Joint Education
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Members, if you would, go ahead and grab your seats. We're going to start here in about two minutes. We're going to start here in about two minutes.
Members, go ahead and take your seats. Chair sees a quorum. Joint education will come to order. Members, to start off, I'm going to recognize Representative Cozart to start us in prayer.
If you would, please stand with us. And Representative Cozart would ask you
to remember Senator English, who broke her hip about a week and a half ago, had surgery, and is currently in a rehab hospital. She's doing well and is going to be out soon and joining us in the future. But please keep her in prayer. We thank you for the many things that you help us with each
Representative Bruce Cozart
Unverified
2:21
and every day. Lord, we thank you for this group that's gathered here today to do the work of the state and the
Speaker 14
2:28
work of the education for our kids and our teachers.
Representative Bruce Cozart
Unverified
2:34
Lord, we thank you for just watching over us each and every day, getting us here safely, getting us home safely. We thank you for the opportunities that we have. Lord, and we come to you and ask you for a healing for Senator English, Lord. As she's up in her age, she doesn't heal quite as fast as maybe someone younger. But we pray for that fast healing and back on our feet and get her going again. We love you. We thank you for everything. Go with us now and help us to do our duty in Jesus' name.
Amen. Thank you, Representative. All right, members, without objection, we'll move to item B on the agenda. I need a motion to approve the minutes from our June 1 meeting. I hear a motion. I have a second. All in favor, say aye. All right. Those have been adopted. Moving on to C on our agenda, consideration of adoption of an interim study proposal from Representative McKenzie. Need a motion to adopt? Second. Is there any discussion on the motion?
Seeing none. All in favor, say aye. All opposed. That has been adopted. So members today, here's kind of the flow of how things will
go. So we have Siegel that is with us remotely, and they're going to be making a presentation on health care costs, health insurance funding. And then we will have our adequacy presentation, our draft from our friends at BLR. I want to go ahead and just kind of talk about what the schedule is going to be moving forward on the remainder of the adequacy process.
And so today, you all have your binders in front of you, as always. In that binder, the first tab in your binder is going to be the worksheet. And so they will present. We'll have the Segal presentation. Then we'll have the adequacy presentation that will be presented. And then you need to take your binders home with you. I know, right, Hope? So take your binders home with you. Please treat your binders as a brick of gold. Don't go throw it in a spare bedroom and never see it again. Take it with you. Continue to study all the amazing work that's been done.
And then we need the recommendations back. So you have your recommendation worksheet in the first tab. We need those recommendations back no later than August the 24th. No later. That doesn't mean we're going to put them together on August the 25th. That means that we need them on August 24th so we can start working on the process of moving towards a joint recommendation. So they'll do by August the 24th. We will then put all the recommendations together. And on October the 5th, which we have a joint education meeting scheduled on October the 5th prior to joint budget starting,
We will adopt the recommendations, and then those are due to be delivered to the Speaker of the House and the Senate President Pro Tem on November the 1st, which actually will happen on October the 30th, because November the 1st is a Sunday.
So that's kind of the lay of the land. And so here is my admonishment, encouragement for
you when you take these home. We've got plenty of time. We've got three weeks to put together recommendations. And as a part of this committee, part of the expectation of signing up for this committee is that we take this process extremely seriously because this is the funding for our public schools, which we all value.
And so last time, out of all of the members, 28 members of joint House and Senate, we had three recommendations come back. My hope and my expectation to know that Senator English would share that as well as Senator Sullivan and Vice Chair McKenzie would share that we want those recommendations back because it makes us, it helps us get to a better place in terms of what the process is and in terms of the recommendations for funding our schools. And so that would be my encouragement, my admonishment to you is please take the process very seriously, spend time the next three weeks looking over all of this amazing data, and then let's come back with good recommendations from everyone so that we can put this together to the benefit of our schools.
Senator Sullivan. Thank you, Mr. Chair, and I appreciate those comments, and I look forward to carrying this binder home with me and laying
it right next to something. I just want to make sure in the very first page there, it says, when making changes, which we're going to try to make, the General
Assembly shall ask the following questions rooted in Lakeview. Just for the committee, and me included, what relevance does Lakeview have? Because that lawsuit, as my understanding, has run its course.
Is that the correct way to state that? That may be a question that I would
allow the Bureau to answer a little bit more in depth. So, Jasmine or someone, feel free to. So, from my perspective, you know, the adequacy process was, the adequacy bill was passed as a result of Lakeview. And so we, even though Lakeview is passed, we still operate under the legislation that came from that, and this process is that.
So, yeah, I would completely agree. But just so that everybody understands how how binding is the Lakeview case on our recommendations and can recommendations be made that might be contrary to what the Lakeview decision was? Or does every recommendation have to follow, you know, how deep do those, it says rooted in the Lakeview, how deep do those roots go?
But I'll let BLR answer that. You recognize that.
Speaker 30
8:10
Hi, Jasmine Rae, Bureau of Legislative Research. I can't speak
Speaker 31
8:13
to how rooted they should be. What I can say is that part of the continuing evaluation act, the adequacy statutes that guides this study, requires, and I'm going to go into this in the final presentation, actually, but as a guidepost in conducting deliberations and reviews, the committee shall use the opinion of the Supreme Court in the matter of Lakeview and other legal precedent to guide the decision.
Speaker 32
8:40
So that's in the statute for the adequacy study. Would it be
appropriate to say that it is rooted but not binding?
answer that? I mean, I think that's critical. If people are going to make recommendations, they need to understand
if we're bound by that or those are just recommendations. I think there's a huge difference in rooted in and binding on.
Speaker 37
9:14
Ms. Garrity, you're recognized. Thank you, Mr. Chair. Marty Garrity with the Bureau of Legislative Research. Senator, I'm not going to definitively say, because I am not sure, but I do know that recommendations change from year to year, or every two years from these committees. So this committee is directed to work within the parameters of the Lakeview case.
And so I don't, you know, it's very much a guide, and I think there are parts of it that may be more susceptible to lawsuit than others. But, again, I would defer to a later date if I can follow up with you to give you a more confident answer. Sure.
I mean, that gives us good guidance going forward from today because nothing's finalized until the committee adopts whatever changes happen.
And we'll make those decisions later on. Thank you very
much. And Senator, I think a very good question, as the Bureau has stated previously, is that this is our process as a joint education committee. This is our process. And so recommendations we make are not necessarily bound by a specific law. uh we can make whatever recommendations we want to then it becomes the purview of the committee whether we adopt those recommendations and pass them on on as our joint adequacy report thank you i
agree with that thanks uh looks like we've got just a couple questions uh representative
Representative Hope Duke
Unverified
10:46
duke you're recognized thank you mr chair just a quick question are we not meeting
in september i don't believe i have a meeting scheduled in september let me
Representative Hope Duke
Unverified
11:03
let me check and get back to you so if i may the the reason if if we're turning in august we're coming
to the october 5th meeting i'm assuming there's the you're going to pull all the recommendations together and we're going to review them are we going to have that an adequate time before the october 5th meeting is all the discussion
i mean that's a lot happening at one meeting if
we're not meeting in september sure we yes we will we will have that all reviewed uh prior to that and get that
Representative Hope Duke
Unverified
11:27
information out to the committee and would that be in a time in which if we needed to have a meeting in september to because if everybody participates in this it's going to be a lot for us to dice through and to try and do on october 5th alone i guess that's my question is
will we have uh you know i'm committed to kind of taking that on a uh
wait and see basis based upon what we've got
Chair
Unverified
11:57
okay thank you. Representative McGruder. Representative Duke asked my question. Thank you. Senator Johnson,
Senator Mark Johnson
Unverified
12:02
you recognize. Thank you, Mr. Chairman. I'm not a member of the committee. I appreciate you recognizing me. I appreciate Senator Sullivan's questions about Lakeview. I consider it a cloud that hangs over this legislature every session. I think in the subsequent time since that, what, almost 30 years ago, it's hard to believe it was that long ago, but I think that the General Assembly has worked hard to make sure that educational opportunities for our children are both equitable and adequate.
I think the LEARNS Act, Mr. Chairman, was probably one of the biggest things we've ever done to ensure that, and thank you for your work on that. But I just remind everyone that in the 30 years or so since Lakeview decision, we've seen a lot of constitutional law that's come out of courts that recognize the separation of powers that perhaps the Lakeview court did not recognize. I do appreciate that we have passed statutes to guide us, but I don't want anyone to think that there's some cannot-be-moved constitutional precedent created by that court decision.
