ALC-JBC Budget Hearings (9a-11:30A)

Ladies and gentlemen if you of the committee if you would please take your seats the chair sees a quorum. Today ladies and gentleman first thing on the agenda the governor is presenting his balanced budget today in this balanced budget is just for informational purposes only there's no action necessary on this presentation now ladies and gentleman. I would like to welcome our governor A so Hutch in San. Mornings we chat via a greetings to a chair Cecile Bledsoe and co chair Representative Jeff Wardlaw into each of the members that are present today thank you for this opportunity to appear before you and to present the budget as we have and the previous by any Ms as I presented today I'll be honored to be followed by secretary Larry wall three and director Jake believe as they answer more specific questions and the follow up on the presentation today I'm submitting my a balanced budget recommendations for state general revenue for the two thousand twenty two twenty three biennium this budget funds the priority of this state including the largest increase in education and more than a decade. If funds are crisis crisis stabilization units that are proven effective in dealing with those a mental health crisis. And the budget allows room for another round of tax cuts. During the pandemic we have worked together to tighten the belt of state government we have reduced spending in the past year and we are focused on the core critical areas of education public safety and our health care infrastructure that was essential during this pandemic as a result you're entering the next year in sound financial condition. We have accumulated a two hundred and forty million dollar surplus from last year and our current year is running a surplus as well. I want to add that I appreciate the general assembly's work to increase the safety net for our cans and who are struggling because of layoffs and financial challenges this includes a rental assistance enhanced unemployment compensation and food assistance all delivered and approved at a use of the carriage act funding as approved by the Legislative Council. In terms of the future we are in a position to absorb the tax cuts that are already scheduled for next year as you know we have reduced the individual income tax rate to five point nine percent beginning next January. This reduction is already included in the forecast numbers that you see before you. The balanced budget submitted today is based upon a revenue forecast. For FY two and twenty two of five thousand and fifty nine point four million dollars which is an increase of a hundred seventy two million dollars over the previous year also can be reflected as a three percent increase in revenue. Now when you look back on the last year we have had to reduce our current budget in the middle of this pandemic and we've had to increase the operations of state government in order to fully fund education and the other services of our state. The budget presented today reflects our experience over the last eight months it restores the funding cuts in areas including higher education department of health the department of military. It also restores funding for a county jail reimbursement into the state crime lab. But it doesn't restore all of the funding. And. Now let me talk about the savings from transformation in the budget. We have identified twenty six point five million dollars in this year's category deep cuts to agencies that have not been requested to be restored. This twenty six point five million dollars savings is the result of good management a team effort and accountability. That was the goal of the transformation and efficiency act was passed by the General Assembly in two thousand nineteen. Let me pause a moment because I know you are data driven. Since I became governor in two thousand and fifteen we together have reduced state employment I. two thousand employees. Now some I ask for what is happened since transformation. And as the Arkansas Democrat Gazette reported yesterday that since transformation we every do state employment by eight hundred and fifty eight employees which is the largest decrease in a physical year since I became governor. My cabinet agency directors are working every day to increase savings and improve service eight hundred fifty eight if your employees and twenty six point five million dollars in reduced spending is a current result. As I mentioned we have an unallocated surplus of two hundred forty eight million dollars. Many of you have mentioned to me your desire to see an increase in funding for the long term reserve fund. I regret I agree with that. And I am recommending that one hundred million dollars be transferred to the long term reserve fund from the on allocated surplus which would grow our savings to two hundred and eighty five million dollars. Prior to creating the savings account we just did not save any money we didn't have any budget for that purpose we were not creating that savings account. We spend it all and now we have changed the culture and standard for our state budgeting. I'll put up the chart that shows this in graph form and you can see in two thousand and sixteen there was zero dollars and the long term reserve because it did not exist and then in two thousand seventeen you can see how it was created a group and a grew and grew to two thousand twenty to hundred eighty four point ninety nine million dollars with adding a hundred million dollars to that will be well over a quarter of a billion dollars our long term savings account. This is important for our future and as you can see this will be added to each year and so it will continue to grow and be a cushion against. The uncertainty of the future I want to applaud again the General Assembly and its leadership during this time that Vaught Felice said long term reserve fund is import. In addition to the one hundred million dollars transferred to savings the pro proposed budget allocates from the surplus an additional investment in rule broadband of thirty million dollars and this can go through our existing broadband program so it's can be as simple allocation of the one time funding. Additional one time spending recommendations are twenty eight point five million dollars to the department of education for academic facilities. The rainy day funds will be part of the allocation and use of long term of our enact allocated reserve that will be reduced from thirty million to twenty five million dollars. Three million dollars for state police vehicles and bringing the ADC economic programs into the budget with a line item a five point eight million dollars. So finally in terms of the surplus I know in this session there will be a debate over other tax cuts for the many different variations being proposed by various members under the proposed budget twenty five million dollars is allocated from our surplus to fund tax cuts. This would allow for a fifty million dollar tax cut in total with the first year of the biennium covered by the surplus my recommendation is lower middle income tax cuts this will set the stage for reducing our top rate further when the economy a louse. One of the ideas is increasing the exemption for used cars from the sales tax. I would propose that the sales tax rate for used cars be reduced from six point five percent as it currently is down to three point five percent for used car sales between four thousand and ten thousand dollars this not only provides a tax break. But it also reduces the incentive to game the system. This would reduce revenue by thirteen million dollars I hope that you'll favorably consider that. The second I also want to show you the second chart I think you've already seen it but let me spend just a little bit of time on that and this was prepared by D. F. and A but you can see how that is allocated for the surplus that we currently have and we also in addition to the items that I have to mention we will have funds in there for the present lease payments the Medicaid trust fund as well as leaving it on obligated balance of thirteen point five. Million dollars which gives us some room to work during the course of the session also built into the budget is the reduction of the individual income tax rate and this is a new proposal that I want to present to you today that's already built in to the Budget so you don't see it as coming out of the reserve funds but this is reducing the individual income tax rate to four point nine percent for new residents of Arkansas for five years. Now there's two purposes for this plan first it's economic growth in recruitment of talent for our growing tech industry and manufacturing in our state. Whenever you can offer whenever lower. Tax rate whenever you see people wanting to move out of the large urban areas this gives us an opportunity to recruit that talent it is also an added attraction for retirees to come to Arkansas the second purpose of reducing the rate of four four point nine percent is to keep our eye on the ball. The goal is to reduce the rate for all Arkansans ins two four point nine percent over the next five years. And so as we lower it for a new residents of Arkansas for five years we're also setting the goal and saying we're going to do this same for all our cans and since so we have a goal to work work towards. This is not designed to per prioritized new residents it is a plan to get everyone to four point nine percent more quickly through continued economic growth the cost is one point five million dollars the first year of the biennium. And I said that is already built in to the full forecast to budget and now before I turn it over to secretary Walter and director below the I want to thank the General Assembly FOR allowed me to present this budget this budget sets the foundation for continued growth of our economy. It sets the stage for continued improvements in education and I hope increased salaries for teachers it supports our state police and gives us a healthy cushion in savings for the unpredictable times in life again thank you for your partnership I look forward to working with you. Thank you governor. Alright ladies and gentleman if the. Mister Walter and Jake plead would come to the table please introduce yourselves we will take questions. You're recognized. Thank you madam chair Jake we DFA office of budget Larry Walter deify. John shall not DFA alright thank you for being here. Of. See seventy five. That. By Representative eaves you're recognized for a question. The manager one of quick question on the four point nine percent what what date are you using to determine how much that would cost the state I mean how are you going to be able to figure out how many people are moving here specifically because of the reduced rate. What we've done is looked at in we're movement within Arkansas for the it's for a historically and use that as a guide. Okay thanks all right of seat twenty two. Thank you madam chair One of one of my question has to do with what you just just What was just ask and I'm Thinking about this in terms of having a budget that reflects our. That which I think we lack not you talked about you just in the governor. To growing the over all quality of life in our state. And for years I think we've not paid attention. So if you just to talk to me about the four point nine and I understand what you're using to determine what is going to cost. What is the evidence that it is going to bring people to our state because. Generally speaking. Tax cuts do not do what we have told people they do for all these years. A but we keep on doing it. Your response please well I our objective first of all it is is the governor said to reduce the marginal rate to four point nine over the next five years so what we're doing is establishing that is a mark to allow on new residents of Arkansas to have the benefit of that. Of earlier before it actually before everybody else gets a hopefully in five years everybody will be at the same at the same rate if if we're successful we believe and that a a way of recruiting and encouraging people to consider Arkansas is a tax reduction in one that is going from six percent when the governor started on the marginal rate down to four point nine which is pretty significant very significant Reduction in the marginal rate for citizens of the state of Arkansas so we believe that will be a way to encourage people obviously there are no guarantees and will and one one might say that the more money you have in your pocket the more the better your quality of life can be wherever you are including Arkansas except that except that there is no research that backs up that premises what I'm asking about and and it's in the other questions is it enough to change the quality of life for us in our state without giving it away to somebody else to come into the state there is just not evidence for that my second question and I don't nine Cheryl let go after this second question but I just made a list of UP of things that seem to be so important to the quality of life in our state like housing. Finding the housing trust the housing trust fund A making sure we address college affordability and and a college debt. Funding pre K.. And going right ahead and buy in the bullet and not just fund toward rule broadband but fund it and and and not have a qualified. So. If we are determined to have a budget that reflects changing the circumstances for people in our state how do we not fund these things that I mentioned. How do we not get to those things if you want me to repeat a my will. Well I I I I understand what you're saying there are there are several things in your less that that need to be considered the one that jumps out at me would be the of of the broadband and role of all broadband generally is the term we using to try to get broadband deployed you pick a loosely around the state of Arkansas we're doing all we can to do that we put on a tremendous amount of money from the care steering committee in the in the money the one point two five billion dollars we receive from the federal government toward broadband and we will continue to do that the governor's got broadband in here for of the twenty two and twenty three so we're we're doing those sorts of things a this is our proposal this is what we know as we look at the budget look at the revenues will look at what we're doing these are the priorities that that this administration is established for the arcade for for the the administration for your consideration to move forward obviously there are things that could be changed it will be changed as we move into the general session that can be discussed and debated and the priorities of this legislature legislative group will also play heavily into what we do twenty two and twenty three. Thank you Mr wonder I I appreciate your responses and I look forward to talking with you more as we go along right thank you Senator hammer I believe you were in seat twenty sixty one. Yes ma'am thank you ma'am chair good morning the moving the hundred million to the long term reserve what impact is that going to have on our S. and P. rating review all made any projections on that I think that was one of the goals of the long term reserve which to get our bonding rating in better status center I understand what you're saying in this the actual quantitative analysis of the analysis of that we have not done but in discussions with standard and poor's in the rating agencies they look at those sorts of things and one as we move into twenty two and twenty three we're adding a significant amount of The money into the long the risk the long term reserve which I think will help us in our of it obviously keeping our bond rating but moving toward a increase a reduction in the the race that we associate with Arkansas it is your we we can get very close to a half a billion dollars in the next two two and a half years right which I'm not opposed to it I'm I'm in favor of it but I was wondering on the does SMP just look at these one time injections infusions of money or they they looking at a consistent stream going into that fun I don't I don't know the answer that question but I would think that they would like consistent it addition and without reductase in taking any the money out I've been in all of the meetings when we met with the rating agencies some on site and some due to conference calls add that topic really has it come up on the how it increases but at but it makes sense to me that if we continue to do it and and so like I do at home I religiously save money yes yes we know so that's mine the and a I think we need to do that here in Arkansas also okay the four point nine did you do any kind of calculation as to what the price tag would be for that for the citizens of Arkansas now if we were to just bite the apple and take everybody down to four point nine instead of giving it to new residents Senator it can be done I think we've got the information to do that I have not. To test in awhile and I don't know if we've done it recently do you know. Well we've I mean if if you we've sliced and diced the fiscal impact of many many different plans and you know we've due if you'd go back all the way to the tax reform task force and some of the work that they did hear the General Assembly the challenge we had is of course it's a balanced budget state and as you look at the budget before you FY twenty two the way that the forecast is on role is really projected to be the bottom of with a four twenty three showing better growth so what we are cutting taxes in twenty two we also have to recognize the limited and nature of the. How tight it is in twenty two going forward but the governor's made it clear that is the global policy goals is to continue to push for that and that's why the four point nine percent for new residents in part was was adopted but we could eight if you would like to give you the revenue impact of going. Flashing down to four point nine sizeable amount of money I'm sure at I'd like to see that thank you manager thank you Representative Jean you're recognized. Thank you madam chair. With Walter I'm on. I'm on the last page word has individual income tax change. Twenty five million in the. Fiscal twenty two year and then fifty million in the fiscal. Twenty three year. Is this part of bringing the top rate down. Of a it because I heard the governor said over five years or or we look in