Legislative Joint Auditing

Are members of we can start making our way towards the it's nine o'clock. The meeting to order first order of business today the adoption of the minutes of the October not twenty twenty meeting or buddies scene of via email is there any objection to that adoption. Okay I will consider that adopted thank you our next order businesses adoption reports of executive and standing committees of Representative berry you're recognized. The amount. Thank you Mr chairman. The executive committee met thirty December the third two thousand twenty staff reported to the committee the audits. The all the special investigation and shortage report scheduled to be presented to the standing committees. Then the full legislative joint auditing committee this month. The committee approves a request to. Perform financial audit for the for the school district for the fiscal year June thirty two thousand twenty one and other business representatives from the turn journals office inform the committee that under Arkansas code fourteen sixty two one oh two a a complaint to the dissolve the city of all porch charter will be filed on December the four twenty twenty stealth updated the committee on the status of the pharmacy benefit managers report that is currently being prepared with no with no additional business to discuss the meeting was adjourned the next meeting of the committee is scheduled for Thursday April the eighth two thousand twenty one. Mr chairman this time moved for adoption of this report thank you Representative gray we have a we need a second on a motion please. We've got all those in favor say aye all opposed no all right thank you will consider that adopted next up as report on standing committee on counties municipalities of Representative rye you're recognized. Thank you thank. Okay thank you Mr chairman of the committee met yesterday on All of December third of committee adopted the minutes of the October eighth two thousand twenty meeting the committee reviewed a hundred twenty nine current reports. One of these was certified to the bond board in eighteen reports including one investigative report or referred to prosecuting attorneys no official for president to address repeat findings in their current reports due to the covert nineteen health emergency motion was passed to defer all reports with repeat findings so that officials could attend the next meeting to address the repeat findings the committee file the report that was certified to the bond board investigative report and fifteen of the force referred to prosecuting attorneys. Three reports of referred to prosecuting attorney said repeat findings and we're deferred so that officials could attend the next meeting to answer questions regarding the repeat findings the committee deferred nine additional or force which repeat findings so that officials could attend the next meeting to respond to the findings the committee filed the remaining one hundred and one reports and I move that the adoption this report. Thank you Representative but we have a second on the motion of second all those in favor say aye all opposed no all right that will be adopted thank you. A next up is Senator Pitsch you're recognized absent the. A report on standing committee on educational institutions. Thank you Mr chairman the standing committee on educational institution chairman's report the committee reviewed a total of sixteen current audit reports which consisted of three higher education reports and FOR school district reports for the year ended June thirty twenty twenty and nine school district reports for the year ended June thirty twenty nineteen committee also reviewed one special report for the period July one twenty nineteen through April thirty twenty twenty representatives from the Arkansas department of education division of elementary and secondary education were present and answer questions from the committee relating to the findings in the audit reports of the herbal Marville pine bluff and always school districts which each are currently classified the by the division as being under fiscal distress the mark Belling pine bluff school districts had audit findings which were repeat findings the other report for the university of Arkansas system was certified to the governmental bonding board as well as referred to the applicables prosecuting attorney the audit report of the oral school district was referred to the applicables prosecuting attorney as the result of a request made by staff the committee adopted a motion to extend the time to file the audit report of the league county school district by up to ninety days as allowed by Arkansas code the district is classified AS being in fiscal distress the committee filed the sixteen current audit reports and one special report that were brought before it Mister chairman I move for adoption of this report thank you center are there any questions on the report. All right seeing none may I have a second on the motion. We've got a second all those in favor adopting say aye all opposed no right that will stand adopted thank you. Next up is the report on standing committee on state agencies are represented speech you are recognized. The card should be on. I'm. Let's let's start over is not agree in this morning. All right should be on okay thanks thank you Mr chair. Forty reports were up on the committee's agenda yesterday eleven current reports and two deferred reports with findings were presented the two reports differed from October twenty twenty meeting where the department of higher in education and department of transportation some of the findings discussed during the meeting from the Levin current reports included the following the department of finance and administration had findings related to our revenue shortage office shortage accounting errors at E. B. D. and an internal audit report concerning the former deputy director and revenue commissioner the department of health and had a repeated finding related to my mileage reimbursement for and Khloe travel the department of Human Services had ten findings included not properly performed bank Rick reconciliations not properly reporting bank activities investments and petty cash funds in the aces two fraudulent checks on a bank account and three contract over payments the state insurance department did not include all checks received and it's receiving law works and not deposit receipts time timely the Arkansas state police reported find and sent of theft of property including seizure funds taken from an evidence room. An audit electrical apprentice program from the office of skills development I'd that identified seventy six hundred and on a law or allowable cost at the department of career education various agency staff members were present to report on how the agency's intent to redress the audit findings and to answer committee questions during the committee during the meeting the committee adopted a motion to file the two deferred reports and and if thirty eight current reports I'm