Senator, I believe the biggest important thing that we do is make sure that we follow the law as it's written, and I think that that has been twisted around, and we need to make it either correct and move to expunge
or leave it and let it ride. So that's where we are
in the crossroads. And we've got three left in the queue, Senator Johnson, and then we'll go to Representative Ladyman and Representative Beatty.
Senator Mark Johnson
Unverified
1:18:03
Thank you, Madam Chair. I appreciate the staff getting us the copy of 14-234-120 and highlighting the point that this committee, the Legislative Joint Auditing Committee, it didn't mention our standing committees. It just says this committee may give this notice of fact to the treasurer. So may is permissive. The treasurer doesn't have permissive.
It says the treasurer who shall then withhold the turn back funds. Now, I believe that the Attorney General's advice to the treasurer is correct that with a
direction which is discretionary by this committee, then he must do this he's saying he's he's looking for and then we give him some conflicting vote within our september meeting well i appreciate the fact that everybody's trying to get this
right and not set a bad precedent on the other hand the fact that it says may gives us this committee only some discretion and i think our council's advice that to follow what was advised to the treasurer by the attorney general that we still have that may we can we may do things and as the definition of expungement is is that it's if it did not happen now we can go back and
forth and this is a good lesson in making sure that you know we follow this because words do mean things but i'm in support of kind of dotting the i and crossing the t by supporting representative ladyman's motion for no other reason than most people in this state are not going to be concerned about how we arrived at this they're going to know did the turn back get back to these cities or did it not and if you we may make that decision however and i think that
the AG giving advice to the treasurer gives us that discretion and we can stick with our original July recommendation not recommendation order to the treasurer or we can not do it we can undo our own they gave us a mechanism to do it I think we should take advantage of that mechanism if we want to do so and I respect my colleagues who say no we we follow the law they didn't they didn't follow the accounting law and so we're going to stick with what we did in July. I think that's what we
need to do is make a decision in your own minds about which policy we should do and let's not get carried away with this because the statute clearly gives us the authority may we make a decision once we've made that which we can expunge according to the AG and I agree with him then but the treasurer has no options so we're kind of like that breakfast thing you know the the chicken is involved in breakfast but the hog is committed so we we're the hog we have to decide
up or down and I think we need to do that today I have an opinion but if y'all disagree on whether it's a good idea I certainly don't hold anything against anyone that sees it a different manner But that's how I see this, and I appreciate the staff getting us the law because, you know, the law affects us differently than it does the treasurer. Thank you, Madam Chair. Thank you.
Representative Ladyman, you're up. Thank you, Madam Chair.
Representative Jack Ladyman
Unverified
1:21:56
Well, I find it very difficult to think that this body who controls the budget cannot, cannot give the cities the money that they are allocated by law. There's no way we can do that directly without a two-thirds vote. Representative Ladyman, if I could interrupt, let's
Representative Robin Lundstrum
Unverified
1:22:18
deal with your motion that's on the floor. I am dealing with
Representative Jack Ladyman
Unverified
1:22:22
my motion. I'm just introducing my motion,
Representative Robin Lundstrum
Unverified
1:22:25
ma'am. Okay, well, we had one more question in on the procedure,
and then we can go and I'll entertain your motion, and then we can make a
vote. So if you'll pause for just a moment. Representative Beatty, you were
Representative Howard M. Beaty, Jr.
Unverified
1:22:40
in the queue, and that's the last one. Thank you, Madam Chair. I guess my
question is going to go more for leg audit staff and for the chairs of committee. In relation to the AG opinion requested by the treasurer, did any member of legislative audit or the chair of this committee suggest
or encourage the treasurer to seek an AG opinion in this matter before doing the wishes of this committee? I
Representative Robin Lundstrum
Unverified
1:23:10
know there were a variety of discussions. Those private discussions will stay private. I don't think that's relevant to this discussion at this time. I'd like to hear from staff representative.
Speaker 122
1:23:33
I did not request any AG opinion of the treasurer's office. Did anyone
Representative Howard M. Beaty, Jr.
Unverified
1:23:40
else from your staff encourage or, or, or ask the, um, treasurer to
seek an AG opinion? I am aware of no staff at legislative audit that requests or encouraged the,
Speaker 123
1:23:50
uh, the, the AG opinion request. I am aware of none. Thank
Speaker 60
1:23:54
you. Thank you very much for answering that question. Representative Ladyman. Okay. Thank you, Madam Chair.
Representative Jack Ladyman
Unverified
1:24:02
I may perceive, uh, I'm looking at the law here and, and again, this is relevant to my
motion and maybe I can do it in discussion, but I think it's relevant to, to do this before the motion. Because if you look at this law, which I'm reading here word for word, and the treasurer of state, Shell, is in response to the may, as Senator Johnson said. So we may do this, and that's in response. And the attorney general opinion is not law. That is an opinion. So we don't have to go by that as a body. We are a separate legislative body.
We do not have to comply with what that opinion is. That opinion is not law until it goes to court and is proven in court, or we go into legislation session and change that. So we could do whatever we want. We take the opinion, we evaluate that, and then we do as a body what we want to do. So in my opinion, that's what we should do, but it seems like the body differs on their opinion, so i will be happy to make a motion i move to expunge the vote taken by this committee
at its july meeting to withhold the turn back front funds from cities and towns that had not completed their water and sewer audits for 2022 and 2023. okay
Representative Robin Lundstrum
Unverified
1:25:34
we move and we have a second and now we move into discussion Senator Hammer. Thank you,
Senator Kim Hammer
Unverified
1:25:46
Madam Chair. If Chair would allow maybe Senator Ladyman
to respond to some of this because now we have that motion and second.
So the discussion of the motion would be this. Does this mean and include all cities, even those that are actively responding to the pressure that's been put on them by this legislative body and are doing due diligence because they got the message and they are actually putting forth the effort to get it done. And also what I understand are the 15 towns, give or take a few, that have put forth no evidence and have given no evidence
that they are doing anything to be responsive as the other ones who are being responsive. Is it the entirety of the group, or are we going to split the doers from the
Representative Robin Lundstrum
Unverified
1:26:44
not-doers out? Senator, just for a point of clarification, currently we have 357 cities that have completed their audits for 2022. For 2023, we have 340 that have completed, both 2022 and 2023.
And for the 2024, we have 171. so we have a large number of cities that have complied and have done that we are dealing with only 39 we originally had 43 municipalities since then a number have completed we have 21 that have completed their 2022 reports we have 15 that have completed their 2023 reports and we have six that have completed their 2024 reports so these cities are working on their compliance they're not done
yet but they did take it seriously once we made that action in July. I suspect we'll see over the next few months even more completions. So that kind of gives you the numbers but let me get this again. For 2022 we have 357 that completed. For the year 2023 we have 340 and for 2024 we have 171. Okay Madam Chair may I ask you a question
Senator Kim Hammer
Unverified
1:27:56
seeing how you got the numbers there in front of you?
Representative Robin Lundstrum
Unverified
1:27:59
yes sir all right let me
let me finish with his question so senator would you
Senator Kim Hammer
Unverified
1:28:09
please state your question a second question is how many have not do not have active letters of engagement and have shown no effort to initiate getting their audits done is there a single number in that group that fit that
Representative Robin Lundstrum
Unverified
1:28:30
description yes we have 13 yes is
that answer your question senator yes but if
Senator Kim Hammer
Unverified
1:28:43
chair would allow I'd like to ask I'd like to give center representative ladyman yes that's where I'm going thank
Representative Robin Lundstrum
Unverified
1:28:50
you representative ladyman let me turn
Representative Jack Ladyman
Unverified
1:28:58
you on all right you're up senator thanks for your question and thanks for the promotion you're welcome the number is 13 but let me add to that you know I think central his motion was very good and I think it's been successful of the
40 I believe the number was 46 somewhere in that range 85% of those 46 water departments that were non-compliant are now compliant. So that leaves, as of day before yesterday, there were 13 cities that had not complied. These 13 cities, with the exception of one, which has a population of 700, the other 12 have a population of 200 or less.