it too basis point a year how we can get to four point ninety five years no that that does not reflect the desire to go to four point nine of play in the martial rate in five years this is the a reduction in income tax on the middle and low income that the governor referred to in the his additional comments do you have the Pacific's of what it what are you looking at doing that no I think we're leaving that open for a discussion of broad discussion with the legislature I know there have been at least one or two proposals that we saying having to do with low income and we know that there are probably others six by surface so we would like to discuss those with legislature on how we by tore at what we might do in order to to lower the burden of income taxes on low and middle income if I have may have local madam chair yes of so what I'm hearing with the governor the plan to get to four point nine and five years there's nothing in this by any of that addresses that. No Sir okay so thank you all right if I can yes and this is a. The new residents is I think the government a comment one of the reasons we're doing that is to keep our eyes on that but no Sir there is not anything specific to that effect thank you all right senator Meeks you're recognized for a question thank you madam chair I have to that's okay the first one hopes pretty quick with the the special incentive we're gonna maybe give the new residents are you all going to be advertising that to and and how are you gonna go about advertising that so people know that Hey if you come to Arkansas you get the special bill or is it just gonna be something Hey they get your surprise you get a benefit the you didn't realize you had it would not surprise me at all of the department of commerce use that to their benefit okay the second question I have is on the broadband issue I'm glad to see there's at least thirty million dollars in their as you know the estimated need for the broadband issue is close to six hundred million dollars and just a little quick math thirty million dollars means we're not and your broadband out to all of our citizens for another twenty years any possibility that we can grow that number so that we make sure our citizens get served a little bit quicker. I certainly something that we look forward to working with the General Assembly on as I mentioned earlier the twenty two year is pretty tight but this balance budget is an initial proposal it's something we're gonna be working with you all on until may but that is something you're open to it sounds like absolutely thank you thank you manager all right the represented Cavenaugh he recognized thank you madam chair I'm over here. I'm gonna go back also to the four point nine and you said that you got the data for what the it would be to the budget for historical data if this is really supposed to be a way to attract new residents to the state of Arkansas it looks like that historical that is not going to be a valid way to it assess what is going to be a hit to the budget. So if it's only gonna be based upon historical data we don't really know what the it's going to be is that not correct. All of our revenue forecasts are just that their forecasts so one in the you see this a lot with the fiscal impact statements that we do for bills we have to sit down and put together our best projection our best forecast and I and all you can use the word our best guess on what that impact will be for your right uh we might have a flood of new residents into this state who take advantage of this and the fiscal impact may in fact be greater than this but that I think would achieve the policy goals of the administration and the whole reason we would introduce that tax right now though this is the best number based on the historical information all the data we have available on what that impact will be all up madam chair yes well for someone that wants to think about forecast. If we're saying that this is to attract people then I think we need to do our forecast based on what you think it's going to attract not what historical that will be so we will not hold on a budget what the real cost of it is when we start looking at all these other tax cuts that we want to do we need to have real numbers that we can deal with and that this is really designed to attract people then we need to look at the forecast based on what you think it will attract thank you thank. A senator bond you're recognized. Quite correct over here from the lamest of ducks I guess Serve the. And I know we've done the sixty million on teacher salaries in the last session to burning up to the door the bottom line of thirty six thousand is the state starting teacher salary level what room remind all of us that we as legislators make more than that in what is a part time gig if you look at the. Financial data for Arkansas on page thirty nine. You'll see a. Where we have been losing ground. Versus the United States on our teacher salaries. And although we are trying to do some things now the other states also are doing things. So. Do we have a plan to make Arkansas say number one and SRV B. region the southern educational board region or to compete at a higher level with the nation on teacher salaries your budget recognizes that economic incentives could recruit new residents possibly it seems to me we need to be laser focused on recruiting the next generation of super hero teachers to Arkansas and that's going to change our future more than just tinkering with that top tax rate. So of as far as efforts to we might make within the budget to improve teacher salaries during the last biennium one of the things that happened was the use of one time money in effect to backstop the sixty million dollar it was sixty million dollars and effectively one time money to help some of the other districts were having a hard time with that mental teacher salary well that's sixty million dollars is built into the budget now so that's something that it's a commend were making we're gonna help those schools that need it we're gonna help increase that minimum teacher salary back up for those districts right but the goal is still thirty six I think I agree pay equity is a huge issue for rural Arkansas and I think that has to be tackled the the salary should be more equalized across the state but do we have a plan to make as number one or number two in the region. for teacher salaries or are we just sort of just comfortable with falling behind as other states continue to exceed us I wouldn't say that we're comfortable from from point behind and I would point out that the advocacy committee recommendations which are fully funded within this budget are the largest sense FY two thousand seven in percentage wise bases it includes fifteen million dollars in in to increase teachers Sally recommendations so I think that as far as funding for public education this budget absolutely provides that now how that trickles down to teacher salaries I think that the money is there and it's certainly it showed a lot of progress of the last two by Indians on that issue well just to close out as follows I think we ought to got to be laser focused on competing competing to be at the top and and maybe the adequacy committee does that I don't think that it does and then also just there are some good things in the budget not to be negative Nelly over here but we have our prison population way down right now the lowest rate ten years I think Mister graves secretary great said the other day and I think we need to focus on keeping that down with an investment in our addiction and mental health treatments with in within the present system and before people get into the present system because I think we've got an opportunity to really capitalize on that I'll be quiet and go home now thank you. All right of senator Chesterfield you're recognized. Thank you madam chair. One of my great leaders is that Arkansas will become another Kansas if we keep cutting taxes and in the quality of life A is diminished but everybody could you please tell me what the states our what is the tax rate for the surrounding states that would make the four point nine Arkansas so outstanding. Would it be lower than Mississippi A would be lower than ten to see would be lower than checks is in Missouri and all of those states Oklahoma. I don't know what the obvious to our okay taxes in Tennessee which have a zero of tax rate so we cut it to four point nine we cannot compete with checks is not Tennessee action on that particular thing but I don't know I don't have the others in front of me I'm sorry I can get that for you to appreciate it and as we are what is funded currently by the used car tax. That is general revenues in. So there is no specificity anymore because at one time the used car tax was used to fund a great deal of public education so that's no longer the case is that right well it goes to general revenue on of course a great deal general revenue goes to education but that is correct. eight AM four is our commitment stand not only to take the twelve. A what is the commitment to hiring yet I'm not hearing it. So all of the category D. reductions that were imposed this year are going to be restored for institutions of higher education in FY twenty two and in addition that will continue funding productivity. But there's no market increase in the amount of money that we are putting into higher education we just we storing we're not increasing well there's a seven point seven million dollar increase with the productivity funding a net increase of seven point seven million. But those schools that are having difficulty with the productivity model don't get anything is that what you're saying. A that's would be how the productivity model works out they are getting their category be restored so they are getting back to where they were but there is no additional funding be on the ice so one of the reasons that people come into places it seems to me certain act I assume they check with the tax rate is I'm not really sure about all of that. But the quality of life and if we don't have access to broadband how do we. A tract does check those young people that young people rely on this as a way of life we can I track senior citizens who are more and more reliant on broadband but just to make that smaller commitment is not what is going to attract the young people who are so check said the and so reliance on technology as we look at this budget are we going to have the flexibility to increase that amount so that we do increase the quality of life as more and more of us citizenry is dependent upon broadband especially in the middle of this pandemic. This is a balanced budget that we're gonna be working with you all on until may it's certainly something that we look forward to to supporting you on I think the governor's commitment to broadband is strong so that's certainly discussion would like that thank you thank you mention right the next in the queue is. Representative Ladyman. Thank you Mr chair. Well first off we know that lowering taxes does help the economy we've seen that when we started lowering taxes in the last three sessions our savings account was zero the governor just does that and we now have a hundred eighty million dollars in reserve and although we've had difficulty with the pandemic we have whether that better than a lot of other states and we were able to do that because we had adequate funding to take care of our people and do the best that we could so where the test I think in and it's worked in Arkansas and I believe we should continue to do that when you talk about broadband we all know or we all want broadband for everyone but that's not a standalone activity if you don't have if you don't utilize that broadband to improve education and if you don't have companies or people who come here to live in remote areas then that we're not taking advantage of the millions of dollars that we're spending for broadband so we can't just focus on broadband we have to focus on other things we have to recruit people to come in here to utilize that we have seen and we will see more transition of people away from large cities that's a fact you can go check that so people are moving out of large metropolitan areas they're moving and more rule areas because they can work remotely now that's been proven as well during the pandemic so we have to keep our eyes on a number of things and not just broadband quality of life yes that's an issue but we have high quality of life in Arkansas not that everybody does you know in my district that drive around housing is definitely an issue but when you look at what we have is natural resources people come here and roll. Wolves during their vacations. Because we do have high quality of life we do have natural resources we just need to leverage those so I get to my question One question was answered how we compare with other states around us and I know taxes and and Tennessee or zero and I I believe four point nine would get us close to Missouri and Oklahoma I don't know the exact numbers but we definitely need to compete in that category but we also need to look at other taxes and my question is I have an interim study to reduce sales tax by half percent and that's a place holder really because I won't look at that A what is the advantage or a I know there's advantages but to reducing income tax versus sales tax. Did you all go through an evaluation of that can you give me an idea of you know she week to we focus all on income tax reduction or to be looking at sales tax what about our property tax I think our property taxes one lowest in the country so we have to look at all three of those things but comparing income tax to sales tax reductions. Can you give me some idea of the benefit of going with income tax reduction. There's a there's a couple different things to to look at with the income tax of course you can target different parts of it so you can target low income folks right you can provide specific incentives for people to come to this state is the fact that you have is if you lower the sales tax you might have an impact on the local community because of course they have local taxes as well so both taxes are high on a nationally both taxes are things that the governor would certainly like to reduce I think that his emphasis is really been on the income tax and stats I think the the app from a state standpoint the easiest for us to quantify but absolutely if there's a way that we can lower that sales tax further I think that's something we'd like to explore you were in a difficult position with regard to the sales tax you know that we are one of the highest is understood in the country that was discussed I believe that some. to some degree in the task force that we had on taxes two years ago and I don't move I don't think a I think the consensus is we need to reduce it but when you start reducing sales tax a small percentage of changes sales tax moves a lot of money to just more difficult from a practical standpoint okay I was not on the task force the tax reduction task force but do you know on property tax. you know hi I know Tennessee's property taxes are pretty high so how to how do we compare their I mean is that are we way low on that my understanding is we are course that's a you know that that's of. It touches everyone everyone that owns a house and even renters who ran they're paying property taxes in the in the red payment at the lake it's a if if that's of I would tell you very political. Issue to tackle it it would probably require I don't would be a constitutional many here well the state cannot we can yelp excuse me yell cannot raise property taxes the governor of this state under the constitution is prohibited from raising property taxes property taxes are exclusively a local issue so you know there's some amendments in the constitution to deal with that the twenty five mills for public schools and that sort of thing but it would really be if a constitutional issue or a local issue two to make some kind of statewide change to property tax rates and in the property tax of by their collected on a county bycounty basis they don't really come up with there you will find those in this budget property tax there is a portion having to do with of where we have the homestead exemption where we replace that money so we do have to put general revenue right it's a half cent sales tax there is levied on everybody the then goes into A fund to reimburse the counties for the three hundred seventy five dollar homestead tax credit so that's an example of where sales taxes are being levied to offset property tens. Senate to work on him and reduce the more yeah I understand I understand that's a local issue but I'm just saying we need to look at all these things and I'm sorry did everything we do here is political so. Everything was all right thank you all right to senator Ingram you're recognized for a question. Thank you madam chair up and I would urge this body did we have to look it up taxes on a broad based we cannot look at him in a vacuum by just comparing of the income tax to adjoining state of Tennessee the property taxes to choke a mule of we don't have the benefit of Texas with the oil and gas tax revenue of the end of the day there isn't a free lunch it comes from somewhere so of I know this body in the past is taking a broad view of. We face a decision the Supreme Court does on the ACA I've asked this question before but. Of what is the plan if the affordable Care Act is repealed and I don't particularly want the answer will they'll give us time to figure that out because of many of us in this body always like to look at the worst case scenario that we're going to face and go from there so what is plan B. if it is thrown out what is the impact in dollars that I know we all have figured an estimate of the impact of the budget would be please. So as far as the plan goes my expectation is that we would probably have some kind of a session two addresses and the reality is that the fiscal impact of that decision would be significant on not just our budget but on state operations. Of G. to further define significant are we talking about a hundred million dollars are we talking about a billion dollars. I know that the last time we looked at this it's been significant and the concerned primarily is that folks if you look at the expansion population every dollar we spend through