moved to adopt this report. Thank you Representative any questions on a report. Seeing none I have a second the motion we have a second all those in favor of adoption say aye aye all opposed no thank you that will stand adopted. A next well let's see. I'd like to recognize Mister Norman for for for the. Thank you Mr chair I just like to take the opportunity to think our our chairs Senator Rapert in and represent of Womack for the past two years for Mr ray for we've had Mr moment for four years which been great and also I'd like to recognize the standing committee chairs and to just from the staff standpoint we just are grateful for the opportunity to have to work with you and and to serve the state and we just want to pre to express our appreciation to you so much and we've got a little present for you. Thank you Mr Norman of. We talked with just a moment yes then executive committee how much of a now that senator RAPERT speak to how much we appreciate the audit staff on the work that you do with the integrity and efficiency it's impressive and I wish the rest of state government could could follow suit but it it's been a pleasure working with you know you make us look good and and we sincerely appreciate the work that you guys don't have I a group that and appreciate every single member that puts in their time to come down here I thought yesterday there's a lot of times people think we only come in here work sixty days out of the year and they really don't realize the time that you all put in and take away from your life your families your business so we appreciate your service and Roger we thank you in the staff because you do an excellent job and we appreciate all that support. Alright thank you next on our agenda is item the be a summary of inter collegiate athletic revenues and expenditures for two thousand nineteen twenty department of higher end of Mister fuller. Could you come to the come to the table. Thank you go in you can proceed with your report. Sir Nick farm the assistant director for finance at the division of higher education. That report before you is the yearly report on the athletic revenues and expenditures for the institutions of higher education intercollegiate athletics. the total amount of athletic expenditures for fiscal year two thousand nineteen twenty. Portable institutions the four year institutions was one hundred ninety one million four hundred sixty thousand two hundred forty three dollars. And two year colleges expenditures were one million seven hundred forty nine thousand eight hundred fourteen dollars. This brings the statewide total expenditure of one hundred ninety three million two hundred ten thousand fifty seven dollars which is a decrease of nine point seven million dollars four point eight percent from fiscal year two thousand eighteen two thousand nineteen. And at the at the bottom of the report that you have there's a comparison of the actual expenditures to the budgeted revenues that were certified to the coordinating board in July of two thousand nineteen. Certified budget expenditures total two hundred million seventy thousand seven hundred sixty six dollars from institutions. And so the the total expenses expenditures when compared to the budget was a reduction of three point four percent. Below those budget amounts actual expenditures buried from those budgeted expenditures from a range of fourteen percent below two one institution that was ninety eight percent over their budget amount I will point out that that one institution that was so far over their budget had an unexpected one time cost start up costs for new. New sport the date they began that year as one they were so far over their planned budget from the beginning of the year. And with that I will open up to any questions you have. Thank you Sir on any question or comments by members. Don't see any so we we appreciate you coming today and Okay Senator Elliott you're recognized in just a second this thing's not acting right today charter again. All right there is a Mr a full would you remind me with that the percentages over or under is this just related to anything but state funds not including any private funds that were spent on sporting activities this would be in any funds that the athletic department spent on. Athletic activities it wouldn't include lack of foundation that was spent on athletics but the department directly any funds that they spent. The. It isn't just state revenues including okay like revenues okay television revenues so so we are not getting an ace we're not getting any sense of. Actually unless there's some the broken out here that I missed that proportions when it comes just to state funds is that is that part of this report and I just don't know how to find it. There is a line let me see if I can tell you where it is the. They're not using the state revenues for the athletics but they are able to the institutions are allowed to transfer from their educational general account your tuition fees a line on the revenue for how much each school transferred A huh and there's a maximum cap that they can transfer from that fund to support athletics none of that is state general revenue transfer all right thank you. Or any other question comment. RSC number that objection will consider this presented thank you. The next item is a review of reports of first one will be a special report on prosecuting attorneys miss Williams you're recognized. Thank you Mr chair good morning or afternoon or is it morning it's morning. I practices the yesterday afternoon and I said good afternoon. This report is to provide this committee with the summary of the disposition some matters referred to prosecuting attorneys of the state's twenty eight judicial districts for the last calendar year. The staff is issued this report annually since two thousand and five. Arkansas code ten four four nineteen provided in appendix a of the report requires the legislative auditor to notify the appropriate prosecuting attorney of transactions reflecting a parent unauthorized disbursements are unaccounted for funds property by a public official or employee. Arkansas code up for a can four four nineteen also requires a legislative auditor to report findings that relate to a prosecutor's office to the state's Attorney General. The code section also directs the prosecuting attorneys to report the status of the matters that were referred to them by June thirty of each year. Arkansas code twenty one to seven oh eight directs the legislative auditor to notify the Arkansas governmental bonding board of audit reports reflecting a parent improper transactions the bond board then determines whether losses covered by the Arkansas self selfinsured Adela B. program entities are required to meet a twenty five hundred dollar deductible per currents and the maximum courage our coverage per currents is three hundred thousand. This slide shows examples of matters that audits are referred to prosecutors and it includes receipts not deposited missing assets on authorized or undocumented