Obviously, anybody can sue anybody over anything, any time, but I feel like subsequent decisions are things that guarantees that the decisions of this body, when i say this body certainly all due respect the education committee but to the entire general assembly decide what is equitable and what is adequate and i don't want any of the brilliant people that put in the kind of hours you do on this committee to lose track of that fact because it's it's a legislative decision barring some new uh court action that i hope we don't have but
i just wanted to make that point and thank you for allowing me to do that
mr chairman Thank you, Senator. Representative Painter, you're recognized. Thank you, Mr. Chair. For staff, I assume there will be a PDF fillable file after this so we can put our recommendations in there. Because if you've got chicken scratch like I do, you won't be
able to read it. Yes. Okay, thank you. Additional questions. All right, so we will wait. Ms. Garrity can get us additional clarification on the question earlier.
But, again, from the standpoint of what this process, where this process has been since its inception and where we are now, again, our opportunity and our expectation as a joint committee is to provide recommendations and then to adopt a recommendation based upon what we have ascertained in the information that's available to us that's been provided as part of this longstanding process. And, again, nothing prohibits us from making recommendations, anything we
want to, frankly, then we just get to adopt it.
So with that, no additional questions. I will move
on to item D on our agenda and recognize Patrick Klein from Siegel. If the two of you
would please introduce yourself for the record, and then you're recognized. Thank you, Patrick Klein. senior
Speaker 60
15:21
vice president and actuary at seagull i think you're muted volga
olga rancini actually with seagull and just to confirm is everyone able to see the the presentation We do not
have anything on the screen right now, if that's what you're going for. We all have
Speaker 60
16:00
a printed copy. Okay, I'm trying to share my screen through Teams. There we go.
It's good? It's on our screens in front of us. It's not on the main screens in the committee,
but go ahead and proceed. Okay, well, thank you for your time today. Some background, we're the actuarial consultants to EBD, and today we're going to walk through our review of the PSE's fund balance and reserve projections, and the main takeaway here is we're going to talk through what it's going to take to keep the plan on solid financial footing for 2027 and beyond.
So one important note, we are not the actuary for EBD, so that is the public consulting group, and we rely on all their expense projections since they are the day-to-day actuaries. We did review the numbers and the assumptions used and deemed them reasonable. We have done this several times, the last being two years ago, and the landscape has changed quite a bit. So on the funding side, the minimum district
contribution has bounced around a little bit. It was at $300, then it went down to $234, increased to $350, and now it currently sits at $400 as of July 2026. Meanwhile, the expenses have increased 17% above projections for 2024 and 2025. So in the market, we are seeing higher medical and pharmacy trends, all-time highs, a lot
of plans that are experiencing double-digit trends. So it's no surprise we're seeing a large increase there. 17% is relatively high compared to our other state clients. And then when we put our, you know, our expenses and revenue together, we're right now we're projecting a slight loss for 2026. So the expenses are slightly higher than the revenue and that deficit grows to $31 million for 2027.
And if there's no material increases, the reserves will be depleted for this plan by 2029. So to help you think through the path forward, we ran several scenarios we'll walk through in a few minutes. But the headline is this. The PSE fund has a surplus right now. But the key is that we need to have a strategy on how we're going to increase the funding to keep up with these growing expenses.
Speaker 60
19:00
So, this slide shows just how much the expense picture has shifted since the last time we
presented. The top block shows Milliman's projections back in 2024, and then the bottom block shows the current PCG projection. And as you can see, there's a pretty large delta between the numbers. So, again, the 24 and 25 actual expenses came in 17% higher than the initial forecast from two years ago.
And the growth in expenses have extrapolated even further. So 2020, we have 22%, 23%, all the way up to 27% increase in expenses for 2029. And it's not just one lever. It's really all pieces of the program. Medical expenses are up 15%. We've had a large spike in the MA premium. And pharmacy costs continue to surge.
So that's really going to be the backdrop of the next couple funding
Speaker 60
20:11
slides. So here's the baseline where we sit today. This slide shows what happens if we keep
this minimum district contribution locked in at $400 throughout the lifetime of the projection. And the top part here, this top row, this is the minimum district contribution. And then if we drop down, we've got our revenue items.
Below that is our expenses. We have our net income loss, so that's just your revenue minus your expenses. Total assets or fund balance, that's how much cash is in the plan at the end of the counter year. And then the bottom row there is our recommended reserve. So this is 14% of medical and pharmacy claims. That is our recommended target for where the fund balance should be. So as you can see for 2026, we've got a large surplus, $188 million in fund balance versus
a $73 million target. But you can see that the expenses are going to grow substantially, almost $70 million a year. And if that revenue remains flat, the fund balance depletes quickly. And so as of 2028, we would be under the target. And at 2029, the fund would go negative without any increase in funding. So this is why we're here.
Speaker 60
21:48
This is the scenario we're trying to avoid, and we're
going to go through some alternative funding scenarios that you may want to deploy to keep the fund balance in check. So before we get into the scenarios we ran, I think it's worth pausing just so everybody has a clear picture on where the PSE funding actually comes from. in counter year 2026, the total funding was around $510 million, and it's made up of these three
pieces. So there's really three pieces where the funding can come from. Historically, the Department of Education amount is $142 million. That's been fixed. Employee funding, We did have an increase for 2027, but before that, the rates were flat, and there was even decreases. Before, I know, the idea was to get to a target subsidy percentage, but that has either decreased or stayed relatively flat.
And then, lastly, the district contribution, which is contingent on the minimum district contribution, that has been the lever that has been pulled. We've seen some changes there, but again, if that's the only lever we pull, you're going to have some sizable increases. So that's what we're going to show in this first scenario. The idea here is that we're going to reach our target reserve at the end of the projection period in 2031.
So you can see these numbers are highlighted in green. So your target's $118 million, and that's where we project the reserve to be. So where do we need to increase that minimum district contribution to get there? It's 21.3% annually. So that starts at calendar year 2028, and by 2031, the minimum district contribution needs to be $867. And so that's, you know, more than double than where it is today.
Obviously, if you increase funding from other sources, then we don't need such a large increase. But if we just isolate that minimum district contribution as the only lever we can pull, that's the increase needed. And then the other scenario we ran is what if we spread the increase equally over all three pieces, all three stools of the revenue? So the district contribution, the employee contributions, and that Department of Education funding.
So if we increase all those uniformly starting in 2028 through 2031, what is that increase necessary to get to our reserve balance at the end of the period? So that drops to 12.5%. So a much more feasible percent increase if we spread the revenue across those three pieces. And that
Speaker 60
25:17
is the end of our presentation, so we'll be here for any questions or comments.
Members, are there questions? Representative Panner, you
recognize? Thank you, Mr. Chair. Just a question for you guys on our smaller districts. How are we going to expect them? That's quite of an increase for even our small districts, rural districts. even if we spread it through all three.
I saw, I mean, go ahead. Sorry. I'm not sure if I'm the right person to answer that. I don't know. It's just the numbers are the numbers. And when you're seeing growth, $70 million in growth on your expenses, and if it all needs to come
Speaker 67
26:14
from the minimum district contribution, That is a big burden on the districts. Yeah, no, I agree. I
think that's something I hope we can take in consideration in the committee because I'm going to
tell you that's going to kill some schools right there,
just this alone. Sure, and to clarify,
I represent Payne here for everybody. Obviously, Mr. Klein and his group, they're providing us the data and the information that's up to us
Speaker 48
26:39
how to disseminate that and what to do with it, much like
the broader adequacy process. Right. Thank you, Mr.
Chair. Senator Dotson, you're recognized for a question. Thank you, Mr. Chair, and you may, I stepped into this just a minute late, and you may have covered this already, and I apologize if you did, but when we started this 2022 or 2023, I can't remember which year we actually made the switch over and had the projections out.
How does this compare to when we were initially looking at the fund balances and what we were putting into when we made the changes legislatively? And I'm trying to remember. Was that the 20 – it was a fiscal session, so it would have been a 2022, I think, year. So we made the switch over to what we're currently doing. It's been about four years. you were projecting things out at that time.
Are we in line with that? Are we higher than that? How much higher are
we than when we were making those projections a few years ago? Yeah, so the expenses have increased almost 17%, 18% from when we were here two years ago doing the same exercise. And again, we rely on the EBD's actuary for all the expense projections. We review them for reasonableness.
But yeah, they came in 17% higher. And then if you look to their 2026 projections, then versus now, 22% higher. So the expense landscape has changed. You've had some really high trends. On the flip side, the minimum district contribution has increased. It's up to $400. So that's been able to offset a lot of those large increases. So for 2026, you're in a really good spot. You're almost break-even expenses versus revenue. You've got a large surplus.