that ninety percent is paid for by the feds that goes away those folks still need their healthcare and to the extent they can they are likely to avail themselves of traditional Medicaid on traditional Medicaid of course the twenty eight cents of that is paid for by the state so it's a better deal for us to have folks on that expansion the concern and the fiscal impact of it would be if that expansion population is no longer allowed or no longer exist what's going to happen to those folks and how are they going to get healthcare as far as the exact number I don't have one recently well or just right there you when you take up ninety percent versus of of the state ten percent versus twenty eight percent what what kind of number is that. It's big. What. This is literally on the back of an envelope featuring here. Your. A lot more and it. For whatever that's worth you will. Not particularly. It's a pretty big envelope. You're recognized. Good morning good morning of. See I would to do she said of please syndicalist B. I'm secretary of the department of Human Services. Secretary of the department of Human Services syndicalist speaks sorry it's hard with the mask is you know better than I do so Two things first the expansion population which is what you're talking about we did know that question would come up so we have run those numbers as a late right now as director blade said with the populations that would return to traditional Medicaid it would of cost us to pay the thirty percent match two hundred and twenty million two hundred twenty point seven million we currently are paying a hundred ninety five million total we would also lose eighteen million in premium taxes so you end up with a total of about. The same populate the part of the population that would return would end up totally having an effect of two hundred twenty million in spending offset by the one hundred ninety five million. And then a loss of another eighteen million in premium taxes okay so bad forty three forty five million dollars would be the direct impact on just what we're covering now not to mention anything else that that that that it would affect correct by senator if I could also point out yes Sir but if I can also point out this the reason we all answer it as the Supreme Court would as usual give time for states to unwind and time for action is because the law itself depending on how much of it was thrown out has a lot more in it than just the Medicaid expansion population there is also there's also children up to twenty six on insurance policies there are a lot of insurance regulations in there and changes there are Medicare changes there's the doughnut hole change there's a lot of things it's a very huge wall as you will remember and so director blade is correct to say we would have to have some time to actually think through all the implications because it's much more than just the expansion population so you're sharing this body that we will have time to deal with this it will not be in your opinion it will not rain down upon our head in this next budget cycle that it will will will have time to deal with a I am should ensuring you that in my opinion. Which is all I can assure you of is my opinion is that the Supreme Court would allow time for unwinding of whatever pieces which would also allow time for Congress. To take some sort of action so I'm like you I think we all are we do try to look ahead and anticipate things that might come out of but there is a difference and at this stage just shooting darts at a board which is what we would be doing so we will we will plan we know a little bit more but at least for running numbers. Thank you. Thank you right next in the queue is a Representative Dotson you're recognized for a question. Thank you thank you madam chair My question is with regards I guess both on the the proposals with regards to the four point nine percent income tax plan. If people. Leave the state how long do they have to be gone before they come back to take advantage of that new rate. I don't know that we have worked out the specific details on that that'll be something that will probably be putting before you all in the form of a bill so you know how long do you recognize of do you have to have residency in another state and then pay taxes in that other state for a certain period of time those are all details that will flesh out when we drop the bill. Okay and then with regards to the use motor vehicle sales tax you it says three point five percent rate under ten thousand I'm I'm guessing and I have no details but I'm assuming that is for zero to ten thousand or is that only on the four thousand and above four thousand ten thousand because right now under four thousand is exempt and is that only three pop point five percent on the state sales tax which is six point five percent or is it. On the entire bill the local taxes still get added on top of this three point five percent so the the proposal would be a as he said from four thousand to ten thousand the tax rate would be the state tax rate would be reduced from six point five to three point five local taxes would still be assessed. Okay so it's basically three percent reduction on vehicles between four thousand and ten thousand yes Sir. Okay and the. I'll get back in the queue for any other questions thank you all right in ladies and gentleman I'm taking questions from those who have an ask a question and then we'll get to those who have already asked a question and that's how we're going down the queue Meeks this so Representative would you're recognized. Thank you madam chairman Mr secretary I noticed in your forecast that you're forecasting the a decrease of fourteen thousand two hundred jobs is that from the present level were it now or is that in the future which one of you can answer the in. That is a year to year change and the job as we were we are now okay is it not affected of tax reductions of lead to economic development. I think that's part of what you're trying to accomplish is is your overall different aspects of the tax reduction will hopefully encourage your gross within the population but also in the in the the development business around the state. So either way we're putting more money back in the consumer's hands which it leads to economic development which could solve that problem of losing fourteen thousand jobs correct. Madam chairman I have one other question one of the statement of We What we're faced. With the funding. Deficiency problem and education in Arkansas. Submitted to your following of a Representative lemons comments is long. Senator bond as long as we have property tax involved in our education system in this state we will never be able to achieve adequacy in education and our constitution states it is the state's responsibility to provide an adequate education. And we've got to address that fact property taxes cannot and will not help our teacher salaries in this state. Because we've seen that in two lawsuits over the past forty five years so when we need to look at that we need to look at getting the schools L. of the. Property tax business and let the counties have that for fire protection streets development roads and that But we cannot achieve adequacy and equity and education when you're at the when you're looking at the property tax well use in Newton county versus Pulaski or Washington or been county thank you madam chairman thank you all right to a Representative rye you're recognized for a question. Yes ma'am thank you Mr chairman of. Larry going back to the property tax we know. That amendment seventy nine is employees and it we are handcuffed to a certain degree. With this because you got your five percent ten percent increases on your property taxes floors residential and commercial properties so you're you're regulated to a certain point what you do have the twenty percent assessment level that can be changed okay on the state level but learn. When you really look at the big picture of this situation no and look at this budget. If you go by four years Larry. Matt we had our service basically we were in trouble. And the proper and not the property is actually with the income taxes have been lowered. But is producing more revenue. So are we saying something are we saying that by lower taxes that we are growing in a bigger budget I mean I I wish that you kind of give us a shot on that one. You know I think in trying to interpret that on a short term basis like annual fiscal years is is pretty difficult one thing we're realizing is the the the last expansion leading up to covert nineteen was a very good economy but we have a lag time in income tax filings to discover what the story was we're now seeing that it was a very good set of two or three years there at the end of that expansion that carried at least the last tax year tax year nineteen carried across covert nineteen period to benefit the Arkansas with tax payments from that prior liability. then that was superimposed with stimulus and other pent up demand on the spending. so we we headed layers to gains in revenues from different categories income tax sales tax and a corporate taxes fairly stable which is a pretty unusual thing to say. A given that's history so a lot of things we come together to help us in the short run. Thank you Mr chairman. Thank you of. Representative Lynch you're recognized for a question. All right. So back on the four point nine percent. For new residents of the state. If the in that new revenue. That the new revenue yes okay so I can you show that is a discount to the budget if it's all new revenue I think the projection and and and this goes to represent Cavenaugh question to the projection would be based on the assumption that some folks are going to move your regardless you know they're gonna be folks who would who would move here in the next coming years regardless of what the tax rate was because the quality of life here is very good so in that sense we might lose some money by imposing this right so it's an opportunity house is what you're taught yes Sir okay. All right of. Representative Douglas. A sixty six sixteen is what we have here. Hello David I'm sorry who is it. Thank you ma'am yes. My question was just to maybe get a feel for the some discussions at one or put the budget together concerning the a used car taxes the reducing the tax level as opposed to you know the the legislative body has considered moving that threshold lot and you know I suppose just the exemption level up higher. In the thought there was it it it does help some of the the poor and our and our state to be able to to. Help tax was reductions for that so my question would be is. If you could share some the the governor's thinking as far as that. Not raising the level or just just reducing the tax over all. Well so when we look at a lot of different options and and you know what John was saying earlier about because it's a balanced budget stay and obviously on the budget guy so I'm always worried about making sure that we can pay for what we've got to pay for but the General Assembly in identifying this is an issue last session really I think catch on a great point and the more we started looking at it the more became clear that the way the tax structure originally had a lot of problems with it there's a lot of fraud frankly associated with a cliff where it says if you buy a car for four thousand one dollar you pay six and a half percent sales tax if you buy that car for three thousand nine or ninety nine dollars you pay any tax. So we started looking at that that's why the graduated rate is presented before you it's also recognition that there are is a benefit for folks who are lower income were blind who everyone needs a I think a car or most people need a car to to live and work so I think that was the thinking that we looked at when we started putting this together. Thank you. All right we're starting again so A Representative eaves you're recognized. Thank you madam chairman when the governor said that this budget restores the funding cuts does that restore those funding cuts to pre Kobe level for all but about twenty eight agencies. It restores the funding cuts to and this is the category deeds that we cut for the current fiscal year for everyone who asked for it to be restored now the governor identified twenty six and a half million dollars in spending that was cut in which the agencies did not ask to be restored they took a look at the budget and said you know we can do without it we can get by so we didn't continue that funding that's that's ACT twenty six and a half million dollar cut the we're continuing on today at four twenty two they are not on the four and a half percent of income tax and I'm with you on what we're trying to do it grow the state get more people to move here to question to have with that and you Jake maybe you can answer these one would be what we tell the people that are already here you know the people that have had business for fifty years that are going to be paying the the higher rate for that five year period that that maybe someone who just moved in is paying the lower rate number two if the lower rate is what what would attract folks to come here when they just a home movie Texarkana. There's a lot about Texarkana that is appealing as a place to live at least on the side of the line. And if we succeed in bringing folks in even if it's to border cities I think that there'd still be a net benefit for the state as far as what to tell folks the governor you know in his comments one of the reasons we're doing this is to really set that book mark that place marker to say four point nine is the direction we're headed and it's a commitment on our level to continue to pursue that even though this year maybe the budget doesn't allow it but we want to continue pursue it and maintain that momentum towards driving that top marginal rate down four point nine for everyone but my guess my point is with with giving a special group the four point nine I think that everyone that's already has been here for years and years is gonna be paying that higher rate I mean they're they're feeling a little little penalized I mean but again I understand you're going and I'm with you on that but would with a better possibility be to continue to lower that top rate in in increments to get everyone down to four point four four point or whatever you need to be it's the budget or presenting today the governor and in particularly the fifty million dollar lower income tax cut has signaled that he's looking forward to working with you all on really setting up the best tax policy so that's an idea that we want to explore further in the session certainly look forward to working with you on I appreciate the info all right thank you a. Ladies and gentleman we have about four people on the queue if you have a question now is the time. All right Senator hammer you're recognized thank you Mr chair just on the four point nine real quick I did a little research and of those that came into the state twenty five thousand two hundred fifty three were foreigners eighty nine hundred and ten were out of state I don't know what platform you intend to have the discussion with the legislative branch on this but I would hope to be sooner than later and said wait until may because I think we really need to hash this out and to the representatives question for those that are here now we don't want to send a signal that were punishing you for staying given the magnitude of the people are coming in of the twenty five thousand foreigners versus eighty nine hundred ten they're just doing state transfer. Jake you made a comment while ago about the sixty million that was set aside for the teachers in order to get it up to the thirty six thousand I think you made a statement that that is in the budget but my memory tells me that that was a one time boost to the school districts and then the school districts had to pick up the cost of the sixty million and can you help me understand that are as my memory failing me I'll do my best because the one time funding came to educational excellence trust fund I want to say or it went to ADD excellence trust fund and looked around for my education folks. But that was a one time part of money is going to go away as those those districts that need avail themselves of that funding that funding is going to go away the adequacy committee recommendations though included fifteen million dollars a year to go back into it and if you remember that sixty million dollars hi that was identified there was to last for years so that's fifteen million dollars an ongoing continues revenue that we're going to add to K. to twelve public education to help those schools continue to meet that minimum salary level you member did that come down with the requirement that the school district's when they were given the matrix funding had to spend that money that we gave them dedicated to teacher sellers because I know you know sometimes schools get that money and then they spend it the way they want to I'm not familiar enough with the timing of how all that worked out together and honestly when people start talking about the matrix I get out of my depth on that but we can certainly get with the the right folks and get a response for you the five point eight economic development programming what I was trying look to the paperwork I couldn't see how that is specifically going to be used can you enlighten us there's a series of programs that have been in place over at the department of commerce economic development commission it's been around for a number of years their the accelerator program there's various different kind of think tank incubator programs for local businesses the commission's been very skeptical those over the years but in looking at them they really do feel like we're getting a good return on those money the only difference is those of always been paid with one time money originally we were supporting them with general improvement funds then they were supporting them with rainy day funds the governor with this budget basically just said look at some point we got to get those into the general revenue budget so we're going to use one time money to support them in twenty two but in twenty three we will not work them into the general revenue budget so that funding stream it is a little more secure. For those programs and I didn't see anything in the