disbursements salary payments in bank withdrawals also any improper use of the entity's credit credit card is referred conflicts of interest issues and non compliance with the public purpose doctor. This is a page out of the report we use the seventeenth judicial district to just illustrate how the report is laid out. We ought would identify the county center in each judicial district we list the governmental entity involved in that county the status is reported by the prosecutor in its in grave and then payment if there is a payment from the bond trust fund it's listed at the bottom of the page. On exhibit three on pages six and seven we summarize the matters that referred to the prosecutors by judicial district we've organized that with listing the number of matters the top of matters that we were referred and if they're still under review. The case results are indicated by each prosecutor and are designated as a conviction cases pending the case was acquitted or dismissed prosecution was the client there was insufficient evidence we have an other category which includes ethical matters conflicts of interest and apparent violations of the public purpose Dr and the last column is cases that are still under review by the appropriate law enforcement agency. And finally. There were twenty cases in which a conviction was obtained. The courts found Seventeen were disposed of in state courts to were in Federal court in one was in District Court in in on this chart you'll see the entity the individual that was charging into without their court ordered sentence including any kind of probation jail our incarceration time as well as fines fees cost an audit costs that have to be paid as restitution. Mister chair this concludes the presentation of this report representatives from the office prosecutor coordinator as well as the Arkansas association a prosecuting attorneys are here to answer any questions thank you miss Williams of this code of Senator hammer for questions if we need to bring somebody up. Try again. A I should show on its own. Can we get the agency to the table please Can folks miss Williams is listed please come up the representatives. Are going up John. You can give you're recognized center. Thank you. Whenever the prosecutors have a conviction. Do they recover the cost of their time invested or is that just the course normal course of doing business. The prosecutors recover the prosecutors cost of doing business right no Sir I believe in certain cases they recover the auditors legislative audit's cost of doing business but I'm not aware of any situation ever where the prosecuting attorneys get their cost of doing business because the money that is going to continue Mr. Yes okay because the money that's recover goes back to the entity from which it was stolen correct yes Sir do you ever track how much time the prosecutor spend convicting these cases of center and I'm not aware of anybody tracking particular time on on how much time they spend on any particular case because prosecution or paid to an annual salary so they're not know by particular case or by our or anything like that so I'm not aware of anybody to tracks that now there may be individual offices that require their you know their deputies to keep it exactly how much time they work on a particular case but I would be surprised if that were the case again because they they they're paid in annual salary and they're just assign the cases that they work in I don't think they keep up with with that kind of a a record okay so educate me is there anything constitutionally that would prevent them from seeking as restitution the amount of time that the prosecuting attorney's office had to spend convicted the case I'm not aware of anything center I'm not aware of any state that does that but I'll be happy to research that but I'm personally not aware of anything that would prohibit that I mean I know we you we have enough trouble right now is trying to you know get expenses from individuals that are convicted I think that would certainly add add to that in in might into being quite a bit of money but I'm not aware of anything that specifically prohibits that constitutionally but I've never looked at that and when it comes to the insufficient evidence because that's a price tag of about two point six five million dollars the chilled and pursue because of insufficient evidence do you what communications you have with lego audit to. A. Balance what they have determined is reason sufficient enough to turn it over to you but you've determined is not sufficient evidence enough to prosecute okay I sent I will point out that there's that there's a big difference in a big with the responsibilities of legislative audit to determine for example that there was a staffed in a particular amount of money is missing let's say I'm just pulling this out of the air here the school district A was missing up tick for madam money that cases audit determines that there's ex number of dollars missing that's turned over to the prosecuting attorney of there's no disagreement that the money's missing but at that point the prosecutor obligation and responsibility is very very different than what the auditor has the auditor determines that money is missing the prosecutor then has to determine you know who the charge and who they can convict beyond a reasonable doubt so there may be situations where we don't have any idea you know maybe thirty five different people have access to that money and so prosecutor can't prove who took it so they don't fall charges so it's it's a difference of the responsibilities that each party has again you know audit being there to determine if something was missing in the prosecutor having a higher different standard and having to prove beyond a reasonable doubt so that that is probably a a simple example of of a case where there be insufficient evidence to to particularly proof to who took that money because so many people have access to that that money that's one example I mean there could be all kinds of other situations were insufficient evidence that the you know what the criminal case the prosecutor has to prove criminal intent so the prosecutor has a situation where they can't prove that there was criminal intent in case they may not go forward with that particular case for that reason so those are two examples of of cases where that would be determined be insufficient evidence and then again the criminal intent standard are thank you thank you Mr. Thank you. Represent speaks you're recognized for a question. Thank you Mr chair he answered the question a heck of okay very. Senator us. You're recognized thank you Mr chair of. Yesterday in audit county municipalities. One particular city. had findings I thank the total was just under ten thousand dollars but it was from many multiple. Problems. In my understanding it's me turnover prosecutor in this. you've explained it I've been there several years and and I've heard the explanation over number that I do understand some things but we always