But, you know, going forward, there needs to be a plan in place to increase funding in future years, or that surplus
will get eaten up very quickly. You deal with a lot of states in this scenario. Is this common across the board in other states as well, or is this unique to Arkansas, the 17%, 18% above projected expenses from two years ago? Yeah, we've
Speaker 60
29:22
seen some plans that have had all-time high trends.
It depends on the state that we're working with. But I would say the range is, yeah, anywhere up to 20% to high single digits. So I would say your 17% is definitely on the higher side. But back in the, you know, I would say like four or five years ago, we were seeing three, four, five percent trends, expense trends, almost like a CPI trend. um from the last two years in the last two years we've
Speaker 67
29:54
seen it really shoot up quite a bit across
the board okay is is there some things
that other states are doing changes in coverages things like that that that are holding those expenses in line well i think
a lot of states are uh are seeing the large expenses come through in their experience and then for future years they're looking at how to mitigate those those large increases whether it be plan design changes or trying to come up with um other strategies um and then but but i would say
Most states are really just trying to find more revenue and increase contributions, looking at plan design changes. Those are the key letters other states are pulling to keep their funds in line with Target. Thank you. Members, we
Speaker 60
30:53
do have folks from EBD here, I believe. You
may be behind the column that I can't see, but I think we have some people from EBD here if we have additional questions for them.
I'm going to take questions from committee members, and then I'll get to non-committee members. Representative
Representative Hope Duke
Unverified
31:16
Duke, you're recognized. Thank you, Mr. Chair. I guess I'm kind of along the lines of Senator Dotson, I think. My question, I guess, in relationship to this data, and I don't know who can give me the answer, is the only solution I'm seeing here is to increase funding, which means find money somewhere, which that all comes from the taxpayer. So where's the solution or the discussion or information from you all
or from somebody else on where can we make some cuts? Where do we make some changes? I mean, that's a typical what our – because even the teachers here, they're getting the benefit of this. When we increase, there's going to be their taxes too. So I think that needs to be part of the discussion on this and who can help us dig deeper into this information to find out, Are there places where we can make some adjustments so that we are not increasing funding, which means increasing taxes in one shape or form, unless we're not cutting somewhere else?
It's just, I think, a simple budget, but maybe I'm
Speaker 89
32:17
just a simple girl. Could I get somebody from EBD who
might be in the crowd? if y'all would please introduce yourself for the record and then you'll be recognized to maybe provide some additional context and answer questions from members
Speaker 93
32:45
James Caldwell CFO for shared administrative services Fran excuse
Speaker 95
32:57
me Fran Jansen deputy director of VBD Courtney
Speaker 96
32:59
Traylor chief of staff at shared administrative services Representative Duke do you want to address
your question more specifically I don't know if I
Representative Hope Duke
Unverified
33:09
can but I'll try thank you um I think it again I'm maybe being oversimplifying this but I think that's what folks understand as well is our choices
as I'm understanding is we either increase funding which means raise tax I mean that all that funding comes from taxpayers or we which we're not to seem to be discussing that are there any other solutions in cutting things where can we make some adjustments to to alleviate or help lessen this problem I'm sure you guys are running that and trying to figure out and coming up with those
solutions but I just haven't heard that yet so or alternatives I can try
Speaker 100
33:47
to address that and I apologize our director Grant Wallace is not able to be here today but I will
Speaker 101
33:55
we've met with him prior to this and we've been asking those questions and I know from an EBD perspective there's two fronts that he's working on that's under the EBD umbrella that they can work on cost and the first one is on the medical side and they're renegotiating the contract with the TPA to work on containing those admin costs and in addition they're doing some post claim review work so that they can make sure that the claims coming through are being
paid appropriately and accurately so they're working to increase that they're also bringing in point solutions which is focusing on the diabetes management maternal care and cancer care to make sure that we have targeted approaches to how those patients are being treated and and working on containing the cost around those then secondarily that's on the medical side on the pharma on the pharmacy side which is where
most of the increase is coming from they are working on renegotiating the contract with the pbm and working on reducing those admin fees so those are the things that ebd can do to to help contain those costs in addition they're constantly monitoring formulary management of prescriptions and making sure that they're paying for you know if there's a a generic available or a brand available to a generic or a generic available for a brand or a biosimilar they're working to
substitute those where it where they can and make sense and then in addition they're also working to enhance their coupon program which are the rebates that they get back on those expensive brand medicines so they're they're trying to make sure they're maximizing that with the pbm and then lastly they're working with the immunomodulators which eventually right now those are primarily brands that they're able to prescribe but they're looking at over time they'll
be able to move to more from the brand names to the biosimilar that will be available so those are the the primary areas where ebd is working to contain those costs can i have a man go ahead
Representative Hope Duke
Unverified
36:23
um and i don't even know this is this is not an area that by any means i have a lot of expertise and even a little bit of novice knowledge on this. So this may be a foolish question, but I am curious.
In legislation that we have passed in 2025 or in 2023, could somebody get us the information, BLR or someone, on what legislation we have passed that have increased maybe coverages or rates or whatever that have impacted this? I don't know if that is even a logical
question for this, but I am curious if what we are doing as legislators when things are coming through and it sounds great and it's a great program. We're going to increase this. What impact it's having down the road when we're coming back here going, what are we going to do? How are we going to pay for this?
We've got to increase their insurance. We've got to increase what they're paying, what the district's paying, what
the state's paying. If, and I don't know if that's even a relevant question, but it kind of seems
to me. So Representative, let me go outside of the committee. I'm going to go to Representative Wardlaw, who has
been involved in this process for quite some time and let him give a little bit of context. great thank
Representative Jeff Wardlaw
Unverified
37:31
you mr chair so patrick if you would we'll kind of go back in history here for a second we're back to the 2023 session and we'll bring it forward to now in the 2023 session we had a
234.50 was the contribution rate it was supposed to went up that year almost 19 and we foregone it because the balance of the reserves and the balance of the system were okay move forward to the next session we were supposed to went up to 325 that next session if i remember right and that number is arbitrary right now because i'm pulling that memory number from memory but we also stuck to the 234 50 again in that session which put us behind the eight ball because by missing that mark
it forced us this last session to go to 375 dollars which is a huge jump by the way we were always supposed to only jump medical cpi but because we've foregone those two injections of cpi index we had to catch up all at once well what you had happen was when you look back at the last year you look at health insurance in general you had about an 18 increase in health insurance across the board it wasn't just the teachers or the state employees look at the blue cross report from back
in may and june everybody saw the 18 increase well you end up having to add that to your cpi and now you're looking at you can't stick at 400 you have to jump those increases to say sound that money was always meant to come out of for this program the public school fund that's the reason it's in your committee and it's not setting in council in the public uh entrance fund we we put it here on purpose because this had always been funded in the past in the history through
adequacy and that's the reason when patrick gave you the report a while ago someone asked what's the number well it's our job to give him that number as legislators of this committee and it's our job to give him that number because that's the task at hand at adequacy if you say no or you say a minimum number less than the percentages he's telling you you're going to be facing a cliff he plays that out very well in these slides um you go back to page four the bottom slide it walks
you through the history i just got you to and then you go forward and he shows you what that looks like it's really scary out to 2031 at the moment but you have to do cost containment you have to get control of the insurance companies which we can go back to session and there were some bills to do that they didn't pass but there was bills to do that but that's where you're at and that's why this is so important in this committee because this committee decides where that cliff lies and it was designed to be that way the system works as long as we do our job and put the money
in when we're supposed to put the money in but when you forego a session two sessions is what we did you're going to see these huge cliffs or huge increases because if you'd done it incremental it would have been small and it would have played up through but we didn't do that because the budget was okay and tax cuts were more important at those times and i'm just telling you that's the job you're faced with in the education committee but it's the job the education committee's always been faced with we've always handled the health insurance of the state of the teachers inadequacy
we've always paid for it here we left it here when we re-engineered the program so you guys still had a say-so and what was spent in the insurance plans. Thank you,
Mr. Chair. Thank you, Representative Waterlaw. Representative Payne,
are you recognized for a question? Just information for me. Can you guys get me maybe the last two cycles of just the administration costs that we have paid and how much that has increased? Please. Thank you. Yes. And share that with the committee, too, please.
We will do that. Representative Andrews
is not there. Okay. Senator Love, you're recognized for a
Senator Fredrick J. Love
Unverified
41:48
question. Thank you, Mr. Chair. I'm just asking for clarification. So I'm on page four right now. It's the Q&A, I guess, slide that's above. Because I'm trying to figure out. So we said if we increase the level to 12.5% on all three portions,
which is the Department of Education, the district, and the employees, then the
employee will go from paying $375 to $400. Is that
Speaker 76
42:26
what we're saying? Is that? No. So the $400, that's the
minimum district contribution, and that's what it is currently right now. So the 12.5 would be increasing that $400 up to roughly $450 in 2028, and you can see at the top part of the slide, that number increases to 506 and 569.