budget where there's an increase for career tech education I mean that's something that has been you know it's important as broadband and I did I just overlook it orders or somewhere in the in the budget that we have an increase to that we did increase the funding by five hundred thousand dollars for adult education for a mentoring program that's in there as well okay but I'm talking about with regards to funding to the vocational centers and the aid funding for second secondary career centers is there any increase in the budget for that. Outside of a restoration of category de funding in that five hundred thousand dollars I mentioned no Sir I think that's an area we need to have a conversation about because it has been a banner that's been flown both by the administration and this branch that we need to do more to help re tool are a individuals in a for not putting more money into that it's just it's just a hypocritical talk and so I do want to have a sidebar conversation with you know I'll be asking to adjust this to make accommodations for that if we're gonna put five point eight into the economic program I think we ought to look at taking care what we've got before we go trying to bring anymore in thank you manager all right thank you all right the senator Elliott you're recognized. Thank you madam chair I want to make sure I've got this number right I think I made a note this see we've got thirteen point five million dollars available to use during the session that's not committed to to any effort is that a correct number yes that is the amount of the funding that we have in the surplus that is not committed on the governor's recommendations okay and A so if we are have been on an ongoing conversation this might seem self evident but I want to be sure I understand it this is a submitted to further discussion with the governor would you assume that the best way to further that conversation would be just to offer a written legislative proposal or are we going to be in a position to have discussions prior to may be coming up with written legislative proposals I'm sure that somebody in the governor's office would be happy to reach out or look for any kind of communication with any member of the General Assembly on this subject and this is going to be something that will be the subject of legislation so it will be tossed around will be debated in committees and passes chambers like every other bill all right and up for was was there any discussion about helping the given some assistance to the cost of healthcare for state employees and FOR public school employees as well. We are we are increasing the amount the state paying for both public school and state employees for their health insurance costs that is part of the EBT recommendations included within the funding here for paid through twelve education is a twenty million dollar increase in funding which is specifically earmarked for public school employee insurance costs and then of course on the state employee side all the agencies increased of thirty dollars per member per month. four those EBT costs yes I wanted to speak to did you did you pick the number of twenty million or did was at number picked with the notion of trying to get the premiums down to a certain amount that is more affordable for people are just pick a number with that my number was selected based on what the actuaries told us we need to have in that fund to avoid any kind of further rate increases for the employees. Okay so that they're going to have the same. Premium amount. The next two years they have right now I don't know I'd. I can get with you on what kind of an increase that is of course the twenty million dollar in state revenue was put in there specifically to avoid any kind of increase on the employees side okay and lastly I I think it's. It's just human nature that anybody would want you know a tax decrease so I I want to be clear that's not a matter of our discussion here I don't think or disagreement what I would like to just have some clarity about if we are trying to use our tax policy to help those who are struggling the most are we now then in a territory where we have a favorable attitude toward the earned income tax credit for real this time around. The fifty million dollars that the governor has set aside in the budget and we have accommodated for tax cuts is at least initially I think his desires that that we look at the pipeline that to lower income folks whether that's an earned income tax credit or in the form of reduce marginal income tax rate that would be that the target is just one of those good discussion points I would assume yes okay alright alright thank thank you madam chair right. Of we're going to go to Representative Vaught. Thank you madam chair I'm I'm over here. Well here as Jake can't I think I just heard you say that the twenty million was to keep teachers from having to pay more I thought the twenty million was what we were going to be in deficit if we didn't come up with those funds can you explain that please well I mean I'm not entirely familiar with the actuarial reports that we had I know that in the debates we looked at that we had a pretty tough conversation about who exactly was going to pay what. we looked at a situation where the cost to maintain that insurance program course for self funded were significant and at the end of the day the decision was made to commit twenty million dollars in general revenue to the public school fund that's money that would have otherwise been required to be paid by somebody either the district level or the employee level most likely so that's the intent to that now how that all shook out as as far as deficits and stuff I'm afraid I don't have that in front of me but that is a commitment on the level of the state to avoid any kind of further increase for those employees and and I understand what you're saying but I'm what I'm trying to remember from education and there may be someone who can answer this I thought there was going to be a twenty million dollar shortfall in the twenty million dollars was just to keep it from going into the red that it's correct in the sense that the twenty million dollars was there to avoid any increase so if my understanding is based on the text messages I'm getting right now is the twenty million dollar will hold them at their current worry by adding that twenty million dollars there it really holds off a rate increase for those employees but essentially we've got to do something better than just the twenty million to keep it from being raised in my correct yes and I think that for all both the public school and state employees side the issue of employee benefits division right to the represent of Wooten here is highlighted this is gonna be something we're gonna be struggling with annually okay thank you all right to the. Representative Cavenaugh. Thank you madam chair I just wanna answer question when the governor was speaking he spoke about it twenty six million dollar savings on dealing with transformation if you've been watching budget hearings we've been asking to see where that twenty six million dollar savings came from we've ask secretary factor that we able to present that to us and she's working on getting those numbers together yeah I don't by chance happen to have where that twenty six million dollars in savings has occurred have do you yes ma'am and then what that is is of course we cut two hundred and five million dollars out of the budget this year we did that by moving that money over into category D. in the RSA that's two hundred five million dollars that we don't anticipate funding and when we set the budgets up for FY twenty two we took the FY twenty one baseline amount as everything that is currently to be funded which is to say we told the agencies in the front in the five percent we cut in FY twenty one you're not going to get in FY twenty too much to ask for we told them look the budget's tight do your best. The agency's came forward and said you know what there's twenty six and a half million dollars that we don't and we think we can operate without so that's funding that we are not planning to provide to them in this balanced budget we can give you that schedule of how that worked out. But that savings happen because of the covert pandemic that's why we had those reductions are was from called it because of what we had to do to tighten our belt because of all of it yes didn't have anything to do with transformation well if I can't the shock the was applied to our economy here for the last six months I I don't want to underestimate how hard it was on the employees on the businesses and also on the agency's. The agencies have absorbed that shock without any loss of services in fact in this case they've been able to identify twenty six and a half million dollars to they actually don't need perhaps the co the pandemic help them recognize the benefit of those savings perhaps there was they would have been able to survive but for transformation but we really do believe that all of the work the agencies have been doing course the governor as soon as he came in office was telling them ya gotta do better you got a tight your belts all that work really put them in a good position so when that shot hit they were able to absorbent able to carry forward with less funding so we do think that that does qualify under the umbrella of transformation. All right to be finished Representative yes ma'am thank you all right of we need to come to check the time and we have just a few more people on the on the queue but let's try to keep them short and concise all right to Senator Stubblefield I don't believe you've had a question since we started so you're recognized thank you madam chair joker whatever you put together the economic forecast for twenty twenty one twenty two twenty three did you factor in anything in regard to a a vaccine such as the one that five released yesterday with a ninety plus of efficacy rate into any of the forecast models. Right we we use a national forecast group that has a health advisory unit of providing input into the US forecast. And there is an assumption that there there would be a beneficial result out in FY twenty two in the second half of the year. so its is roughly in line with that component of the forecast assumptions. All right thank thank you meant manager all right to a Representative would. Thank you thank you Mr chairman I have a couple of questions very quickly. Jake this the sixty million dollars that we voted to approve for teachers that primarily aided those districts who were paying. Let us. Then the normal I have region that we were trying to achieve is that not correct it it was it was sixty million dollars set aside to help those districts that we're paying less than the minimum okay so that was not a teacher wine salary increase a lot of districts didn't even give increases because they were already paying the beginning salary of. Of the what we were attempting to achieve and that this is yes it is my understanding that the adequacy recommendations currently fund above that minimum okay so hello has it been since we've given L. right pay raise to our teachers in the grades that they're in I know that we provide funding for teacher salaries to that educational excellence trust fund but that's an issue that I'm gonna have to get somebody to to walk or to to will to respond you on I know that it's an issue where to some extent this state has some influence on that decision to some extent the districts have that some influence on the decision so I'm not I'm not sure on the best got answer that I'm sorry this then chairman I have one more call. Okay we'll make it will it will you also consider what what we have attempted to approach relative to the vacant positions and the fact that their time at tied to the four hundred and twenty now four hundred and fifty in the future to try to get the true cost of our insurance so we don't have to carry in some of these agencies of six hundred positions vacant of thousand positions of vacant that are that are in the budget the primary there just to fund the four hundred fifty dollars in insurance premiums due to a child do you off the and you alluded to a moment ago don't you think we need to come up with that way you go X. amount of money that's going to cost XML per employee and we're going to give X. amount is the state as a fringe benefit what you think it be better to show that it is a line item rather than going through in playing for for the lack of a better word these games that were planned with those positions. I think that anything that we can do to make the budgeting process better and more transparent is something we need to look at and in particular to your point about the insurance rates I think at a time when you know the state was paying twenty or thirty or fifty dollars per member per month it might have made sense to do it the way we're doing or up to four hundred fifty dollars per member per month that's a significant cost it's something that I know that transformation shared services is working hard at looking at figuring out okay how we can handle this if there's anything we can do on the budget side to make that illuminate that I think it's something we need to look at. So I guess we we will look at that yeah right of figure out we here's my worry again I'm afraid we're going to get in the same position as you alluded to a moment ago we're in the same position with our state employees we got into several years ago and we're about to face again with our teachers were their premiums more than double someone that they're paying over a thousand dollars a month and health insurance so ma'am chairman that's all I am thank you Jay. Thank you I'm a senator of England to add a little history on that particular question and you're recognized. A Hitcher up button. You're recognized thank you up represent wouldn't you you're you're you're you're right just for the history I haven't started in the late nineties the legislature decided the way to control of the of permanent positions and to keep department heads from asking for of moral positions then they needed was to require them to pay the French benefits the insurance the the benefits to go along with the of in effect what it did was it didn't really did try or the department heads from asking for excessive positions of the inadvertent or the ancillary benefit that came was those positions help keep insurance rates down so wanted artificial level due to those ghost employees not claiming of any of making any claims to the fun they were receiving the the the premiums but we're we're not making any claims but the original intent was to try to get control of the budgeted positions and it it didn't it's sort of did the opposite the group but obviously the thank you all right thank you all right we're going to a. Representative Ladyman. You're recognized. Thank you madam chair. Of Jake you may remember this when in public health we had a discussion about the prescription benefit for state employees and that was basically going to be going away and they had to go to Medicare part D. and we extended that a year out now this money that is put in here how does that affect that is our money added to this budget to cover that or house that affected we did not have anything in there right now that's the word my understanding is that that's a solution we're gonna be looking for helpful from the General Assembly to devise it's something that it's an issue like I mentioned earlier that I I kind of in my head wrap up with all the other funding problems that we've got with health insurance but it's something that we know is probably going to have to be accommodated some here but absent that kind of specific solution we don't have anything specific in here that we could accomplish okay thanks for that one of the question and educate me on this form wrong what if I look at the back page it talks about the official forecast and if I go across there The base in twenty twenty two is a reduction of nineteen million if my math is right but then if I go over to the total for twenty twenty two it's an increase of a hundred seventy two million or two point eight percent and if I look over into the following year twenty twenty three the base is a negative three million the reduction of three million but if I go over to the total is an increase of two army five million or two point nine percent now if I remember right I think we've increase the expenses around two or three percent every year. So my question is is this budget always going to be increasing even though we're reducing cost. A I mean are we going to get to a point to where we can. Level hot I mean people want to reduce cost so why why is the budget going up every year I mean I know inflation is in there but we're also we've also got savings. You may not be lands the question but I get that question all time wise the budget going up when you're reducing cost so what's going on is not the budget necessarily but the amount of revenue that we're collecting to our taxes and that's a reflection of the hard work of the people the state the industry say some of the stuff that you all were talking about earlier we're balanced budget state and as was mentioned earlier we had used to be in a place for every dollar that came in we spent. We're shifting away from that now. We collect the tax revenue we have a forecast the projects set out we benefited from a couple really strong years but we're kind of conservative in our budgeting we don't want to get to place we can't pay for anything but in the end of the day we are cutting those taxes as the as that economy keeps rolling as those funds keep on and we'll bring that number back down okay so let me ask you this is clear up for the people that ask me that question so are in our income is going And so are expenses are going up so in in reality we're not increasing the budget even though we're spending a little money we get the money we don't put anything in there we just spend the money on the needs correct rains we there's a couple lines in the budget they're gonna go up every year public school fund Medicaid insurance and employee races there's areas where we're going to have growth but in the vast majority they agencies in there that it the RSA have not seen an increase in their base bottom line operational funding since the governor was elected and