Legislative Joint Auditing
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Speaker 1
1:30
Thank you.
members if you want to get your seats we're going to start
here in just a second. So I call
the legislative joint audit committee to order. The chair sees a quorum. So our first item on the agenda is the adoption of the minutes of the July 11th, 2025 meeting. Any questions? If not, then do I have a motion for adoption of the minutes? So move motion in a second. All those in favor, let it be
known by aye. Any opposed? Motion carries. The next item on the agenda is the adoption of the reports of the executive and standing committees. Representative Lundstrom,
you're recognized to report the executive committee. Thank you,
Representative Robin Lundstrum
Unverified
3:37
Chairman Petty. The report of the executive committee. The executive committee met on Thursday, September the 11th and adopted the minutes of the meeting held July the 10th, 2025. Staff reported to the committee the audit and special reports scheduled to be presented to the standing committees and the full legislative Joint Audit Committee this month. Staff also noted reports that are anticipated to be completed soon. In new business, requests were deferred for special reports regarding UAMS Washington County Lease Agreement
and the Conway School District Maintenance Department. A request for the special report on the Hot Springs County Solid Waste Authority was deferred to the staff to seek more information regarding the scope of the request. In other business, the county voted, or excuse me, the committee voted to establish a policy to direct staff to immediately notify the treasurer state treasurer when the legislative audit receives a waiver a water audit for a city whose turnback funds have been held withheld due to a late submission of these audits pursuant to arkansas code 14-234-120
the committee considered new business and items postponed from earlier in the meeting regarding a special report on physical impact statements. The committee voted to authorize staff to determine the population of acts with physical impact statements passed by the 2021 regular legislative session and categorize those acts by impact amounts provided. No additional business was discussed. The meeting was adjourned. The next meeting of the committee will be scheduled for Thursday, October the 9th at the call of the chairs. I move to adopt this report.
Thank you, Representative Lundstrom. You've heard the report, and we have a motion to
adopt the report. Do we have a second? Any discussion on the motion? All those
in favor say aye. Any opposed? Motion is adopted. The next item on the agenda is the report of the Standing Committee on Counties and Municipalities. Senator Stone, you are recognized to present that report.
Senator Matt Stone
Unverified
5:43
now you're recognized sorry okay thank you item number one the committee adopted the minutes of the meeting held july 10th 2025 item number two the
committee was updated on the status of the december 31 2022 delinquent private water and sewer audits three entities three entities turn back has been reinstated because all reports have been submitted the committee was updated on the
status of the um december 31 that's item number three 2023 delinquent private water and sewer audits of the 64 delinquent entities 45 have filed their 23 reports since um july l jack meeting item number four the committee was notified that all private municipal audits for the year ended december 31 2023 have been filed item number five a discussion was held regarding the city of rockport substantial non-compliance with municipal accounting law city officials were
not present in the committee approved a motion to defer this report until october meeting item number six officials from the city of lakeview were present to address questions regarding the city's failure to meet the requirements of its approved plan for repaying misused street funds the committee voted to notify the state treasurer and city officials that the city's highway revenue will be withheld until a balance due is paid in full item number seven the committee reviewed eight deferred reports and 224 reports current reports officials from eight entities were present to
address repeat findings six previously deferred reports were filed and two were deferred of the 224 current reports reviewed 12 were referred to the prosecuting attorneys and the attorney general and one was certified to the government bonding board the committee filed 218 current reports and defer six reports to allow officials to answer questions or provide further information
at a future meeting item number eight the committee voted to approve the reinstatement of turn back funds for the remaining delinquent entities that have filed a december 31 22 report or have provided an engagement letter stating that reports for december 31 2022 and 2023 will be filed by the end of 2025 calendar year item number nine the committee voted to notify the december 31 2023 delinquent entities that their reports are to be filled out before the end of 2025 we move for the
adoption of this report thank you senator stone representative Womack you are recognized
for a comment thank you mr. chair mr.
Representative Richard Womack
Unverified
8:40
chair i have a substitute motion to adopt the report with the exception of items eight and nine i request that those two items be voted on
separately okay is there a second i have a motion
and a second um so we're not voting
At this point, on anything but the substitute motion. Okay. Representative Womack, would you mind
explaining your motion? Sure. Thank you, Mr. Chair. Honestly, during discussion yesterday, I
Speaker 32
9:12
think there was a little confusion about
Representative Richard Womack
Unverified
9:14
exactly what we were voting on. And when it was cleared up last night, I believe the action we took yesterday is in direct conflict with state law. And I'd just like the committee, full committee, to take a look at it before we move on with something we regret.
All right. Any discussion on that item? It looks like Senator Gilmore,
you're recognized. Thank you. So just a point of
Senator Ben Gilmore
Unverified
9:45
clarification on the substitute motion, we'll be voting on the report and then the other items, correct? So there will be a vote on the other items just separately I'm making sure I understand that Okay, in addition mr. Chair if I may
Yes, sir. Look, I think there was some discussion about the cities and counties and their turn-back funds I think it was debated fully. I think it was healthy debate I supported for several reasons Senator Wallace's motion. I appreciate him making that I think I think from our standpoint we when we When we set something in motion, we have the ability to undo that From my perspective now again, that's my opinion. I understand members may not share that opinion, but
Obviously, we'll we'll figure out where members are on this in just a second, but I think that The action was taken. I think the message was sent to the cities. I think that there is there needs to be an understanding that there's real consequences for cities not doing what they're supposed to do. And I'm for that. But I also understand too, at times, there needs to be some grace. And when you have turn back funds withheld from small communities, I think it can be detrimental. And my district is made up of several of these small communities, as is many
others in this room. So that would be my only caution. Again, I'm not trying to absolve people of their of their wrongdoing or things that they should have done and I think that two things can be true I think they should have done what they're supposed to do I think now they are trying to do that I just would ask the committee to consider that and I respect Representative Womack's motion here and I understand what he's trying to do and his position on that not lost on me and I understand where he's coming from but that's that's my opinion on it that's where I'm coming
from i do think that the message has been sent i think the message has been received um i don't hopefully i don't think we'll be here again um in the future but uh you know i just i think there needs to be some consideration what happens to communities when turn
back funds are held thank you thank you senator gilmore just to just to be clear we can debate the vote on uh the items that have been asked to be taken out by the substitute motion so if you could limit
your discussion at this point to whether or not use support or have questions on the substitute motion at this point senator stone you're recognized yes I
Senator Matt Stone
Unverified
12:24
would just like a to make a comment I don't believe there's any confusion in yesterday's meeting what we
voted on I believe it was clearly articulated from both sides what was at stake there was a proper motion in the second after spirited debate and and it was and it was passed and if it gets undone today we have a proper motion if we get a second
on it it will be undone but I think everybody's clear on what they're voting on thank you
Senator Wallace you recognize to speak on behalf or on the substitute motion thank you mr. chair we we I hear the
Senator Dave Wallace
Unverified
13:07
term that we're being told that this is against state law is
there going to be anybody here from the Attorney General's office that can show us how that's against the state
law or whose word are we taking that it's against
the state law and that's a question the Attorney General's office will not be here today they there have
been requests to have many discussions I have had personal discussions with them multiple times they are not here today to speak on behalf of that one thing that we have not had is someone speaking from a legal standpoint saying that this is legal
uh and so i think that's probably something that we may consider at the proper time as well may i respond sure
Senator Dave Wallace
Unverified
14:06
i go back to what we've been told many times that 51 members of the house and 18 members of senate can do anything we want to do as far as making a law and we make the laws the bureaucracy does not and we had a good vote yesterday it was a spirited debate and i urge us to vote against this motion by the representative
Chair
Unverified
14:27
representative hock you're recognized thank you mr chair um i think it also needs to be said that in
Representative RJ Hawk
Unverified
14:39
the executive committee this same motion was placed in executive and it was overwhelmingly denied because while the attorney general was not there, he did communicate with the chairs of the executive committee and with the, um, with the chairs of this, this committee that to say that it was the opinion of the attorney general that we would be violating
law. And so in the executive committee, we, we said this would, you know, we, there was 95 representatives that voted for this bill during the session. There was 35 senators during the session that voted for this bill as is, and we would be undoing. And frankly, I believe that we would be politicizing the Joint Audit Committee if this were to pass. And so I'm with Representative Womack on this, and I just think this would set a bad, bad precedent.
Representative Howard M. Beaty, Jr.
Unverified
15:35
Representative Beatty, you're recognized. Thank you, Mr. Chair. I sat in the committee yesterday and did participate in the discussion of the motion by Senator Wallace. I respect and appreciate each member's vote and to take a position one way or the other. Those members that were not in that committee meeting that did not hear that debate, I'm certain we'll hear that in a few moments. My issue is we are a political body, and everything we do is politicized. So the fact that this was discussed in the executive committee with how many members that represent the 100 in the House or the 95 that voted for this, I'm not certain.
My position is that I agreed with Wallace's motion yesterday. I'm going to agree with Wallace's motion today, and I look forward to just getting on to the actual vote on this motion and getting into the discussion. So I thank you all, and I respect Representative Woback's
position and motion on this. So thank you. representative long you're recognized thank you mr.
Representative Wayne Long
Unverified
16:37
chairman um you know i was in education committee yesterday so i didn't get to participate or hear really any of this uh yesterday so i was
speaking in favor of the motion to vote separately uh you know as somebody that really didn't get to participate in the other committee or hear anything about it i'd like more information before it's time to vote on it and i think this would be the best way to do
Representative Matt Brown
Unverified
17:05
it thank you representative brown you're recognized thank you mr. chair um of course i wasn't in that committee yesterday but um i did listen to the testimony when this bill was presented in house committee
and in senate committee and the idea behind passing this law was to prevent municipalities from hiding information or dragging their feet to not report errors in their practices. I believe the law gives municipalities sufficient grace, and I am concerned about them feeling that they don't have to adhere to the law,
so I would like to hear it debated. I
Chair
Unverified
17:57
support the motion. Senator Mark Johnson, you're recognized. Thank you,
Senator Mark Johnson
Unverified
18:00
Mr. Chairman. I don't want to belabor this. I think most of my colleagues understand it, and I appreciate the comment that Representative Brown just said. We're not looking at this. To me, we are not looking at this as the law we passed in the last session.