One of them, I think, has 70 population, or maybe it's 170. So these are very small cities. from discussion with a lot of people some of these cities are as you said senator they're not they're not doing anything and those cities need to have their money withheld at some point but there are other small cities a city of 200 people that has to pay either thirty five hundred or ten thousand dollars for an audit that puts them in a bad situation especially since they haven't
a turn back for two months that may be keeping them from complying I don't know here's the other point and I think Senator Gilmore made this point yesterday in the meeting in September this body took a motion and told these cities that you're going to get your money they probably made adjustments speaking as a previous mayor I would have done this and I'm sure they did and said hey we're going to get this money so then they changed their financial plans
and now we're telling them 30 days later no sorry you're not going to get your money you know we told you you were going to get it but you're not getting it so now we're telling them they got to go back and make changes again and why are we doing this we're 85 percent compliant and the motion had the effect and I appreciate the senator making that motion I think it was necessary it was successful so we've got a short list that we can work with and I spoke to municipal league
and they say these cities are coming in every other day they get another city that's compliant they're working on this so let's give them a little leeway here to maybe the end of the year by expunging this vote still gives them till the 31st of December and then we take another action if we need to. So, Senator, I hope I answered your question, but the number is 13, and most of these cities have a population of less than 200, and I'm sure they're struggling without their turn back money because that's only one of two sources that they probably
have. They get rates from their water users, but they don't have sales tax, they don't have businesses. These are little towns of 200 or
Speaker 127
1:32:04
100 people. So I hope I answered your question manager yes would would you allow
Senator Kim Hammer
Unverified
1:32:11
representative layman to restate his motion and I'd like to privilege that before we take the vote I may want to come back with substitute motion but I'd like to hear the rest of the discussion from other members but when he restate his motion when we get close
Representative Robin Lundstrum
Unverified
1:32:24
to the end we will definitely have him restate the motion the actual number of
cities besides the ones that haven't done anything is 13 the total number is 39 the law says that they have to have 22 23 and 24 we have 10 that have 22 and 23 but not completed 24 we have 20 excuse me have six that have filed their 2022 only and then we have eight that have engagement letters for 2022 so but we have they're not completed yet and then we have the 13 that
have not engaged so it's it's
a little little more than just 13 um we have tyler excuse me senator
deez and then representative hoke hope dick senator
Senator Tyler Dees
Unverified
1:33:17
thank you madam chair i i appreciate the discussion and appreciate the motion i i think uh for myself um there was a lot of side conversations through through this last week and the last few days especially about um setting a
bad precedent or um or even changing law through this committee outside of a session which that concerned me of those types of conversations but everything i've heard today this motion and voting for this expungement does not set a new precedent does not set new law um i believe it's completely in accordance with statute 14-234-120 which we see here today that this body does have the ability to do that and so my main discussion point is that I have complete confidence that the law is clear
that we may we have the ability as a body to vote in this way that it does not I wanted to encourage you just like I needed encouragement before I voted on this that that voting for this motion does not set new statute into law it actually just follows it now you can vote for or against but your conscience can be clear is is my point and so i'm encouraging members to vote for this this motion thank you senator representative duke thank you madam
Representative Hope Duke
Unverified
1:34:39
chair um i guess i have a little
bit of a question on what the effect of the expungement of the july motion um on the july action has on September I mean if July didn't in effect take place can September action I mean because it sounds to me like the September action from what the representative is saying would stand and this is for staff to begin with would stand but I don't understand how it stands if you expunge the action which my understanding is what happened in July never took place so how
can you take action in September on something that happened in July so can can we get some
Representative Robin Lundstrum
Unverified
1:35:23
well I asked and asked staff initially please let's let
Speaker 288
1:35:33
let's let staff respond representative Duke if I understand your question correctly and you're concerned about if the expungement occurs for the July
Speaker 164
1:35:40
action how does that affect the September action of this full committee. Is that accurate? Yes, I believe so. Okay. In the way that we interpreted
the advisory opinion of the Attorney General, if this body wants to undo the legal effect to the Treasurer's Office that occurred with your July action, then you would want to consider expunging both the September and the July action of the body. Because if I recall correctly, there was sort of an amendment to what was done in September and it gave them and it gave those 43 entities until December 31 of 2025 to get either an audit in for 2022 or a letter of
engagement that promised completion of an audit for 2022 and so I think the cleanest way but there again this is just up to the body the cleanest way would be to try to expunge both if it's the will of the body to go back and undo that July action because it's that July action that had a legal effect for the treasurer based on the reading of that statute. Have I answered your question, Representative Duke? I
Representative Hope Duke
Unverified
1:36:53
think so. It's brought up a lot of different questions
because I had issue in and of itself with what we did in September on whether this body had the authority to do what it did in September. So that in light of what we did in July. so there's just so many layers to this and I think what got gets us in trouble sometimes is everyone or if we're not necessarily engaged from the very beginning and we come in halfway or we try to make some of these decisions on the fly I'm representative ladyman if the chair will allow is is your intent to just expunge the July do you tend on doing another motion for September
because my understanding also would be I mean I guess the September if you'd expunge
a july one then they have to december if you expunge both then all bets are off is that correct turn me
Representative Jack Ladyman
Unverified
1:37:46
on uh thank you madam chair uh yes i have a second uh motion when this one is dealt with to expunge the vote for september does that answer your question may i manager
Representative Hope Duke
Unverified
1:38:01
So then, in effect, with that, if your best-case scenario happens and both expungements happen, then those
cities have no deadline at all. Right. Unless the committee came back. Based on legal advice from the staff on how to
Representative Jack Ladyman
Unverified
1:38:18
handle this, that's when I was told that we need to expunge both boats, and then it would go back to, like, no action was ever taken. So the turn back would go back to the cities
Representative Robin Lundstrum
Unverified
1:38:32
Okay, and madam chair if I may finish your question you wanted to ask about the end date Would
Representative Hope Duke
Unverified
1:38:41
there be a cutoff date on on these funds right and that that I think he answered it There's not going to be one at the September 1 We'll also be expunged. So there is no There is no accountability unless we come back at a different time there's no end date for them to have these audits completed there
Representative Jack Ladyman
Unverified
1:39:00
would be no date at this point but he would be it would clean the slate so that a new
motion could be made and any date could be put in there
Speaker 295
1:39:10
so just clean up may be made today -
Representative Jack Ladyman
Unverified
1:39:14
it could be made at any time you have to ask staff that in my opinion yes it could be
Representative Robin Lundstrum
Unverified
1:39:23
made anytime let's let's chew on that and then get back in the queue. Senator Murdoch?
I like that. Senator Hammer? I'm gonna make a
Senator Kim Hammer
Unverified
1:39:40
substitute motion it may just get blown out of the water but I want to
Representative Robin Lundstrum
Unverified
1:39:47
make a substitute motion. Let's finish the discussion before we entertain any other motions there are those members that have been waiting in line that have not ask a question representative McElroy I'm not
Representative Carol Dalby
Unverified
1:40:04
going to entertain that motion just yet representative Dalby thank you madam chair the good thing about lawyers one will starve to death two will make a living and so it appears to me and my
part of the discussion is i think we if we expunge the july vote there's no reason to take up anything else because at that point there's nothing in the law that has given us the authority to set any date on these folks and so we expunge it they're free to do whatever they want to they don't have to do it until we start bringing them in individually and addressing each one of them individually so So what we're going to do, if we vote for this, we're going to tell the cities that are dealing with this
and those who have already dealt with it, never mind, you don't have to, don't worry about what we did. We'll change our mind, and you can take whatever amount of time you want to file your report because there will be no deadline, and we don't have an authority to set a deadline. all we're going to do is say kings x we're not doing this anymore take your time and some of you've taken your time since 2022 and so i think that we need to stick with what we've done
and not expunge but that's just my thought thank
Representative Robin Lundstrum
Unverified
1:41:24
you thank you i appreciate that um senator johnson you've been in the queue quite a bit and if you could
Senator Mark Johnson
Unverified
1:41:32
make it short thank you madam chair uh on this motion uh i go back again i want to know what the law said and i think we can all all remember that this bill was sponsored by senator wallace and representative gas away senator wallace is not here today so i'm don't i'm going to be careful in interpreting what he
said when he set these wheels in motion for us to to undo what we had done in july Representative Gassaway is here, and if he wants to weigh in and say I'm all wet on something, that's okay, too, and I respect him enough to sure hear that. But it appears to me that this bill was to address a specific problem, and it gave some teeth to this committee to enforce what these cities are supposed to be doing.