a whole bunch of and actually elected to take a cut to those operational expenses that's where that twenty six and a half million comes from thank you all right senator Chesterfield you're recognized. And. Thank you madam chair Mister Ladyman as one of my questions about. Was read prescription drug cost for up for me please but I'm wondering overall what are we doing what have we written into this budget that will allow us to attract and retain the brightest and the best in our state employees other races in here other benefit increases in here what do we have that say as to those persons many of whom make very little money. That we are interested in making sure that you our valued. Well a built in here we've got the performance fund races and all state employees got on average a two point two percent raise and I want to say that was in June which is pretty good compared to a lot of private sector employees who many of them got a lot less than a race. We're also finding insurance of this state the twenty million dollar on the public school side and also the four hundred and the four twenty to four fifty increase on the the state employees side so I think that on both levels there's a commitment there to making sure we have a strong work force state will the minimum wages be raised other than that which is going to come as a result of the constitution amendment change. Hi. Wouldn't know how to answer that I I don't know because in looking at some of the minimum wage is we're talking about twenty two thousand dollars entry level salaries. And I'm concerned that twenty two thousand dollar entry levels salaries is not going to attract a lot of folks to this state so you know I'm I'm just wondering what are we doing have we looked at that so that we are changing those numbers so that we can attract the brightest and the best we've been fortunate and that people have come to work sometimes because of the benefits they can get health insurance sometimes they can afford it sometimes again for that but we need to make a commitment it seems to me to pay our beginning salaries more twenty two thousand dollars a year thank you all right thank you blazing ten when we have one more question and then we're going to move on and that is. Representative would. Thank you Mr chairman our think Senator hammer I had forgotten about that and and I appreciate him sharing that just makes it all the more reasonable that we need to look at the vacant positions very closely and set up a we have the personnel committee now in a also the from the come forward if they need additional of position The great grade if you will positions wing may need to look at legislation that deals with those vacant positions when they come forward to the personnel committee that have a pool of money or pool of positions that we could give them if they got in a real bind thank you mile German all right thank you and lady a gentleman we appreciate you for being at the table in answering all these questions and to you are dismissed thank you. Now ladies and gentleman we will have a Representative eaves who will give us the personnel subcommittee report. You're recognized. Thank you madam chairman the personnel subcommittee of the Arkansas Legislative Council joint budget committee met on November fifth twenty twenty the subcommittee review the following agencies personal related requests and personnel related special language the subcommittee respectfully request that they be filed with the executive recommendation to the Arkansas Legislative Council joint budget committee. All right I need a motion to approve. All right second. All those in favor say aye. All those opposed the motion passes alright moving on. A we have a power point from of the department of Human Services with the secretary syndicalist speaks and we can pass those out now. All right in ladies and gentleman for your information we haven't had any questions from. A anyone online. A yes. You're recognized yes are we going to come back to the audit findings are we going to look at the yes that is after the power point okay thank you so much thank you. All right if you would to recognize yourself for the record. Thank you madam chair mark white was part Indian services. Dawn Staley with the department Human Services. In cases Smith department of Human Services okay let's wait just a minute. He would introduce yourself for the record. Thank you for your patience hi Anthony Gillespie I'm secretary of the department of Human Services. We welcome you to the committee and to I believe you have a power point we do we thank you very much we will be will be very quick but we appreciate you letting us frame up our budget so that of. We can just kind of give a very high level hundred thousand foot look at it before you start going through it with everyone. So with that I believe you each have copies. Is anyone not have a copy here in the. The room. Okay I think everyone has a copy okay alright thank. So I want to start by noting that overall. The DHS budget for twenty two and twenty three all. We are asking for increased appropriation only for personnel related performance pay insurance and related to H. D. C. personnel if the project will talk to you about a month we are asking for no es G. R. increases except in Medicaid and I will explain that so With that if you go to the first page. Just want to mention. Overall happening to us with personnel. Is a you see here FY twenty one numbers we are reducing our request for authorized personnel down to eight thousand one hundred and fifty five so that we will talk through that reduction you go to the second page. I do spend a second on this if I could we don't usually talk to you about turnover. It all of you that are in business. I understand the impact of turnover on your budget and the impact on your operations we follow our turnover through a dashboard were able to actually looking keep up with what's happening with all of our different classifications of employees. Of all of our geographic locations all over divisions X. federal I just want to highlight. What we're seeing and this is been going on for some time. Overall you see I've circled for DHS it's forty five little over forty five percent turnover we are actually at this stage for assisted except like twenty one we are running higher than that. If you look at TVS which is where we will talk to you about some efforts we have under way to try and address turnover. A. Okay bye. With this. It's hard to talk and breathe. If you look at DDS where we're trying to address some turnover issues you'll see over seventy five percent annual turnover in some of our classifications which are the ones were focused on right now our direct care workers our turnover rate for some of them is over a hundred percent annually. And then if you look at the data the division of aging adult behavioral services this is where we have the Arkansas state hospital ash and FOR we also have the Arkansas health center which is our state nursing home and you see that we are. Our turnover rate there is it forty percent last year it is up higher than that is were this first. Four months of SF point twenty one. And then DCFS Hartfield staff or child welfare workers as you see there. Right at forty percent and it is a a good forty five percent higher already in this first four months so one of our major areas that DHS is focused on and our twenty two twenty three budgets is trying to address our turnover that is for us critically important to get the positions filled and to keep people in those positions for some significant period of time. So if you go to the next slide please. These are some of the things that are reflected in our budget and our division directors can talk with you about these in more detail as well as some of the changes within within their budget lines that reflect these but if you if I could I'd like to start at the bottom of the slide with the last bullet. IT director stone can speak to this in more detail but in order to address the Issues of turnover at the human development centers one of the things that we are doing is we have begun training we have begun shifting from having our direct care workers not be certified to having a CNA training and certification for all workers. We have begun that process and that is under way and it is something we brought through the legislature earlier and it was approved but now is reflected in twenty two and twenty three as being fully implemented there are several levels of worker that are affected as you can see here twelve hundred forty four positions that were SCO ones and SCO to these are now SCO threes as they go through the training and as they get their certification. So we also have added some or ins and we have a more nurses at those facilities we have found that that is needed and we have also increased some LPM positions to are in positions in order to be able to recruit and attract individuals it is our hope that making these changes will not only. Bring about Improve quality of the services that are offered at the HTC's but it's also our hope that this will begin to address this extremely high turnover rate that we're experiencing their so what you do see in the budget under DDS is an increase in appropriation beyond just the performance pay and the insurance increase that is in all the agency budgets but what you do see is an appropriation increase of a little over six million dollars that's associated with that there is no es G. R. increase associated with this only an appropriation increase okay if you go up to the top then these actually do connect together. Many of you will remember that for several years now we have been working on an integrated eligibility system this a new system. Is based off of Medicaid as it's under pending in terms of an individual determining eligibility for being in Medicaid but this integrated system will allow for determining eligibility to cross of Medicaid snap T. and creates a backbone for other programs as they come in for example In SF why twenty three when we launched the second phase of Aries Alfa the Arkansas of a department of Veterans Affairs is going to be linking into the system through there so that they can refer veterans directly in to the system so it is our first truly integrated system here for eligibility that system will launch in December with the first pilot we've been working on this for awhile and lunch phase one and the rest of this year phase two and twenty two and by twenty three it will be fully launch so director merry Franklin can tell you more about it but a key component of this is it not only improves operations not only makes it easier for both providers and clients to access and provide information keep up with where things are come through a portal but it also will result in some efficiency so we have fifty positions that we will that we have been allowing to open based on attrition and those positions by July they are included in this budget to be turned back in. Now I will tell you that what we are now doing with those positions is based on some of really great input from OPM those positions which include SCO threes are going to be used by DDS for their positions. And instead we will in the governor's letter turning fifty if the DDS positions in their place so you will feel CS come down the fifty positions but we're just making a little bit easier to move them across the two groups and it's something that we have going on now with the CNA training. so that that the couple things to highlight their also within the budget is we have been preparing for several years for a federal requirement for everyone to upgrade their child welfare systems to modular systems so Arkansas is now moving forward to do that we have been preparing for that for quite some time so that is assumed as part of what we'll be doing over in DCFS. And that will improve operations in many many ways including making it much easier for our workers to work to conduct their work when they're out and not have to do as much back in the office which will make their lives enormously easier. Couple of exciting things that I do hope you will have the time to let of might director Michael prompt talk about over DYS they have been working through Right effort for several years and working with a lot in the last session the legislature passed a number of reforms corrected to use services and juvenile justice and they have been working through a number of areas were and it's resulted in in some not just improve services for youth and approved treatment but it's also allowing us to make some important steps that we think are quite critical you'll see on one of the bullets that we are able to since we have been able to reduce the number of residential facilities because of reduction in the number of use coming in as well as a reduction in the amount of time they have to spend in and a focus on treatment as they return home we are able to shift one point seven five million to community based provider treatment that goes on at home which is great the other thing is The A one of the facilities which we have closed we will be using for a new program that is going to be a pilot we're going to try for a couple of years using some federal a federal grand moneys that the office of the drug director found which allows us we're calling it residential option for adolescent recovery we have a great need in this state for substance abuse treatment services residential substance substance abuse treatment services for youth so that's what this will be for non adjudicated use judges will be able to refer them here and they will be able to get treatment so it's a program under development there we're very excited about that. You go to the next page. These are some of the areas that are reflected in the Medicaid budget these are all items that Have either been through or are. On going to be considered in December by the legislature and so we have built them into the budget assumptions. Seven hundred additional slots for the a CS waiver often referred to as the DD wait list will be taking seven hundred individuals from that waitlist and once that goes through the legislature in December and moving them over on to that waiver so that their again that part is paid for with pass premium tax as it state match there were rate increases we've been doing rate reviews issue no Sir rate increases for ambulance there's an ambulance assessment again that was a law that was passed that CMS has approved so an ambulance assessment will allow for rate increases their they should be AT T. adult day treatment an E. I. T. T. early intervention day treatment There was a DM a reduction to Medicare costs dear me ridge what happened with the in me was DME was reduced so that what we now pay is the Medicare rate and that was part of the rate review and then pharmacy administer vaccines there review their rate it was also increased to through the write reviews. We are sending additional vaccine and lab costs for code nineteen in the twenty two budget. And the rate adjustments that are normally put in place for various provider groups that are making their payments are they put up the match for these and that is included in here for nursing homes in hospice. We are will. As Medicare rates go up we have to make increased payments around certain areas including supplemental cost we pay the differential and Medicaid cost Medicare cost sharing and so that was for the built in and then finally we did build in an assumption of the renewal of the Arkansas works way for that is something that the legislature will have to decide and then based on what comes out of the legislature we will be if if if it does come through the legislature we will then be seeking CMS approval as well but we've built a budget assuming it continues on. Cell. Quickly budget risk I always just mention these just so you're aware that like every other agency our budget is driven by certain factors that sometimes are out of our control one is the number of foster children in care this has been fairly stable for the last couple of years however we are what we have had a recent increase tied to covet director stone of she's made director Martin mission Martin does have good plans to address that but it primarily is around the fact that it is taking longer to move children out of care to permanent placement and so that will probably take about a year to work that out of the system obviously we always bring into care any child that needs to be kept in brought in for safety reasons but be aware that. Our A that is a risk to our budget. Budget does assume that the current trend around juvenile's being committed continues if that were to change that would obviously have an impact economic conditions when you run social safety net programs can have an impact litigation we already discussed this a little bit earlier today but they're litigation always potentially impacts us in obviously the cases before the Supreme Court would have an impact on us. The public health emergency that's under way has a direct impact on us and I will mention this quickly. Our Medicaid budget is. Driven primarily by the number of people enrolled in Medicaid how much they utilize services and from a state G. R. side what the federal matches why we are in a public health emergency we are receiving a higher federal match and I will show you this in a couple of other slides. The a with that federal may have your federal match also comes a requirement that we not descend role anyone for Medicaid unless they die or they leave the state so there they call it maintenance of effort but their continued eligibility be on Medicaid is the other side of accepting the higher federal payment so right now that public health emergency is through March of twenty one if it is extended and they basically extended on a quarterly basis if it is extended further than we will continue to accrue enrollment and we will continue to receive a higher match but we have built our budget based on the assumption ends in March I think we're thinks it's critical about that is when it ends there are certain populations that will be quicker for us to re determine their eligibility income base populations for example such as Arkansas works is a quicker process of re determining eligibility and your roles there for probably shrinking assuming those individuals have jobs and have income. Other