And we need to look at that, not to relitigate that or re-legislate that. That has to come in 2027, or if the governor should call us in and include this as something on the call that we would deal with. The law is the law. As I said in the county municipality subcommittee yesterday, when we're not in session, we're just 135 ordinary citizens, and we don't get to change the law in an interim committee.
Now, we can change rules, and we have a lot of flexibility to do that, And that's a good thing. But when something's in the law, we can't change it. And I say that with utmost respect to my good friend Senator Wallace, and he and I agree almost all the time, but this is one where I think we disagree. I think we've gotten very astute legal counsel both from our committee's counsel and from the AG's office, and I would support this motion. I think we need to follow the law, and if we need to change it, I would certainly be open to doing that in the proper venue at the proper time.
Thank you, sir. Senator Wallace, you're recognized. Thank you,
Senator Dave Wallace
Unverified
19:43
Mr. Chair. Members, if we can't come down here and make decisions to affect our state, we might
as well go ahead and stay home and play dominoes. we're here to make law we are lawmakers this body makes laws i sponsored this bill
it's a good bill knowing if i knew then what i know now i'd have made this date 31 december we've had over 100 towns we get down to i think either 15 or 40 i forget the number and these towns or the towns are having problems getting a CPA to do their audit. They just need more time. And what's going to happen is we cut this off.
We're not punishing a town. We're punishing the people inside that town. If you have a water man and if he doesn't get paid a check, he's not making a lot of money from these small towns anyway, he's going to go to a bigger town. We are, this will hurt the small towns, and we are bigger than this. There's not a reason for us to do this. There's not a law that prevents us from doing this. Thank you, Mr. Chair.
Speaker 21
21:07
Representative Lundstrom, you have a comment? Yes,
Representative Robin Lundstrum
Unverified
21:09
we have the video of, and it's textbook. I have to compliment Representative Gassaway and Senator Wallace when they presented the bill. If I could point you to the screens, and let's take a look at that. Okay, hang on just a second. Are they going to be able to show it at all?
To give them a second, I have a copy of the bill in front of me. it's very clear exactly what the intent of the bill is and what the law says. It doesn't matter intent, it's what's written here. They did a very good job of presenting this and making it clear that they had 18 months to do this, plus another 12. In the very back, on the back page, line 30, it simply says that they may give notice to the fact that the Treasurer's Office, blah, blah, blah. Then it's circle the word shall. Once the committee voted in July, they were following the law,
and this is the process, it's not something we can go back and change. They had latitude, two and a half years, to get this done. Two and a half years to get this done. If we go back and go, well, we'll go three or four months more, four months more, whatever, we're just extending the pain here. They made the choice. They can choose to hire a private auditor or choose to use leg audit. They chose to use a private auditor and not submit that information. I know the Municipal League's been working with these folks on and off
and trying to help them, but this is not getting done. We have to follow the law, and the law goes from may to shall, two very important words, and we're in the shall. We don't have a choice but to implement the law that we voted for. To do anything else is inappropriate. And I think they're ready with the video.
Okay, they're still working on that, and we may, in the interest of time, and not be able to look at that. But Representative McElroy, you're recognized.
Representative Mark D. McElroy
Unverified
23:15
Thank you, Mr. Chair. You know, I don't talk much. But in the Delta, we're limited on our auditors. They're not arm wrestling to get on to a 400-person town and go through a box of books back there and try to find out what's going on. But they're not guilty of anything right now. They hadn't even had their books looked at. But we're not just punishing the mayor or sending them a message.
The water superintendent, he's making a little bitty check. And I used to have my water license. It's hard to get a water man in a small town. And when he misses his car payment and gets one payment behind on his house, he don't want the cheese. He just wants out of the trap. And that's what's happening in these small towns in the Delta. And you're not just punishing them because the people that depend on that water,
they don't have a dog to hunt up
here. They don't care. All they want to know is when they turn on the water tap, the water's going to come out,
and it's going to be safe to drink. And I was county judge in 1993, and legislative audit was five years behind. You can check my records. Five years behind on their audit, but now they're trying to put the pressure on these
little towns. I just ask you to think about the people in the Delta. Thank you.
Representative Duke, you are recognized. Thank you,
Representative Hope Duke
Unverified
24:55
Mr. Chair. And my comment is just primarily on, I guess, on the motion. I think that we do need to have the substitute motion. I'm in favor of it. And there's clearly lots of different points of view on this, and that is why members need to have the opportunity to vote on these things separately as opposed to batching them. And then I would say I think we need to take great pause on what precedent we do set here.
If we choose to say that when we're not in legislative session, 51 members can go ahead and do something different with the law, that's a big decision to make. there are processes put in place to be able to address problems if we think there's something that we really do need to change there's a process in place to do that but to decide that 51 members can in this committee and another committee make law or change a law because we don't like it I
think that's a real slippery slope and it may be good for this issue for some of us and we may agree with it but then there's going to be another issue and another issue because we all know that's happened in past sessions where we've gotten away and gotten home and gone oh my goodness that was not the best decision or the best version of that law we need to fix it and we've usually had to wait so I think for those reasons we need to I support this substitute motion and I think we really need to think the long term and I have empathy for these cities I
I have some rural towns in my area. We do have them in northwest Arkansas, and so I understand that. But there's a bigger narrative here, too, and we can't forget that narrative as well. So I'm going to be supporting the
substitute motion. Okay, Senator Wallace, you're recognized for the last discussion before we take action on the motion. Thank you, Mr. Chair.
Senator Dave Wallace
Unverified
27:00
Members, we keep talking about the law.
Who can give me the law that says that we can't do this? I asked that question yesterday and didn't get an answer. And my final word is we have a great state. What harm comes to our state by allowing a few small, very small towns the grace of another 60 plus days maybe 90 days max to avoid causing pain to all their citizens
who did nothing wrong find grace in your heart thank you I'm gonna make a liar out of myself and my good friend Senator Flippo let you speak for the
Speaker 92
27:58
last time on on the motion don't get in
Senator Scott Flippo
Unverified
28:00
the queue very often mr. chairman uh but i do see the video pop we're not going to watch this video are we i do i've served on audit for 10 years now never seen us do anything like this concerned about the precedent that this sets we go back and find you
know you know four and five six months ago members bringing a bill on the floor and then bringing it to committee half a year later um i just i just don't like the precedence this sets i don't that's necessary. That's
Representative Robin Lundstrum
Unverified
28:27
it. Thank you, Mr. Chairman. Senator Flippo, if I may. This isn't, this is a very well done presentation and it's very clear what the authors of the bill and what the actual bill does. It's more for educational. If we don't want to watch it, that's fine, but I would encourage you to look at how well this is and it's clear and two and a half years
later the bill is being implemented so i think it's a mistake not to take advantage of the historical knowledge that we have and look at what the members did and how they voted the senate voted 35 to zero and the house voted 92 so i if you don't want to watch it that's perfectly fine but please know this is for edification purposes only and if it's not something the body wishes to that's fine but I would encourage you to take a look at it at some point okay
let's let's go on with the the substitute motion and just explain we're not bought it we're not voting on the last two items that we've been debating mostly in this conversation about the motion we're just voting on the substitute motion which is separating the last two items from the full report if this motion passes a vote of aye is a vote to separate these two items a vote of no is to not separate and then at that point we would take a vote on the
Speaker 97
29:54
full the mo the initial motion including those the last two items so is this appropriate time
Senator Dave Wallace
Unverified
30:05
to ask for a division by vote vote by the Senate or of the House both
separately, or do I do that after this vote? Okay, I would like, or I guess I make a motion that we divide the vote, the Senate, and by
the House. And I believe that requires three hands. One, two, three, I
see. All right, we will divide this vote on the motion, the substitute motion, by Chambers. Okay, so the substitute motion by Representative Womack is to simply pull out items 8 and 9 and have those voted separately.
And I guess my question would be for staff or whoever is, if this motion did fail and or does, if this motion passes, then we will vote on them separately. If it doesn't and then the full motion doesn't pass or the original motion doesn't pass, what happens to all those reports and everything at that point? Do we have an opinion on that?
Speaker 107
31:59
Thank you, Mr. Chair. Emily White, legislative
Speaker 108
32:02
audit. So if I understood the question correctly, if the full committee does not adopt the full, or does not pass the motion for the full report, at that point, everything that was done in subcommittee would essentially be rejected because it's the job of the full committee, pursuant to Masons and pursuant to your rules, to either accept or reject what was done in the subcommittees yesterday. Okay, thank you. That clarifies.
All right, one last time we're not voting on the items up or down. We're voting on the substitute motion Which is separating the last two items for a separate vote in a minute if this motion passes a vote of I is voting separately those two items a vote is no is We will vote on the report separately
the original report separately and and I guess because we're doing chambers We're gonna do roll call
Speaker 113
33:01
okay all right Kevin if you'll lead that thank you we'll start with the house representative gasways having signed in Jimmy Gasway am I on
Representative Jimmy Gazaway
Unverified
33:26
there we go but But before we vote, can someone just restate the motion?
Yes, I think it was as simple as a substitute motion to adopt the
report with the exception of items number eight and nine, and at eight
Speaker 121
34:04
and nine be voted on separately. No. next representative rye not having signed in representative ferguson representative kenneth ferguson representative kenneth ferguson voting no
Next, Representative Mark McElroy? No. McElroy, no. Next, Representative Long? Yes. Representative Long? Yes. Next, Representative Carolyn Brown? Yes. Next.
representative Carlton wing next representative Cameron Cooper having not signed in representative Rick Beck having not signed in representative joy Sprenger. Next, representative Tony Furman.
Speaker 121
35:25
Representative R.J. Hawk, yes. Representative Lundstrom is a yes. Next, Representative McElindon, not having signed in. Representative Rebecca Burks. Representative Burks is yes.
Next, Representative Hope Duke. Representative Hope Duke is yes. Next, Representative Unger not having signed in. Representative Torres having not signed in. Representative John Carr. Representative John Carr is yes. Next, Representative Womack. Yes.
