Legislative Joint Auditing - State Agencies
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Representative Stephen Meeks
Unverified
0:00
All right, we're getting to be about 1.30, so if everyone will start getting settled in, we'll get started in just a moment.
all right i'd like to welcome everyone to the uh september almost at august september meeting of the uh state
agency subcommittee uh our chair and vice chair are out so unfortunately y'all have the third string quarterback today but i think we'll we should be able to work our way through this without any without any trouble um so first thing uh chair sees a quorum uh so first thing on
the agenda is um colleagues uh everyone should have gotten the minutes from the august 13th meeting without objection we will go ahead and file those seeing none we'll consider those uh filed and with that we're going to jump right on into our business for today and i'll turn it over to our uh analyst mr bullington all right thank you mr chair today
Speaker 6
1:21
we're going to present four special reports and four regular reports with findings we also have five reports without findings and these are listed on page one of your audit summary
and staff recommends we file those reports without findings colleagues any
Representative Stephen Meeks
Unverified
1:39
questions on that okay without objection we will consider those filed next okay the
Speaker 6
1:43
first special report that we're going to present today is issued in response to a legislative request approved by the legislative Joint Auditing Committee for us to obtain from the Department of Health answers to questions regarding the sexual risk avoidance education funds obtained through federal title 5 grants you should have a copy of the letter in your packet and this letter includes the questions and answers that we were
provided this letter was deferred from our June and August meetings and Department of Health staff are here to answer any committee questions okay colleagues
Representative Stephen Meeks
Unverified
2:12
any questions looks like we do have some so if we could have the agency representatives please come up to the table
okay now when you get settled in if you would introduce yourselves to the
Speaker 18
2:40
committee Christy Sellers division director for health advancement at the Arkansas Department of Health Donna Adams chief
Chair
Unverified
2:45
of staff Department of Health Matt Gilmore department health okay all right
Representative Mary Bentley
Unverified
2:51
representative Bentley you're recognized thank you chairman again I want to thank
the staff for holding this off for a month due to my knee surgery last month I appreciate you guys holding it off for us and thank you for the report I do have some questions just to
clarify some things as I have asked some questions it was my understanding that at ALC had never uh went ahead and admitted for the funds to be used for this program so I'm just kind of confused if you can clear that up for me Mr. Gilmore if we have if we did actually uh approve for the funds to
Matt Gilmore
Unverified
3:25
be used that'd be my first question and I may turn to my colleagues here so um it was grant funding we received I think we had the appropriation and we used it in
you know so we didn't do a contract or a grant and so we you know we used our existing staff to do the work so I don't know that it would have required legislative approval I think that was the kind of route we we were at an impasse I think with some various discussions we were having so I think we that was the only way we could continue to do the work I think and not delay it much longer and get get the progress or the process started but i'll defer to anything they want to
Speaker 29
4:08
add to that yes that is correct so we had the appropriations to
Don Adams
Unverified
4:13
spend the money originally we were going to sub grant it out but we decided to pull it in house and use our existing staff we did not add any staff but use our existing staff to execute the program okay great i appreciate that so um if
Representative Mary Bentley
Unverified
4:28
you guys walk us through so what did that staff do and how do they go with some of our colleagues may not know so what exactly is the program what did the staff do with the
Speaker 35
4:39
schools that they went to sure i'll defer that
Speaker 18
4:43
to miss sellers so srae is sexual risk avoidance
education so for our federal grant requirements we have to provide a curriculum it has certain guidelines that we have to follow certain topics that we have to cover i don't know how much detail you want i can go into more but it is for us a 13 modules that they have to complete with the students and you have to complete each module for the fidelity of the program so they go into the schools and are able to deliver this education how much detail do you want well you know i think
Representative Mary Bentley
Unverified
5:11
that across the board teen pregnancy is a big thing
in arkansas so i think it's important that we do some
details and kind of said did you guys did your staff do the teaching or did you guys train the actual teachers at the school to
Speaker 18
5:25
do the teaching or maybe a combination so um for this past year our staff was trained by um the dibble institute who was the creators of our curriculum we are using an abstinence only curriculum
Speaker 44
5:35
indeed to try to um avoid any teen pregnancies or unwanted pregnancies um i'm sorry i lost my train
Speaker 46
5:45
of thought i'm not even gonna lie so far we have
Don Adams
Unverified
5:50