populations take longer for us to REDETERMINED those who need a medical determination for example it will be a longer process so the growing of your roles does take longer for it to work its way through the system and out it's just a fact. we also of course. DO always have new of drugs that come along that are incredible in what they offered but they do have a higher cost at the beginning to bring them into the system and then again just as I mentioned already Arkansas works has an impact on the budget whether it continues or not okay very quickly just to look at the F. map assumptions for those of you that like to see the detail on how this is going you see the last several years. Chip we were at over a hundred percent for chip for awhile chip is now going to be down right at eighty point two nine excuse me eighty point zero nine percent the federal government will be providing us roughly eighty percent of everything we spend in that category Arkansas works the red line stays at ninety percent that just stays flat and for traditional Medicaid children disabled except or we will go from seventy one point three three two percent to seventy one point five five percent that for twenty two we have just assume twenty three to be the same as twenty two you go to the next page it'll show you what I meant about that enhanced F. map bump. And you can see how how that increase works that enhance bump does not apply to Arkansas works because it stays permanently at ninety percent but you can see the impact for us on the traditional side. And then the next page just so you can see what's going on around involvement as I mentioned around the maintenance of effort that we have to continue this is what has since the start of the emergency to October first this is what our increases look like and these are continuing on a monthly basis. And then. My final note is just to show you a high level look at the financials. As you see. For S. FY twenty one. Be cut where you see where it says without enhance depth map that is that is where we are getting enhanced it up that would not have been there and we would have had to spend more of the green and pink. This year but with the enhanced F. map we are not having to spend some of our under strict we are not having to spend all of our carry forward an unrestricted revenue this has helped us out this year okay if you look at twenty two when the enhanced F. map is gone what you will see is that what we are not requesting any additional appropriation we are requesting seventy five million Seventy five point three million to be exact in additional S. G. R. just so you know sixty five of that with the money from this year which we will not we we are not getting and will not need in twenty one because of the enhanced F. map. But it does not stop was going on in terms of medical cost growth and utilization so we're asking for that to be added back in in twenty two with an additional ten million dollars in as she are. Again relying on our carry forward monies out of our trust fund and then going into twenty three. You'll see that we asked to continue that seventy five. Add another fifty million to it. For that year. And again we will move forward through most of our carry forward. This does put the state going into twenty four where there is very little flow over. And that's that's critically important in terms of looking at how we are going to keep Medicaid on a sustainable path. But this is what we are proposing for three year plan for Medicaid and when we get to DMS budget today were happy to walk you through more detail and talk about it press one to give you this overall look at what's happening across all parts of DHS and I appreciate your patience and listening to it all right we thank you I think this the this is very informative and I appreciate you bringing it A we have some questions the first question is Senator hammer. You're recognized thank you Mr chair let me go back to a statement you made regarding if we stay in emergency status that it would result in increased funding to understand you to say that correctly. Yes Sir as long as the public health emergency continues and assuming Congress continues the public health emergency under the same terms right now yes we would continue with the enhanced F. map and tied to it we would continue with the requirement not to descend role from Medicaid and that emergency statuses as defined by the state or by the fed to be defined by the feds okay so no matter what we do it would not interfere with money coming down from the federal government is that correct that is correct I'm looking at mark in case I'm wrong but he is nodding yes that is correct and that money that comes down with that how does that translate because we get increased funding because of the emergency status how does that money flow down to reimbursement to providers including hospitals or any other providers the same way in normal match flows down as we pay individuals I'm excuse me as we pay providers of the state of Arkansas submit for that payment from C. amass so we pay the providers and then we are reimbursed from CMS and to the providers get paid a higher reimbursement rate for covert related cases or cases related to the declaration of emergency because there's an increase funding coming down to that pass on to the providers no there is not an increase in in general and rates I think is what you're saying is there an increase in general and rates across the state and there is not an increase in rates across the state during this period of time the federal government does this because all the states. Work with a defined amount of money that they have that they're put towards healthcare costs and that's why it is tied to this requirement to keep more people on the rolls. Then how does the additional money that we get from the feds because of being under emergency status. How does that money flow out and not just stop within the budget of DHS if people are not getting additional services maybe because I don't feel the need to go the doctor or whatever house that money accumulated in the DHS budget we do not receive any money except to reimburse us for claims that we pay so that's the first thing it is a match on a dollar for dollar basis and I'm looking to don and mark and if I say anything incorrect please step in but it is eight it is a match that they give us if we spend one dollar. For example and they will give us. Seventy six cents of that dollar if we never spend that dollar then we don't get the seventy six cents okay so the money doesn't accumulate because we don't ever receive it it is a reimbursement for us man check a few more you only go to fund the queue. Mister. Yes if you don't mind we do have quite a few and occur thank you. Senator Chesterfield you're recognized for a question. Thank you Mr chair of and good morning good morning A I'm sure you would agree that you can't do your work if you don't have people working. Yes ma'am have you considered a certain conducting a survey of your employees to determine what is driving the turnover yes ma'am and we have done some of those I don't want to speak for my directors who have been conducting these around particular groups. But I would urge you to either talk with them here or separately but director Martin around child welfare workers has not only done that but she has she's done extensive work and she has received a national grant in order to do a basically a a three year program aimed at reducing turnover around child welfare workers and So it is something that she has done and is looking very directly a lot of the issues they're raising director stone has done the same thing over at the H. D. C.'s to try to look into what what's going on I hate this those are not the only places where you have turnover now those are not the only places where we have turnover and images the number just a moment and then ask for your response. If I am working under director and the director is conducting this survey I'm not gonna tell the director of what I think. So I'm thinking that it is time for us to have an independent survey of our employees to determine whether or not there is a toxic working environment because people work for less if they're happy. This was troubling me he is I am wondering why we would not have with this rate of turn of we would not have an independent entity coming in survey the individual so that they would not feel that they have to just say what that people wanted them to say and they can speak honestly to you so that we can move forward in in creating an environment that is less toxic for our for our our employees I'm gonna ask director of deputy director Smith to talk about that a little bit but as part of what they both did they did use independent we agree with you we're so we're not at all saying no it's not a good idea that's why they both did use independent entities to conduct the surveys would you care to step in and senators to vote I would just add in areas where we have extremely high areas of turnover as secretary the list we noted like and child welfare and DDS we have brought in independent entities but our human resources department has an exit survey process and they conducted not the division itself so those that process is optional it is paper it's after individuals have left we immediately reach out to our staff that have left and and ask them to complete a survey and give us notes as to why they have left and I will say we have a pretty good response rate pertaining to individuals responding back and giving that information back to HR and HR then disseminated out to the division directors for them to adjust accordingly and equally myself don and misty bone who is over our shared our shared services equally gets the results for us to respond back to our division directors and our chiefs to determine what we can do better but we see let me just say this I think after they're gone is a little late. I'm saying here we conducted a survey of our employees were currently there. To determine their satisfaction in their employment so that we don't have to look at them after they've gone that's my concern. Yes if I can add to what add to what he said was saying so for example with within DDS with our human development centers we have actually brought in outside individuals partnering with universities as an example to come in and not just conducts surveys but actually focus groups with staff both understand about job satisfaction but also to get their feedback on ways that we can improve some of that actually than work with some of those outside entities to design programs and change you know if if they've given feedback for example to say you know we need greater clarification of job duties as an example or I want to make sure that managers are being held accountable or you know those those are some examples of things that have come out in that process we have and taken that may that information actionable both in our trainings also in our work with supervisors and in the hiring process to make sure that were being responsive that feedback I mean is it is a perfect absolutely not and we're continually looking for ways to build on that but those are just a few of the examples that we're trying to do both on the front end as well as the back end so if I can add to that just. I hope you can tell we are not at all defensive in any way about the idea that any idea connected with turnover and trying to help maintain employees and keep employees we will take back your suggestion and even where we have not looked at doing independent surveys we will look into doing independent surveys not as we know we need we need to keep doing more and more the places we've been focused right now the H. DC's primarily and child welfare workers these are really tough jobs and at the end of the day that that her her chin but it doesn't mean that there are going to be things we can and should do and that's what we're trying to take some of the steps were taking These are rough jobs that have gotten rougher in the last six to eight months and I hate you will see that and I I don't think that you're being defensive I'm just glad that you're taking proactive stance my concerning use the calls that I get are not always around those two areas. People don't like to be bullied in the workplace. In some of the folks who call me feel they're being bullied in the workplace and that is not a reflection of the Senate Gillespie that I know so I'm just saying it is important not just in those divisions but that we look through that and that we provide some training you don't have to cheat you don't have to beat people over the head to let them know you're in charge. Yes ma'am you're directly right about that thank you thank you. Alright thank you senator Wallace you're recognized for a question. Hey senator. A. Can a ski speaks Senate to can you push the button there green but. House that the agent thank you thank you leadership is tough It won the questions I have have in you may have answered this not in here it are you tracking your leadership in your losses Per. Team are leadership position to see if anybody really stands out is this a high turnover in their area. That's a very good question Yes and it's part of what and I will ask Debbie directors daily to speak to this it is part of what Well and deputy director Smith it is part of what by this DDS and DCFS have been looking at we've also done the same thing around some of the other areas Looking to see where we have A supervisor that may have unusual turnover right compared to the other areas or a particular office that may have higher turnover compare to other areas and going and to look to see what what is going on there the exit surveys to help us in that because you you you begin to see as well as the numbers in some cases we have been able to go in and as you said provide additional training perhaps overlay a temporary other supervisor or administrator who comes in and helps work alongside that one and try to train and grow with them and in other cases we just had to turn over the person there in order to be able to make it work but which all like to add to that. No I would just I would just echo with secretary Glaspie stated I mean we are consistently looking at what is occurring with staff particularly We get a lot of feedback from the field pertaining to things that are happening out and county offices that we don't directly have our eyes on I failed to mention when I answered the question before hand and the senator Chesterfield asked that we equally have an employee relations office that takes compliance they take all ranges of complaints typically from discriminate you know discrimination of of any form but also general harassment and that can come from individuals outside of our agency but it can be internal including their supervisors so we do respond to those things we do look at what is happening specifically with supervisors and try to try to quickly address those things either through training or with a sector because we know that sometimes having to to move people on and just and just to add in addition to our employee relations unit we also have an area within are shared services so it's separate from the divisions where people can make anonymous complaints whether that's about program so that's about staff in that way then it also provides for a separate lane from their supervisor or their immediate change actually go in and investigate so we can determine if there's an issue but also then you know if there's actually me take with regard to that situation or that particular supervisor and that's something we actually review those monthly internally within our executive management but then we also provide quarterly briefings as part of our senior management so they also understand what we're seeing if there are trends and that maybe concerning so we're use that information as a whole across the agency but also then following up individually with those specific supervisors and managers if we see that there are trends that maybe concerning but also for seeing some positive things right that we want to be able to share more broadly the dashboard you saw that one slide on we've only had it for about a year that was I have to come. And our our HR team FOR getting and I. T. teams for coming together in putting that together it is something our folks have wanted for many many years but that actually lets us to drill down and see what's going on and has become a really useful tool for not just looking high level but if you said going down and seeing all right what's actually driving it and is it is it a particular. That was part of the reason we began focusing on those particular worker levels at the HTC's because we could see very clearly across all five of them a turnover rate that was nearing a hundred and in some cases over a hundred percent so we knew that was a systemic issue and we needed to drive a change that way with that but that's a good new tool that's helping us a lot. Thank you Richard lesbian manager I have no other questions. Alright thank you alright ladies and gentleman justice Kennedy gear your of thoughts toward the time A for those the room the queue please be thinking about your questions and make them there is a saying and the list move on we've got a long attend all right to the next the senator Elliott you're recognized. Thank you madam chair US secretary Gillespie once at the age to seize where you where you talked about requiring more training of of everybody work in there like it if you did have a CNA get up to get one and so forth. Okay if if that's how are you assuming that that's going to help with the but the turnover I did I did make that connection okay I would I will talk about it but I would really love to let director stone talk about it more detail because she's the one who's implementing the program at the HTC but in general it is this one of the things that we did find we've been working on the HTC's now for several years and the personnel issues. And starting it up to the point senator Chesterfield made starting several years ago with an initial first round of surveys one of the things that came forward that we found was that employees were not only talking obviously about pay or about working conditions. But to our surprise one of the one of the biggest issues at that stage that they raise to us was that they