Representative Womack, yes. Next, Representative Sonia Eubanks Barker, not having signed in. Representative Howard Beatty. No. Representative Beatty, no. Next, Representative Dalby. Yes. Representative Dalby, yes. Next, Representative Stan Berry. No. representative stanbury no next representative julie mayberry yes representative julie mayberry
yes next representative brian evans is not signing in representative keith brooks representative keith brooks Having passed the
Speaker 126
37:53
dan sullivan no next senator ronald caldwell senator
Speaker 121
38:07
caldwell next senator scott flippo no senator flippo no next senator mark johnson Senator Mark Johnson, yes.
Next, Senator Jamie Scott, no. Senator Jamie Scott, no. Next, Senator Jane English, no. Senator Jane English, no. Next, Senator Kim Hammer, no. Senator Ken Hammer, no. Senator Petty is a yes
Next, Senator Matt McKee Senator Matt McKee is a no Next, Senator Steve Crowell Senator Steve Crowell is a no Next, Senator Matt Stone Senator Matt Stone is a yes. Next, Senator Frederick Love.
Senator Frederick Love is a no. Next, Senator Wallace. Senator Wallace is a no. Next, Senator Ben Gilmore. Gilmore is a no. okay
the substitute motion fails
so now we're back on the original report and
the original motion from the committee to pass are the was there a second there's a second is there any discussion on the original motion seeing none all those in favor of the original motion to adopt the report let it be known by aye all
Speaker 102
40:34
those that are opposed no no I think I know where this is headed
but I'm gonna I'm gonna go through this again the nose were very loud but I think we counted them individually a minute ago and we know where that was at but
Speaker 138
40:55
let's let's go ahead and roll call the report
from the committee as presented to adopt the report is a yes
Speaker 5
42:06
Thank you.
Thank
you.
Thank you.
Thank you.
Speaker 145
44:06
All right, members, let's get back on task. We don't. Members, let's get
back on task so we can get everyone out of here on a reasonably time frame.
We don't end up here very often in audit. I've noticed that. So thank you for your patience. But I do want to
ask for a clarification from Senator Wallace as to, for staff, for audit staff purposes, as to with this motion now, if it passes, if it fails, obviously nothing changes. If it passes, what is the expectation at December 31st if they haven't turned in their reports by then?
Do we expect to be back here again and have the same debate again for a few more months? Or is this it? No more, you know, we're three years out on a report, and so that's enough. So if
you would, and does this immediately turn on their turnback funds today or as soon as
they can? So if you could clarify what we're trying to accomplish here with this motion. Okay.
Senator Dave Wallace
Unverified
45:41
I met yesterday was that we we moved the date back to 31 December and 31 December being the drop dead if that they if they don't have a letter in by then or if they don't have the audit done by then then it is their funds are cut off question
Representative Robin Lundstrum
Unverified
46:09
when you say letter just a letter of engagement doesn't get
it that extends it out so you're saying
a letter of engagement or the audit or the audit
Senator Dave Wallace
Unverified
46:23
is completed what my original motion yesterday was and I'll read it is if a city is on the 2022 delinquent list their turn back will be reinstated Once the 2022 audit is completed or the city has submitted a letter of engagement with a CPA to complete the 2022 audit by a date before December 31st, 2025, the city must also complete their 2023 audit by December 31st, 2025.
There was a second motion to that and said that if a city is on the 2023 delinquent list, they have until December 31st, 2025 to complete their 2023
audit. Okay, so if, and maybe I'm just not clear on what your expectation, If they have an engagement letter to perform the audit by December 31st and complete the audit by December 31st, then it turns it back on.
If they don't have an engagement letter or they don't have an audit, then it turns off or it stays off. It turns off Okay So and then and then the other question that did I have is if this motion passes and and it does pass
Does it mean that they turn it on with the next turn back money or do we
notify the treasurer to release all the past that has been withheld the last few months? Well, my understanding is
Senator Dave Wallace
Unverified
48:14
that Treasury does a Money dump is not the right word, but I'll use it on the 10th of every month so
The 10th has already passed this time. So it would the first Money release would be
10 October But would that be for the month or would that be for that month plus all the that the treasure has has
Had withheld it would be for that month plus all the treasure has with help Okay, so bringing them back up to current on all of
the funding. Okay. Until December the 31st. All right. Chairman Petty? Yes. Is this legal what
Representative Robin Lundstrum
Unverified
48:52
we're doing? It looks like we're going back over the law that we've already passed. Can we get a – Ms. Emily, can you come up and give us – is this legal what we're doing? I think that's a question we need to ask.
Speaker 157
49:14
ms emily you're recognized thank you madam chair and mr chair um representative lundstrom if i understand your question correctly
Speaker 108
49:29
are you asking me the question about um what senator wallace is is wanting legislative audit to do
Speaker 159
49:35
on december 31 2025 if the audits are not in and a letter of engagement is not
Representative Robin Lundstrum
Unverified
49:43
received? When the audit committee passed this in July and made the
decision to follow the law, we're going back now and creating some pretty big chaos. And I just want to
Speaker 108
49:56
know if this is correct, if this is legal. The code section is 14234120, Representative Lundstrom. And in subparagraph C, ladies and gentlemen, it says that once this body, the legislative joint auditing committee refers a municipality to the treasurer's office and you had discretion in july not to refer them but you voted to refer them in july and the law says once
you refer them in july the treasurer shall hold their turn back funds until they have filed their most recent fiscal year-end reports. That's the law that you passed. So based on the way that we understand the motion now, you voted on that in July, and that immediately happened in August. We referred those municipalities to the treasurer's office, and the treasurer's office in August began withholding those turn-back funds.
But now if I understand what you all are asking us to do, You're asking us to not wait for all of those reports to be filed and to go ahead and notify the treasurer that these municipalities are in compliance when based on our interpretation of the law,
Representative Robin Lundstrum
Unverified
51:13
they might not be. Thank you. I think that's really important to note that we are breaking the
Speaker 56
51:19
laws that we passed. May I, Mr. Chair. Sir.
Senator Dave Wallace
Unverified
51:26
Oh, there you are. Okay. You're recognized. Thank you, Mr. Chair. Yesterday in our subcommittee, we asked that question, and we asked specifically the question, are we breaking any law? And I thought the answer that was given then was that we are not. And I would
go further. If we're breaking that law, I'd like to have the AG tell us how we're breaking it,
because I don't believe we are. I believe that we as a body have the right to do what we're doing for the good of the state. Otherwise, let's go home and
play dominoes. All right. I believe we are moving into discussion on the motion to adopt the report, so we'll continue in the queue here. Senator
Senator Kim Hammer
Unverified
52:24
Hammer, you're recognized. Thank you, Mr. Chair. Point of clarification to the motion. Last month was when the
action took place to refer it to the treasurer. Is that correct, my understanding from what was said a minute ago?
It was July. It was July. Okay. So what the law required to be done has taken place, and it's now in the hands of the treasurer, correct? So
what the law required to be done and what has happened, I think there's a distinction there. Because what could have happened last July, the way the law was written, as I read it, they could have referred it to the treasurer. They have the discretion to not.
They didn't. Last August, they could have referred to the treasurer. They have the discretion they did not. All the way up through this year, and then this year in July, they decided you've had another 12 months, and so now we're going to refer you. Once that, as I read it, and I'm not an attorney, once that has happened, then the discretion for the
Speaker 170
53:30
committee goes away. The law says you shall produce the report.
Senator Kim Hammer
Unverified
53:34
Right. So there's the idea of any benefit of holding this report to the end of the year.
That's not an option or even a consideration, correct? that's what's being debated now that's what's being debated now is whether or not that is to hold it to the end of the year or just to hold it to hold
it to the end of years what the motion is got it okay thank you
Okay, members, I still think there's a little bit of confusion, maybe a lot of confusion in my mind as to what we're doing, where we're at, I suggested that we move to roll call.
But I think from the queue, there's a lot of questions or debate or clarification that needs to happen. So I'm going to, and I don't know if this is proper protocol or parliamentary procedure or not, but I'm going to allow us to have the many members to have some additional discussion before we actually move to formal roll call. So Representative
Representative Carol Dalby
Unverified
55:11
Dalby, you're recognized. Thank you, Mr. Chair. I want to speak
on Senator Wallace's motion because it was my understanding, and I'm in the committee yesterday, it was my understanding, this motion, and somebody can clarify if I'm not understanding correctly, that we will say, the motion is, you get it filed by December 31st, and if you don't get it filed, just send us a letter.
and then then don't worry about it just send us a letter saying you've engaged somebody but there's no deadline on that so they could send a letter saying oh we've engaged somebody and then be another year down the road before they ever get get it in on those folks who have sent the letter that's the way that motion reads in my mind and because it doesn't say you know it just says if you get your get your audit in you're going to get your money back or otherwise send a letter in
and you're going to get your money back and then you've got because we're going to trust that you're going to get it in and i think that that's wrong and i totally agree with miss white and her analysis of the law we turned it over and it becomes a shall and so for that reason and i voted no while ago and i'll vote no on the uh roll call which i think we're in a wrong parliamentary procedure, but that's for others to decide. Thank you. Representative Mayberry, you recognize?
Representative Julie Mayberry
Unverified
56:41
Thank you. Yes, we're lawmakers, but only during a legislative session. This is not a legislative session. I don't know when we have ever changed law outside of that time period once every other year. But that is not the purpose of this committee. This committee is the audit committee. Whether you like the law or not, that's what we voted on as legislators.
If it needs to be changed, then we need to do something to do it the right way. This is not the right way to do it. This is allowing a small little group of people the power to override the rest of the members here. This is not right. Can I ask legislative audit, has there ever been a time that a legislative audit committee has basically changed a date in law, in and of itself?
Speaker 176
57:57
Can I ask that simple question? Can anybody answer that?
Representative Robin Lundstrum
Unverified
58:13
Representative Mayberry, I don't think that's ever happened. We're in new territory. I don't think we have the right to go in and change the law once a bill is passed. We're in charge of making sure that this is done to the letter of the law.