So that's that 12.5% increasing the minimum district contribution. And in addition, like you pointed out, the Department of Education and the employee funding would also be going up
Senator Fredrick J. Love
Unverified
43:04
12.5%. Okay, and so what we're asking is for employees to pay the $50 increase and then another $55 or $56 increase. Is that what we're asking? I mean, is this what this metric is saying?
Speaker 76
43:22
That's what I'm asking. yeah um so yeah they're the
employee contributions would all go up 12.5 percent so yeah if an employee is paying a hundred dollars today they'd
Speaker 117
43:36
be they would pay a hundred and twelve dollars and fifty cents for for 20 in 2028 uh eight okay i guess
Senator Fredrick J. Love
Unverified
43:44
i need to ask what what is the employee plan paying right now well yeah i'm trying to get the i'm just trying to get
figures what actually what is an employee actually paying now today are they paying they have they pay
yeah they pay different contributions based on what plan and tier ebd should have all that information and what we're showing you here is the total dollar amounts that they go into the fund but um does ebd have that number i don't have
Speaker 123
44:19
an average amount that they pay but i can get that for you i think it does vary
Speaker 122
44:25
depending on the plan and the number of you know family members they have
Senator Fredrick J. Love
Unverified
44:29
but i can get an average okay i would just like to know the average of what we're
Chair
Unverified
44:40
at we're going to be asking employees to pay
all right thank you i should be able to pull it up here
Representative Rebecca Burkes
Unverified
44:59
too while we're waiting Representative Burks, you're recognized. Thank you, Mr. Chairman. So I'm curious, what specific factors caused the 45% substantial increase in prescription drug claims in 2026?
Does this have something to do with the weight loss medications, and what were
Speaker 131
45:20
the causes of the increase? So to address the GLP-1 question, currently EBD, we only cover GLP-1s in the case of diabetes. Obviously, this is an area that is getting a lot of attention, and we're certainly looking at some options. But so specifically to that, that would not have in and of itself attributed to those increases.
However, it is, we do pull the information of the, you know, the chronic conditions of which diabetes is one. We have Crohn's, colitis. so as those for the public school employees actually the PSE had the larger increase between PSE and ASC but it's also that
Speaker 95
46:21
the drug costs as you can
imagine have gone up substantially in the last two years
Speaker 132
46:28
so the rising drug cost you would say was primary factor for the increase in assumptions yes thank you representative
Representative Rick Beck
Unverified
46:44
Beck you're recognized thank you thank you mr. chair I appreciate you guys coming out and trying to answer some of our questions the concern I have is this it seems like we're kind of peeking through
the door and we're seeing some categories and we're seeing some numbers in there, but there's not enough real details here to make intelligent decisions on it. And I was wondering, is the data available where we could take possibly comparable groups of people that are on the state plan versus this to see if there are any glaring differences either way on these as far as cost, administrative, you know, I'm just going to throw some things like administrative costs, certain drug costs, or things like that.
And then at that point, we could take a look at those and say, okay, here's what's going on, and maybe certainly justify the increases, which I think would make the committee more susceptible to being willing to make better decisions as far as where those additional costs need to come from. Because it's almost now we're at the data level. I see it at the data level where it's almost like, okay, either you pay it or you don't. And so before we make that decision, I think it would be better to have more data related
to directly, not just like the teachers, this category went up 45%, but then taking it a step further and saying, okay, in a comparable group in the state plan, is that the same cost increases that we're seeing? Or are there some big varying differentials, I should say, between the two? And then we could possibly justify those differentials or not. Is there any way that we could get that data before we make our decision?
Speaker 131
48:41
I'll be happy to take that back. And in conjunction with Director Wallace and our reporting team, we will, in fact, I'll probably follow up with you directly to get some more specific answers, I mean, some more specific questions, but we'll be sure and do what we can. Is it August 25th? Yeah, we will put together what we can before
Representative Rick Beck
Unverified
49:04
I'd appreciate that. Anyone else on the committee who has similar questions, let's get together so we can take it to them as a group and say this is the data that we want,
maybe the different categories. Thank you. Isn't that essentially what you're tasked to do with right now, is looking at that detailed level and come to us with some recommendations and choices? Isn't that the goal for Director Wallace right now by August 25th? Yes, and I do think he
Speaker 100
49:35
has plans to present that in August. Yeah, that's kind of what you're looking at. Where
are the details? Where do we cut? Where do we add? And we appreciate that. Yes, and he will be at the August meeting.
Yeah, thank you. Representative Painter, you're recognized.
Thank you, Mr. Chair. I hope maybe we can have that before the August 25th, because if we've got to make recommendations before having submitted by 430 August 24th, I think it would help us to have that quite a bit before. And then second thing is I would like to know across the board the medical claims that we're seeing. If it's increased by 15 percent, I would like to see what those claims are.
And then if we're also seeing that across the board on the other employees within the state as well. So that can help me give me a better understanding of what we need to fund. Appreciate that. And thank you,
Representative Beck, for doing that for subscriptions. Thank you. I think I heard you say that the biggest spike has come in the pharmacology side. Is that correct? We're seeing increases both ways versus medical expenses versus pharmacology.
is there a difference a significant difference do you know the percentage what that might be just roughly based on
Speaker 101
50:57
the information on this report i believe it's 45 percent on the pharmacy side but
Speaker 151
51:06
i i would look to the yeah 45 that that's the difference in the projection right um for two years ago versus now for 2026 gotcha thank you so a lot a lot of That's driven by actual experience and then higher trends.
Thank you. And while I'm speaking, I did find the premium rates. So if we're talking about the most popular plan, which is the classic plan, an employee-only coverage, they pay $88 monthly right now. So a 12% increase would be roughly, you know, increase that contribution up to $100. And it does vary by, you know, if you cover your family, it's going to be up to $391 in the classic plan.
Speaker 117
51:57
So there's different tiers and different plans, but hopefully that gives you
a rough idea. Great. We appreciate it. And with seeing no further questions, we'll excuse the witnesses. Thank you very much. And we'll be moving to item E, the adequacy study. We appreciate all your input. Thank you. We look forward to seeing you again soon.
Speaker 39
52:36
Okay, would you, just for the record, please introduce yourself
Speaker 156
52:41
one more time. Good afternoon. Jasmine Ray, Bureau
of Legislative Research. And we will proceed. may proceed with the
Speaker 32
52:48
your report thank you so we're here today to present the preliminary final report of the
Speaker 31
52:57
2026 adequacy study today's presentation will include a brief overview of the adequacy studies components a review of the key findings from the preliminary final reports the process for submitting
recommendations and a reminder of important dates for the final stages of this adequacy study. First step, we'll review the main components of the adequacy study. The duties outlined in the continuing adequacy evaluation act 2004, excuse me, referred to throughout the preliminary report and this presentation is the adequacy study statute are fulfilled in part through the reports provided by the Bureau of Legislative Research. And as a reminder, the full adequacy study statute can be found behind tab 1a of your binders.
Each report aligns with the topics identified in the adequacy
Speaker 32
53:46
study statute using evidence and legal precedent, including the opinions in Lakeview, to examine each topic. Additionally, BLR applies
Speaker 31
53:55
the definition of adequacy that was adopted by these committees throughout the study. And the statutory requirements tracking sheet behind 1B of your binders shows how each of these reports
Speaker 32
54:07
align with the eight broad study requirements of the adequacy study statute.
Speaker 31
54:18
This slide details the adequacy study reports that have been presented to date. For each topic examined,
Speaker 32
54:26
the study considered four types of available evidence, including analyses of Arkansas K-12 funding, expenditure, and achievement data. We also, when available, provided state comparisons.
Speaker 31
54:39
We did literature reviews and analyses of Arkansas educator responses from online surveys. And in addition to presenting the report shown on this slide, staff responded to 52 member questions between these presentations.