did not feel like they were Treated professionally they did not feel like they were and this was an interesting one they didn't feel like they were recognized as part of DHS and the example they all gave was I don't even have an email I don't even have something that says my name at DHS dot Arkansas doc up. So as you know as a there are many things that she undertook but one of them was okay you are a valued member of the team just like everyone else and so we have gone in and put in email throughout throughout the HTC's everyone has an email address that may seem very simple but it meant we had to actually put in kiosk because these people that that is a computer meant we had to wire in those places but now they're part of it they receive all the same communications that they are part of everything that goes on and we make a point of almost weekly at least putting out special communications to all of DHS that recognize our workers at the H. D. C.'s so that was one little step the kiosk actually came from DCL computers they were no longer going to be using because they lost their license so we've been able to do some things like that but other issues within it. A reason I mention that one other issues within it we're not just pay but we're also around this professionalism. And so a CNA what we will be certain to realize is that all other long term care facilities like this thanks to our at our state hospital at our health center a CNA is your entry level person. And there is something in having read achieve that professional credential maintaining that professional conduct credential that elevates the position in addition to pay it elevates the position and so that's how we came about it was to recognize both the pay issue but it was also to recognize the professionalism and the desire for their roles to be considered and to be equal to the roles at other facilities where they care for people residential based facility so that's how that came about so we are we are paying for the training putting everyone through the training and will as part of their just as part of their annual education we will pay to keep up their credentials so now they're moving into a professional level and it also opens the door for more of a career path as a CNA someone can then move up the ladder and we are hoping did just as we've seen it other places that that will happen there that they will get more interested in the medical field realized they could become an LPN realized they could take other steps. Amend judges in the interest of time I I would just say this and by potential question I hope maybe and I'd like the notion of treating people that way and letting them see a path forward I have not ever I think in all my years of working seeing turnover this big four there were not some real systemic issues with conditions of the work so in the in the process of doing something that I think is this good we are not getting real specific about the conditions I I would she here we might lose them because we might train them to collide someplace else if we are not addressing those other underlying things I would just associate myself with the comments from senator Chesterfield and leave it at that because I get those same kind of I get the same kind of complaint and as a teacher in a very similar kind of atmosphere one of the major reasons people think it's salary but one of the major reasons we meet the those teachers is working conditions of celery matters that were conditions more many times thank you madam chair alright thank you and ladies and gentleman of the different divisions will be up later so if you have a question that is specific to the division that to maybe of they can answer it might be wise because at the time element for you to wait with your questions so just think about that is we are. Go to Senator Stubblefield. Thank you madam chair most of my questions were for the different divisions but I would would say this are did I miss something on the audit findings are they gonna be presented after this after this okay yes also I would I mean I agree with senator Elliott senator Chesterfield concerning the use to I've seen these terminations you that made so far correct they're they're not fired no terminations can be fired for they have quit that just means employment is terminated okay in the in the the common thread that runs through all of these terminations is. Just burnout. Again I would really to for that to directors down but burn out getting another position When you are talking about some of the positions at some of the human development centers until they do the CNA these are GS one positions that. The work is really really hard and so for that salary you could have in the private sector a much easier job. Thank you Mr chair have questions later for alright thank you. A. All right next on the list is the. Senator hammer. Thank you ma'am chair what is the of how much to pay out in the cost of the contracts get the independent surveys do you know. I don't know but let us get you that number we will get that for you today okay I would appreciate that because of just on a personal level several sessions ago there was a bill that would of utilized a three sixty evaluation process and I would like to know what the cost of the independent surveys are purses what could have been done or what could be done those independent surveys okay I'm sorry I and my mind thought independent assessment in Medicaid okay we can ask directors don't well. Because when we work with one of the universities here she did and director Martin work with that federal grant so we can ask them if they can bring you those see if there's a way they can have those by the time they come to the table okay and on the record on the budget that was presented this morning there's four point one million dollars going into Medicaid trust fund is that sufficient to meet the needs of the trust fund and I'm wondering how you came up with the four point one million dollar request. To be included to the trust fund. All right into the shoe sale to the. By Jake plea DFA office of budget sufficient is the kind of tough word but that amount was put in there is the intention of offsetting the impact on any changes we might make to funds going into Medicaid trust fund. Okay so there's no scientific data there's no that's the definable reason why just that's what we thought need to go in that's the fiscal impact of of policy changes that we're looking at which may affect the Medicaid trust fund here in the session okay I'd like to get a list of policy changes that socially with the FOR could. A ENE senator just Cup quick once the Kate make me make a quick I make a quick reimbursement for the nursing home and hospices that increase or decrease. The increase those are those are areas of the budget that have annual adjustments that going to affect each year all right in the increase in the grants and budget was presented this morning DHS grants like obscenity five million and then when you get up to twenty twenty three it jumps up to her to twenty five million could you explain what those are please. Certainly so within the within the budget recommendations and talks about this is what secretary Glaspie was speaking to during the presentation so there the request is for seventy five million dollars to increase in state fiscal year twenty twenty two and that includes the restoration of the de funding the sixty five million that was originally in the forecast for twenty one plus a ten for ten million dollar increase and twenty two and then the hundred twenty six million in twenty three represents building the seventy five million into the base and then an increase of approximately fifty million dollars on top of that. Our thank you Mr thank you all right Representative Representative bit you're recognized. Thank you madam chair. My question really. Has to do with. The. You mentioned earlier some of the so the feedback that you got and salaries and where stress and all that in your budget or maybe it's too it's not in your budget but there's a different pro is there something that you've done to. Respond to some of the issues the the only one and I'm not a this is it looks like were very increasing the pay level maybe a little bit there by increasing the target are the greater what if you want to call it but other than that What is the and I would also and is. Our time I would love to talk to when you guys to take the experience I had one your offices I think you'll find very interesting. Yes we'd like to hear that we seriously and. There are things in the budget that are part of A seemed action activities to go on That will. Continue our work to try to address the issues we have a turnover of piece of it is and I don't know. Keith if you know the amount of money that is assumed in there for the national grant. For the work at. A A DCFS. All right we will we will get that for you but DCFS actually has a national grant that allows them to. To a literally conduct an additional I think they called academy me there is a national group that provides grant funding to states and comes in with a program that is a several year program to try to reduce turnover of child welfare workers because it is an issue everywhere and part of it it includes an academy that really dressed focus on training leadership and how to work with a lot of these different areas and there's a whole range of this and director Martin can talk more around that so that's all assumed in the budget as part of the activities that she is going to have under way we also have begun a number of other activities partly out of recommendations that came to us a couple of years ago from some consultants we worked with and eight that were organizational communications experts and as one of the universities here. And so out of that we have we have an we now for example are doing two employee orientation sounds very simple right but we weren't doing it we did not have a DHS white culture we did not have a you have joined DHS and you are getting brought into the bigger organization and at a training around that and the the way they're now brought in as much more professional the way employees are brought in and made to understand the larger organization they've joined as well as the basically the ethos of the culture so all of those things are new and part of it As we said there's a lot more we know we can do I can we can start naming a whole bunch of things but essentially in terms of financial impact the only one you're seeing right now is the one at DDS we have not been changing grades due to a turnover or anything like that except there. Thank you. A next is of represented Coleman. All right he's. He's good all right to a Representative would. Thank you chairman. I am. A bill FOR your presentation that you heard. Relative to the questioning that I'm going to ask you. And appreciate the situation as it relates to your ability to retain employees. But there's just some things that are glaring that stand out in your organization that I feel like we need to address. One of those with the what what is your ratio of supervisors to the employees. A. It would it would be uniform across the board for F.. Many many supervisors do you have. Four five is it five supervisors for if I if I have the manager six thousand seven hundred seventy seven about that. You should have a twenty percent ratio may if you use five people or five it employees that are supervised but one I'm asking what your ratio in your agency we will have to get that for you because we don't have it broken down like that we don't think of it like that different units have different ratios in terms of the number of individuals or. The total agency and get that go right ahead clause step in and Representative and as secretary Glaspie was stating I mean we have different ratios per the division it also you go there ever right and and you will find those is the mother seventy seven six thousand seven hundred seventy seven employees budget you've got an average of a I I just want to point out that we will have to look at the difference between when we have to break care service employees versus office staff madam secretary you're telling us that is that the report I got this morning you have fifteen hundred eighty seven positions. They were on field. You had eighty seven of those that have been vacant for over two years. The unit do you know how much money we're talking about their. With four hundred and fifty dollars a month in insurance and then of the average salary of forty five thousand. In terms of. The fact that these are unfilled positions and that we're not spending money on them but your budget it. Appropriations you've got the money set aside at seventy one million dollars. The average salary of forty five thousand then you've got that when you're paying the insurance premium us as eight point six million. And this goes back to Senator hammer appointed L. earlier. and it would DFA relatives of positions in relative to the insurance premiums. And then you have twenty pages. I have in this other manual twenty pages seventy spaces seventy in positions per page fourteen hundred. Nineteen. Four twenty nineteen and twenty twenty that have not been filled or thank you. So you're telling me in the atmosphere that we're existing in today but you can find employees. we are partly saying that of those fifteen hundred and eleven would you like to walk him through where those each stand in terms of hiring open. But yes we are also having trouble hiring we will not take you we are not okay and and represent of wound just to clarify of the fifteen eleven position that she received that was a snapshot of which positions were vacant at that prospective time I think we've noted by the percentages that we've given you that we have a significant number of turnover so those are not necessarily positions that have always been vacant for positions that have been vacant and not field we have actually only we only have nineteen positions within the agency that have not been that at during that snapshot that had not been fielding even since that time we have actually field sixteen of those positions and then three of those positions are actively being advertised so we have really concentrated on positions that have never been field but when you're looking at positions that are vacant they can be positions that are in the midst of being vacated by respective division and now being advertised and being field but not ones that have just been sitting there dormant. At twelve hundred and forty six positions. That are budgeted with feel. A heavy finished. Have you finished the reportage submitted in August. Twelve hundred and forty six budgeted positions that are vacant and then there's two hundred and thirty vacant budgeted positions which makes for fourteen hundred seventy six. Physicians. Ninety five of those ninety five of those were like in over two years. You needed ever won the unity those ninety five positions that have been vacant for two years and you couldn't fill and I I will tell you that what we have for those positions that you're looking at what we did we'd weekly recognize that that was an issue. Some of those positions have been filled others of those positions have been use you see DHS when we present to you a resource for allocation they have been moved to divisions that can properly use them and so we do recognize that there had been some that have been sitting out there and are moving them accordingly throughout the agency or you're representing those fifty positions that you're going to give back. No of that's the three percent that's he that's an example of where like yes we are utilizing those positions elsewhere in the a fee but as part of this and and working closely with the office of personnel management you know we have continued to review and and yes there are some places where you know I can think of several positions off top my head where we have said we have tried and tried and tried to advertise that specific position in that area for this particular function and it's not working and so either we need to then look and say is it just that you know we just can't hire for that position is that a great issue the salary issue isn't supervisor or work conditions issue whatever it is and so in those cases and we're looking and saying okay what can we do around that specific area but I think much like to the discussion around the fifty positions of and saying well if we can't utilize them for whatever reason in this area then let's look at other places across the department where we know we have needs and try to shift those around so I mean that is that is definitely an ongoing process that when we look at those we look at those that that data on a daily basis yeah and a very small minority of those positions that you that you see we have decided to surrender so it's not the fifty that you read but we we are looking at that and Terry would you would you ask. Are you willing to S. P. G. your directors of a each division to look very thoroughly it ever position surely I would think that would be more than fifty that could be turned back. Hello eight thousand eight thousand two hundred and fifty three positions that you're authorized. At we yes I. I will ask them because I ask them constantly right this is not like the first time since I got here I have not been talking to them about reducing position we have consistently and I think secretary Smith has the numbers we can walk you through the reductions at DHS over the last several years but I think and we we agree very much with not having a lot of positions that are not needed. With that I do I do I do have to say I really believe all of my division directors truly are trying to work with what they've got and are trying to work and share among each other to fill needs a simple example is for web very small example that's in the budget this time. One of the areas we continue to have issues retaining is over in the legal specs county legal operations attorneys they represent the agency and the foster children and it is a again it's one of those high it's one of those roles where it just turns over constantly it is very hard for us to keep those attorneys one of the reasons we know for that turnover is the fact that their case load is so very very high so what we have tried on the child welfare side to bring down the