I can't answer you for all history, but I think we're in dangerous, uncharted territory, and we're setting precedent here, and I think that's something that we need to show extreme caution. Thank you. Senator
Senator Fredrick J. Love
Unverified
58:49
Love, you're recognized. Thank you, Mr. Chair. I'm going to go back, and I think I will have staff come up and answer regarding the law. And I guess my first question is this, is that when – was that Ms. White?
Can you come back up to answer?
Senator Fredrick J. Love
Unverified
59:14
Just a clarification, Senator Love. You have a question for – Yeah, I have a question for staff. I have a question for Ms. White because, and based on the testimony she just entered, that's what I'm basing this on. So, Ms. White, I'm just going through a timeline. So, based on the law, we had, the committee had the discretion to refer it to the treasurer's office.
Speaker 159
59:38
Is that? Yes, Senator Love, that is accurate. That discretion you all
Senator Fredrick J. Love
Unverified
59:44
had in July. okay so then we're not debating I guess the debate I'm hearing two things the debate is in my mind the question is we have the discretion to refer so they did they could refer to they could not refer is that not correct yes sir that is correct and then they referred it so not the question in my mind is can we can
Speaker 160
1:00:09
we rescind that action? Well, the way that the code section reads, Senator Love,
Speaker 108
1:00:17
and that's subparagraph C in 14-234-120, it says that once the committee decides to refer it, at that point, the action that is called upon for the treasurer is a mandate. It says the treasurer shall withhold those funds until all reports have been filed through the most recent fiscal year.
Senator Fredrick J. Love
Unverified
1:00:37
Okay, so So, so, so to your, to your knowledge, then we cannot rescind that action.
The, the, this, the joint auditing body cannot rescind that action that the committee made. Is that what you're saying? Is that your testimony? Yes, Senator. It
Speaker 160
1:00:53
is. Listen. Because, I mean, what I'm saying is
Senator Fredrick J. Love
Unverified
1:00:56
we're debating, to me, we're debating two different things. We're debating, number one is, did we have the discretion to make that action? yes or no we did not i mean if the committee did not send that action to the treasurer's office then
it wouldn't it wouldn't be an issue but it did create the issue and my question is then not if it's legal or not for this body this body to actually rescind that action because that's what we're debating the debate to me is is can we rescind that action it's not if we're if it's if we're operating illegally because we we have the discretion in the code to say if we could refer or could not refer the report and so i think we need to be very careful when we begin to start
saying that we're operating illegally because the committee did not have to to send it over there in the first place i mean so i think i think you know for us to cast aspersion saying that we're operating we're not operating within the law or not this body had the discretion to either send or not send and i think we need to debate that point carefully versus are we operating legally or
illegally because those are those are two different points within this within this this law within the code and so i just i think we need to kind of tamp down on if we're operating legally or illegally or changing you know different things like that because that's the that that rhetoric i don't like i will say and i think we just need to tamp down that that type of rhetoric because this body for us to actually have the discretion that's within the law right
Point of order. Are you going to entertain this point of order? Because I do
Senator Kim Hammer
Unverified
1:03:09
want to hear this. Yes, I was trying to find the button here. Yes, sir. And just this is not directed to use in her love, but I think the conversation is heading in a direction that we are asking our legal attorney to render a legal opinion. I'm not really sure that that is the right position to put her in.
I think that direct questions, but we need to be a little bit cautious about putting our staff attorney in a position to pick sides as far as legal or not. And I appreciate the line of questioning, but I think there ought to be a degree of caution to that,
Speaker 141
1:03:43
Mr. Chair. Thank you. Thank you, Senator Hammer, and I agree with that. Hold on for a second, Mr.
Senator Fredrick J. Love
Unverified
1:03:49
Chair. With all due respect, though, when you ask, and I'm not directing this to staff, but we asked her to legal, we asked her to render the decision, and she rendered it.
So I'm speaking on what she rendered. I'm not asking her to pick sides. I'm just speaking on she rendered something, and that's what we're debating. So I don't want to put her on the spot. So Ms. White, don't take it like that. But what I'm saying is I'm listening to the rhetoric that we're exchanging, and that's what I'm speaking to, not for the fact that, you know, what Ms. White rendered. So, anyway, and the last thing I would say is this, is we talk about the precedents that we're setting.
A number of these cities have called me as well. And the point that I think Representative McElroy made, Senator Gilmore made, about the CPAs, and Mr. Chair, you are a CPA as well, of CPA firms not being able to get down to those small communities to actually provide those services. that is a real issue i mean i've worked on this committee this committee right here
my entire legislative session and this is a real issue for these small communities to get cpas down there to do this to get this work done so i think um when people start talking about precedence and grace and different things like that i think we need to really think about that as well so with that mr chair i'm done thank you all right thank you senator
love and and i i think just to clarify uh
and and i'll let miss white speak for herself in just a minute but i i think what i heard was not rendering an opinion
she was reading the law to us what it says and what it doesn't say uh and then i don't think there was a debate as to whether or not because there's two parts there's discretion and then once you go beyond that we don't have that discretion and I think the discretion portion of the debate there is no debate everybody agrees we had the discretion but the other part is where the debate is so
just a clarification on that representative Beatty you're recognized thank you Mr. Chair I just kind of want
Representative Howard M. Beaty, Jr.
Unverified
1:06:07
to follow up because I think Senator Love kind of hit on the point I'm I'm
I'm hitting on as well one the clear language of the act is understandable by all these cities failed to submit their audits the language in the bill said that that list you know once that motion was made on July 10th that that would be submitted to the treasurer and then turn back funds would be held we don't I don't I don't dispute that or argue that point but I don't see anything in that legislation again we're not changing law because we're not changing anything that's in the code
we're we're using the discretion we have as legislators that we were given by the constituents that elected us to provide grace to some of our cities and i don't see anything and i asked this yesterday where in code or where in in in state law do we give up our rights as legislators to address an issue or something that we feel needs some additional attention. We don't have to have a legislative act to extend a date. We can take that action as a body, vote or pass that. And I
respect the opinions of those when you cast your vote, because we all have one vote. I would just say right now, you may not have a city that's in this circumstance. And right now, it just applies to water and sewer audits but it could apply to other areas in the future that affect directly affect your city and your constituents so my deal is I don't dispute the language in the law that's clear language we all understand we met our obligation a motion was made legislative audit
has fulfilled their duties per that legislation I don't see where it's an act or a power of legislative audit to tell this body that we don't have the authority to take an action and if we take that action and then that's relayed to the treasurer's office that shouldn't have any impact on legislative audit or the process or the job that they are um are to discharge for this state but we're not changing law by making this action uh and so i think members that that's the only place i would dispute or disagree with you on is we're not changing law by taking this action
we're giving grace to some communities that need it some of the most impoverished communities that we have in the state and what we're going to do is you're going to create and compound the problems that legislative audit and that city county committee deals with in the future because these folks don't have the resources to pay their employees and provide essential services so they're going to utilize all avenues that they have to take care of things and your legislative audit i'm i'm going to be um waiting to see when you go back in and do the audit for this time
period where you take 90 days worth of cash flow out of these small towns to see how they've utilized funds to take care of the needs for their for their citizens but this directly impacts constituents in my district and that's why i'm speaking up on this i y'all know i believe in enforcing the law and the rules and i think we've done that by holding that turn back money they've had 90 days of no cash flow coming in it'll be october before they could get their money back so 90 days out right now is budget time for these cities so along the same lines that's compounded
their budgeting process and everything else we're not punishing these mayors you're punishing the small mom and pop and the citizens of these communities when their services aren't there so i just ask you to make that consideration we're not changing law we are strictly exercising the authority that each of us have as legislators so i'd please ask you to think on that and quit focusing that that we're changing state law because we can only do that by a legislative act not a vote of this body and it's something we do every month every month that we meet we do things
like this so we're not stepping out of our our territory maybe not in legislative audit but in other committees that meet in this room so with that i ask you
to reflect on that and i thank you
letting me speak mr. chair thank you co-chair lundstrom you had
Representative Robin Lundstrum
Unverified
1:10:24
a comment or yes just a point of clarification the bill as it states gives them 18 months to comply then it gives an additional 12 months and all of that so that's been two and a half years to comply i i think that needs to be
very clear before before it gets to line 30 the treasurer's office and we voted to shall remove the turn back funds they still get their funds once they comply and they don't have to wait till the next month once they get their job done and cities are to their credit they are getting the job done um that's turned on almost the next day so they're not having to wait an additional month but two and a half years before this action was taken they've known this is coming okay and and and
i just feel like uh now's a good time to interject this because of a few things
uh that were said not in not in a negative vein but i staff legislative audit works for us and and they're not picking sides they're interpreting the law and i think we want that to be a bright line that they notify us on and and so i don't think that we need to um um i don't want to use the word blame i i think we just need to be conscious of the fact that they work for us that they are doing what they feel like the reporting requirement per the law is.
They're not picking sides. So, Representative Gassaway, you recognize? Thank you, Mr. Chair.
Representative Jimmy Gazaway
Unverified
1:11:53
And I guess first let me begin by saying that I have a great
deal of respect for all the opinions that have been expressed here so far, and I have a great deal of respect for legislative audit and the staff. I served as chair of this committee the last legislative session and was actually the sponsor of the bill that we're discussing here today. But I would note that lawyers have different opinions.
The Supreme Court, for example, is made up of lawyers who have become judges who issue opinions, and this is why there is a dissent, because lawyers disagree all the time. It happens every day. And with regard to this particular bill and the language of the bill, and I completely agree wholeheartedly with Representative Beatty that we're not changing the law. We can't change the law. The law says what it says. The issue before us today is the interpretation of that law. And, again, lawyers can disagree about interpretation as they do every day.
And so when I look at this bill and I look at if I'm asked to interpret it, what I see is that the Legislative Joint Auditing Committee, which is this committee, may give notice of the fact to the treasurer of the state that these reports are late. We may, which means what we did with that law is we empowered this committee with discretion. The committee may. The committee has discretion. Now, we exercised that discretion when we gave notice to the treasurer a couple of months ago.