used our existing staff we've reached I think the numbers are around last school year close
Speaker 44
5:58
to was it 30,000 yeah at the end of the school year it was a little over
Don Adams
Unverified
6:03
28,000 students that had received SRAE education from but we have had requests from two school districts to take the curriculum campus-wide across their whole district so in those instances we're going to either train or send their staff for training so they'll do that with their existing staff but
they'll have to go become certified to present this material so we're doing it in the future we're going to accommodation a combination of our staff doing the training but also some school staff doing as well when they meet that criteria that's great so how would a school is there funding
Representative Mary Bentley
Unverified
6:35
available and thank you chairman for allowing me just to ramble on here with my questions i haven't even asked you thank you chairman um so how are schools um made aware of the program do we have funding for more schools to reach out to you and so where are we at in
that process i know we get uh at this point maybe too late for this year but for next year how can schools reach out to you and do we
Speaker 18
6:58
need do we have sufficient funding for more schools we do have sufficient funding for more schools we really um schools who had either previously received um srae or who have been you know maybe interested in the past we have reached out to a lot of school districts to kind of tell them what curriculum we're doing show them the curriculum make sure that they feel comfortable with it we have had some schools um that have used maybe someone else in the past that have reached out so it's just kind of been a combination of how we've gotten
um into a school if we do have schools who are still interested for this school year we definitely can probably have staff that can get in just depending on where they're located the staff that's available but we are still taking
Speaker 44
7:35
schools right now for for the 26 27 school
Don Adams
Unverified
7:39
year and the staff a lot of the staff that do this training are those community health nursing specialists that we spoke about and they're housed in the educational co-ops so they're integrated into the the school systems that's
Representative Mary Bentley
Unverified
7:52
great um one last question chairman if that's okay
um how many schools do you guys think you could add i'm just curious at this point before we go legislature start pushing it no it
Speaker 43
8:03
would really depend on the area we have some areas that you know staff is utilized a lot and
Speaker 18
8:08
we have some other areas where schools may not show just as much interest um so it would really depend on the area i don't want to give a
Don Adams
Unverified
8:15
number but with this with this new model where you know we'll do as much as we can internally but then for school districts that want to take it further than what we have the capacity to do then we could train
their staff or send their staff to training to
Representative Mary Bentley
Unverified
8:31
increase capacity great are you working with department of education to get information out there to schools across the state or how are we getting how
Speaker 18
8:37
are schools learning about it so our chips and gins they work closely with the school nurses and they also work with the department of education the school health coordinator that is a nurse and so we are working with them to help get the word out and let
Representative Mary Bentley
Unverified
8:50
them know what's available great thank you thank you chairman
Representative Stephen Meeks
Unverified
8:55
for i appreciate it just a couple questions how do you determine or what students would be receiving this training?
And then do you have any way to track results to see if we're being effective with
Speaker 18
9:06
this program? So as far as in tracking the results, there is what is considered a pre-assessment, post-assessment that can be given. And we don't really measure those, but those can be sent in to be measured. We do track numbers. And then, of course, we can compare the number of students to what the teen pregnancy rate may be in a particular county or in a school district if that helps with that answer
Don Adams
Unverified
9:30
and the curriculum has been studied and
you know there's some scientific evidence evidence-based and that's why this particular curriculum and there are a few
Speaker 34
9:37
others is approved for us to use through our funder and it may just
Representative Stephen Meeks
Unverified
9:42
be too early yet to see any results from the from the program would that
be a fair assessment yes and then it as far as what students received us all students at a certain grade level
Speaker 44
9:54
in the school certain how's that determined the school gets determined we normally offer it to high school students there is a middle school adaptation that our providers have been trained to deliver if
asked to but the school determines okay all
Representative Robin Lundstrum
Unverified
10:11
right representative lundstrom thank you chairman um how did you pick the educators
for the department you said there were the department was providing the educator how did
Speaker 18
10:24
you pick those educators So we had what we call Chips and Chins, and they're community health nurses, community health specialists. They were already integrated into providing education in the schools, and it varied on topics. And so we called upon them since they had relationships with the schools.