And I think we got their attention. I really do believe we got their attention. Now, if you look at the seal of the state of Arkansas, on one side you'll see an angel holding something that says mercy. And on the other side, you'll see the sword of justice. And that's really what we're trying to do here is counterbalance justice and mercy. I think we want these cities to comply. That's the justice side. The mercy side is we're going to give you a little bit of leeway and a little bit more time.
I think we got their attention, the numbers that were stated, that a whole lot of these cities got after it. But that doesn't mean we don't keep that sort of justice to use later. So I'm going to vote for the motion by Representative Leidingman, even though I had many reservations about it. This is like parenting. When do you give your kids licks and when do you just give them a stern lecture and say, straighten up? And that is kind of how I feel about this. But I'm going to vote for it for those reasons, and I encourage us to clear the deck.
We can always come back and paddle them, so to
Speaker 143
1:43:34
speak. Thank you, Madam Chair. Thank you,
Senator Fredrick J. Love
Unverified
1:43:42
Senator. Senator Love? Thank you, Madam Chair. I just have a question, I guess, for
you, our staff. So when we first initially took up the action, we sent it over to the treasurer's office, the treasurer's office held the funds then later we had discussion senator crow made a motion out
of here and we accepted the motion to actually reinstate the funds by default would that not be an action to actually that councils out the first initial action and then so then we went and got got an AG's opinion that says, well, we have to go back and expunge, but by default of the second action, it was already expunged.
Representative Robin Lundstrum
Unverified
1:44:34
No, sir. How would that not be? We have to follow the law as it's written,
and the committee may, and that's what we're working on the may part right now, but the treasurer has nothing to
Senator Fredrick J. Love
Unverified
1:44:48
do with this. They work for us. They follow the law. Hear me out, Madam Chair. Once we took up Senator Crowe's motion and we voted
to reinstate the funds, we reinstated the funds in here. That was the motion and that was the action. So now I'm confused as to why we needed an AG's opinion to say it was necessary for us to expunge it.
WHEN IF THE INITIAL MOTION WAS TO STOP THE FUNDS, THEN WE TOOK UP A MOTION IN HERE TO ACTUALLY REINSTATE THE FUNDS. SO THEREFORE, BY DEFAULT OF THIS BODY TAKING UP THE SECOND MOTION, IT CANCELS OUT THE FIRST MOTION. THAT IS HOW THIS BODY IS PREDICATED. THAT'S JUST LIKE US PASSING A BILL, AND IT'S TAKEN UP IN JANUARY. WE PASS IT, AND THEN WE PASS another bill in february that cancels that bill that is how this body works so i'm i'm i'm unsure
why the ag is saying that the second action that we took needed to needed needed to it's it's it's an actual motion that we took so why do we need to expunge when by default that is expungement this body took it up that
Speaker 149
1:46:19
Senator Love, I can't speak to the reasoning I don't know why the AG opinion was requested but I can tell you that based on the way that we read the Attorney General's advisory opinion that the treasurer's hands were tied um based on the legal effect of the action that was taken by this body
Senator Fredrick J. Love
Unverified
1:46:41
in july okay but but the legal effect of us actually reinstating it we took that motion up this body passed that motion
so why would we need an expungement that i mean you all come on like this is not making any sense at this time because we took a motion to actually hold the funds now we took another motion and PASSED TO ACTUALLY REINSTATE THE FUNDS, BUT NOW WE NEED AN EXPUNGEMENT. BY DEFAULT, THAT IS AN EXPUNGEMENT WHEN WE TOOK THE MOTION UP TO REINSTATE THE FUNDS. NOW IF WE'RE GOING
TO SAY THAT A MOTION THAT WE TAKE UP IN HERE IS NOT VALID AND THAT
WE NEED THE AG'S OPINION TO MAKE SURE THAT THIS BODY IS VALID, THEN WHAT ARE
WE DOING? Was that motion not valid by Senator Kroll that we took up
Representative Robin Lundstrum
Unverified
1:47:42
and we passed? Senator, we're, we've, hang on just
Speaker 303
1:47:48
a second. Mr. White. Senator Love, I think you have a valid
Speaker 122
1:47:55
point. The situation I see is legislative audit can interpret the law.
That's going to be for the courts to make that final decision. Um, what I think there we have before us is one executive branch agency who is not going to act until they sought another executive branch agency's opinion
Speaker 171
1:48:18
for this body to get that agency, um, to
Speaker 122
1:48:23
act, you know, we would recommend following what their attorney told them their AG said to the treasurer's office as far as whether the vote we had in September
is valid and held that's a decision to be held by the courts um and I couldn't
Speaker 123
1:48:39
I'm hoping I'm trying to help answer your question
Senator Fredrick J. Love
Unverified
1:48:45
well I hear what you're saying but what you what you're saying is now we have to change the voting threshold if there was a if If there was a motion made to actually hold the funds that was made on one threshold, okay, now we have made another motion, a second motion, to actually reinstate the funds.
But now you're saying that there's a different threshold for the expungement, and I understand that. But the motions that we made were both valid because they came out of this body. And if we're going to say that the AG has to validate us, you all, then we are in trouble because we are the ones that the people elected to do the will of the people. So any motion that this body takes up should be a valid motion.
That is how it works. IF WE PASS A BILL AND THEN WE PASS ANOTHER BILL THAT CANCELS THAT FIRST BILL OUT, THAT IS IT. THAT IS HOW THIS BODY IS PREDICATED. THAT IS HOW THIS BODY WORKS. SO WE SHOULD NOT NEED AN AG'S OPINION ON IF WE NEED TO HAVE AN EXPUNGEMENT OR NOT BECAUSE SENATOR Crow's motion that we took up was a valid motion of this body now if some of
it I mean like if some people do not like the way that motion falls then that is fine but this but the motion that we took up was a valid motion and it should have reinstated the funds which that is that that is not an argument that is a fact of record so that's what we should follow what this body
does by law that is what that is what you just handed out says
Representative Robin Lundstrum
Unverified
1:50:45
thank you senator we're working on that well let's get to the couple of other people in the queue and then we'll get back at
Representative Julie Mayberry
Unverified
1:50:56
it represented Mayberry thank you madam chair I'm gonna make this really short because we're spending way too much time talking about this. I'm sorry. Think about the cities out there, the majority of them, watching this discussion, and they're sitting there saying, we've done it right. We have followed the law.
Why are we going to allow others to not follow the same law? And I just want you to think about that, the message that
Representative Matt Brown
Unverified
1:51:31
that sends. Thank you. Thank you. Representative Brown. Thank you Madam Chair. According to Senator Love's statement and comment, if we leave things just exactly the way they are now, then the cities will get their turn back, no they won't get any turn back money unless or until they are up to date by December 31st.
is that correct thank you wait wait they won't have they won't receive any money unless they get their reports filed that's correct well no i didn't say that was his motion i was talking about senator love's uh discussion point that i understand that let's i understand if we just follow what's already been voted on then that would mean that none of these cities would get their money until the end of the year unless or until they file their audits, correct, or make some progress?
Representative Robin Lundstrum
Unverified
1:52:29
Once they file the 2022 audit. Or
a letter. No, they have to have an audit. They have to
Speaker 314
1:52:44
have it filed. And let's let staff clarify.
Representative Matt Brown
Unverified
1:52:47
Representative Brown, would you restate your question? If we, as Senator Love stated, that he believes that what we have done in this body is okay, that what we've done is correct, that we are within the law,
if we leave things just the way they are, the way we've already voted, and don't expunge these votes, don't make any more motions, The effect of that would be that the cities that are not in compliance, they would have their funds withheld until the end of December, unless or until they file their 2022 audits. Is that correct?