So the preliminary final report, with permission of the chairs, rather than merging each adequacy study report into a single, formerly over 200-page document, we pulled the key facts and findings from the reports to form the core of this preliminary report which is now 32 pages including appendices and we hope this condensed format is easier to review and assist the committees as you begin your deliberations the
Speaker 32
55:25
preliminary final report includes a historical and legal framework key findings written stakeholder testimonies
Speaker 31
55:32
and an overview of limitations encountered with data analysis but today's presentation will primarily be focused on the summary of key findings so in this next section we will go over those key findings including information about progress made since the 2001 lakeview decision so
Speaker 32
55:58
the 2001 decision which the arkansas supreme court upheld identified low teacher salaries as
Speaker 31
56:04
a critical issue and cited that arkansas ranked between 48th and 50th in teacher pay as of 2025 as was reported um earlier in our teacher salaries recruitment and retention report we are now um ranked 45th in average teacher pay and 36th whenever you adjust for the cost of living the arkansas supreme court also agreed with the lower courts assessment regarding the state student performance issues. It noted that fourth and eighth graders did not rank at or above the
national average on the National Assessment of Educational Progress, referred to as the NAEP, in math, reading, science, or writing. This slide shows the fourth and eighth grade proficiency ratings in math and reading at the time of the decision, but please note that science and writing scores have been excluded here because they are no longer available for comparison. So while Arkansas's rankings have not reached or exceeded the national average since the 2001 decision, the overall percentage of fourth graders scoring at or above proficient has increased, as you can see here on this slide.
And the same is true for
Speaker 32
57:18
eighth graders. The 2001 decision also noted low fourth grade proficiency ratings in
Speaker 31
57:24
math and reading on the statewide assessment. So to determine the state's progress, we compared those findings to the most recent 2025 Atlas results.
Speaker 32
57:33
But it's important to note that the state assessment has changed multiple times since the Lakeview decision. So the results are not fully comparable.
Speaker 31
57:43
As shown on this slide, while math performance has increased, the percentage of fourth graders scoring proficient or above in reading has decreased.
Speaker 32
57:56
As shared earlier, the definition of educational adequacy adopted by the committees is applied throughout the
Speaker 31
58:02
study. This part of the definition identifies a goal of having all students or all but the most severely disabled perform at or above proficiency. As of 2025, no gray level between 3rd and 10th had more than 39% of students scoring proficient in reading and science or 43% in math.
Speaker 32
58:19
And for your reference, the full definition of educational adequacy, as adopted by these committees, can be found
Speaker 31
58:26
behind tab 1C of your binders. As reported in the Accountability and Achievement Report, the long-term goal set in the state's ESSA plan is for 80% of each student subgroup identified for reporting to achieve a test-based grade level proficiency score. And as of 2025, no subgroup has met this goal.
Speaker 32
58:49
And that long-term goal is set for 2030. This part
Speaker 31
59:00
of the definition of educational adequacy outlines sufficient funding to provide adequate resources as identified by the General Assembly. So now we'll start going through some trends related to funding and spending that have been presented in the resource allocation reports earlier in the study. So key findings from the funding overview and resource allocation report show several trends.
Local and other funds make up a larger proportion of total K-12 education funding compared to previous years. Additionally, the last three adequacy studies highlight a consistent trend. Superintendents identified mental health services, school safety, and dyslexia support as the top three critical resources for an adequate education that are not currently funded in the matrix. Special education is the area cited as most need of additional funding, specifically for the FTEs funded in the matrix, paraprofessional funding, and high-cost occurrences.
Speaker 32
59:57
This feedback aligns with written stakeholder testimonies and data collected by consultants that were hired
Speaker 31
1:00:03
by the committees to conduct the 2020 adequacy study. for your reference a summary of the stakeholder testimonies is available on page 16 of your report and the full synopsis of these written testimonies can be found in appendix f here you see some key findings from the resource allocation and expenditure reports regarding
spending trends um spending trends show that between the 2023 and 2025 school years public schools spend an average of $15,499 per student. That's from all fund sources, not just foundation funding. They spent between 40 and 42 percent more per student on matrix resources from all fund sources than received in foundation funding, and five percent of funding is spent on non-matrix resources, with instructional aides accounting for the
Speaker 32
1:00:58
highest percentage of spending. And as a note,
Instructional aids is a term used by BLR to categorize expenditures on instructional classified employees. Therefore, it is possible that some of these expenditures include roles that superintendents identify as paraprofessionals. So now we'll discuss, now that all the
Speaker 31
1:01:21
adequacy study reports have been presented and the key findings from those have been summarized in the preliminary final report, the next step is for the committees to make their recommendations.
Speaker 32
1:01:33
as you move into the recommendations phase we thought it would be helpful to reshare the questions
Speaker 31
1:01:42
Taylor provided during the legal framework presentation she gave back in February these questions are intended to guide the committees when making changes and as a reminder the adequacy study stipulates the committee's misuse the Supreme Court's opinion in the matter of Lakeview along with legal other legal precedent as a guide during deliberations and reviews so here you see some potential areas of recommendations which these include
changes to formulas and funding tools issues for study statutory frameworks education policies and more really any recommendations that you all want to come up with and this slide shows some examples of broader categories or excuse me some concrete examples related to the broader categories that were shown on the previous slide I'm not going to read all of those off to you though behind tab 1d of your binders you will find the paper version of the recommendations
form that representative Brooks referenced at the beginning of the meeting an electronic version of this form will be sent by Riley and following this meeting it will contain directions on how to complete the form and it will also have links embedded in the form to write two resources that can be helpful including summary of changes recommended by past committees and past consultants that have been hired to conduct these adequacy studies and as a
reminder submissions are due by August 24th Here
Speaker 32
1:03:21
we wanted to remind everyone that you can access all current and past study materials at this website. In addition to the August 24th
Speaker 31
1:03:35
due date for recommendations, there are a couple of other important deadlines. October 16th is the deadline for recommendations to be approved by both committees and should include proposed implementation schedules, specific steps,
Agencies responsible, resources needed, and any draft bills proposing legislative changes. And then the final report with recommendations is due by November 1st. That concludes my presentation. Thank you
Speaker 34
1:04:00
for your time. I can take any questions. Thank you. We
appreciate the presentation. Representative Duke, you're recognized. Thank you, Mr. Chair. thank you
Representative Hope Duke
Unverified
1:04:14
again for your report and all the work you all do on this my question is um from on page
six slot on the slides there and it's just kind of a general question since and i don't know if you know the answer to this but since 2001 when we've got this for these first tests versus the atlas and all the different
tests i mean we've been taking tests since i was in school and that was a long time ago have the standards changed that much i mean i know you mentioned you can't the tests are not exactly the same and we need to keep that into in mind whenever we're looking at
the scores and comparing the atlas and
the act aspire and the benchmark and all the different tests that we've had
but over those years have the standards that they have been tested upon change that much i cannot answer that
Speaker 32
1:05:04
question right now but i'm more than happy to look into that for you i
Representative Hope Duke
Unverified
1:05:09
would appreciate that and and my thought process on this because i've heard that um that was a
comment often made in school board meetings when presentations were being made about the test scores well the test changed and so this is the kids are getting used to the test and so
forth and so on but if the standards don't change even though the test changes and even though some of the questions and wording and different things may change if the substantive standards don't change we should still have a general idea this should be a still a pretty good picture from 2001 to 2024 how our kids are doing on learning the standards but if we've had a significant change in the standards since 2001 and 2024 then I think that's relevant for us to know as well so that's kind of the question but I have the I kind of think that they haven't changed enough
to warrant not having been able to move the gap or make move move the ball forward more in our scores just because the test change doesn't mean that it's not as reflective and that's sometimes the argument that is used in poor test scores is well the test has changed so many times we can't really judge we can't gauge or our kids aren't used to it so I think it would be at least helpful for me to know how much of our standards changed and I don't know if you need to go further with did that have significant impact on what the test looked like if the standards didn't change
that much i don't think they probably changed that much because not that not that much changes um especially in the early elementary
Representative Rick Beck
Unverified
1:06:50
years we will definitely look into that for you okay thank you
representative beck you're recognized thank you mr chair um my question is um related when you were talking about mental health services and school safety and dyslexia, and you said not funded.
These are not funded, according to superintendents. You said these are not funded. My question is, the concern that I have is that obviously we took care of these, so they were getting funded from something. And within the school, the matrix, right, in the school, it has to come from somewhere. If there's no money for this, it has to be pulled from another resource. Now, that might be a federal resource or some other program like that,
but it very well could come from another line item on the matrix. And we've seen that in the past where they have the latitude to take these things in the matrix and move them and pay for different areas. So my question is this. I'm concerned that we could hide, and I don't mean hiding something to keep it from us, but in a way, some area that we need to be funding.
We'll just use the school safety or some other, that category. Is there some way that we could be missing that we need to fund that and we don't see it because it's being funded from another source within the matrix because your superintendents are telling it's not funded. So they've got to be pulling the money from somewhere. The point of my question is this. Here we are trying to move the matrix around and make it fit the schools,
what the schools are actually using. But my concern now is that if something as a category is not funded, Does that, do we, are we able to see where that money to fund that
Speaker 30
1:08:56
particular item is coming from? So, first of all, I want to
Speaker 31
1:09:01
provide clarification on how the question is asked to the superintendent. So, we provide the, you know, every line item that is on the matrix, which are the resources that have been identified by the committees to make up the matrix.