They had a history with working with those particular age groups. We thought that they would be the appropriate staff to deliver this education. And their medical background helps. Yes, that does. I would love
Representative Robin Lundstrum
Unverified
10:48
to see the 13 modules, if it's possible, to send that to the committee. I don't have them electronically. We don't receive them that way because
Speaker 18
10:56
we have to pay for that module. But I can provide you a hard copy if that would work. I would really appreciate that. Can you
Representative Robin Lundstrum
Unverified
11:03
tell me a little bit about the Diebold Institute or Diebold Institute? Oh, Diebold Institute.
Speaker 18
11:08
They are just a, I call them a curriculum provider or maker. They do have other SRA and PrEP educations, curriculums that they provide. They are just kind of really into what I would call teen education, so they cover other topics besides anything that's sexual risk avoidance. But they've been around for several years. There were some studies done through some universities that kind of talked about this curriculum and how it did at that time demonstrate that there was a reduction in the teen pregnancy.
Chair
Unverified
11:41
There's 17 other states use this curriculum, many southern states as well.
Representative Robin Lundstrum
Unverified
11:45
Okay. I'm curious. I would reiterate what Representative Meeks said about tracking. I would love to know what the teen pregnancy rate and the STD rate for these counties and where we may need to double down with the education due to the problems that they're having. So I would encourage you to not just do pre and post and then set it aside, but actually do testable measures. And
Speaker 43
12:09
we do have statements from kids who have completed this this past year
Speaker 18
12:13
about things that they've learned and how they feel like this has benefited them. I would be happy to share some of those
Representative Robin Lundstrum
Unverified
12:22
just so you might get some feedback from the students as well. I'm very familiar with that. Oh, okay. I'm actually in my job in past life. I'm just really
curious about the actual statistics. All right. Thank you. Thank you,
Speaker 80
12:38
Chair, for letting me ask a question. Okay, colleagues. Anybody else?
Representative Dwight Tosh
Unverified
12:42
Representative Tosh. Thank you, Mr. Chair. Let me make sure I understand.
And you said that your staff is training these educators on administering this program. I understood that. So I guess my question is, you said resources were provided to the school, I guess, to compensate them or whatever for this administering of these programs. But what I wasn't clear on, are those resources allowing the schools to hire additional personnel to be able to administer the programs that we're talking about here?
Or are those responsibilities for the administering of this program being given to educators in addition to their other responsibilities and to the other workload that they already have? How is that being handled? Yes, sir. And let me clarify.
Speaker 29
13:33
I wasn't clear earlier. We have 21 existing staff members that have gone through the training
Don Adams
Unverified
13:40
that can conduct this education. So they're certified. We also are training our staff to be train the trainers so they can certify others. And that's currently ongoing. We haven't reached that point yet because we have to have a certain amount of experience in administering this program before we're certified or approved to train the trainers.