case load of the child welfare workers which is we're trying to get at around twenty nineteen twenty there and we did get there at one point But is rising again with the number of kids coming in but we really work at that and we with the legislatures help added positions there what we're doing on the county legal side is you will see in this budget that we are shifting we are reducing some positions we're taking a group of positions that are being turned in in order to create for county legal attorneys and start to grow those that those are coming from all over the agency folks are giving up positions so that we can put in for more lawyers that won't come close right now their case load is it's supposed to be about sixty it's running ninety nine. On average all right that is extraordinarily high it won't come close but it is a first step and as we try to hire those because again it's hard to hire we went through this recently we've got one opening I have approved three people. In northwest Arkansas for that position and each time by the time we make the offer they have moved on. So we're going to add more and then we're going to reach around inside DHS and try to do some more as we can find a way to pay for it so yes Sir I will you know when we meet again on Monday I will say to the executive team again make sure you are looking at describing your budgets and positions but I will tell you they know that they have to do that because we are coming to them constantly going we have a need for four more nurses over here who can come up with some positions we can use to get ourselves for nurses here and if you get death squad to the table director Sherm I would ask you to talk to him today he's done some tremendous work in the last year at at the division of provider sport and quality assurance just by putting in some I. T. and some restructuring to be able to free up some positions that he will be giving up so we we take it seriously but I appreciate your question and I really do appreciate and understand that absent of if I can add to that I think it's important keep in mind that the biggest chunk of these positions we're talking about our positions related to our facilities these were we have people that we're taking care of them on a twenty four seven basis and we have to have people in those buildings twenty four seven the B. loss under standards and also just make sure that we take care of those folks and keep them safe and doing that we we have to do that with Bob whatever meat means we can because we do have trouble hiring for those positions we have to look to other means we have to pay overtime we had to pay contract agencies would look contract labor which the whatever it takes to get folks in the in the door but ideally we'd rather those folks B. full time because full time employees and so that's why we have had many those positions there is so as we can find people as we can recruit them we have a place that we can put them in to get them and position because in the long run that's financially better for the state rather than paying overtime or paying a contract agency to bring someone in. We really do need to move on so make this your last call then okay let me conclude rather very quick I'm not questioning how will your performing your job I think you're doing under the situational thank you to the right right of benefit for the state of Arkansas in for her people but I'm just asking that you look at these positions very closely to be sure that they're justified in the and and I wish you luck in attempting to fill but we just need to be good let's that we just need to be good stewards of what we're give it and I appreciate you thank you very much thank you ladies and gentleman by this time we should have been through half of the other agenda items and here we are so I have three people left in the queue we're going to take those so we're gonna break for lunch and come back A all right of A him for Representative Ladyman. Thank you mentor I'll try to be brief but of I want to talk a little bit about you the the turnover rate your seventy five percent and I remember on the same likes been a couple years ago where we had a meeting up don't grow human development center were were you announced or a on the stone announced the CNA program. And I mean the excitement of those folks in that room was something else. And then you can see that you know they wanted to do better they want to have recognition and I think you've done a good job at The number that's Babbitt but seventy five percent I was excited about that number when I saw it because I believe two years ago we had that meeting at the end of Elm centers it was a hundred and twenty years something like that it was pretty I is that correct it is yes Sir that what is that it is around to certain classes of workers which are the ones we are shifting into the sea an ace the program did get a slight delay getting started because of because of the pandemic we obviously could not start the training and so it has gotten started now so we're hoping as you said the excitement that was there will be there and we have started that training and have started finally moving those individuals into it when I saw was people that were interested in their job in the they saw the opportunity to grow and if you train them to higher levels and maybe they will stay in as you said maybe the going to nursing our little nursing career but also the jobs you you can't feel these jobs you know believe it or not the unemployment rate nationally six point nine percent and summers in Jonesborough is way lower than that and I know in northwest Arkansas is way lower than that when I drive around oversee all the signs of help wanted and you're trying to compete with that in a very difficult job I understand that in as mark yes you said most of these positions are in those lower level a difficult to fill jobs so when you look at the the turnover rate it looks high but you have to take. One ninety basically you take whoever you can get from any means you can get so your labor pool you can't really that those folks because it's a difficult job and I've talked to people is one at their work at the UN building center they put after two three days and I say why'd you quit nice well just can't handle that we just can argue that job I enjoyed doing it but I can't do so is the biggest is one of the big problems the labor pool and not being able to be selective did you know you want to bring someone that wants to do that kind of work is that one of your biggest issues I'll on stop it. a let director stone address that more but it for us we're hoping that having the CNA with the. Let us bring you and make you a CNA two things a CNA you do have to do more of a betting for someone to to be able to be to get that position which is good and secondly we are hoping that will not just increase the labor pool but also a tract more workers who are interested in more of a career path so we're hoping it will help with the labor pool yes Sir. All right thank you all right to senator Irvin. Thank you madam chair question appreciate your presentation that you that this that you gave us quickly just to to note I mean in the past two years this is tremendous amount of work and and I want the members of this at this body to understand and know that this was not these are not simple tasks that were taken the the the launch of the Arkansas integrated eligibility system is incredibly crucial and at it it's just going to be game changing I think for the clients that we serve and I'm excited to see how that connective itty can continue beyond just DHS that throughout our state agencies so that we can kind of change the dynamics of how we are dealing with our clients are our citizens the people that we serve because I'm I'm interested in that and so I think there's just so much opportunity there additionally I think your focus on the rate review that's tough work and add that systematic that need to be done put in place the governor initiated that launch that that was very good work the also just a lot of the other things that you have on here my question on the F. map on the enhanced F. map and you may have said this I while I was out to but do is that going to be through the end of twenty twenty one or is that going to be based on just decisions that are made at the federal level right now at it is based on the seasons but at the federal level right now the emergency has been extended into February I believe so for us it therefore goes to the end of March the way the federal rule is set up it the the enhanced F. map and the MO egos to the end of the quarter in which the emergency ends and so right now we will be losing that. At the end at the end of March of twenty one it is something that's basically announced by secretary ETS are at this point the whoever the secretaries of the hell of health and Human Services okay and what we do with the difference of that. See you in a different question yes ma'am okay the difference of that is it allows state to not run stork short of state G. R.. In an emergency when more and more people are added to your roles okay so in other words we have a finite amount of state money right that is there and if using very simple math if we were expecting to have four people and we were going to have for people and the state share was going to be twenty five dollars but instead we are going to have. Ten eight people double the state still only has twenty five dollars right right and would otherwise twenty five dollars more for the other four people actions so the fed step in with an enhanced F. map to stretch the state dollars further because more people are going on the rolls so that's why those two things tie together they require you to keep people on the rolls during an emergency like this okay but they give you the money to stretch your state dollars further do we do you have an and number I figure of what that going to look like or be a total amount of money. The total amount of money it says we can pull that together of the total amount of money associated with with that in hand staff mount yeah and have and I I just about I mean is basically an additional six dollars right on every. Right at six dollars on every it's going to be different for the traditional edition six cents on every dollar we spend so you don't have to get that to me now that I'd like to know what that what that is and what that looks like and then my last question is on this Medicaid funding flow over the biennium the state share and you may have already said the but as it goes from as seventeen you know one. I know that this is rounded off but it there's an increase in the state share where does that increase come from and where's the increase and unrestricted refer the Kerry for come from okay the increase is thank you know how we do the budget we on Medicaid we use certain assumptions in order to establish the likelihood of growth of both around with a Roman levels but edition like what what the cost increased cost of a providing health care we'll be right and so we use basic assumptions around that that are nationally used so we used for pharmacy for example we use CMS after office of the actuary their healthcare expenditures growth for prescription drugs we use their projections of five point seven five point eight percent five point seven percent growth in twenty two and five point eight and twenty three for long term services and support for you CBO's March six twenty twenty baseline growth rate for long term care three point one percent and four point three percent for the two respective year's institutional medical we used historical as well as the why eighteen to twenty compounded annual growth rate so and that what came in at two point five and three point five so for each you know there's several others of these but for each area of the Medicaid budget what we do every time is we use some either historical trends here and take those board or we use the national estimates on growth rates and we use those to project out what this band will be and combine that obviously with projections around enrollment okay in our overall growth rate is that what is it four point five percent okay under the medically national yeah the national is five point five yeah so we're at four forty four point one five. Five which what four years ago we were at six something yeah so we we ACT six we are you I think we are doing. Yes okay alright thank you senator passed your previous question we're projecting for this fiscal year to earn eighty one million in additional revenue due to the end and stuff map that that is the gross for does include the cost of all the extra people on the rolls but that's the gross Speaker. All right ladies and gentlemen Representative Lundstrum you're recognized thank you I'll make mine shortens wait we've been following the fingerprint issue for a long time here and I know you all have been working diligently to get that fixed since last session so if you could give a short update for those of us that are left so that they know what I'm talking about when I say fingerprint inching and child care all right great I'm going to ask Debbie directors met to talk about this and would if you as you start would you please explain. The whole electronic fingerprint the the electronic background check process because I think that is not the whole process but the initiative because I think it's a good one. Some represent a lotion thank you for one for advocating for this but also walking with us as we work through this process if if any of you all have been contacted by providers you may hear them have expressed concerns about the fact that it takes a at it it takes an extended amount of time to get background checks when you are doing a paper process meaning when the staff member is going to physically get fingerprinted that card is getting mailed in to our office that it is then being processed sent to the state police and equally then getting process by the state police so we were having I believe that the at the onset of this process is taking somewhere close to. Three to six weeks in order to process represent less from is holding up her fingers to show me that the amount of time is taking to process background checks as a result we've had a collaborative effort between us and the state police we have created what is called we are we are using electronic fingerprint and now the board is a stating me but we have an electronic means of taking fingerprints and so individuals just simply have to schedule an appointment at our county offices where they are where they use our electronic fingerprint system that is electronically transmitted to the state police we have created a system to do so and we are now down from four to six weeks to a process that usually is takes somewhere close at three to five days in order to process background checks so it's it's still a work in process we still have to finalize and bring upon and bring different providers on right now we only have child care providers were looking to expand the system and and some individuals associated with how welfare we're we're looking to bring the whole child welfare system and and then the remaining of our providers so that will make a significant difference when we're talking about Medicaid providers that such a large community that is still using paper checks right now and so we're really excited about expanding the number of providers that have access to the system and it's a great initiative between us and state police but thankfully motivated by represented luncheon pointing out the issue that was that was outstanding. All right. He finished just as a follow up I know there's been some interest in speeding up the process and local chambers of commerce have also expressed an interest in purchasing a fingerprint machine so that instead of going to the education co ops because the education co ops are also backed up because teachers and bus drivers constantly need to update and we're having new people come on the the local chamber of commerce may want to purchase one to speed that up so that they can harvest those fingerprints quickly so the nursing homes and child care facilities can quickly hire folks so just to plant that seed for the future thank you thank you and if I could madam chair mentions something that's near and dear to your heart we should along the same lines coming out of that we should shortly be able to move to of electronic child maltreatment red treatment registry that is something director stone has been very focused on and did with their I. T. system and others at the full I needed because I that that is coming soon that is so exciting thank you so much and with that we are finished with their questions and we thank you very much for being here ended on a good note with the such such good progress so thank you for coming and we are going to have the audit report before we leave and then we're gonna break for lunch so if miss walls would come to the. Okay. I'm sorry legislative audit. Three. And by the way of a director Gillespie you and your people can stay we change the the rules and so you're welcome to stay. Would you identify yourself for the record please. Thank you madam chair I'm Tammy Shaw with legislative audit. The federal compliance findings for the department of Human Services are from the June thirty twenty nineteen statewide single audit report there were twenty one findings applicable to the following programs that are administered by DHS. One finding affected both the child and adult care food program and the state administrative expenses for child nutrition. There were six findings that affected both the children's health insurance program commonly referred to as chip and Medicaid. Chip had one additional finding and Medicaid had an additional thirteen findings the compliance areas affected by these findings included cash management claims payments recipient eligibility provider eligibility regarding fee for service and managed care. Home and community based services matching and reporting. Question costs for the June thirty twenty nineteen report total almost twelve million dollars. Thank you madam chair that concludes the summary of the findings. All right any questions. A seeing the questions we thank you for that report ladies and gentleman we pool be back it to one thirty you are adjourned until then.