If we just leave things the way they are now, they won't get any
Speaker 303
1:53:47
money until they get that filed. Mr. White where we
Speaker 122
1:53:51
are right now is when entities when municipalities that were on that original listing have filed the 22 23 and 24 audit reports we are providing a letter to the treasurer stating that they have filed reports through the most recent calendar year and then
treasurer acts and their their authority that's their decision we provide the letters to that effect anytime we have a municipality who has either filed a 22 report a 23 report or has provided us with a letter of engagement with a promise to complete by the end of december we are sending a letter also to the treasurer's office in accordance with september's motion
Speaker 315
1:54:37
we can't that they will get their money and we'll get their money
Speaker 122
1:54:43
then our our direction and guidance to the treasurer's office is that they release those funds it is
Speaker 123
1:54:50
the treasurer's office that then acts or doesn't act once they complete
Representative Robin Lundstrum
Unverified
1:54:58
they get their funds and their funds are held in escrow until they do complete so we're
Speaker 317
1:55:04
fully within our purview just to leave things the way they are yes if we leave
Representative Robin Lundstrum
Unverified
1:55:11
things the way they are the cities will continue to complete once they complete they get their money the process is working we will get to an end of the line though where there will be a list of probably 14 cities out of the 390 something that have not done anything and we'll have to deal with that in a separate I don't know how we'll deal with it but we will have to deal with it then in the meantime
Speaker 317
1:55:36
the process is working as a further point of discussion on this these cities who are that are so tiny that are so small that they do not have the fund maybe they
i'm giving them benefit of the doubt they do not have the money to hire the auditor to do these this work is the ultimate uh conclusion of this that they would just simply lose their charter and quit struggling that is not something this committee can
Representative Robin Lundstrum
Unverified
1:56:05
decide that's something legislatively we would need to have a process for them to surrender their charter but that's not for us to decide us we are just looking at whether or not they've completed the
audit my question would be if they have a water and sewer department and you don't pay your water bill what happens you get your water cut off at some point they've got to be able to
do an audit But that's a discussion we have to decide down the road. Senator Murdoch, sorry. I got
Senator Reginald Murdock
Unverified
1:56:40
you. Yeah, try it. Thank you, Madam Chair. This is for staff. Could you please state Senator Kroll's motion from September, please?
they will need just a minute the reason I'm saying that is because send a love
when he mentioned the second past motion taking the place of the initial motion I think we need to be clear on what that second motion was thank you
Representative Robin Lundstrum
Unverified
1:57:18
they're working on it senator Dotson you were in the
Senator Jim Dotson
Unverified
1:57:22
queue thank you madam chair my My question is just for staff, before we take a vote, I just want to make sure we're all crystal clear.
If the motion is to expunge, that is a two-thirds majority vote, or is that a simple majority vote? I just want that clarified for all members before we vote on any motion. Okay,
Representative Robin Lundstrum
Unverified
1:57:42
so we have two questions for staff. Let's give them a moment to
Speaker 303
1:57:50
answer. Are we ready? Senator Murdoch you asked about the motions that occurred in September if I understood you correctly There's one that had there was one principal motion that senator Wallace made that was a little bit of
Speaker 326
1:58:02
Senator crows There so the September motion took the place of the
Speaker 171
1:58:18
July motion There was there was a motion in July
Speaker 122
1:58:22
by Senator Kroll to withhold turn back for the 43 municipalities Completely then in September there was a motion made by Senator Wallace and that motion and I can read it for you here
Speaker 328
1:58:35
if you so desire but it That's the motion to return There was a motion to reinstate the turn back funds for those remaining December 31st 2022 delinquent entities that have filed a december 31st 2022 report or have provided an engagement letter stating that the december 31st 2022 report will be completed by a date before december 31st 2025. the cities must also complete their 2023 audit by december 1st 2025. that was the september
Representative Jimmy Gazaway
Unverified
1:59:09
motion thank you representative gas away thank you madam chair so in discussion of senator ladies ladyman's motion i just want to make a couple of points we have a lot of issues going on here and this is a lot to sort through and i appreciate staff for the work that they've trying to sort through this and follow the proper process and procedure one I think there's an initial question it's been brought up about Arkansas code 14
243 120 and whether or not we're changing the law any something that we do here is changing the law we're not changing the law that law is very clear so I don't think there's any issues with any action that we take here in terms of changing law that we've previously passed there's been an issue brought up about subcommittees and motions that are made in subcommittees and how they bind the full committee and the way I understand that the arguments been made Senator Dismang's point is that Senator Krull's motion to withhold the money the
turnback funds was a motion that was made in a subcommittee that motion that was made in the subcommittee and made it into the report was it was adopted by the full committee when we adopted the report and that's how the turnback funds were withheld because of an adoption of a report i think senator disming's point is is if we can bind uh if a subcommittee's report adoption binds the full committee then wouldn't a motion to expunge in a subcommittee wouldn't the adoption of that report also bind the full committee and
essentially be an emotion to expunge or the adoption of a motion to expunge and i think that's a fair point the problem is is that's not the motion that was made in the subcommittee what it sounds to me the motion that was made in the subcommittee yesterday was a motion to recommend that this committee expunge the vote I think we'd have a different story if the if the motion in the subcommittee would have been to expunge and then we adopt subsequently adopted that report but that's not what it was the motion yesterday was to recommend that the full committee
expunge. I also want to say I agree with the Attorney General's opinion, and this goes to Senator Love's point about whether or not we should, whether or not the action that was taken in September was legally valid or not. And the issue there is really kind of one of parliamentary procedure. The issue there, the action that we took in September was to rescind the notice. And I think the question that the Attorney General had was whether or not we had the power to rescind a notice that we had given. And the Attorney General essentially answered that by saying,
yes, but the proper way to do it, the proper procedure to follow to do that is by a motion to expunge the vote where the notice was initially given, which would be the July notice that was given based on Senator Kroll's motion that was adopted in the report. And so I think Senator lady's motion to expunge is proper. Now, it's a question of, you know, where you stand on whether or not we should expunge that vote and whether or not this money should go back. That's a fair
question for the body to debate. I personally am in favor of expunging it. I'm also fully in favor of accountability and enforcing the law. But this is the first time, so just to speak on the policy of it. This is the first time that we've ever really had the ability to enforce this particular law. And we took advantage of it at the first opportunity. And I think we got a lot of the city's attention when we adopted that motion in July to withhold their turnback funds. I think we sent a strong message and I think we've seen a lot of compliance. And my understanding
is there's 13 cities that are not in the process. And out of those 13, there may only be four that haven't responded to anything so we definitely have gotten people's attention and i think at this point if we just allow them a little grace period to get into compliance and then we can always come back and we can send that notice again when we believe it's appropriate so if we come back in december or january and we think we see that you know there's some cities that have just completely ignored this after we withheld their turn back funds then we have the
ability to uh send a new another notice and withhold those funds and take the appropriate action so i'm in favor of the motion to expunge at this time i think it's the proper way to handle this again i agree with the attorney general's opinion i don't think that we're changing the law here uh i think senator disming makes a good point and i would agree with him that we could have expunged the vote by subcommittee vote if the motion in the subcommittee would have been to to expunge but that wasn't the motion in the subcommittee motion in the subcommittee was to
recommend to this committee to expunge which i think is a different a different thing so with that i'm in favor of senator ladyman's motion and i hope you'll give it due consideration thank you
Representative Robin Lundstrum
Unverified
2:04:24
thank you representative gasaway i believe we
left senator hammer hanging with a substitute motion and then we will go to the original senator hammer thank you
Senator Kim Hammer
Unverified
2:04:35
madam chair and knowing center rep if i
may to representative ladyman through the chair make this comment knowing that there's a second motion that you're going to bring this one may
align with yours so the committee can just use your discretion vote for against i'd like to offer a substitute motion substitute motion to expunge all previous votes to withhold turn back funds and instruct the treasurer to release funds to cities that are actively showing efforts to comply with the law as determined by a list provided to the treasurer from legislative audit staff and the chairs, but not to cities who, as of the date of this motion, have produced no evidence of actively complying with the law.