So up to this point, the health department has done all the training in the state for the last year and a half when we brought it in-house. But some schools are wanting to take this to the entire district. And so voluntarily, if they decide, we can train or send their staff to training in order to provide this curriculum in-house, if they so choose. if they don't want to do that we'll do our best to accommodate them with our staff
Matt Gilmore
Unverified
14:32
so it's it's voluntary we're not we'll provide it if they want us to train their staff
Representative Dwight Tosh
Unverified
14:39
we'll train their staff okay it's not something that's become mandatory okay okay that makes sense i understand i just didn't want i wasn't real sure if we's in a position where we're saying here this is a new program and you educators you've been designated you're going to be the ones that teach this in addition to the other responsibilities you have at this school and I was just making sure and it doesn't sound like that's what's
happening so I appreciate that thank you thank you for
Representative Mary Bentley
Unverified
15:07
the question okay anybody else oh representative lunch comes
Representative Robin Lundstrum
Unverified
15:12
back sorry just one follow-up we had some wonderful people doing at-risk education before we switched this are any of those folks involved no ma'am none of those
Speaker 44
15:24
folks are involved just because we brought it all in-house so we have no outside providers or contractors
Representative Robin Lundstrum
Unverified
15:29
no other groups at all no consulting groups or anything no ma'am
Matt Gilmore
Unverified
15:33
so the the individuals you may be referring to that may have had
this grant with us before they may be doing their own services elsewhere but it is as far as our efforts is strictly department of health employees no outside groups is involved in this project okay thank you
Speaker 79
15:46
thank you chairman okay all right anybody else going once going twice all right
Representative Stephen Meeks
Unverified
15:53
Thank you all for being here this afternoon for your presentation, and we will move on without objection to the next item Thank you, mr. Chair Josh
Speaker 6
16:03
Davis one of our staff is now going to present the next three special reports on asset and tobacco
Seizures as well as seizures related to human trafficking Coaches copies of these reports should also be in your packets and so now I'll turn the mic over to
Speaker 96
16:28
Josh to present those all right thank you mr. Bullockton and thank you mr. chair this presentation is the report for the review of law enforcement agencies compliance with the asset seizure forfeiture requirements of the uniform controlled substances act
for the year ended December 31st 2025 asset forfeiture has been used since 1971 to help prevent vehicles and other property of drug traffickers from being used in the commission of subsequent offenses. During the late 1990s, legislators became concerned that a lack of uniformity and accountability in forfeiture procedures across the state was undermining confidence in the process. During the 1999 meeting of the Arkansas General Assembly, Act 1120 was enacted to address these concerns through the amendment
of the Uniform and Stroll Substances Act. The forfeiture process is shown in Exhibit 3 on page three of the report. Arkansas code provides that within 48 hours of an asset seizure, the seizing officer shall file the original confiscation report with the seizing law enforcement agencies for maintenance in a separate file. Within three days of receiving the report, seizing agency shall forward a copy of the report to the prosecuting attorney for the district in which the property was seized and to the Arkansas drug director for entry in the asset seizure tracking system.
in turn the prosecuting attorney has 60 days to file a complaint in circuit court listing as the seizing the seized property excuse me schedule one on page five the report provides a summary of seized assets for the county year 2025 by judicial district over the past 10 years 45.9 million dollars over 3,900 vehicles 5,200 firearms and 604 incidences of other items have been seized. The map in Exhibit 1 on page 2 of the report shows the seven judicial districts
selected for testing. To conduct the review, two seizure incidences in each district were chosen from the tracking system. Legislative audit staff traced the seized assets recorded in the tracking system to the supporting confiscation report and verified required procedures had been followed in the disposition of the seized assets. Additionally, one confiscation report was randomly selected from the agency's files and traced to the tracking system to test that all seized assets had been properly reported. Finally, one seized asset was randomly selected from the
agency's evidence room and traced to the entity's confiscated inventory records. All material assets selected for testing were accounted for. However, exceptions in record keeping were noted in four of the ten agencies reviewed. As listed on page three of the report, the Lowell Police Department and the Lone Oak County Sheriff's Office did not maintain a separate file of the original confiscation reports. The Arkansas State Police did not obtain and maintain a proper transfer of property receipt. The Tri-County Drug Task Force did not forward the confiscation report to the