hear the deal what was a previous administration. this that no this was from two thousand nineteen I think so it's not that far back. But the problem is is he in local politics in and you say well it's less than ten thousand dollars. But it's so many multiple things if nothing Stephen investigated whether to know regime or not. This step is just keeps going and going and going and if nothing else you can just turn the heat up under some of them if if we had someone on the what takes time and effort. But there there's gonna have to be some examples made. because we see this step ever month when we come in and it's just excuse after excuse after excuse from the. Entities that the and again were our only option is sometimes you know maybe we can push the home for money but the real. Thank you will fix it it prosecutors. we'll find one of these things in at least turn some he to so that's just something for you to own I do understand what you just plan on the go thank you Mr. Thank you. Are there any other question the comment. Committee members. How do one Senator Rapert. Thank you very much of that this really can echoes what Senator rice is talking about and I know that it executive committee may be the last executive for the previous one before that we had members that came in and ask you legislative audit to try to take some action and it was a matter that has been fairly well publicized into central Arkansas community here as it relates to allegedly stealing of time. And. From everything that I keep hearing from this though everybody seems to think that there's something wrong apparently no action is taken by the prosecutor in charge. A and this is something that is really frustrating to members and I'm trying not to rehash the whole thing here but it but it's illustrative of what Senator rice is talking about would you please at least comment about the fact because it would be important for us to know if there is an inherent stumbling block in some of these prosecutors actually taking action. I think that the body in the it's the state needs to consider the the ability to have a special prosecutor of sorts consistently pursuing these things so that we don't have small time politics hindering us from hold people accountable I appreciate your response yes Sir and I'm not sure I'm of the Hudson were of the exact case you're talking about but I'm not specifically aware of all two hundred and ninety four of you know the the referrals here so and I want to be clear about this on any time the committee has a specific case that they want to hear about if I if I can find that out ahead of time I will either talk with the prosecutor the handle that case and make sure I am you know able to explain what happened or have them come with me and you all have occasionally request to somebody so again that that offer goes for anything in the future because I mean I can guess on some of these some of these I I am familiar with and some I can do a general comment so that that's the first thing I want to point out you know if there's a specific case I'll be happy to bring that prosecutor where deputy with me or make myself available to learn what why that's the first thing with regard to your special prosecutors I mean if there is a specific conflict I note Senator rice mentioned eight eight Lee a local politics sometimes leads to a conflict we do have positions in office I have to their conflicts special prosecutors now they they handle it could be an audit case it could be a capital murder case there's nothing limited on that so if there's a specific case where a judge and prosecutor determine there's a conflict whether it's local politics or on the related to a defendant or something like that now therefore there is a mechanism in place to you to have that procedure followed where special prosecutors are pointed again there's two people in my staff to handle that now if they are unable to handle that because of the volume of the cases they already have that I can often go to it the joining judicial district get somebody to handle that so that's how we address certain conflict situations but but in I think an answer your question I mean it there has to be a conflict to. Term and well. I'm gonna leave it for today we should follow up because the here's the problem. They don't even articulate a conflict they just do nothing. That's the problem because what happens is that they don't want to take any action that would further. Prosecution and by stepping aside in declaring a conflict they they're by allow that to proceed you see with the special prosecutor I just think that we need to really think about it because there a lot of members especially the the chairs of the committees that have been the executive committee are frustrated because we come up here in your spend a tremendous amount of state money and our time to identify and report findings and then when the reported on prosecutors there's a good number of those that nothing ever happens and and so trying to find out if there's something inherent in our process they could be rectified that would allow there to feel like that all the effort that is put in by these committees. Actually results in action in some accountability and so again I'm was on a whole set for today I just wanted to make sure that at least speak up because this is been a recurring theme in a problem that's been articulated thank you for your yes Sir and we and we met with the exact accounts I think my prosecutor board and we discuss this issue on numerous occasions in terms of what it would take for you all have special prosecutors obviously would take a change in the constitution because of separation of powers issues and and one thing I might point out though if there are individuals that they never ended up being special prosecutors if if they followed the same you know standards that any attorney word in terms of making a charging decision and things like that that may be faced with the exact same situations of not being able to prove beyond a reasonable doubt certain things and they wouldn't go forward either what's with all due respect we all know that a lot of it has nothing to do with that it has to do with the politics of thank you for your comments. Senator hammer you're recognized thank you Mr chair who makes the determination who refused the decision of the prosecutor the local prosecutor that there's not enough evidence to convict. The there's no one Senator hammer the I mean at any particular district in the Balkh would stop at the elected prosecutors test okay so if that if elected prosecutor was involved in that charging decision it would be his or her decision if a deputy prosecuting attorney is handling that particular case and all to Billy you know I guess it could conceivably go up the chain of command to the to alternately to the elected prosecutor chief deputy but as far as an outside source that they make that decision that just comes with the discretion of the prosecuting attorney as in any particular case whether it be