And then we ask them, are there any resources that are not currently in the matrix that you believe are a part of an adequate education that needs funding? And these have been the consistent, these have been the answers that they've provided
Speaker 32
1:09:31
consistently over the past three years. Really four, if you count the 2020 study that were APAs, the data that they've gathered. we can identify where the funds if it's category they obviously we know that the
Speaker 31
1:09:47
foundation funding matrix is is a funding model it's not a spending model so we can show how much is being spent on mental health resources from
Speaker 32
1:09:57
foundation dollars from categorical dollars from um supplemental dollars from federal dollars we i'm happy to provide that we we do have that data and I we have seen
Representative Rick Beck
Unverified
1:10:09
that in the past but I guess I'm interested so so
you're saying you do have the data that shows where these things are being funded from and probably more accurate than saying
not funded in matrix it's not maybe would be not not funded adequately in the matrix because there is some funding for for dyslexia support right well there's not a line in the matrix for dyslexia support but
Speaker 185
1:10:35
there is some funding set up for that
Speaker 32
1:10:42
there i don't know off the top of my head if there's supplemental fun there may very well be supplemental funding that is dedicated to
Representative Rick Beck
Unverified
1:10:49
dyslexia all right so i i'm just interested
in trying to say within the matrix can we is there is there a way that we could make the matrix my intention is not to make it a spending model um but my to make it a funding model that actually closer matches what the schools are actually spending the money on. Therefore, it would make us easier to track where we need to increase funding and where we could decrease funding, actually, if it's in the case, you know, moving the funding around. Whereas right now, it's like we have all these little categories in the matrix,
and we figure it all up based upon 500 students. Here comes a big chunk of cash down the pipe. You do with it what you want. And we don't really know whether we're funding things categorically right. Probably categorically is the wrong way to use it with the matrix. But, you know, we're in the right area to make sure that we get the funding levelized out. So it seemed like it would be a much better tracking and a much better benchmark for the school. If you have a school that has a lot of spending in one category versus all the other schools,
you might say, what's going on with this situation? you agree i
i can't agree or disagree with that okay do you do so
so you're going to provide me with um information when when in these well i guess these categories would be a great place
Speaker 32
1:12:19
to start to say where is this money coming from yes we can provide you the source of the what funds the schools used for
Representative Rick Beck
Unverified
1:12:28
those three resources and if there was funds actually allocated for that
and they didn't use all of that fund for what
Speaker 188
1:12:36
it was allocated for. Yes, we'll look into that, yes. You can give
me that information. Absolutely. All right, thank you. So we can do that, but there's also creative ways of getting
around all of that, correct? I won't make you
Representative Brit McKenzie
Unverified
1:12:54
answer that. Thank you. Representative McKenzie, you're recognized. Thank you, Mr. Chair. I kind of, I guess this is another question relative to non, oh, hey, how are you, Non-matrix spending, because I see in your presentation that I found it annotated on page 11 within the fuller report that non-matrix spending, 5% of foundation funding received by districts and charters were spent on non-matrix spending.
By dollar amount, it was non-technology facilities that were accounting for the highest dollar amount, and then instructional aides were the largest by percentage. So I don't know if I'm piggybacking off the question you had about categories, but it sounds as though we've drilled down into categories or subcategories of what the non-matrix foundation and non-foundation money has been going towards. If we could see, because if there's an anomaly between a dollar amount over a set of time and a percentage of the dollar amounts over a separate time,
and they're different categories, I would love to know how we're getting there. Also, when it accounts for $2 billion over the last three school years, That's like 11% if we were to just combine all the dollars we spend to non-technology facilities. It seems like an inordinate amount outside of what is separate and apart from what we allocate for physical plant resources within the matrix, and in addition to the new captive we have where everyone's filing claims as fast as they can.
So I'm just a little confused by specifically slide 17 of your presentation and page 11 of the broader presentation because I don't understand it's anomalistic. It just may be because the dollars match up over that same period of time, they're different. And if it's all right, Jeremy, I just have a few more I could rattle off. So I guess the question here is could you provide those further categories for the non-matrix, non-facility funds and where they rank? And I guess a lot of questions have been circulating around it is relative to the surveys and people indicating in surveys, hey, we don't have what we need or, hey, we are using what we're given, but it's also for other things.
The problem is those surveys, it's a qualitative response. We have data that we can true things up to within our, you know, back end. but ultimately we're creating a quantitative data set of all of these superintendents' responses without the follow-on of, okay, we'll then pin every receipt to every statement you're making. So I think we get a little bit fatigued, and I know I get fatigued at the beginning of the adequacy process when we look at those administrator surveys because it's, I understand, they're doing the best they can, and it's like based off the top of their mind, they're responding to the questions
and the stimuli that are given to them in that survey, and we've gone through the modalities of that survey, and it's I don't have too big of problems with it but it's there but we're using that as a as a cudgel now we're saying that is quantitative data superintendents don't have what they need well where is all of it going to and that's where I think we're getting a little bit of the frustration here and where we'd like to advise I mean representative Beck says he doesn't want to do a spending model I'm okay with us being a little bit more specific as to percentage of spending within categories in this existing matrix if we're not going to change it and it that's all of that is not just a monologue to say it's to build to a in a perfect world I'd love to match
this up with all of the sources of funding state support local support federal grants how that compiles to the four fifteen thousand four hundred ninety nine dollars per student and all funding sources against those localities at going out and achieving bonds or asking for a millage increase if I could see a historical over the last two to three years I'm not going to go back to you know 2001 but the same superintendents are saying they don't have the support that they need are the ones that are saying well we're not telling you how we don't have we that what we don't have we're not telling you how we don't know what we have what we don't need but at the same
time we haven't gone to the ballot and asked for more um we haven't done it on a local level or we've invested admin support for you know more grant writing we can't sit here and say well you know our 40 to 42 percent that we're going to contribute into that total number is satisfactory because we have no idea how you're going about collecting the rest of that revenue so this is a lot you said 200 pages and I don't want to add more to it but and it might be impossible I'm saying this right now it might be really impossible for you to go back to your data set or an additional survey we send out with like less than 60% response by admins to say when was the last time you
wouldn't ask for more money at the ballot when was the last time that you went and achieved a bond increase or some non-state support non-local support of funds and how much admin exists just for the purposes of federal grant writing it's hard for us to because we all think about the number we're gonna give it's that you know seven thousand seven hundred and twenty two dollars we're gonna give an annual support for per pupil funding but in reality it's it's double that number it's over 60% of that number comes from other sources and we don't know how they're spending that money or if it's earmarked in specific things so I guess my first question is can we see those categories
the second is if possible please let me know if it's if this is a wild hair can we get some form of um you know historical linear data that says cabot school district went and asked for the bond increase for millage increase in these years they're they didn't have adequate spending in these years based on the survey responses just so we can kind of have some long tail data on this because at the end of the day this is all the universal rate of millage i mean we have that in our constitution 25 mil everyone has to apply it if it's if we're saying
and everyone's not getting enough, and there's not enough, then we have to do the matrix work, we have to do the adequacy work, but is that a need for us to go require locals to increase their millages? Because we did that at the state level. We did it in a constitutional amendment. So it's just a lot of unknowns relative to a lot of responses here saying we don't do enough. I'm trying to figure out where the gap is. Because even though we compared our regional states, $15,499 per student is still a lot of money. So thank you for all you
do, and I appreciate your help in the pursuit of getting this done correctly.
Speaker 31
1:18:54
to that? So I want to first address the non-matrix part, which was at the very beginning. First of all, on page 42 and 43, not of this report, but of the resource allocation report, that provides you details on all the non-matrix expenditures. I think that there may be a little confusion between the non-matrix expenditures just using foundation dollars versus non-matrix expenditures using all dollars.