drug director within the required three business days. And the Lone Oak County Sheriff's Office did not maintain adequate seized property inventory records. To verify that corrective action is taken legislative audit staff followed up with those agencies that had findings in the prior county year review discussions with staff review of documentation and verification of forfeiture process steps were among the procedures performed to ensure corrective action was implemented of the three agencies with exceptions in the prior year two of the agencies which were
the dallas county sheriff's office and the eighth south drug task force implemented corrective action without exception the other agency with the finding in the prior year was alma police department and they had no instances of confiscation reports in the prior year as of april 30 of 2026 so no verification of correction corrective action could be conducted in the consideration of time the presence of agency officials was not requested today and this concludes my report and i'll be happy to answer any questions thank
Representative Stephen Meeks
Unverified
20:23
you mr. chair I have one question on the human trafficking
seizure there was no assets that were seized looks like in the last year or so is that common that that takes place do you have a history there are we getting to a point my I guess the point of my question is are we putting such a dent in human trafficking in the state that the seizures are basically falling to nothing or is it common for there to be little to no assets seized yes
Speaker 96
20:59
sir that that's a new report actually that was implemented in the uh uh i forget
what act that was um but it was presented i think last year or year before last so we haven't had any time to review on the human trafficking part okay the the report that i just presented is just for seized assets under 564 505 so the human trafficking section would be under a different different section yes
Representative Stephen Meeks
Unverified
21:23
sir okay all right colleagues any questions on that report okay representative
Representative Robin Lundstrum
Unverified
21:29
lunch um looking at page 5 it talks about you have automobiles firearm and other and I guess the other is the jewelry and real
property or campers trailers electronics what happens to those items uh generally if it's
Speaker 102
21:44
just the other items negligible items like that those things
Speaker 96
21:47
will go to auction um and be sold and then
Speaker 98
21:51
the funds that are are raised from those auctioned items will go back to the prosecutor drug control fund okay thank you okay any
Representative Stephen Meeks
Unverified
22:02
others okay all right uh without objection then we will consider that report filed all right next
Speaker 102
22:09
thank you mr. chair the next report is on uh tobacco control
Speaker 96
22:19
uh this letter reports law enforcement agencies calendar year 2025 compliance with the asset seizure and forfeiture requirements under arkansas code 2657247 arkansas code provides forfeiture procedures for tobacco products under which the full amount of excise tax due which was not paid or which were possessed or sold by an unlicensed wholesaler or retailer. In addition, the property and money used to facilitate a
criminal violation of code for the manufacturer distribution of contraband tobacco products may be seized and forfeited to the state. According to Arkansas Tobacco Control, no tobacco-related asset seizures occurred in calendar year 2025. Additionally, legislative audit staff followed up on two seizures that were outstanding from the prior year to ensure compliance with code requirements. One occurred on April 8th of 2019 and included $17,361. The disposition of the asset was reviewed and verified without exception.
The other occurred on April 10th, 2024. This case was still pending at the conclusion of our fieldwork. The defendant in that case was set for a federal trial to begin April of this year. The $4,142 that was seized in that case was still being held in the prosecutor's attorney's office asset forfeiture fund. um as of april um of this year i haven't followed up to see what that federal case is so i assume it is still pending um and that concludes this report thank you mr chair okay colleagues any
Representative Stephen Meeks
Unverified
23:45
questions on that one okay all right saying
Speaker 46
23:55
none we will file that without objection thank
Speaker 102
24:02
you mr. chair so so the last report is is what we referenced
Speaker 96
24:07
earlier on the uh human trafficking uh this letter reports that law enforcement ages calendar year 2025 compliance with the asset seizures and forfeiture requirements of arkansas code 55601 through 612
Arkansas Co. provides forfeiture procedures for seized assets that were used in the Commission of the Crime of Human Trafficking under the Human Trafficking Act of 2013. According to the Human Trafficking Coordinator, no assets had been seized to date under the human trafficking from January 1, 2025 through February 26 of 2026. So due to the absence of any human trafficking-related seizures, no additional audit steps were necessary to ensure property were seized, recorded, and adjudicated in accordance with the code.
Representative Stephen Meeks
Unverified
24:49
So that concludes my report. Thank you, Mr. Chair. All right. Thank you. And,
of course, I've already had my one question answered on this one. Anybody else have any questions related to this report? Okay. Seeing none, without objection, we will file that report. All right. I'll let Mr. Bullington get resettled back in, and we'll move it
Speaker 6
25:11
right along. Thank you, Mr. Chair. The first regular audit report that we have today with findings is the Department of Education FY25 report, and this report contains four findings.