If a city who is actively proceeding stops effort to comply, they will be called before the full legislative committee. Cities who have not shown effort as of this day of this vote are required to attend the next full legislative audit meeting, at which time a full report of all activities will be made to the committee. And if I get a second, I'd like to speak to my motion and the rationale, Madam Chair. The chair will
Representative Robin Lundstrum
Unverified
2:05:47
entertain a second. Is there a second?
We have a second by Senator Cooper. All right, let's discuss that
Senator Kim Hammer
Unverified
2:05:57
motion. May I speak to my motion? yes thank you i'm struggling between you know having listened to all this i'm struggling between grace mercy rewarding effort but not uh rewarding those who are blatantly disregarding the law because i think that is an injustice to the cities that have gotten the message are making an effort and what i see this motion doing is saying to those that have f have shown effort
we are, we heard you, we're doing what we got to do. We're trying to get it done. Let's go ahead and reward them. But yet there's an element of accountability that if you stop doing what you're being asked to do by the law, you're going to come in front of this full committee. At the same time, those cities, 13, whatever the final number is that have shown no effort, they don't need to be given the same treatment as those that are putting forth effort. And they need to come in front of this committee, and they need to explain theirself.
And at that time, if they've got a good explanation, we may choose to release. But they don't need to be able to sit out there without any accountability and thumb their nose at the legislature or this committee. And I think this establishes a protocol for them to have to come in front of us. That's the intent of the motion. I'd appreciate a good vote. Understand if you don't want to vote for it. Thank you. Thank you, Senator
Representative Robin Lundstrum
Unverified
2:07:21
Hammer. I believe, Senator Dotson, you have a discussion point. Thank you, Madam Chair.
Senator Jim Dotson
Unverified
2:07:27
Senator Hammer, while I like the intent of where you're going with your motion, because I'm in agreement, I think, to a large extent with what you're trying to do, I'm concerned, however, with the actual statute that we have in front of us, 14-234-120, under C1 there where it says the Legislative Audit Committee may, quote, give notice that that, in effect, that notice, whether it was July, September, or today, triggers the Treasurer
holding these funds for all municipalities. And so I don't know that it would change the status quo. The Treasurer sent out an AG's opinion on the September deal to say, did this actually rescind the notice and I think we're with your motion while we might have expunged the vote on all previous motions in effect we're giving a new notice to the treasurer to hold I don't know that we can turn the spigot on partially I think it's an on or off switch with that give notice that's my
opinion of it I'm sure the treasurer's office will will get to make that determination if we do anything other than just fully expunge or or leave it as is where we gave notice um
but just wanted to give you that consideration and everybody in the committee that consideration before
Senator Kim Hammer
Unverified
2:09:03
considering your motion could could i respond madam chair thank you um and uh senator you know i'm looking at the the language has an element of permissiveness
utilizing the word may and whether it is this way or not it is my intent through this motion that what we are doing is saying that the treasurer may go ahead and release to all these but in the motion it keeps the element of accountability that as long as they keep complying then they can keep getting the money however if they don't the motion has it and I realize members don't have the benefit of this being written out to see in front of them, but those cities that cease to be
compliant with trying to get to what the law is asking them to do will be in front of this full committee, at which time we could say to the treasurer, stop it, because they have stopped their effort. That's the intent. Whether it aligns with your concerns in the law or not, I'll
Representative Robin Lundstrum
Unverified
2:10:08
defer to the full committee's wisdom. Thank you. Representative Ladyman, would you your motion for the record so we have both these motions in front of us okay
Representative Jack Ladyman
Unverified
2:10:28
you're up yes I wouldn't thank you madam chair my motion was I move to expunge the vote taken by this committee at its July meeting to withhold the turn back funds from cities and towns that have not completed their water and sewer audits for 2022 and 2023. Thank you. We do have to take
Representative Robin Lundstrum
Unverified
2:10:50
the alternative motion first, but I want you to have both of those fresh in your mind. So we have, Senator
Hammer, if you could give us the short version, we need to vote on that unless there's any
further discussion. Would you like me up up? Sorry.
Senator Kim Hammer
Unverified
2:11:12
Yes. Give us the short version again. I'm sorry, Madam Chair. Would you restate what you're asking me to do your motion?
Oh, restate my motion. Yes. Okay. You're on. Yeah, I know I'm reading something. Somebody sent me in aligned with this. The motion was to expunge all previous votes to withhold turn back funds,
which addresses the multiple dates that are in question the motion to expunge all previous votes to withhold turn-back funds and instruct the treasurer to release funds to cities that are actively showing efforts to comply with the law based on a list provided by leg audit and concurred by the staff and the chairs but not to cities who as of this date today of this motion have produced no evidence of actively complying with the law. If a city who is actively producing stops
efforts to comply, they will be called in front of the full committee. The intent of that is you're working on it now. Don't take this as a signal that you can stop because you're going to come in front of the full committee. Cities who have not shown effort of this day are required to attend the next full legislative audit meeting, at which time a full report of all activities will be made to the committee I would I would think that this would also
clarify that we are giving notice that these 14 cities are not in compliance therefore the money would only be withheld for those 14 cities everybody else's money is going to be released and would continue to be released as long as they continue to make and show effort. Otherwise, they're going to be in front of this committee, which I don't think any of them want to be. Thank you,
Representative Robin Lundstrum
Unverified
2:13:17
Senator Hamer. My understanding is this is a two-thirds vote. Is that correct? Okay. Is that two-thirds
Senator Kim Hammer
Unverified
2:13:24
of the quorum or two-thirds of members present? Would staff clarify that, please?
Representative Julie Mayberry
Unverified
2:13:30
Senator Hamer, present to your rules. You have always operated on members or authorized alternates
Representative Robin Lundstrum
Unverified
2:13:40
present okay let's make sure we understand we are voting on senator hammer's motion and it
has to be a two thirds vote so those in favor wait just a second
Senator Reginald Murdock
Unverified
2:13:59
Thank you. I think this is germane to the motion. Certainly it's going to be an effect of the motion. So if we pass this out, the Treasury Department then has the duty to do what we're saying or not.
I guess my, and it says shall. That's a good
point, Senator. It says shall. Okay. So what I don't want to see happen, and what I'm throwing this out here publicly,
is that if someone is looking for a reason not to because they don't agree with this being passed, then that shall becomes something else, and then becomes another submission to AG or whomever else after this body does what it, has done i just think this body this should
be respected whatever we do throughout so that i think we're
Representative Robin Lundstrum
Unverified
2:14:56
there um representative ladyman you had a i saw you come up yeah thank you madam chair
Representative Jack Ladyman
Unverified
2:15:04
i'll try to be brief but uh senator hammer i i agree with what you're
trying to do and i understand but my concern is that who determines whether they're actively pursuing is it going to be in the treasurer's office and they're trying to decide and who defines who's actively pursuing and what is the definition of that so I just think there might be a lot of gray area here and then nothing happens that that's my concern with your motion I know you're trying to do the
right thing and I agree with what you're trying to do but I'm afraid it would create some misunderstanding and people making decisions based on something they don't have a definition for. So that's just my comment.
Representative Robin Lundstrum
Unverified
2:15:46
All right. Senator Hammer, you can respond and then we're going
Senator Kim Hammer
Unverified
2:15:52
to need to go to the vote. Yes. And, and, uh, center, center, keep wanting to make you center. So I don't give him ideas represent layman. They, that's why I put the phrase in there as determined by legislative audit staff and the chairs. Uh, we're, we're putting a lot
trust a lot of authority in them that evidently there is an identified list by some protocol that has been included in discussion day we're down to 13 cities that have nothing I think if somebody's name is on the list we can as individual legislators go to the chairs and lay out and say hey now wait a minute here's evidence that they're doing it that'll create maybe a little back and forth but it seems like the content of the discussion day we have narrowed it down that there are certain number of cities 13 maybe around that number that haven't
done anything there's evidence that everybody else is doing something to move toward it so that whether that's a good explanation satisfies your concerns or not but that's why I put that phrase in the motion
Representative Howard M. Beaty, Jr.