again a theft case on the side case of assault anything like that that is that is the discretion of the prosecuting attorney on whether to go forward or not so other than internal review to get alternately to the the elected prosecutor possibly there's not another outside source that that does that. You think they'd be merit in the idea of establishing outside source that one a because of the discussion today for the number of cases that are referred and lack of evidence that there would be a merit to have those reviewed by a third party independent source to save up we think you'll miss something or you need to go for this center I'm not aware of any any state that has anything like that in particular I mean the prosecuting attorney throughout the country have discretion to do that that that is their job that is the responsibility and I'm sure some case law out there that says it's their discretion and there's only so I'm not I think you'd be a drastic drastic change it probably would be unconstitutional to do something like that but it but again I'm I'm just not aware of any state that does that because that would circumvent the authority of the prosecutor and that's with their elected to do is to exercise their discretion and then on the funds collected of I noticed the restitution amount is. Like the. Two point two million I thank or give or take a little bit Just because that has how much is actually been collected from the convictions do you know no Sir I do not own I don't know if I don't know if the staff has I I know that I do not have that information. Mr can staff and like Mr no we we don't track that I mean once it goes into collection it's of either in a circuit clerk's office or sheriff's office in there a lot of most of the time they're set up one time pay. Share can direct comment to the chair you bet. It might be interesting in future reports if possible and I know this may take time to develop but we see these reports about the amount of settlement and the restitution but would be interesting to maybe create a little history to track how much is actually gotten collected over a period of time and may we can develop that off line but you can come in and save you know made rest or collector restitution for half the money but is it actually money in the bank and. May we could talk about that offline thank you going on in thank you. Representative rye you're recognized. Thank you Mr chairman of one just one particular item of all these that really home and and what I was looking at yesterday when we were going over is something that's been repeated quite a few times. Now the last election when we voted one half cent sales tax. Okay seventy percent went to St fifteen percent went to counties fifteen percent went to cities and but every three to four years the city's receive money for their streets and that's coming off the sales tax. And we're seeing where that money in some cases is going in the general fund and and there's not even reaching the city streets. So you know I've got a real problem with that. Because people voted on it and the and they say that you know they want that money which is have sent to be used properly and that's misuse of money. Receive I'm I'm I'm not familiar with that specific each other is there a particular case where that was referred to a prosecutor on that specific issue because I can look at that otherwise I I don't know enough to to comment everyone of them they've been referred to prosecute rich represent Ronald I don't. Yeah and that's that's a separate known not yet I thought we've done this before one time. On the knobby my knowledge. I think we've got a separate issue going on right now unless it was something specific to the prosecutors. You know specific case and I don't think he's in a position to speak to it. The moment all right of way done as. Integration well maybe I'm not understanding your your query. Okay a. But we sure need to look into that okay we'll visit after this and make sure that we're getting in on the same page thank you yes Sir. Case up I'll be happy to follow up on I'm just not aware of one. All right thank you are there any other questions or comments committee. All right seeing none well direction will consider this reviewed thank you for being thank you Mr chairman I'm sorry I'm not sure of myself on Bob McMahon the prosecutor coordinator yes Sir I realize that legislative I appreciate thank you much thank you. Good evening ma'am good evening good evening. All right next the only agenda special report on the cost benefit analysis of selected economic incentive reports to be presented by just a minute you're recognized. Thank you Mr chair. The consolidated incentive ACT of two thousand and three combined existing economic development incentives and to for statutory and five discretionary incentive programs. Legislative audit is required to prepare a cost benefit analysis of the economic incentive projects on an annual basis. The objectives of this report where to a value a the controls over the awarding and issuance of CIA incentives by the Arkansas economic development commission and the department of finance and administration. To the time in the overall effectiveness of CIA programs and to determine the effectiveness of selected CIA projects this year's report contains no findings. This chart which appears on the bottom of page three of the report shows the distribution of CI a CIA finds by region incentives awarded to companies totaled almost seven hundred three million dollars and incentives use told over five hundred and ninety six million dollars. This chart which appears on page five of the report shows the distribution of CIA finds by incentive tied. Statutory incentives accounted for eighty one percent of all incentives awarded well discretion incentives accounted for the remaining nineteen percent. Exhibits three and four on page four of the report right down the awarding of funds by calendar year as well as by industry. In two thousand and thirteen legislative audit staff began reviewing CIA programs on a project by project basis with the accumulation of that data from these individual project vis we are now able to draw overall conclusions about the cost effectiveness of entire CIA programs as shown in exhibit six on page seven of the report and on this slide. Among the four statutory incentives three result in a net positive benefit to the state and one or turned a negative benefit to the state. Of the five discretionary incentives awarded wonder turned a net positive benefit to the state and one or turned a negative benefit to the state we cannot reach a definitive conclusion regarding the three remaining incentives is more projects will have to be completed interviews before conclusions about the effectiveness of these programs can be drawn. In addition to drawing conclusions regarding the overall effectiveness of programs A LA staff review thirty five individual projects that recede eight of the different CIA incentives these incentives were offered for tax years two