The first finding, educational freedom accounts are state-funded accounts used to cover approved educational expenses, including private school tuition, curriculum, tutoring, et cetera. During our review of 746 expenses totaling $305,000 from 52 EFA accounts, we identified three exceptions totaling a little over sixteen hundred dollars comprised of the following one expense of about two hundred dollars with insufficient supporting documentation in this case the supporting invoice was not itemized there was one expense of forty two
dollars that was a duplicate payment for a service already reimbursed the receipt was submitted twice approved by a different reviewer and not recognized as previously paid and one efa accounts expenditures exceeded their allocation amount by fourteen hundred dollars due to a duplicate account created by student first that was not detected and combined with the approved account when transferred to the new vendor class wallet mid-year the agency has since strengthened controls during the application process to prevent this type of error in the future and the second finding during our review of agency controls implemented in state fiscal year 25
over efa accounts we noted that the agency identified 19 students enrolled full-time in a public school in the 24-25 school year who spent efa funds totaling over 58 000 in fiscal year 25. of the 19 students 16 were enrolled in an online open enrollment charter school and three were enrolled in a public school district and finding three the rules governing the academic facilities and partnership program defines project cost as utilizing specific funding factors established by the agency which serve as the
basis for the estimated state financial participation for partnership projects. In our testing of seven of 62 projects, we noted that the agency used an incorrect project cost factor for one recipient because of a formula error in the cost factor computation sheet, resulting in an under-calculation of over $659,000. The agency has subsequently strengthened the controls over computation sheets by restricting cell formulas to administrative access only. Additionally, the A.C. corrected the undercalculation and created an amendment with the appropriate amount of funds for the district.
In the fourth finding, the following issues were noted related to equipment. During our testing of 30 deletions, we discovered that the Division of Career and Technical Education was informed in April of 25 that one laptop valued about $2,500 was stolen. The A.C. notified law enforcement and the state chief fiscal officer of the incident, but did not report the theft to us as required by code. During our capital asset observation testing of 75 items, the Arkansas School for the Deaf and Blind was unable to locate a backhoe attachment purchased in 2006 for $8,000.
The agency performed an investigation that could not determine whether the asset was lost, stolen, or sent to marketing and redistribution in a prior year. The agency notified law enforcement, state chief fiscal officer, and us after they were unable to locate the asset. Mr. Trudet
Speaker 12
28:20
concludes the findings for the Department of Education, agency representatives are here to answer any committee questions okay if members
Representative Stephen Meeks
Unverified
28:28
from the agency you want to come forward I do have one question now when you
gentlemen get settled there if you would introduce yourselves please Greg Rogers department of education daryl smith department of education office of school choice okay thank you gentlemen uh my question is is
that it seems like i think related to finding one and finding two that maybe in the efas there was some overpayment and uh according to what it says here the recruitment the recoupment process has not yet been fully developed for when there are overpayments can you give us the status of where we're at with that yeah so we've we have like
Speaker 118
29:21
this was the first year that was the open up to everybody and since that time we have continued to improve the integrity of the which we do have a recruitment and in the ones that we have a recruitment process in the um findings that you have here the 1400 that was just a change over from using the one provider that we had going over to another one and we're working with the provider right now to recruit those funds because that was a mistake on their part so as we go through this process we do have a recruitment process we are continuing to look at that as far as the duplicate findings on the duplicate enrollment on the second finding we now are down
we now have a download that we do an app scan that when we verify the students are in efa funds we take that file against with the file and app scan and compare the two and where they drop out daryl's team starts an investigation whether they should be in a private school or where i mean a public school or where they are actually using the efa
Representative Stephen Meeks
Unverified
30:17
accounts so we have established those processes now okay and generally as i understand it the efa that money goes to directly to the provider so if a if they're enrolled in a private school the private school would build efa directly
correct correct so if the student decides to leave the private school and go to the public school theoretically the private school should stop correct correct and then of course you would get noticed that we've got a new student in the public school which right okay correct but you have 400,000 students to keep track of. So that's, you know, mistakes are going to happen, but it sounds like
we're getting things worked out. When the meeting's over, if you have time, I do have a different issue that I need to visit with you on offline. So if y'all have time to hang around afterwards, if not, that's okay. I'll get with you later. But if you have a few minutes, I'd like to
visit with you about that. Colleagues, any other questions related to this one? Okay. All right. Seeing none, thank you, gentlemen. Without objection, we'll file that report. And head to the next one
Speaker 6
31:15
okay the next report with findings is the department of parks heritage and tourism fy25 report and this report contains two findings and it was also deferred from our august meeting the first finding the arkansas department of parks heritage and tourism notified us in february 26 of an apparent disbursement of state funds totaling almost 2400 from a payroll direct
deposit involving impersonation of employee a direct deposit change bank change form was received by an Office of Personnel Management and Human Resources staff member from what appeared to be a Parks, Heritage, and Tourism employee's personal email address, and the employee's direct deposit banking information was changed in the payroll system without verification of the request's authenticity. Before the change was identified as unauthorized, the direct deposit was issued to the new bank account, and as there were a report date, the funds had not been recovered. This finding was referred to the prosecuting attorney and the attorney general.