Unverified
2:17:01
representative patty madam chair that motion had a lot of moving parts and it Could you restate that motion and just
Representative Robin Lundstrum
Unverified
2:17:11
hit the highlights? Oh, all right. Senator Hamer, let's make it short.
No sidebar, no discussion, just a straight
Senator Kim Hammer
Unverified
2:17:22
motion. Like hot, please. Thank you. Motion to expunge all previous votes to withhold turnback funds and instruct the treasurer to release funds to cities that are actively showing efforts to comply with the law as determined by legislative audit staff and chairs but not to cities who as of this date of this motion have produced no evidence of actively
complying with the law. If a city who is actively proceeding stops efforts to comply they will be called before the full committee. Cities who have not shown effort of this date of this motion being passed are required to attend the next full legislative audit committee meeting at which time a full report of all activities will be made to the full committee that's substitute motion thank you senator hammer we have a second
Representative Robin Lundstrum
Unverified
2:18:22
Cameron made a second excuse me senator representative Cooper all right so we're all thoroughly confused. Let's go vote. All in favor of Senator Hamer's substitute motion, please signify by saying aye. Aye. Those opposed? No. We have
a roll call by division of chambers.
I rule it fails, but let's go ahead and do a roll call. Remember, it has to have a two-thirds vote, and we've had a request for a division of the House, a division of the body.
It was made by the House, so we'll start on the House side.
Speaker 344
2:19:25
Representative Gasway is having signed in. Representative Rye is having signed in. Representative Rye. Representative Mark McElroy. Representative Mark McElroy. - Representative Wayne Long is not having signed in.
Next. Representative Carolyn Brown? - Yes. - Representative Carolyn Brown is a yes. Representative Fred Allen having signed in. Representative Fred Allen. Representative Cameron Cooper. Representative Cameron Cooper is a yes.
Representative Tony Furman. Representative Tony Furman is a yes. Representative R.J. Hawk is not having signed in. We go to first alternate. Representative Paul Childress.
Speaker 328
2:20:49
Representative Paul Childress. next representative
Speaker 344
2:21:03
robin lundstrom no representative robin lundstrom is a no
next representative mindy mcclendon having not signed in we go to first alternate representative Rep. Rebecca Burks? No. Rep. Rebecca Burks is a No. Rep. Hope Duke? No. Rep. Hope Duke is a No. Rep. Stephen Unger? No. Rep. Stephen Unger is a No.
next representative Womack representative Womack is a no next with representative Sonia Eubanks-Barker not having signed in representative Howard Beatty representative Howard Beatty is yes next representative Carol Dalby Representative Carol Dalby
Speaker 345
2:22:21
Next Representative Stan Berry No Representative Stan Berry No
Speaker 328
2:22:36
Next Representative Julie Mayberry No representative julie mayberry is no
Speaker 344
2:22:48
next representative matthew brown is having signed
in representative matthew brown next representative brian evans not having signed in representative keith brooks representative keith brooks next
Speaker 328
2:23:25
representative jack ladyman yes representative jack ladyman yes
Representative Robin Lundstrum
Unverified
2:24:09
7 yes, 8 no's, 4 present, the motion fails. now we'll entertain the motion by a representative Leidyman yes sir
representative Leidyman would you please state your motion
Representative Jack Ladyman
Unverified
2:24:50
yes thank you madam chair I move to expunge expunge the vote taken by this committee at its July meeting to withhold the turn back funds from cities and towns that have not completed their water and sewer audits for 2022 and 2023 Okay, we have a motion and
Representative Robin Lundstrum
Unverified
2:25:09
a second on the floor. All in favor? Aye.
All opposed? No. Let's have a roll
call vote. I couldn't tell. I don't think it rises to the two-thirds. So, motion fails. Let's have a roll call vote. and we have there we have one two three four five six separated by the house I'm
going to by the chamber house
Speaker 344
2:26:01
start on the house side Representative Jimmy Gazeway. Representative Jimmy Gazeway is a yes. Representative Johnny Rye. Representative Johnny Rye is a yes. Representative Mark McElroy. Representative Mark McElroy is a yes.
Representative Carolyn Brown. Representative Carolyn Brown is a yes. Representative Fred Allen. Representative Fred Allen. Representative Cameron Cooper. Representative Cameron Cooper is a no. Representative Tony Furman.
Representative Tony Furman. Representative R.J. Hawk is not having signed in. Representative Paul
Speaker 328
2:27:13
Childress. Representative Paul Childress.
Representative Lundstrom is a no. Next,
Speaker 344
2:27:33
Representative Mindy McAlendon, not having signed in. We go to Representative Rebecca Burks. Representative Rebecca Burks is a no. Next, Representative Hope Duke. Representative Hope Duke is a no. next representative stephen unger representative stephen unger is no
next representative richard womack representative richard womack is no next representative howard baity yes representative howard betty is yes next is representative carol dalby representative carol dalby is no next is representative stan barry
representative stan barry is yes next is representative julie mayberry representative julie mayberry is no next is representative matthew brown representative matthew brown
next with representative brian evans as not having signed in
Speaker 328
2:29:17
representative keith brooks representative keith brooks next representative jack ladyman representative jack ladyman is yes
Unknown speaker
2:29:38
They're going to give us a vote total.
Representative Robin Lundstrum
Unverified
2:30:08
Yes, sir. It's two-thirds. Yes, sir. Seven yes, eight no, five present. The motion fails. All right, moving on. Next item on the agenda is the Education Committee.
Senator Dees, if you would read that report
Senator Tyler Dees
Unverified
2:30:53
on the Education Committee. Thank you, Madam Chair. The Standing Committee on Education Institutions met on Thursday, October 9th, and adopted the minutes from the meeting that was held on September 11th, 2020-25. seven education audit reports for the year ended on june 30th 2024 were included on the agenda with no recommendations from the subcommittee of my dad sorry for the joke officials from the mammoth
spring school district were present to answer questions from the committee related to findings in their audits reports which was deferred from the september meeting three school districts audit reports had findings and were referred to the applicable prosecuting attorneys and attorney generals. The committee filed seven audit reports that were brought before it. And Madam Chair, I move for adoption of this report. I have a second.
Representative Robin Lundstrum
Unverified
2:31:47
Is there any discussion of the education
report? I believe there was a member that had a discussion. Representative
Duke. I'm sorry, that was Representative Unger's committee. All right. Got a lot of
notes up here. All right. We have a motion and a second. All in favor? Aye. Aye. All opposed? All right. Motion passes. Our committee report is accepted. And too soon, Senator Dease. Too soon. All right. Standing committees for state agencies.
Representative Steve Unger
Unverified
2:32:20
Representative Unger. Thank you, Madam Chair. Committee's agenda yesterday. Three reports with the following findings were presented. The Department of Agriculture had an unauthorized payroll disbursement. The Department of Education did not have adequate controls in place to identify students with educational freedom accounts for duplicate enrollment in a public school. Additionally, the Department used one of its appropriations for a different purpose than the specified in its Appropriation Act,
made an overpayment for a National Board for Professional Teaching Standards incentive, and reported a stolen utility vehicle. The Department of Health did not properly prepare bank reconciliations, reported that an employee had falsified travel expenditures, and did not properly obtain bids for a capital asset addition. Various agency staff members were present to report how the agency is intended to address the audit findings and then answer committee questions.
During the meeting, the committee filed 10 reports. I move to adopt this report. All right, do we
Representative Robin Lundstrum
Unverified
2:33:45
have a second, and then we'll have discussion. We have a second by Senator Dotson. We have two in the queue right now, Representative Mayberry. And then Representative Mayberry. Thank
Representative Julie Mayberry
Unverified
2:33:57
you, Madam Chair. I'd like to make a
motion to extract the Department of Education Annual Financial Report and vote on that separately.
Representative Robin Lundstrum
Unverified
2:34:06
Okay, we have a second. Discussion? Okay, all in favor?