thousand nine three two thousand seventeen and the projects were distributed among tier rankings which are based on economic need. Twelve of the projects reviewed receive the invest our consented invest arc is primarily designed to retain existing businesses that have been in the state for at least two years and invest five million dollars in new construction and equipment. Due to the nature of invest our consent of job creation is not required. Of the thirty five projects reviewed in this report nine received only invest our consent is and three received a combination of invest ark and other incentives. For the non invest art projects review the state invested an average of twelve thousand dollars for the approximately fourteen hundred new full time jobs created exhibit seven on page ten of the report provides a summary of these projects. Based on our analysis of see our project CIA projects we concluded that the tax back advantage Arkansas create rebate and invest our programs have an overall positive COSTEFFECTIVENESS while the two in house research and development programs have a negative COSTEFFECTIVENESS in house research and development projects do not typically retirant positive cost benefit ratios due to the significant amount of the incentive. I would like to point out that there were legislative changes made to both are in the programs done the two thousand nineteen regular session with act three twenty seven and legislative audit has not yet reviewed any are the projects completed after these changes were made. This concludes my presentation and we have officials from economic development and if a present to answer committee questions thank you Mr. All right thank you Sir A we do have quite a list of folks here I guess if you all just make your way to the table willow will catch let whoever's the right person for whatever the question yes answer those questions. And I guess if you don't mind we'll go ahead normally in in audit will we it's our custom to put people under oath this money this might get some interesting questions will go and just take the precaution if you don't mind so when you come to the table just. This state standing in. There was gonna show open on all right of thank you Sir please introduce yourself and state your name and affiliation. Thank you Sir A please you got to run and race thank you do solemnly swear affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth. Thank you Sir please be seated. And next would you please a stand raise your right hand and give us your name employer position. Thank you ma'am do you solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth. Thank you ma'am. All right of first of a question senator Elliott you're recognized you should be on. I am I I have a thank you Mr chair I have a question regarding the in house research development change in at three twenty seven of twenty nineteen could you remind me what that change once yes ma'am so the prior to the change in twenty nineteen you could claim credit for numerous categories of expenditures four are in the purposes with the changing the statute we narrow down the category of expenses to strictly wages that was one change that we made the second change that we made was the amount of credit that you can claim over the number of years of the agreement is based on the incremental increase in your are indeed expenditures so we establish a baseline actually tied to the federal are anti tax credit that year one and year two in subsequent years to be the change from the previous year the increase and so really what we're incentivizing here if you kind of bored all down is the increase in wages that are tied to our indie so if you don't have our and the wages you don't get the credit and FOR not increasing the are and the wait is over time the credit really is going to benefit you. So does the strictly refer to the if I have a company and I am not using say company funds for research and development it has to be tied directly to that just. this is are there any implications if I'm working say for our indie if I'm working with the US a estate a higher rate institution is there any connection there are any overlap as a company if I might be working with somebody like that that. Over eleven the sense of your work for both entities overlap in the sense that maybe that brown work and say it let's just say I'm working with the universe of Arkansas I have a copy number for the university of Arkansas and might be hiring somebody from that university if it's possible to work out some kind of situation like that would that would something like that matter is that even possible to do under our law. And you know I think there could be issues with that employee of higher ed institution working in two different places they probably would have to in their employment in order to be able to come to work for the company and then I think we have to just you know ensure that wages are actually getting paid Senate to what extent then for most companies in this state is. It is who would I know over all it's a it's a negative affect but who is actually benefiting from something like this because you'd have seems like you have to be a pretty big outfit to have this kind of boring D. not necessarily center in and I do think that it is negative the the the benefit is negative relative to the cost benefit analysis that a LA was running I think they noted in the report and we would agree with it there were no immediate short term job creations as you look at the are and this is a benefit accrues over time and so the way the econometric models work with implants which the tool the LA uses of the tool that we use use as well is heavily dependent upon near term immediate job creation so really that the benefit that we have to ask is is there a public good is there a benefit to ensure that companies are doing are in the over time which is a couple things one it creates a health for that company so their function over time to increase a level of sticking this with the state because they get that that benefit of of of being here in in terms of the sorts of companies that would benefit small biotech companies are benefiting we've got companies up in northwest Arkansas who are working on a covert vaccines in Kobe testing her benefiting as they have scientists you're working those wages will count toward the print okay and then our last question is this is kind of an overall question and this is come up before no especially I was state about it before of trying to figure out what we know I don't know that a company he might have come to our state anyway without all the in but not the incentives that we've offered Is there any and discussion inside A EDC about the other factors other than are these incentives we Kate handing out. That the state ought to be thinking about. Long term. For being attracted to companies locating in our state not. Tax incentive dependent for every discussion because I know there's research on those things. Yes ma'am I think you know. If you look at ADC