And so this was speaking to the
Speaker 162
1:19:32
5% is just using foundation dollars, and that's where the instructional aides comes into play. um as far
Speaker 31
1:19:40
as the the um 15,499 dollars again that is from all fund sources that's not just foundation dollars um so you know essentially districts are spending basically almost all of their foundation funding that they're getting but five percent of that is going towards things that y'all are not saying specifically is in the matrix or at least they're not perceiving it as being
specifically in the matrix as far as the survey is concerned and that survey can be changed if there's any any changes y'all would like to make this recommendation process is a perfect opportunity for for that um we would welcome any recommendations you all have for changing the survey for
Speaker 162
1:20:23
the survey instrument no and i'm i'm not recommending a
Representative Brit McKenzie
Unverified
1:20:27
change i'm saying it's that and it's it is what it is i mean the results directly represent what we're asking them the stimuli is to say tell us
anecdotally do you have enough where do you think you rank do you have enough support are there enough teachers in classroom um and it's a survey it's not you know it's not a comprehensive model of completion for payroll personnel um it's not a roster it's it's hey tell us what you think and please get it back to us by a certain date so i understand that there's always going to be gaps um and the answers back to that but it it's you know i and it's not to be critical i'm just saying that we're using qualitative data to say quantitatively here's here's what we're we're
missing on um responses are important but then you know the show proof or the show cause on those responses is really what we're trying to get to um so and i get the what you previously said about the whole difference between foundation versus non-foundation there's just a lot of numbers a lot of columns a lot of data i'm just trying to make sure we all see it clearly especially when it's when it leads to the null hypothesis that we're not doing enough how are we not doing enough what does it smell like when we're not doing enough let's try to fix it and five percent isn't within a margin of error that's you know we are that's that's i mean if we look at the
categoricals within the founding within the the funding matrix like that's even larger than some of those categories um so if that is if that is people administrators voting with their feet and the dollars that we allocate to them to a new thing, a new entity, a new being, not just dyslexia support or tiered special education, what is it? And should it not be reflective in the way that we write our matrix? So, I mean, and I'll go dive into page 42 and
43, but that's, it's larger than 3%, therefore it should require a little bit more study. Well,
Speaker 161
1:22:15
I'm happy to provide more of the
category. Please. Dig deeper into the categories for
Speaker 32
1:22:20
you. And as far as like the historical information related to everything you said with millage and we'll probably have to follow up with you now
Speaker 191
1:22:28
I need it right now and I'm just kidding thank you so much
for your help yeah the key folks we've got independent school districts who make their own decisions so we can find that
however we want this is just a suggested system how you spend your money if they don't want to do that that they're not bound to do that, correct?
That's my understanding. Yeah, so we can collect all the data we want, and they can use it however they want. Or we can pass a constitutional amendment and say this is a spending and funding formula. And if folks want to do that, feel free to do it. But right now we have independent school districts, and they're going to make their decisions based on what their
constituents want. Representative Mayberry, you're recognized.
Representative Julie Mayberry
Unverified
1:23:20
Thank you. I appreciate the opportunity.
So, and I really don't know who to ask this question to because I don't know if you can answer it, but it's just something that as I sit here in these meetings, you know, the past year we've gone over adequacy. We look at all these different charts of what we're spending on this and that and, you know, looking at spending by fund source, this last sheet here. For example, operations and maintenance, you know, we have a line for that. We've talked about counselors and nurse and principal and secretary.
And this is all based on Lakeview, where we came up with the system before we ever allowed our tax dollars to be used for EFA accounts. And I'm just trying to rationalize how we can spend this much time figuring out what is needed for public school to be equitable and adequate,
but yet we haven't sat down and asked and done charts and analyzed, for example, homeschool. What's the true cost to homeschool? because according to what we've analyzed here, we include operations and maintenance, which is electric bills and water bills and things like that. Well, obviously you can't homeschool, use that money to pay for those things. And yet all we do is say, well, whatever the funding matrix is, whatever that amount is,
we're just gonna do 10% less. And I just feel like it's too general and I won't be here next term, But I think there should be some type of study on what is the true cost and what can that money truly be used for. If we do say, for example, a student who's in public school can use the school nurse for some needs or the counselor for maybe some mental health assistance or, I mean, obviously that's expected,
but yet the homeschooler can't use the EFA money for maybe some medical or mental health. I'm just trying to throw out the idea that I think we need a
little bit more understanding of what is the true cost to
homeschooling and come up with that amount and not just be so generic with, well, it's just 10% less than everything else 'cause it's not apples to apples.
I don't know, like I said, I don't know who has an answer.
Somebody can run that legislation. No, like I said, I won't be here. I didn't say you. I said someone can run that legislation. That's what it would take if you want to have a – this survey is for the previous year, correct? This adequacy study is based on data from the previous year. From the 2025. And some of the things that are being impacted education today were not a part of this study. True. And if someone wants to have that be a part of this study, we can certainly do that.
A committee member can bring that to this committee and say we'd like this committee to study the true cost of whatever you want to study. And this committee could adopt that study to do that. It's not a part of this study currently. But for me, according to what I hear you saying, there needs to be one, I would agree. yeah but and how do you do that bring that suggestion to this committee thank you
representative gonzalez you're recognized thank you um thank you for explaining all of this
um i'm still new to this as i'm serving my first term i wanted to ask if on the superintendent survey, I was curious as to if that could possibly be disaggregated by school size and other demographics and student populations, for example, English learners, special education
students income level and the reason I'm asking is I'm wondering if if that is I'm curious as to what the top three areas that the superintendents are seeing that they need in terms of additional resources I know this is the overall all of the school districts but I'm curious as to what how how does it look when the then the data is desegregated because because our school districts
are so they're so different so one area of the state they may need xyz is there that or they say xyz is those are their top three choices and then some other area of the state and it and it of course is based on the student population so um i i know this is the overall but i'm just wondering if we can look at it in that regard. Yeah, that's no
Speaker 155
1:28:44
problem at all. We can certainly do that. Thank you.
Representative DeAnn Vaught
Unverified
1:28:52
Representative Vaught, you're recognized. Thank you, Mr. Chair. Is there a way that we can look at things that we have passed that we did not attach funding to it? I don't want to use that word, unfunded mandate, because I know that's not a word that y'all can go by. But I know that we've passed legislation that says this is what you're going to do, but we've not attached any kind of funds to it that say you're going to use these funds to help teach it. And I can use one because I passed one.
I'll use the Holocaust bill, K-12, teach about the Holocaust. We gave no money to go toward teaching of the Holocaust, but we've asked schools to make sure that they do it in their standards. And I could list a whole bunch more, but I don't want to. if there's a way that you can
Speaker 31
1:29:41
help us figure out what those are. I'm sure with legal's help we could. How far back would you want
Speaker 213
1:29:46
to go? Well, I've been here for 12. What about 10 years? What about five years?
Representative DeAnn Vaught
Unverified
1:29:52
Because I know it's grown over the years. I think Holocaust, though, would probably
Speaker 156
1:29:58
be six. I will work with legal and see what we can do for you. Thank you.
I think that's it. personally an excellent request you know we have things have changed tremendously in education funding in the last three or four years and we as a committee have the option of including that in our final report if we so choose so i appreciate that information i think that would be valuable
moving forward representative beck you're recognized just
Representative Rick Beck
Unverified
1:30:29
one quick question of the of The 60-40, the matrix, foundation funding, and the other funding. What percentage of that 60% is not directly allocated towards what we would call kind of categorical funding? So in other words, what I'm getting at is, is the matrix the only place where the school district has the latitude to move funds
between categories within the foundation funding, whereas their other funding, the larger chunk, would all be allocated as sort of categorical funding, you know, to a specific purpose. So foundation funding, which is directly related to the
Speaker 155
1:31:13
matrix, can be spent however. Right. It doesn't have to be with anything
Speaker 31
1:31:18
actually in the matrix that they don't want to be. categorical funding those are restricted funds but
Speaker 32
1:31:27
they can transfer within each other and so
those categoricals are your alternative learning or english learners your pd and there's another one that i'm not remembering right now but they can be transferred within each other um this this supplemental i if i'm if i recall correctly those i i think that those
Speaker 31
1:31:49
are restricted funds but i'll let my staff correct me if i'm if i'm wrong so so
Representative Rick Beck
Unverified
1:31:56
would it be safe to say that the foundation funding is the most open-ended funding that a school district has in other
words it can be spent any way they would
Speaker 218
1:32:07
like i think it's it's safe to say that that's the most
Representative Rick Beck
Unverified
1:32:11
flexible for my funding so a lot of this stuff that we're talking about as far as items within the foundation funding, where the funding is being spread out all over the place, it's probably, is it a cause or the effects? It's the effects of the other categories having them more restricted as far as how those funds can be spent, whereas the matrix can be, or the foundation funding, can be spent however
Speaker 32
1:32:36
you want. I think that's a pretty accurate description. Thank you. representative
Representative Hope Duke
Unverified
1:32:51
duke you're recognized thank you mr. chair um would it be possible to have the department come down and ask to answer a couple questions specific to study yeah well here here's my thought process is i'm going to go back and take my binder which i'm very excited about taking
back um and i'm going to go and i'm going to make some recommendations and right now most of the recommendations and information that I have on what we should or not should be doing but the thoughts we've been doing are coming from and I appreciate it coming from the school districts all the teachers did not participate in the great number that we'd like them to from the superintendents from principals and I love having all that information but we also have a department of education who has a whole lot of data at their fingertips all the time and I would like to have a little bit of their thoughts about what because I we've talked a lot about the funding and the
funding is very important, but the test scores, the fact that we've had 24, 25 years and they've not moved a whole lot. And I
want to make sure when I'm filling my report out that what I am looking at doing besides just, okay, well, we need to fund this
or we need to fund that or superintendent, is it going to move the needle? Because that's a whole age group of kids that graduated that are not proficient on things. And so.