But that, in my opinion, and again, it's my opinion, does not mean that this committee loses discretion. This committee has discretion. We are elected by the people to exercise discretion, and we retain our discretion. And so if our discretion now is to withdraw, revoke, or rescind our notice, that is the discretion that this committee can exercise. That actually, in my opinion, is probably the proper way to handle this, would be a motion to withdraw, revoke, and rescind the notice that we gave the treasurer, because Ms. White
is correct. Once you give the notice, the treasurer shall. The treasurer has no discretion under the law that we passed. But this committee retains the discretion to do what we want. This is what we were elected to do, as Representative Beatty said. And so I'm just of the opinion that if this committee, that this committee is empowered to withdraw its notice, to rescind its notice, to revoke its notice to the treasurer, and at the appropriate time, and I agree once again wholeheartedly with Representative Beatty's comments, that we should enforce this law. This is a good law. This is a law that we should seek to enforce to ensure compliance, and I wholeheartedly support the law that I sponsored and that this legislature passed, but this committee retains the discretion, in my opinion, to revoke that consent and then to give notice again at the proper time.
And so that's what I would ask this committee to consider as you consider your vote on this motion. And maybe at some point there needs to be another motion. But, again, my opinion is that that would be the appropriate way to handle this. And I respectfully respect all the other opinions that were also given. Thank
you very much. Thank you, Representative Gassaway. Senator Dismaine, you
Senator Jonathan Dismang
Unverified
1:15:26
recognize? thank you for recognizing me as a non-committee member kind of listening to the debate I'm not
sure where we're at in the process I mean but I do know what you're being asked to vote on is do you approve the report or do you not there's already been the debate on do we withdraw something from the report and vote it separate and the membership said no right so we're only debating whether or not you're going to approve the report but what I would like to do is go back in time and kind of look at what we're doing here and what what we're allowing non-legislative entities they have the authority to dictate which is policy this bill wasn't something that representative
gas away and senator wallace dreamed up overnight it was a bill that was brought to them by legislative audit drafted by legislative audit and we're sitting in this room right now saying there is no interpretation other than the one provided by legislative audit who drafted the bill. That's a ton of authority. The other thing that I would say, and this goes to what Representative Gassaway's point is, in the bill, it gives discretion. And do we know the one thing this committee did not do? Outline what that meant. The most crucial, important part of the
bill, which was giving this body discretion, we didn't even set what the parameters were. Again, we were giving our authority to set discretion to a non-elected body. That honestly doesn't need to have the power to set policy on what is decided to be sent or not sent. That is y'all's discretion. So, again, I think you've got two things happening. Number one, you've got the ability to vote and approve or not approve. And if you read what his motion was yesterday, it isn't.
By the way, an engagement letter isn't a little deal. If you sign an engagement letter, that is not just some willy-nilly letter that goes out and is a piece of paper. That has teeth. It's a binding contract. It's a real thing. And the second part that I would say to that is it also says that the audit has to be complete. If I heard his own words from the motion that was made, that's not in front of you, by the way, all you all have and are debating is a piece of paper. Everybody else has a copy of the law.
everybody else has a copy of the motion and we do not sitting at your desk as far as I know but if I understood what you said there's a there's a specified date and when that audit even has to be complete so what he was seeking to do was set discretion or set the parameters for discretion and if we allow for discretion what does that look like and then the last piece is I would agree representative gasway I think that the more prudent thing is because you have the ability to do it is to withdraw or you know remove y'all's motion to send that to you know
the department of treasurer whatever it was but again i just i don't know where we're at i feel like i appreciate the latitude because i think we've got a ton of latitude we were supposed to be in a roll call and we devolved into a full demand plate then we went from the debate to actually allowing questioning of outside entities to i don't know where we are today i'm a non-member speaking so well then you're cut off then i appreciate that but again i just i i want us all to be very mindful of what we are allowing someone house to have the authority to do that
has only been given to you as a member of this audit committee not
our staff to you thank you senator dismayne so i i guess
in that vein with your comment and and with senator or Representative Gassaway's comment and there's been multiple times both
in committee yesterday and today by the people that knew that they were not available today that the Attorney General needs to speak out my question would be at this point Representative Gassaway if if between now and then
between now and the next meeting the Attorney General says guys what you did was wrong what is going to be our reaction or how do we undo what we did that we undid so that that's a question that I that I'm a little concerned about which may or may not happen
so represented Gassaway you may have a an opinion their follow-up well I see senator Wallace
Representative Jimmy Gazaway
Unverified
1:19:45
has got his hand raised and I certainly don't want to jump over him so he may want to answer your
Senator Dave Wallace
Unverified
1:19:54
question. The sun didn't come up tomorrow. That's speculation. We don't know what's going to be said.
We're here in a moment right now. They may or may not agree with what has been said. That's like asking will the sun come up tomorrow? We are here now as lawmakers to make a decision not to hide behind a bureaucracy. Thank you, sir. clarify
on bureaucracy are we talking about the ag are we talking about
okay thank you senator johnson thank
Senator Mark Johnson
Unverified
1:20:41
you mr chairman i think where we're headed here is some interesting case law i can't see how this couldn't be ending up in some court somewhere and that may be a good thing i definitely first i want to say i appreciate the comments of senator wallace and representative
baity basically pointing out the problem the problem is these municipalities need some help and they're they got their rear ends in a crack kind of thing i also appreciate our house co-chair pointing out that they had a lot of time to extract themselves from that situation and in for one reason or another failed to do so which led to a good piece of legislation that passed basically unanimously in the house and the senate and now we're coming back and say
yes but that's good law but yes but we need this exception now since yesterday's meeting i've been kind of in a situation as senator gilmore called it a conundrum that's probably another word for it as well but i've been thinking how do we get out of this staying true to our oaths to hold the law but not hurting our people and our mayors and city council members that are trying just trying to do their job i am intrigued by representative gasaway's point that perhaps we can do this
through a motion to rescind our previous act and i have to think that regardless of the the issue we're about to vote on whether we adopt the report or not i think that that if that is the will of the committee then maybe we we should rescind that act especially if it's rescindable and that may be where the case law we're going to see decided comes down but but here here's what i wanted to say about about this most importantly we make an act a legal act and let's compare it to
some a couple that goes down to the courthouse and gets them a marriage license and they find someone that can solemnize marriages and they get married and they say I do and that person says I pronounce you I started to
say husband and wife but that's not even that way anymore that you're married and then they walk out of court and say hey we made a mistake we don't want
to do that well how do you undo that well it requires legal action and I ask the thing I'm really asking myself is
If I'm the treasurer today and he can speak for himself, he is a constitutional officer, if I were the treasurer, what would I
do? Now, if I were the treasurer, I think I would
follow the law to the extent that his legal counsel and the attorney general tells him to follow. And we know that word shall is in there. So if we don't want him to follow it, then perhaps the best way to give him the tool to not have to follow it is to do what Representative Gassaway mentioned in this committee today votes to rescind our July action.
Now, to me, the question is, is it rescindable at this moment? If it is, then I think maybe we've gone a long way towards solving this conundrum. But if it's not, then someone will probably file an illegal exaction lawsuit and it'll go to court and then we'll have that case law. So I think everybody here, everybody in the room doesn't want to hurt our citizens by cutting off money to for important services. On the other hand, it's do we want to just ignore the law when it's not real convenient for us?
So I'm hoping that if we accept the report, and I think votes are probably here to approve the report, then we immediately move to some kind of action such as Representative Gassaway suggested, that we officially, if the committee has that power, then we should act today and rescind our July action and allow the treasurer to move forward with this additional advice and not force him to have to do something that the law absolutely mandates he do.
So I hope I'm clear about that. And, Mr. Chairman, thank you for the opportunity to speak on that. Thank
you. Representative Rye, you're recognized. Yes, sir. Thank you,
Representative Johnny Rye
Unverified
1:25:35
Mr. Chair. The big thing about what I see here is just a movement of dates. That's what I think that Senator Wallace was trying to do in the first place to get everything straight so that the counties and cities would be able to operate in a proper manner.
And while we're sitting here, we've got folks that are out there in small towns now that don't have enough money to hire someone to do their accounting work. So, I mean, to me, it's a very simple thing. I think we're making it a whole lot harder than what it really is. And I think we need to do what the people would want us to do. And I appreciate you letting me speak, Mr. Speaker.
Senator Kim Hammer
Unverified
1:26:31
Senator Hammer, you're recognized. Thank you,
Mr. Chair. For me to make a decision about my vote, I'd like to ask a point of information, please, if I may. Yes, sir. How
many entities are we talking about here? There are 44 on the 22 list and around 69 or so on the 23 list.
Speaker 126
1:27:03
I mean I may have been turned over to the Treasury Kevin would you care to answer that yeah so the number of entities that had not submitted the 2022 report in July were 43 entities since that point three have caught up underneath legislative audits interpretation of the code so at this point if I'm not
Speaker 218
1:27:27
mistaken there are 40 entities of which turn back funds are currently
Senator Kim Hammer
Unverified
1:27:31
being withheld how many of them reached out to you for help
Speaker 126
1:27:41
as leg audit so we help all the municipalities and we provide guidance to the
municipalities but I want to make sure to clarify something that was stated here in relation to water and sewer engagements is that legislative audit does not perform those engagements we do not perform water sewer engagements we are not auditing the water and sewer funds that's only for private CPA firms completion if if
Senator Kim Hammer
Unverified
1:28:03
does that answer your question it it did and one last question how
many other ones do you do not the water circuit you can't do those but how many how many of the other
entities in comparison to the ones we're debating about do you currently do if you had the ballpark thank you mr. chair if i understand
Speaker 126
1:28:25
your question correctly there are around 500 municipalities and we perform the general
Speaker 218
1:28:29
financial audits for around 460 of those all right last one in the queue representative brown and then we're going to move thank you
mr chair um i just would like some information maybe from staff
Representative Matt Brown
Unverified
1:28:49
these people, these cities that are so far behind, I mean, nobody wants to hurt the residents of those cities. No one wants to cause them harm. It seems that we have a very liberal approach to giving them time to get their reports done. But my concern is if they can't hire a CPA to do this, or if they don't have the money to get their reports done is, this is just a question,
this isn't a criticism, how much will they actually have time to get it done by the end of the year? That's one question. The other thing is, can they not see the futility in using a private auditor and use our legislative joint auditing, our audit committee, our audit staff? Can they reverse their decision to use a private auditor?