deceiving organizationally we have a community development wing and we have an economic business development where you can have business development without community development as well it's important focus for us and so just taking the steps that we need to take to ensure that there you know good streets that we're doing you know helping took the role Arkansas with curbing guttering with water treatment plants things like that that is a focus for us because we know that companies will not relocate to those areas unless there's a decent quality of life and so it is important to have that going. Well I you know I think as we all know their challenges with role Arkansas with with due to the population more can get done we're trying to do the best job account that. Your first question first part question in terms of. Are we providing these incentives to companies who would come here anyway one one respect the statutory incentives it really is a discretionary for us if they meet the eligibility requirements they get the benefits. But on this question ace incentives I can tell you that we do have conversations about whether or not indeed an incentive package will help move the needle in terms of the decision for folks for business owners is always a question of if you want to go she on the price is there a risk of the customer's going to walk away what are you doing this week in the process walk away if you know they're not going to walk away then you're not going to reduce the price work we're having this conversation so I I'm I'm part of those conversations as we're looking at you're trying to bring companies in it is always see something that is is not public reported because those negotiations but I can tell you secretary prestin is it is still routing the people's money well in order that and he does ask that question regularly is is actually going to facilitate the decision to get them in Arkansas can you bring suggests that legislation to me or any other legislator or about what we should be doing could be doing as a state to improve quality of life these those issues that you're discussing and EDC that need to be improved because obviously is something all of us ought to be working on Senator Elliot I think the this body is on tremendous job in terms of talking about broad band and broadband is is is a significant need not only just in terms of for education health care but also for economic development and so the work this body has done to you know make funding available we very much appreciate and were not let me just kind of sat there were were pushing out as fast as we can. Did you hear Mike Mike did you get my question though are there other things you can bring to us that it's been a matter of discussion or that that you have discerned that we should be concentrating on for improving quality of life in this state. That would attract businesses so that we are not so heavily dependent on incentives and just improving the life of people in our state they are there thank you can suggest to me for example not now I don't mean right now because I don't want take up any more time I'll take that word back sector pressed and will surely put our thinking caps on okay thank you thank you Mr chair. Thank you there's nobody else in the queue at the moment or any other questions or comments. All right that went remarkably smooth appreciated thank you guys for coming to the table thank you Mr chairman being here today of without objection we will consider that when reviewed and move on our next order of business. That will be a special report on law enforcement agencies compliance with asset seizure and forfeiture requirements of the presented by Mr Josh Davis and you're recognized. Thank you Mr. This report review the law enforcement agencies compliance with the asset seizure and forfeiture requirements of the uniform controlled substances act for the year ended December thirty first twenty nineteen. Asset forfeiture has been used since nineteen seventy one to help prevent vehicles and other property of drug traffickers from being used in the commission of subsequent offenses during the late nineties legislators became concerned that the lack of uniformity and accountability and forfeiture procedures across the state was undermining confidence in the process during the ninety nine meeting of the Arkansas General Assembly ACT eleven twenty was enacted to address these concerns the amendment of the uniform controlled substances act. The forfeiture processes shown the slide and exhibit three on page three of the report Arkansas code provides that within forty eight hours of an asset seizure the seating officer shall file the original confiscation report with the seizing law enforcement agency for maintenance in a separate file within thirty days of receiving the report the seating agency so 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 Caesar tracking system. Schedule one on page for the report provides a summary of seized assets per calendar year twenty nineteen for all judicial districts including the amount of cash automobiles the weapons and other items. For example as shown on the slide in the second judicial district over three hundred eight thousand dollars in cash ten vehicles eighteen weapons and three other assets were seized in twenty nineteen. For the entire state approximate four point two million dollars three hundred fifty nine vehicles five hundred and thirteen weapons and fifty one other items were seized. Over the past ten years over sixty four million dollars fifty five hundred vehicles and forty six hundred weapons have been seized. The map on side and exhibit one on page to the reports of the seven judicial districts selected for testing to conduct a review to seizure incidence in each district were chosen from the asset seizure tracking system. Auditors trace the seized assets recorded in the air at as it sees tracking system to the supporting confiscation report and verified required procedures have been followed in the disposition of the seized assets additionally one confiscation report was randomly selected from the agency and tries to the asset seizure tracking system to ensure all seized assets have been properly reported finally one seized asset was randomly selected from the agency's evidence room and tries to the indices confiscated inventory records. Do the cover ninety pandemic and guidance issued by the Arkansas department of health to the fourteen agency selected for testing and FOR county or twenty nineteen. eleven today's the agency personnel only as a result LA was unable to visit these two agencies those are the been county sheriff's office in the Bentonville police department and the nineteenth west judicial district the testing of these agencies have been deferred to the twenty twenty county review. As a result of testing one exception was noted at one of the twelve agencies reviewed as shown on page three of the report the bass state eight cell drug task force did not obtain and maintain a proper transfer property