I agree, but I don't know if that's what we're studying, right? There's a report. You're going well beyond that report. But if someone, if someone here from the department, they can answer, I don't know if I caught the question or not, but I think I got the gist of it. Is there someone here from the department being ready to address that? i don't have any we're getting into an area that is is is certainly pertinent and certainly worth
knowing are we getting any bang for the buck so we're doing an roi study in higher ed and we're doing an roi study to make sure we're spending our money accurately i think one what i garner from this are test scores going up if your test scores are going up i would assume you're spending your money more wisely than someone who is throwing a $31,000 teacher staff party with scores going down.
So am I correct in assuming that question is a bang for the buck question? Kind of. I mean,
Representative Hope Duke
Unverified
1:35:22
there are things here to the point of special ed. Do we need to have increases in special ed? Do we need to have increases in like the
dyslexia? Whatever those different areas are, are putting more money, as we're looking into this, are those the areas that will also not just fund those things, but move the needle, right? I mean, there's a difference between, I can put more money to
funding something, but is funding that going to make our kids read and going to make them better at math?
Speaker 96
1:35:52
That's a direct question. Can you respond to that, please? Sure. I know it's broad. Yeah. So Courtney Solis
Speaker 226
1:36:01
Ford, Chief of Staff for the Department of Education. I'm going to start by addressing one of the questions you brought up earlier, which was about changes in standards and changes in assessments. And you mentioned that standards haven't really changed a lot in 25 years, and they haven't. We review all of our academic standards on a cycle basis, and, of course, we make any updates anytime there's a legislative change to incorporate the new requirements.
One of the problems was that previously our assessments were not assessing our standards. We did change assessments multiple times over the last several years, but those were kind of off-the-shelf national assessments that were not specific to Arkansas standards. So when LEARNS was passed, we were able to and required to develop a specific-to-our-state assessment, which we have done, that is aligned with our standards. So our teachers are teaching what they're required to teach, and we're assessing where students are and how they are learning those standards.
we saw in the first year that they're not where we want them to be and there has not been a lot of improvements over the last 25 years but with the changes that were made in the last three years and this information has been put out we have seen huge gains in what our students how much they're achieving how much they're learning we believe that we will continue to see those that growth and those improvements as we go forward regarding the funding piece of it as you all have have talked about that it is a funding model so you all decide how much money districts should get
in order to to run their schools to do all of the things that they're legislatively required to do but it's up to them to make those decisions and to put that money where they think it needs to go so it's very difficult for us as the department to be able to say yes if you put more money in special education it will improve you can throw money at a lot of things it doesn't mean they're going to improve it has to do with the decisions that are being made at the local level and where that funding is going because even when you say we want to put more money in special ed funding does that mean more teachers does that mean more paraprofessionals does that mean more services
we don't know the answer to that because we can't dictate where that funding would go to that that's what you all have to decide as part of this process is how much money goes to schools and where that money should be spent or do you allow them to continue to have the latitude to make those decisions because they know their students they know what they need and they should be the ones making the right decisions so we are happy to answer any of your questions and provide input we feel like we have already made some significant changes and that you all have made some huge changes in legislation that will give districts the tools and resources that they need
to see growth and we are seeing that so I hope that that answered most of your questions but I can't speak specifically to where funding should go or that putting funding in a specific area will absolutely show improvement. Just to add to that, again,
districts have a huge say in how they spend their money. They have pretty much 100% say in how they spend their money. If the legislature wants to be more involved at the granular
level, write that legislation. Bring it to the committee or do a study and have the committee study that and we can look at addressing that but that's not what this adequacy study that we're looking at right now did we can make whatever changes we want to that it but
Representative Hope Duke
Unverified
1:39:26
it but it gives us information to decide what we want to do that's sure absolutely that's i
mean that's my understanding it's part of the adequacy studies to help us decide
what we need to do in the
upcoming session if you'd like to make or someone would like to make a recommendation for this committee to get information from the department of ed from whomever if someone would make that recommendation i think this committee would be glad to to act upon that uh recommendation and accept it or not but we have to have a recommendation from somebody to initiate a study may i so i want
Representative Hope Duke
Unverified
1:40:06
to make sure i'm understanding in what context you're saying
a recommendation because we're talking the recommendations that we have due on the 24th are you talking in that context are you talking just in general let's have a recommendation we can have a study and have a discussion about it are those two separate things or are you talking about on the one
on the 24th yeah two separate things there are two separate things and they're They're
two separate and they're the same. So if you want to study it for the next year, fine. If you want to study it before August 24th or August 15th or what's today? If you want to study it by August the 8th, we need a recommendation to act rather than we can discuss this.
I see value here. I see value that. We agree or disagree. We have to have a definitive recommendation for us to act. Right. And I do understand that. But
Representative Hope Duke
Unverified
1:40:57
you also have to have some underlying information on it. And I appreciate all the information that we
have gotten through the adequacy study. And I'll get offline, I guess, with Courtney a little bit on some of the additional questions I have. Because to your point, I'm having a hard time. I believe in local control. I like the districts having the flexibility. But when you continually ask for money, which is kind of what I get from the last couple of years of adequacy,
well, we need more money, well, we need more money. hey, I also need to see results that we are moving the needle forward before I give you that money. And is that money where you want it? Is that where it actually really needs to go, to your point, bang for the buck? Are we making sure that it's going to the place that's actually going to move these kids and getting them to read math and all the things that they need to do? And so that's part of what I'm trying to understand here before I make my recommendations for this upcoming study. Because just because you tell me, I mean, my kids come and tell me
they need money all the time right but they don't really need money and when they have to make a choice about this or that they make a different decision and that's kind of what I'm trying to figure out is I'm not excited I don't think a whole lot of the members of going back and saying let's raise taxes go back to your local school districts and that's not going to fly most of our school districts and so figuring out where do we shift money if we need to shift money or if if we were needing to raise you know if that's what we need to do to have an act what is it an equitable education because I understand that's Lakeview right that that's not our job
to see if we have enough money but to see if
I think we all agree so all right thank you you know the questions I don't see thank you very
much thank you for your testimony on advocacy members I don't see any other business and we are adjourned Thank you.
Agenda
A. Call to Order
B. Consideration of a Motion to Approve the June 1, 2026, Meeting Minutes [Exhibit B]
C. Consideration for Adoption of Interim Study Proposal (ISP) [Exhibit C] - ISP-2025-089 by Representative Brit McKenzie – Requesting the House Committee on Education to Study the Creation of a Personal Education Tax Credit Program to Empower Families and Expand Educational Freedom
D. Discussion of Health Insurance Funding and Medical Price Estimates [Exhibit D] - Patrick Klein, Vice President and Consulting Actuary, The Segal Group
E. 2026 Adequacy Study: Presentation of Preliminary Final Report and Adequacy Recommendations Form [Exhibits E1-E2] - Jasmine Ray, Administrator, Policy Analysis and Research Section, Bureau of Legislative Research
F. Other Business
G. Adjournment
Documents
No documents posted.
Speakers
Representative Keith Brooks Chair
Unverified
Representative Bruce Cozart
Unverified
Speaker 14
Senator Dan Sullivan Chair
Unverified
Speaker 30
Speaker 31
Speaker 32
Speaker 34
Speaker 37
Representative Hope Duke
Unverified
Representative Stetson Painter Chair
Unverified
Chair
Unverified
Senator Mark Johnson
Unverified
Speaker 60
Senator Jim Dotson Chair
Unverified
Speaker 67
Speaker 48
Speaker 89
Speaker 93
Speaker 95
Speaker 96
Speaker 100
Speaker 101
Representative Jeff Wardlaw
Unverified
Senator Fredrick J. Love
Unverified
Speaker 76
Speaker 117
Speaker 123
Speaker 122
Representative Rebecca Burkes
Unverified
Speaker 131
Speaker 132
Representative Rick Beck
Unverified
Speaker 151
Speaker 39
Speaker 156
Speaker 185
Speaker 188
Representative Brit McKenzie
Unverified
Speaker 162
Speaker 161
Speaker 191
Representative Julie Mayberry
Unverified
Representative Justin Gonzales Chair
Unverified
Speaker 155
Representative DeAnn Vaught
Unverified
Speaker 213
Speaker 218
Speaker 226