Could they not just use our audit staff
Speaker 123
1:29:57
and get it done? Representative Brown, if I understand your question
Speaker 126
1:30:01
correctly, that is where the municipalities currently stand is in July there was a 12-month window that was started of which they are to get those audit reports filed and at the end of that 12-month period if they have not filed those audit reports they would lose the funds completely they're currently being escrowed I believe that answers one of your questions your
second question about legislative audit performing these services again that has been a service that legislative audit has not provided in order for this to be a success and to hold all funds accountable. We work in partnership with private firms, and private firms doing this work is necessary to get them audited. We don't have the capacity to audit all the water and sewer funds. Does that answer your
Let me restate it this way. The legislative audit,
our legislative audit, do not currently audit any of the entities that we're talking about today. That is not part of their role as legislative audit currently. So are we just talking about water and sewer audits, or are we talking about their
Speaker 227
1:31:14
whole audit? Water and sewer audits. So, and legislative audit doesn't do those? That's correct. Thank you.
Representative Matt Brown
Unverified
1:31:20
All right, are we ready to move on here?
All right. Representative Casaway. Am I recognized? There we go. You are recognized, yes, sir.
Representative Jimmy Gazaway
Unverified
1:31:53
So you asked if everybody was ready to move on. I'm not entirely sure because I just want to make sure everybody knows
and I know what we're voting on. My understanding is the motion is to approve the report as it was presented. That would include Senator Wallace's motion that they be given additional time until December the 31st, which I think still leaves open some question about what happens on December the 31st. Is it an automatic the funds are shut off again, Or does this committee need to meet and resend a notice? And I don't know the answer to that.
I wasn't, unfortunately, I wasn't in the subcommittee yesterday, so I don't know what the discussion was and exactly what the parameters of the approved motion were. But I think that may be something we want to figure
out before we vote. You must have overheard as we were having that same discussion. So what I was
about to say is if if Senator Wallace and I could together articulate the question, the motion, the questions, what happens at that point from your motion?
And what I heard was that the action that was taken in July is undone and the funds are released immediately, all of the funds. And then come December 31st, if they don't have their audit completed, then the process starts again. And at that point, immediately staff notifies the treasurer. but that's just what i heard i want you to
clarify for the for everyone here
so that was that was yes okay yes sir and and just to clarify on the engagement letter uh senator dismay talked about the engagement letter um the the we're talking about the actual audit not an engagement letter at december 31st yes sir
okay representative Dolby that was the the committee report and then the motion was
Speaker 234
1:34:13
on that representative Dalby oh I was
Representative Carol Dalby
Unverified
1:34:26
just asking for clarification if Senator Wallace would just I mean I forgot now what the motion what his motion was and you know with all the discussion just for clarifying purposes because that's part of the report and I just wanted to hear that motion again became but representing womack just handed it to me and it it doesn't say everything has to be in 31st
the motion that i'm reading says the committee voted to approve the reinstatement of turnback funds for the remaining delinquent entities that filed a december 31st 2022 report or have provided an engagement letter stating the reports will be filed by the end of the year but then i heard him say otherwise that his motion while ago and and that's what i'm asking is that an accurate statement of the motion or was the motion that i understood from yesterday was if you've got
the engagement letter in by the end of the year you're okay and then you can get that audit in later that was my always has been my understanding of his motion that's what i'm asking clarification because it seems
like we've gotten off track somewhere and I can't follow what it is he's trying to do.
Senator Dave Wallace
Unverified
1:35:39
I think it best. Let me read this motion again and then I'll speak
to it. If a city is on the 2022 delinquent list, their turn back will be reinstated once the 2022 audit is completed
or the city has submitted a letter of engagement with a CPA to complete the 2022 audit by a date to complete the 2022 audit by a date before December 31st 2025 the city must also complete their 2023 audit by December 31st 2025 so they have to have their their audit
done by 20 by the end of
2025 December 31st okay and then the
second part of that mother second motion was just simply as if the city is only 2023 delinquent list they have until December 31st 2025 to complete the 2023 audit okay does that help Senator
Johnson, do you have a question, or did you guys get it worked out there?
Senator Mark Johnson
Unverified
1:36:58
Well, if you leave Senator Wallace's mic on,
too, I think we may can work this out. Mr. Chairman, I would love to see us, maybe in one motion, maybe in two, one after the other, pass what Senator Wallace has said, but also to make clear our intent that we officially by a voting committee rescind the referral to the treasurer that was sent in july
i don't the legality of that i'm not sure of but we certainly want to give the treasurer the discretion to make the decision and not be where he feels like the law has hemmed him in on what his action would be and it would solve this short-term problem that we're dealing with of our localities having these problems. Now, I just had turned to Senator Wallace and said, would you consider amending your motion to add that,
that we approve the report and rescind the motion? Maybe they need to be two separate motions. As long as we don't leave today until we've done those two things, I think we could create more problems for us down the line. But that's my suggestion, and I'm kind of looking at our staff thinking is that will that work will that kind of get us out of this conundrum or is there some reason why maybe we
Speaker 112
1:38:33
perhaps should not do that so senator mark johnson our understanding of the motion that senator wallace has made will
in effect cause that that that rescission of that previous motion i just want to make
Senator Mark Johnson
Unverified
1:38:44
sure quite that we are clear about it and that we acknowledge our july action
uh and that we specifically say we we rescind that i yeah i agree with you that's the that would be the effect but i don't want there to be any question about it so i trust y'all to come up with with the answer to that thank you mr chairman
Unknown speaker
1:39:16
Thank you.
Thank you.
Thank you.
all right we've got one question it looks like and then we'll summarize what we're doing one more time so
senator hammer mr. chair may I ask senator Walls
Senator Kim Hammer
Unverified
1:40:58
question about his motion yes I think that's what
we're trying to get clarified thank you if you'd light them up please mr. chairman would
Speaker 246
1:41:13
you push your button Senator Wallace so I can latch you up here sir there we go
Senator Kim Hammer
Unverified
1:41:18
thank you mr. chair and Senator Wallace I just need the unintended
consequences to what may happen and bring me some peace of mind if we go with this so your motion is basically going to give grace to these cities to be able to let the treasurer not withhold the money for them I'm correct yes sir okay and has that that money's already been paid out to the towns currently or it's been withheld correct being withheld sir okay so they get to the we give it to him and
they get to the end of the time periods that you have established and they still have not done what your motion is going to require them to do what would be the retroactive date that they would withhold money or take money back from them and how would that be facilitated I would say 31 December okay 2025 all right so that gives them to the end of the year and then if they have not complied it would kick into where their turn back money would be starting January first that correct yes sir and
Senator Dave Wallace
Unverified
1:42:21
my logic that is once they get that money it's
Senator Kim Hammer
Unverified
1:42:24
gonna be spent so it's gonna be hard to take back right and that's why I was concerned about a lot of clarification it's hard to get money back from people who can't afford what
they need to do in the first place I just wanna make sure sure thank you yes sir thank you okay so just to clarify we
are we are we've gotten clarification from Senator Wallace's motion from yesterday and what was passed yesterday which is in the report which is what we're voting on and
And that motion is that immediately, immediately upon passage, if assuming it passes here today, notification will go to the treasurer that they will release the funds. And then as of December 31st, 2025, those that have not had their reports completed, then the funds would then begin immediately to be withheld at that point, at the January 10th disbursement date, basically.
Is that correct, Senator Wallace? Yes, sir, it is. Okay, thank
you. All right, are we ready, staff, for the roll call? The motion is to adopt the report, and we had a vote. It was very loud, and yet we had another vote on the substitute motion, so we're doing a roll call on the report.
Speaker 113
1:44:10
Senator Sullivan, Senator Sullivan yes, Senator Caldwell, Senator Caldwell, Senator Flippo, Senator
Speaker 126
1:44:36
Filippo, yes. Senator Mark Johnson, yes.
Senator Mark Johnson, yes.
Speaker 113
1:44:45
Senator Jamie Scott, yes. Senator Jamie Scott, yes. Senator Jane English, yes. senator jane english yes senator hammer sender hammer yes
senator senator mckee senator mckee yes senator kroll senator steve kroll Senator
Speaker 121
1:45:31
Matt Stone. Aye. Senator Matt Stone, aye. Senator Love. Senator Love.
Speaker 126
1:45:49
Senator Gasway. Representative Gasway. My apologies. Representative Jimmy Gasway. Yes. representative Gasway yes
Speaker 123
1:46:08
representative Rye representative Rye yes representative McElroy representative McElroy yes
Speaker 123
1:46:26
if long no representative Carolyn Brown represent of Carolyn Brown yes representative Carlton wing representative Carlton wing no representative Furman represent a Fuhrman? No. Representative RJ Hawk? No. Representative RJ Hawk? No. Representative
Lundstrom? Representative Lundstrom? No. Representative McElindon not having signed in representative Berks
Speaker 121
1:47:18
no representative Duke no representative
Speaker 123
1:47:28
Steve Unger not having signed in representative Randy Torres not having signed in. Representative John Carr? No. Representative Womack? No. Representative Womack? No. Representative Howard Beatty? Yes. Representative Howard Beatty? Yes. Representative Carol Dalby? No. Representative Carol Dalby? No.
representative Stan Barry
Speaker 121
1:48:04
representative Stan Barry yes representative Julie Mayberry representative Julie Mayberry no senator Wallace senator Wallace
Speaker 123
1:48:23
having signed in representative Keith Brooks
Speaker 121
1:48:32
representative Keith Brooks no senator Ben Gilmore senator Gilmore yes Senator Justin Boyd. Senator Justin Boyd.
Okay, motion passes and committee report is accepted. Next up, sir.
Senator Mark Johnson
Unverified
1:50:19
Okay, you're recognized. Mr. Chairman, I move that the Legislative Joint Auditing Committee rescind the notice that was sent to the Arkansas State Treasurer at our July meeting referring these entities to have their turn-back funds withheld. Okay,
Speaker 163
1:50:48
clarification. I thought staff said that.