receipt as required by code section five sixty four five oh five eat three. The agency responded that has taken action to correct this matter. This concludes my presentation thanks erection time the presence of agency officials was not requested today and I'll be happy to answer any questions you may have thank you Mr thank you Sir looks like first question up is a Representative love you're recognized. Thank you Mr chair in in review and some of the reports in the committee yesterday. We found that. There was cash that was seized in and in some cities are counties in the in the cache went missing. I guess my question to staff is is there any prohibition against a because I would think that once cash is seized I guess the should be deposited into on that and to a I'm a checking account or whatever in till you know until. I guess it can be disposed of whether it's giving back whether it's just I don't know has dispose of. Is there any prohibition against cities and counties taken that still. Because the many changes have K. F. I guess the main and evidence or whatever. It is seems like it makes it more okay the cash will walk away in so I'm just trying to I'm trying to you know think through this is there any prohibition against that. Williams again in a lot of cases the cash is considered evidence so and depending on who's involved in the case it's put in a vault it's locked the bills could have been marked for some you know in a drug case so they don't always deposited no Sir I don't see okay well here I am right here in front in front of it so I guess I I guess that that's that's kinda. I guess that's kinda my mind whole concern with seizing cash because even though it is evidence of me it's still going to be it's still gonna be evidence if you deposited into an account in this you talking about counterfeit funds or whatever I mean. I'm just thank in Maine with aggressive with cash walking away I think it's the safer route would be against to have a deposited in I don't know but I just I just sent that question so okay thank you Mr chair. All right thank you next up the center wrasse you're recognized. Thank you Mr chair of remembering we address this during. Session a few sessions ago because I remember former senator Linda Collins. Attention good discussion on this Senator Clark and we Senator Clark here today Senator nobody's question that I don't think we've heard the last of it but he made public recently. About a case that drew concern. about somebody that had been arrested In the. Camper or some mobile vehicle that he was living man. I'm doing this recollection to be exactly but. A was sees that belong to his mother. The title was in her name. Maybe in some other property. Hi I'm just doing this for members You know I I'd appreciate works task force does not looked at my district it's not not that much money in. Things But. I wish somebody made the comment on what senator Clark posted will you know they they need they they were told when I contacted law enforcement we should have gone and done this and should build on it the general public doesn't know. The process they don't have the sheet. It shows were here it goes through and and who you can contact how to get a hold of the court. But I have great concern. When a citizen has property in their own name. And and it's taken from them. And so in their total will you didn't you didn't do something time or whatever that so I'm just saying that to this body I hope we have. some legislation and I can expect to to look at this and and again what trying to be supportive of our law enforcement there there's some cases in the US that are too borderline I do have a question for staff for the the chair. is the Arkansas drug director call trying. Yes Sir okay A this I wanted to verify that in that but I do appreciate this report and I I would like at some point with its the this committee or JP are something I think there's some other things need to be looked into we'll see what happens in session thank you. Thank you senator. Are any other questions or comments from committee. Pharmacy in on that will be reviewed. So what residence late. The. Your question. Of thank you Mr chair yes is more or less comment to the Representative love and to senator rice of dealt with several cases of drug seizures and and and had to go through the entire process and with represented love this week photograph the the the standard practices photograph the money at the same words taken once it's back to the offices photographed again and then deposited at the earliest we can into a bank a checking account like you said so we take precautions there because there's been too much of that stuff Mrs that way we keep the total account in center us on the Owned taking of acid school you know what I'm concerned about with that with the is Mr McMahon and some of the others and Welch is one I take it they give the receipt to the owner and it's fall they got forty eight hours to file it to the prosecutor the prosecutor has sixty days with the complaint to get to the person that is being taken away from somewhere in there it must be and draw the they didn't follow what they should have so they could to those folks could of retain their property to use me great concern there too and the that's all of the input ahead Mr chair and I appreciate it thank you Sir. All right well no further question or comment will consider that review thank you committee. Our next up is special report of law enforcement agencies compliance with the tobacco seizure and forfeiture requirements the calendar year. ended December thirty first two thousand nineteen Mr Davis you're recognized in. Thank you Mr. Reports law enforcement agencies county you're doin IT complies with the asset seizure and forfeiture requirements of Arkansas code annotated twenty six fifty seven to forty seven. Arkansas code provides forfeiture procedures FOR tobacco products upon which the full amount of excise tax due is not paid or which were possessed or sold by an unlicensed wholesaler retailer in addition the property money used to facilitate facilitate a criminal violation of cold for the manufacture or distribution of contraband tobacco products may be seized and forfeited to the state according to Arkansas tobacco control one tobacco related asset seizure Kurt encountered twenty nineteen in addition I LA staff followed up on seizures that were outstanding in the prior year to insure agency compliance with code requirements no instances of noncompliance were noted as a result of staff procedures. And that concludes of that report and there's no age seized after for questions thank Mister thank you Sir there any question or comments not report. Our CNN will consider that reviewed thank you members of the next item businesses other business of the next meeting of the legislative joint auditing committee will be held at the call of the chairs. A is there any new business needs to come before the committee. Aren't seeing none will consider this meeting adjourned thank you for your tenants.