Aye. Opposed? No. Let's hear this. It passes. and we'll have a separate vote on that uh representative in it you got cut off
and didn't get your question you got okay thank you um representative mayberry can i can i make you
Speaker 361
2:34:39
restate your motion please uh restate the motion or
Representative Julie Mayberry
Unverified
2:34:43
make a second motion because i think my first one passed yes it passed thank you it passed okay so what i would like to do is um since that did pass to defer that finding or that report to be discussed by the full Arkansas legislative audit at the next meeting so you're just asking to be deferred for that to be deferred and to be discussed before the full legislative
Representative Robin Lundstrum
Unverified
2:35:14
audit at the next meeting okay that's a proper motion all in favor oh wait wait wait staff's waving me so we need a second on that we have a second by representative duke all in favor aye opposed
all right thank you we'll take that up and put it on the agenda for next time representative in it you're still
on did you need something yes okay let's hear it thank
Representative Denise Jones Ennett
Unverified
2:35:43
you um chairwoman i have a question i don't know if this is out of line um what measures is
arkansas taken to prevent duplicate enrollment among students with efas representative in it you're going to get to
Representative Robin Lundstrum
Unverified
2:35:56
be the first up in next session or the next meeting for that exact question you can ask those
questions there thank you we'd still need to adopt the rest of the report is that correct okay let's go ahead and adopt the rest of the report i need a motion to do so i need a second second thank you representative in it all in favor opposed okay a report is adopted
all right next we have a special report a
review from the arkansas state public school employees health benefits fund and i would ask members that you please stay for this because we need to make sure that everything is going well with our employees benefits funds and i'd like for you you to listen closely and then we will get in. If most those members could come up with the, you'll need to be sworn in.
Representative Stetson Painter
Unverified
2:37:04
Mr. Spivey, would you come up and bring us the report? thank you madam chair Arkansas code requires legislative audit to conduct an annual review of the employee benefits division and the performance of the health and benefit plans the primary objective of this report was to analyze the fund balances of both the state and public school employee health and benefit plans at June 30th 2024
EBD administers the health and benefit plans for both the state and public school employees. Benefits are provided through self-funding, a method by which the state takes in contributions from both the employee and the employer. Separate funds are set up for each plan to pay health and pharmacy claims and to serve as reserves to prevent dramatic rate increases for subscribers. Since January 2023, EBD has paid United Healthcare to manage the group Medicare Advantage plan, commonly referred to as the MAPD plan for Medicare eligible retirees.
This exhibit, which is found on page 2 of the report, shows the plan enrollment for both subscribers and members for each plan. The term subscribers refers to both employees and retirees who are enrolled in the plans, while the term members refers to subscribers and their qualifying dependents who are enrolled in the plans. As detailed in this exhibit, from fiscal year 2023 to 2024, the number of subscribers decreased by 12 for the ASC plan and increased by 2,216 for the PSE plan, creating a net increase of 2,204 for both plans.
The exhibit shown on this slide and on page 2 of the report provides Medicare-eligible retirees by enrollment in a retiree plan. As indicated in the bottom row of the exhibit, the MAPD participation rate at June 30, 2024 was 62% among ASC subscribers and members and 41% among PSC subscribers and members. The first plan discussed is the ASC plan. As shown in the exhibit on the slide and on page three of the report, the ASC plan had just over $360 million in fund revenue for fiscal year 2024.
State contributions provided 65% of total revenue, subscriber monthly premiums made up 26%, and other revenues accounted for 9%. Other revenues included FICA savings, investment income, and pharmacy rebates. As shown in exhibit six on page five and on the slide, the ASC fund balance increased to 119.6 million at the end of the fiscal year. The fund had a growth rate in fiscal year 2023 of 114 percent
compared to the 44 percent growth rate in fiscal year 2024. The fund's growth was primarily the result of plan revenues exceeding expenditures by 38.8 million and a 1.8 million dollar decrease in the actuarial incurred but not reported health and pharmacy claims. Revenues were higher primarily due to the increase in employer monthly contribution rates. Exhibit four on this slide and on page four of the report provides a five-year comparison of cost
per subscriber for the ASC plan. As indicated by the blue line in the exhibit, the health and pharmacy claim cost to the fund per subscriber totaled $688 per month, a $5 decrease from the prior year. As indicated by the red line, the out-of-pocket cost to subscribers increased from $359 per subscriber per month in fiscal year 2023 to $366 in fiscal year 2024. This exhibit is provided on page 5 of the report. The blue line indicates changes in claims and
administrative costs for the ASC plan for the past five years, while the red line indicates changes in premiums and other revenues for the same period. It should be noted that premiums and other revenues for fiscal year 2023 included one-time funds from the American Rescue Plan Act, commonly known as ARPA. Schedule 3 on page 14 shows health and pharmacy claims by plan type. Shown on this slide is the portion of the schedule related to the ASC plan. For fiscal year 2024, health and pharmacy claims paid from the fund totaled $183 million and over $99 million, respectively,
while MAPD plan costs totaled over $17 million. Additionally, Schedule 4 on page 15 provides a four-year comparison of health and pharmacy claims. A factor contributing to the change in health claims for retirees was the utilization of UnitedHealthcare's MAPD plan for a full year. The next few slides contain information regarding the PSE plan. The exhibit on the slide and on page 6 of the report shows over $459 million in fund revenue for the PSE plan for fiscal year 2024.
Legislative funding provided 31% of the total, contributions from school districts amounted to 29%, subscriber monthly premiums made up 30%, and other revenues delivered 10%. Other revenues included performance guarantees, penalties, investment income, pharmacy rebates, and FICA savings. As shown in Exhibit 10 on page 8 and on the slide, the PSE fund balance increased to over $206 million at the end of the fiscal year.
In fiscal year 2023, the fund balance grew at a rate of 53% over fiscal year 2022. In fiscal year 2024, the rate of growth was just under 1%. Exhibit eight on page seven and on the slide provides a five-year comparison of cost per subscriber for the PSE plan. As indicated by the blue line, health and pharmacy claim cost to the plan per subscriber totaled $527 per month, a $35 increase from the prior year. As indicated by the
red line, out-of-pocket costs to employees increased $13 from the previous fiscal year to $347 per subscriber per month. This exhibit is provided on page 7 of the report. The blue line indicates changes in claims and administrative costs for the PSC plan for the past five years, while the red line indicates changes in premiums and other revenues for the same period. It should be noted that premiums and other revenues for fiscal year 2023 included one-time ARPA funds.
Additionally, for fiscal year 2024, total claims and administrative costs exceeded premiums and other revenues. Schedule 3 on page 14 shows health and pharmacy claims by plan type. Shown on the slide is the portion of the schedule related to the PSC plan. For fiscal year 2024, health and pharmacy claims paid from the fund totaled $310 million and $106 million, respectively, while MAPD plan costs totaled approximately $7 million.
Additionally, Schedule 6 on page 17 provides a four-year comparison of health and pharmacy claims. Factors contributing to changes from the previous fiscal year included increases in plan subscribers, plan members, and plan utilization. ALA also reviewed the 13 members of the ASC plan and the 16 members of the PSE plan with cumulative claims exceeding $500,000. ALA tested these claims for accuracy and timeliness of case
management services and noted no discrepancies. The 2024 total cumulative health and pharmacy claims exceeding $500,000 totaled $26.1 million, a decrease of $6.6 million from the prior year. Our report contains one finding as noted on page 9. In accordance with R1-19-4-702 of the Department of Finance and Administration Financial Management Guide, if an agency pays an invoice in the fiscal year subsequent to when goods or services are received,
that invoice should be recorded as a payable. EBD paid $3.8 million for the ASC health claims and $6.5 million for PSC health claims in fiscal year 2025 that should have been recorded as a payable in fiscal year 2024. As a result, accounts payable and expenditures were understated at the end of fiscal year 2024. Amounts affected throughout this report have been adjusted for these errors. Madam Chair, this concludes my presentation. Agency representatives are here to answer committee questions.
Representative Robin Lundstrum
Unverified
2:46:14
Would the agency representatives please come forward to be sworn in? If you would
please rise. If you would, I'm sorry. Please
Speaker 367
2:46:39
state your name and position. Grant Wallace, Director of the Employee Benefits Division. James Caldwell, CFO, Shared Administrative Services.