Senator Mark Johnson
Unverified
1:50:52
We did, yes, sir. I want to make sure there's no, totally be unambiguous about this, exactly what our intent is. And I'll add to my motion that the co-chairs will send a letter to that effect to the the treasurer okay I
have a motion and a second hold
on for discussion with staff any discussion while staff is discussing any discussion of the members
Representative Carol Dalby
Unverified
1:51:22
representative Dalby thank you mr. chair it just appears to me that we just I mean we voted and the body has spoken saying that we're going to give them until december the 31st so we're all on that page they now have december 31st if we now my understanding of this motion if we rescind what we did in july then we are now saying you don't you're not even
you don't even have to have a letter in you don't have to have your audit in you don't have to do anything because we have taken that back and those provisions are not in place and so we have will have just re taken off what we just did giving them a deadline we've now said we're rescinding that all bets are off you don't have to do this and so that's the way this motion in my opinion looks like we're going to do now had we so right now we've got a date certain which i
think that's what was the will of the body that was what senator wallace was trying to get done quite frankly that's what the municipal league was wanting done because they're the ones who drafted all of this so now then we're saying okay we're going to take that back nothing's on the table we're back to square one like we were back in July and I don't think that that's where we need to be because we've now said we've got a date now we're gonna say we don't have a date
Senator Ben Gilmore
Unverified
1:52:57
senator Gilmore thank you mr. chair and and I don't know that this is really discussion but more of a point of clarification point of order and i i appreciate my lawyerly colleague over there and rarely do i like to disagree but there's times when i try to play a lawyer on tv so here i go as i understand the motion was passed in the report for a date certain as you stated representative i think all this is doing not changing that at all all this would be
doing would be rescinding just to you know cover our bases to clarify whatever it is a previous action back in July I think the two are mutually exclusive and completely separate as I see it and maybe staff can can speak to that if they feel differently but that's the way I see it I think the one has no bearing on the other can
can we work on the language of the motion then we don't have a second we undid the second can we work on the motion to make it clear what we're rescinding
and be specific that the the we're rescinding and in its place the action that was taken today replaces it or something just to clarify because i think we're we're creating some mass
confusion some quite frankly some possibility for litigation if we do withhold and then i just if we could clarify yes sir i agree with what you
Senator Mark Johnson
Unverified
1:54:31
just said i did not write this down the motion was sort of
spur of the moment but i'm intrigued by as i said by representative gasaway's suggestion that we still possibly had the ability to just simply say what we said to you mr treasurer in july We rescind that, and that would give him cover to not be in between in a dilemma of is he following what the committee just said in Senator Wallace's motion and what the statute says.
I'm trying to give him some cover so we can get out of this situation, and I think they do stand alone. I appreciate Senator Gilmore agreeing with me, although my friend Representative Dalby is a lawyer and a lot smarter than I am. But I do think these two are separate, but complementary, shall we say. And I trust the staff, if we could come up
with something, and I would hope we could maybe do it today. Thank you. Okay. So your motion that you made,
you're trusting staff to help craft that motion to satisfy? Okay. Senator Hammer, you're recognized Well, first of all, do you have a second
Senator Kim Hammer
Unverified
1:55:53
on the motion? Because I don't want to talk to you if you don't have a second There is not a second on the motion The second was withdrawn, but was the motion withdrawn? The motion was not withdrawn Okay, then I'll wait until you get a second before I have a
Representative Carol Dalby
Unverified
1:56:12
comment, please Representative Dalby This is just a parliamentary question
I mean, we don't have a second but would we not be because i don't want us to be in haste uh we never make good decisions when we're in haste and we're trying to draft something off the top of our head none of us do well uh in that deal if this would be something that the senator might consider let's address this come what is it september our october meeting because they're they're good right now they're they're
good they're going to be following the motion i mean the adoption of the report they're good right now and then if we feel like come october we need to get this in the right position to uh withdraw because the the treasurer's the treasurer's going to be following what we have now said they've got this deadline until December the 31st and it just seems like when we start drafting off the top of our heads is when we get ourselves in in a pickle and so I would I would
just offer that as a suggestion and then as an aside I appreciate Senator Gilmore's kind words we all ate at a Holiday Inn
Speaker 80
1:57:32
Express last night so all right the the motion was
withdrawn representative Beatty I lit you up I don't know if you still have more comment or we're
Representative Howard M. Beaty, Jr.
Unverified
1:57:45
done well my question is just to make certain I understand the intent of Senator Johnson's motion and I
respect the um the wisdom of representative dalby and senator gilmore my question is could we could we instruct the chairs of of leg audit to draft a letter to the treasurer informing them of the actions of this committee and and what we passed in in um in the in the county committee and what this committee passed today that way they have that that that notice and we're not we're not placing that on anyone other than this committee so that would be my request I
don't know if that needs to be in the form of a motion but if so I would place that in a motion that the chair of the committee notify the treasurer of the actions taken today by the committee so
that they are informed properly by this committee
of the actions we took as legislators
representative Beatty that is the normal process anyway okay the action of the committee on something like this we would have
the letter drafted and we'll begin to work on that language and proceed from there okay so do we need a
Speaker 273
1:58:58
motion or not do not need a motion all right thank
you sir thank you okay next on the agenda item number three the standing committee on educational Institutions. Representative Duke, you're recognized to present.
Representative Hope Duke
Unverified
1:59:22
Thank you, Mr. Chair. The committee met Thursday, September 11, 2025, and adopted the minutes from the meeting held
July 10, 2025. 47 education audit reports for the year ended June 30, 2024 were included on the agenda. Officials from the Brinkley, Deer Mount Judy, and Pine Bluff School Districts were present to answer questions from the committee related to findings in the respective audit reports which were deferred from the July meeting. A representative from the University of East Arkansas Community College was present and answered questions from the committee related to findings in the audit report. Eight school district audit reports had findings that referred to the applicable prosecuting
attorney and attorney general. The audit report of Mammoth Spring School District was deferred to the October meeting so that school officials can be present to answer questions from the committee related to a finding in the audit report. Based on requests made at the July 10, 2025 committee meeting, staff provided a summary of unauthorized withdrawal findings noted in fiscal year 2024 school district audit reports. The committee filed 46 audit reports and deferred one audit report that were brought before it.
I move to adopt this report. thank you do we have a second we have a second any discussion if not all those in favor say aye any opposed no motion is adopted and the next item on the agenda is our standing committee on state agencies and we have representative brown is a new substitute to present this report
So Representative Brown, you're recognized. Hit
Representative Matt Brown
Unverified
2:01:12
your button, and I can
thank you. Thank you, Mr. Chair. The Standing Committee on State Agencies on September 11th, eight reports were on the committee's agenda yesterday. Two reports with the following findings were presented. The Department of Inspector General used contract labor for the Tax Appeals Commission in excess of the amount allowed.
The military department made payroll direct deposits for active duty soldiers into the wrong bank accounts. Various agency staff members were present to report on how the agencies intend to address the audit findings and to answer committee questions. During the meeting, the committee filed the eight reports. Move to adopt this report. Thank you. You've heard the report. We have a motion to
adopt the report. Do we have a second?
Second. have a second any discussion if not all those in favor say aye aye any opposed no motion is adopted
next up our review of some special reports the first item is a special report for law enforcement agencies compliance with asset seizure and forfeiture requirements under the uniform controlled substances act for the calendar year ending december 31st 2024 and mr josh davis is here and going to present this report. Thank you,
Speaker 277
2:02:39
Mr. Chair. This report reviews law enforcement
Speaker 278
2:02:42
agencies compliance with the asset seizure and forfeiture requirements of the Uniform Controlled Substances Act for calendar year 2024. Asset forfeiture has been used since 1971 to help prevent vehicles and other property of drug traffickers from being used to commit subsequent offenses. During the late 1990s, legislators became concerned that a lack of uniformity and accountability in the forfeiture procedures across the state was undermining confidence in the process. During the 1999 meeting of the Arkansas General Assembly, Act 1120 was enacted to address
these concerns through the amendment of the Uniform Controlled Substances Act. The forfeiture process is shown on the slide and in Exhibit 3 on page 3 of the report. Arkansas Code provides that within 48 hours of an asset seizure the seizing officer shall file the original confiscation report with the seizing law enforcement agency for maintenance in a separate file within three days of receiving that report the seizing agency shall forward a copy of the report to the prosecuting attorney for the district in which the property was seized and to the Arkansas drug director for
entry in the asset seizure tracking system in turn the prosecuting attorney has 60 days to file a complaint in circuit court listing the seized property. Schedule 1 on page 4, the report provides a summary of seized assets for calendar year 2024 for all judicial districts. For example, as shown in the second judicial district, almost $470,000 in currency, 28 automobiles, 46 firearms, and two other assets were seized in 2024. For the entire state, over $3.7 million, 317 automobiles,
453 firearms, and 34 other items were seized. Over the past 10 years, over $48 million, 4,100 vehicles, and 5,200 firearms have been seized. The map on the slide and in Exhibit 1 on page 2 of the report shows the seven judicial districts selected for testing. To conduct the review, two seizure incidences in each district were chosen from the asset seizure tracking system. We traced the seized assets recorded in the system to the
supporting confiscation report and verified required procedures had been followed in the disposition of the seized assets. Additionally, one confiscation report was randomly selected from the agency and traced to the system to ensure all seized assets had been properly reported. Finally, one seized asset was randomly selected from the agency's evidence room and traced to the entity's confiscated inventory records. All material assets selected for testing were accounted for.
However, exceptions in record keeping were noted at three of the 11 agencies reviewed. As listed on page three of the report, the Alma Police Department did not maintain a separate file of original confiscation report. The 8th South Drug Task Force did not obtain and maintain a proper transfer of property receipt. The Dallas County Sheriff's Office did not forward the confiscation report to the Arkansas Drug Director within the required three business days. The Dallas County Sheriff's Office, the Alma Police Department, and the 8th South Drug Task Force
did not maintain adequate seized property inventory records. And the Alma Police Department did not include an odometer reading as required by the code in the confiscation report for seized vehicles. Responses from these agencies were provided in appendices A, B, and C, respectively. Legislative audit intends to follow up with these agencies to verify whether corrective action has been taken. Additionally, Schedule 2 on page 5 of the report provides the number of agencies reviewed by legislative audit and the number of agencies with exceptions for the past five calendar years.