In the second finding, Arkansas State Board of Finance Rule 2012a states that all cash funds on deposit with a bank or financial institution that exceed FDIC deposit insurance coverage must be collateralized and the collateral pledge must be held by an unaffiliated third party custodian in an amount at least equal to 105% of the cash funds on deposit. During our review of collateral, we noted that just over $100,000 of a bank account's balance of over $350,000 was uninsured and uncollateralized
at June 30, 2025. The amount uncollateralized by Rule 2012-A was approximately $105,000 or 105% of the amount not covered by FDIC insurance. The deficiency was caused by an abnormally high amount of War Memorial Stadium funds on deposit at year-end in accounts where the combined balances would typically be lower than the $250,000 of FDIC coverage. Mr. Chair, That concludes the finance for the
Speaker 12
33:01
Department of Parks, Heritage, and Tourism. Again, agency representatives are here to answer committee questions. Okay, and
Representative Stephen Meeks
Unverified
33:07
if the agency would come forward.
And I want you all to get settled in, if
Jami Fisher
Unverified
33:27
you would introduce yourselves to the committee. Jamie Fisher,
Speaker 127
33:31
Chief Financial Officer with ADPHT. good afternoon shay lewis secretary of the department of parks heritage and tourism okay thank
Representative Stephen Meeks
Unverified
33:37
y'all for being here now it's been a month so you're all going to have to help me with my thinking cap here um on the on the questions i know there was some uh question on the how the employee um how that happened with somebody i guess getting an agency email address and faking
that to opm so that we were able to create a fake employee um so any follow-up on that and then i think on the bank one it was just a i won't say fluke but it was a temporary issue um so so
where are we at on those two items kind of bring us about to speed on where we're at with
Jami Fisher
Unverified
34:12
that sure uh the initial item was with opm payroll where the adjustment was made to a bank account from a fraudulent employee it was from their personal account um impersonated looked like it was a legitimate employee and they made the bank account change the funds were not recovered
and we did report immediately upon being notified that that had occurred the second we have gone through and done an analysis and insured any of the bank accounts that are at our larger parks that might receive larger amounts of deposits and potentially exceed the 250,000 do have collateral in place so okay all right sounds good all right colleagues any questions on
Representative Stephen Meeks
Unverified
34:45
any of these okay representative Bentley thank you chairman thank you all for being here so have
Representative Mary Bentley
Unverified
34:52
we put anything in place to make sure that we don't have that happening and like we do with that employee
how well that fraudulent account was set up is there anything that we I know that fraudulent things are happening every day but is there anything that we can do to prevent that from happening
Shea Lewis
Unverified
35:06
in the future so through the direction of the legislative audit review direction was given for controls to be put in place by office of personnel management to prevent that from mapping in the future we have reached out to them but have not heard of the specific controls that they're doing there all right great thank you thank you chairman I
Representative Stephen Meeks
Unverified
35:27
appreciate it okay anyone else okay all right saying none without
objection we will follow that report thank you guys for being here for your follow-up with us okay and
Speaker 6
35:37
next the next report with findings is the Arkansas Public Employees Retirement System FY 24 report this report was early release in April, it contains three findings. The first finding, APERS notified us of the following loss of state funds and property. In December 24, APERS became aware of two instances in which an employee in the APERS call center reset account credentials for a member self-service account without verifying that the caller was the account holder. Therefore, access was granted to
an unauthorized user. Before access to the account was revoked, the unauthorized user redirected one month's benefit payment of almost $2,700 and as a report date the funds had not been recovered. And in June of 25 APERS reported that a Microsoft Surface Pro tablet and keyboard valued at about $1,700 were not returned by a former employee. The proper paperwork had not been completed to assign the asset to the employee allowing it to be overlooked during the off-boarding process. Subsequently APERS did recover the equipment and this finding was referred to the Prosecutant Attorney and the Attorney General. The second