Representative Robin Lundstrum
Unverified
2:46:46
Okay, if you could raise your right hand, gentlemen. Do you solemnly swear or affirm that the testimony you are about to give will be the truth, the whole truth, and nothing but the truth? I do. Thank you. Members, please jump in the queue if you have questions. I have one as well. On page
15 of the report, where it talks about the PSE, health and pharmacy claims and premiums, I'll give everybody a chance to get there, page 15, page 15.
If you're looking at the report, I'm sorry, it's page 7. On ours, it's page 15. This is the slide that has PSE, health and pharmacy claims and premiums for physical year 2020 to 2024. I'm
concerned. I'm seeing a rise in cost
and then a decline in premiums. Can you explain this or delve into this one a little bit
Speaker 367
2:47:54
more? Yes, ma'am, and I echo that concern.
What happened during this time period is that the state match, The district minimum was cut from $300 to $234.50, so that's why you'll see the decrease in revenue. And on the increasing in costs, we've experienced an increase in cancer diagnoses and treatments within this population that was outpacing the state employee side. So we're diving into that just to see if it's a one-time kind of blip or if there is something more long-term that we need to kind of adjust our modeling for.
We've not completed that work, so that's the study on the expense side. What we've done on the revenue side is during this past session there were corrections to get the district minimum back up to where it needed to be, and we continue to work with the Department of Education on our funding side to make sure that those issues get back on track and that we are seeing an increase in the revenues. So we do have a plan. We are
Speaker 370
2:49:02
addressing these things and are getting back on track with where we need to be.
Representative Robin Lundstrum
Unverified
2:49:08
Okay, thank you. Representative Mayberry, I believe
Representative Julie Mayberry
Unverified
2:49:13
you had a question. Thank you, Madam Chair. I'm just curious because it's not necessarily in here and it may not be something that you all directly pay, but I don't know where the money comes from to pay for it. So when we have a bill that affects the state employee plan or the public school employee plan, it has to go through fiscal analysis through SEGAL,
and I'm trying to figure out, is that something that state employees are paying for or are we paying for as the state? can you help me understand who pays for that
Speaker 367
2:49:52
report so we do not it is not part of this this our bills we do not receive any invoices from seagull or anything like that so my assumption is that blr covers
Representative Julie Mayberry
Unverified
2:50:03
those expenses okay blr is paying for that but before um you all would do the analysis like but because this was a recent change i guess not last legislative session but
the a special session before that is that is that correct you all did some type of
Speaker 373
2:50:20
analysis well we do have our own actuary that would run that does run or can
Speaker 367
2:50:26
do our own kind of modeling and any kind of impacts on potential legislation so we do have that
Representative Julie Mayberry
Unverified
2:50:32
service yes okay um just frustration with that process i
realize that that's probably something that maybe i need to discuss with BLR then but it takes a really long time to get those fiscal
impact reports back and I know I'm not the only one that was receiving the fiscal impact the last week or two obsession which makes it pretty impossible to get a bill
Speaker 361
2:50:57
that has anything in there through so
Senator Jim Dotson
Unverified
2:51:05
anyway thank you senator Dodson thank you madam chair I'm going back to what
chairman woman Lundstrom was talking about on that expenditures for PSEs exceeding the
revenues in 2024 the last slide that they were referencing said something about six point five million dollars was was in a inappropriately put in the wrong year but it should have been in 2024 is that on top of the number that's being reported here or you know it may be for staff rather than I believe it's staff if you could help us out with that it
Representative Robin Lundstrum
Unverified
2:51:42
was included in so that's included in
Senator Jim Dotson
Unverified
2:51:47
this chart here that on on page seven of the of the exhibit okay so in essence we we basically almost broke even it was about five million dollars which is you know one percent off um but things that we did in this session where does that take us because this has been this has been 15 months or so the snapshot was june of
Speaker 367
2:52:23
any kind of bills that were passed in the session that would have addressed plan design will go into effect in January. Some of those things might have kind of rolled out in August, but when it came to really like plan design and coverage of certain benefits, those will be in January of this upcoming year. So we will not see that impact probably until you audit FY26. You'll get that kind of first six months run. So we
Senator Jim Dotson
Unverified
2:52:53
can expect another further decline in 2025 more than likely,
but if I'm reading correctly on page eight, the, uh, fund balance has what, 206 million at the end of 2024. Correct. So that, that basically, if, if we're only 1% off, we have enough fund balance to maintain claims payments for a few years to where we can get the revenues back up. Right. We
Speaker 367
2:53:23
and I want to kind of define little narrow, because it does take a high-cost claim come in, and we're eating into those really fast.
Senator Jim Dotson
Unverified
2:53:33
Oh, absolutely. But as of the moment, there's roughly $200 million in fund balance to help address those. We're not building on that fund balance, but we're not dipping into it enough to where we can't make it to January. and start
collecting additional premiums based off plan design changes. Correct. Thank you. Members, do you have
Representative Robin Lundstrum
Unverified
2:54:01
any other questions? With the indulgence, I would like to hold this over a little bit.
We need to catch this before. I'd like
to see what's going on next month and the next month. I'd like to avoid dipping into that fund balance too significantly, and I'd like to hear what your results are. On those that are having cancer, the one-off thing, I'd like to get some more information on that. So could we ask you to come back next, would November work or December to come back and give us an
Speaker 373
2:54:33
update? We'll come back at any time that you ask, so.
Representative Robin Lundstrum
Unverified
2:54:38
Hang on just a second. Staff recommends, or there's two ways to do this, you could come back to this committee
or we could ask a motion to send it to the EBD committee and have them review it and they can come back that way. I would entertain a motion either way. I think the EBD committee is a good fit for this. I would entertain that motion. Could I
get that? I believe Representative Burks. All right. And I have
a second from Senator Dotson. Let's move this to the EBD committee and take another look at a little deeper dive, and then you can keep us up to
date that way. We have a motion and we need a vote. All in favor?
Opposed? All right. We'll see you in EBD. Thank you. All right. Thank
you staff. We do need a motion to receive that in this committee to file a report so moved
in a second okay all right those in favor opposed
thank you all right we received that okay having no
other business come before this committee we will see everybody again on November
13th and 14th thank you for your work today Thank you.
Agenda
A. Call to Order by Chair
B. Adoption of Minutes
C. Reports of Executive and Standing Committees:
D. Review of Report:
E. Other Business:
F. New Business
G. Adjournment
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING, Oct 10, 2025 | Agenda | 1 | Official source ↗ |
Speakers
Speaker 3
Representative Robin Lundstrum
Unverified
Senator Jim Dotson
Unverified
Speaker 22
Senator Ben Gilmore
Unverified
Senator Jane English
Unverified
Speaker 7
Representative Howard M. Beaty, Jr.
Unverified
Senator Fredrick J. Love
Unverified
Senator Jonathan Dismang
Unverified
Speaker 90
Senator Tyler Dees
Unverified
Representative Richard Womack
Unverified
Representative Jack Ladyman
Unverified
Speaker 122
Speaker 123
Speaker 131
Senator Mark Johnson
Unverified
Speaker 146
Speaker 147
Speaker 149
Speaker 151
Speaker 154
Speaker 148
Speaker 164
Representative Julie Mayberry
Unverified
Speaker 171
Speaker 173
Senator Kim Hammer
Unverified
Speaker 188
Representative Hope Duke
Unverified
Speaker 207
Speaker 209
Speaker 213
Speaker 144
Speaker 210
Speaker 221
Speaker 227
Speaker 208
Speaker 231
Speaker 235
Senator Matt Stone
Unverified
Speaker 64
Senator Steve Crowell
Unverified
Speaker 60
Speaker 275
Speaker 127
Speaker 288
Speaker 295
Representative Carol Dalby
Unverified
Speaker 143
Speaker 303
Representative Matt Brown
Unverified
Speaker 314
Speaker 315
Speaker 317
Senator Reginald Murdock
Unverified
Speaker 326
Speaker 328
Representative Jimmy Gazaway
Unverified
Speaker 344
Speaker 345
Representative Steve Unger
Unverified
Speaker 361
Representative Denise Jones Ennett
Unverified
Representative Stetson Painter
Unverified
Speaker 367
Speaker 370
Speaker 373