For example, in calendar year 2020, we reviewed 14 agencies and noted five exceptions. Therefore, almost 36% of the agencies reviewed had exceptions during that year. Mr. Chair, this concludes my presentation. And in the consideration of time and the presence of agency officials was not requested today, as previously mentioned, staff will follow up with those law enforcement agencies with exceptions during the next review cycle to ensure corrective action has been taken. Thank you, Mr. Chair.
Thank you, Mr. Davis. Committee, you've heard the report. are there any questions for staff regarding this
report if not do I have a motion to file the report have a motion a second we got a second all right any discussion on the motion if not all those in favor say aye any opposed no motion passes the next item is the special report for law enforcement agencies compliance with tobacco seizure and forfeiture requirements for the
calendar year, December 31st, 2024. Mr. Davis, you're recognized to present that report. Thanks again,
Speaker 277
2:07:42
Mr. Chair. This letter reports law enforcement agency's calendar year
Speaker 278
2:07:45
2024 compliance with tobacco seizures and forfeiture requirements. Arkansas Code provides forfeiture procedures for tobacco products upon which the full amount of excise tax due was not paid or which were possessed or sold by an unlicensed wholesaler or retailer. In addition, the property and money used to facilitate a criminal violation of code for the manufacturer distribution of contraband tobacco products may be seized and forfeited to the state. According to Arkansas
Tobacco Control, one tobacco-related asset seizure occurred in calendar year 2024. In addition, legislative audit followed, staff followed up on seizures that were outstanding in the prior year to ensure agency compliance with code requirements. No instances of non-compliance were noted as a result of staff procedures. Legislative audit did follow up on one seizure that was still outstanding from the calendar year 2023 report to ensure compliance with co-requirements. The seizure occurred on April 8th of 2019 and included over $17,000. A delay in that
disposition is typically caused by extenuating circumstances beyond the control of the custodial agency. In this instance, the attorney for the prosecuting attorney's office who were over the case were allowed to withdraw because they were no longer employed by the prosecuting attorney's office. As of the review date, the cash was still being held in the prosecuting attorney's drug task force asset forfeiture holding fund pending that disposition and this concludes my presentation again a consideration time presidency of presence of agency officials which was not requested thank you mr. chair thank
you mr. Davis committee you've heard the report are there any questions for staff regarding this report if not do I have a motion to file the report motion and a second any discussion if not all those in favor say aye any opposed no motion passes the the next item is an investigative report for review of selected transactions for the Marion County Regional Airport for the period May 1st 2017 through May 31st 2024 mr. Anthony Weston you are recognized to
Speaker 268
2:09:49
present that report Thank You mr. chair this
Speaker 282
2:09:53
report is issued in response to requests from the 14th judicial district prosecuting attorney for legislative audit to review selected transactions of the Marion County Regional Airport our assistance was requested to investigate financial discrepancies and assist in Arkansas State Police investigation the objectives of this review were to determine if airport disbursements specifically payments made to the board treasurer were documented and proper department determine if the airport
complied with Arkansas code requirements for obtaining annual financial audits and assess internal controls for adequacy. The airport was established by county ordinance. It's governed by a six-member board. According to the airport bylaws, the board treasurer is responsible for all funds and securities of the board, collecting and dispersing funds and providing a financial report to the board and the quorum court quarterly. The individual serving as treasurer during the review period resigned in February of last year.
The board maintains three bank accounts, and airport funding consists primarily of fuel sales and hangar rentals. The county contributed $2,000 to the operation of the airport in 2023. As a regional airport, the airport is required of Arkansas Code to be audited by CPA within 150 days after the end of each fiscal year. Review of airport bank statements revealed undocumented and questionable disbursements totaling over $117,000.
This amount includes over $111,000 in undocumented disbursements to the board treasurer and 6,000 in checks made payable to cash, as shown in Exhibit 1. Due to insufficient documentation, we were unable to determine a valid business purpose for these disbursements. It should be noted that many of the checks to the board treasurer were issued out of sequence, with other checks issued for routine airport expenses. Financial statements for January through October 2023 were provided for review, and we were unable to reconcile ending balances, revenues, and expenses with bank activity.
Furthermore, balance sheets indicated two CDs, which totaled over $77,000 as of July 2023. However, bank inquiries indicated the airport has not had any CDs in the last seven years. Arkansas Code requires the airport to be audited annually, and it appears the airport has never received a financial audit. Inadequate financial records and several internal control deficiencies were also noted.
Invoices were not always retained to support disbursements. Ledgers were not prepared for all bank accounts, and bank accounts were not reconciled. Financial duties were not adequately segregated due to an inadequate number of personnel, and the airport did not implement adequate compensating controls. While financial statements were provided to the board, information did not agree with the bank activity. The board did not provide adequate fiscal oversight. We recommend that the airport maintain adequate financial records,
segregate financial duties to the extent possible, obtain annual audits by an independent CPA, and evaluate fidelity bond coverage to protect the airport from theft of financial resources. We further recommend that the board provide adequate fiscal oversight of airport transactions, bank statements be reviewed monthly by someone not involved in the bookkeeping process, and financial transactions be monitored for propriety. In summary, our review revealed undocumented disbursements totaling over $117,000 payable to the board treasurer or cash,
inadequate financial records, and internal control deficiencies. In addition, we were unable to determine when two CDs totaling over $77,000 were cashed and how those funds were used. This report was forwarded to the 14th Judicial District Prosecuting Attorney and the Attorney General. Douglas Starkey, who served as board treasurer during the review period, resigned in February 2024, was charged with felony theft of property and abuse of office in May of this year.
Mr. Starkey pled guilty to these charges, was sentenced to 60 months probation, and was ordered to pay over $117,000 in restitution to the airport. According to the current board president, restitution has been paid in full. Mr. Chair, this concludes my presentation. Management response is provided in Appendix A of the report, and officials are present to respond
to committee questions. Thank you, Mr. Weston. Committee, you've heard the report. We also have representatives from Marion County, from the regional airport, and from the city of Flippin available if you so desire.
Are there any questions for staff, or is it your desire to call any of the witnesses to
the table? So just for my sake,
in summary, the airport is required by law to be audited annually, but they have not ever provided an audit. And as a result of that, there was a request by someone in the legislature to do selected transactions
because there hadn't been an audit. and these are the transactions that you've found, potential improprieties and funds that
cannot be accounted for of about $77,000? I believe that the prosecutor requested
Speaker 282
2:15:36
this due to the board coming across information that led them to request the legislative audit be involved. Okay. But they are
Speaker 286
2:15:47
required by law to produce an audit.
They just have failed to produce
Speaker 245
2:15:53
an audit. Correct, that's my opinion. Actually, I
see it, yeah, here, Arkansas Code 14362-124. Okay, so thank you. Senator Johnson, you are recognized. Thank you,
Mr. Chairman. Mr. Weston, I've seen
Senator Mark Johnson
Unverified
2:16:08
a lot of things since I've been on this committee, but this is the first time I've ever heard they said they had CDs that no one could find. They didn't exist.
uh was this just by your investigation he they just lied and said we had cds and put it on a ledger sheet and but they're just the money was absconded with is that pretty well what it
Speaker 283
2:16:35
appears to be uh well according to the state police uh affidavit the state
Speaker 282
2:16:40
police investigator questioned him about that and he admitted to to stealing the 77 approximately 70 000 worth of cds before he started with the rest of
Senator Mark Johnson
Unverified
2:16:51
the funds so there were at one time cds he just cashed them in
Speaker 283
2:16:56
and pocketed the yeah and the bank records the banks were not able to go back far
Senator Mark Johnson
Unverified
2:17:02
enough to tell us when those because of the time period correct
thank you for your answer thank you mr chair thank you any other questions obviously we're in audit and we see the significance and the importance of having audits timely filed. If not, I don't see any others in the queue, so do I have a motion to file the report? I have a motion in a second. Any
discussion? If not, all those in favor say aye. Any opposed? Motion passed. So that concludes the review of the reports. Under other business, the next meetings of the Legislative Joint Audit Committee will be on
October 9th and 10th, 2025. Seeing no other business, we are adjourned.
Agenda
A. Call to Order by Chair
B. Adoption of Minutes
C. Reports of Executive and Standing Committees:
D. Review of Reports:
E. Other Business:
The next meetings of the Legislative Joint Auditing Committee will be held October 9 and 10, 2025.
F. New Business
G. Adjournment
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING, Sep 12, 2025 | Agenda | 1 | Official source ↗ |
Speakers
Speaker 1
Senator Jim Petty Chair
Unverified
Representative Robin Lundstrum
Unverified
Senator Matt Stone
Unverified
Representative Richard Womack
Unverified
Speaker 32
Senator Ben Gilmore
Unverified
Senator Dave Wallace
Unverified
Chair
Unverified
Representative RJ Hawk
Unverified
Representative Howard M. Beaty, Jr.
Unverified
Representative Wayne Long
Unverified
Representative Matt Brown
Unverified
Senator Mark Johnson
Unverified
Speaker 21
Representative Mark D. McElroy
Unverified
Representative Hope Duke
Unverified
Speaker 92
Senator Scott Flippo
Unverified
Speaker 97
Speaker 107
Speaker 108
Speaker 113
Representative Jimmy Gazaway
Unverified
Speaker 121
Speaker 126
Speaker 102
Speaker 138
Speaker 5
Speaker 145
Speaker 157
Speaker 159
Speaker 56
Senator Kim Hammer
Unverified
Speaker 170
Representative Carol Dalby
Unverified
Representative Julie Mayberry
Unverified
Speaker 176
Senator Fredrick J. Love
Unverified
Speaker 160
Speaker 141
Senator Jonathan Dismang
Unverified
Representative Johnny Rye
Unverified
Speaker 218
Speaker 123
Speaker 68
Speaker 227
Speaker 234
Speaker 112
Speaker 246
Speaker 163
Speaker 80
Speaker 273
Speaker 277
Speaker 278
Speaker 268
Speaker 282
Speaker 286
Speaker 245
Speaker 283