finding, APRES reported to us overpayments that were made to retirees and beneficiaries of the public employees, state police, and judicial plans totaling over $261,000 for state fiscal year 25. Overpayments of one to two months worth of benefits routinely occur with the public employees plan as the plan pays benefits at the beginning of the month. However, ineffective internal controls allowed payments to be calculated incorrectly resulting in the following excessive amounts. APRES overpaid a public employee's plan member approximately $42,000
by not appropriately recognizing reciprocal service as concurrent service, allowing the member to retire under normal retirement provisions versus early retirement provisions. In the second one, APRES overpaid a judicial plan member approximately $46,000 by not appropriately calculating the benefit under Tier 1 provisions, but rather using Tier 2 provisions at an inaccurate rate for Tier 2. in the third finding april's internal controls over benefit payments were not operating effectively we tested 60 members who either retired entered the deferred retirement option program or retired
from the drop in fy25 for two members differences were noted between the amount received and the amount recalculated and when combined these differences resulted in a total overpayment of about 750 dollars before they were corrected you can see the details of those two differences within the body of the finding. As a result of that, we performed additional testing and noted four additional members that were affected by the removal of the IRS flag, with an additional overpayment for these four members totaling approximately $94,000. APERS was ultimately able to negotiate with the Compass vendor
to cover the overpayments related to this issue in the form of a service credit. In response to a prior audit finding related to benefit overpayments, APERS implemented a procedure in January of 2022 called the benefit reconciliation auto report this procedure creates a report each time the benefit payroll is generated the report helps april staff verify that retirees and beneficiaries are receiving the correct annuity amount we randomly selected two months from fy25 to review to ensure that the benefit reconciliation auto report was being reviewed and the control was operating
effectively the ac was unable to provide evidence that the reports were being reviewed make sure
Speaker 12
38:50
that concludes the findings for april's and ac representatives are here to
Representative Stephen Meeks
Unverified
38:55
answer questions okay if the agency representatives would come and then
once you get settled in there if you would introduce yourself to the
Speaker 137
39:14
committee please good afternoon amy fetcher the executive director of apers
Speaker 138
39:18
good afternoon jason willett cfo vapors good
Speaker 139
39:23
afternoon patty ship chief assurance officer laura gilson general
Representative Stephen Meeks
Unverified
39:30
counsel okay all right thank you for being here i have two questions uh one for mr burlington
um on finding number two when we have these over payment of these two employees looks like we had 42 000 and 46 000 um i'm wondering how many employees did you were you
testing when you came up with that was that like two out of 100 tested or no in
Speaker 6
39:55
this case they provide to us all the over payments they made near new year that was the whole 261 000 these were two large ones that were in within that population they gave us so this is all of them 261,000 these two made up about 88,000 of
Representative Stephen Meeks
Unverified
40:07
that 261 okay all right so it looks like we're
overpaying by almost a quarter of a million dollars which is almost starting to get to be real money so where are we
at on trying to prevent that in the future well we have several processes in place
Speaker 137
40:23
that our risk officer is working with the team on part of it was on education because some of it with staff mistakes. Also some of it was because of the reciprocal service between the LOPFI system and APERS. LOPFI recognizes concurrent service for their volunteer firefighters and so what they provide to APERS sometimes has some concurrent service. In APERS laws we do not recognize concurrent service so that was one of the some of the issues that were happening and so we've put
extra controls in place to make sure we're checking those
Representative Stephen Meeks
Unverified
41:02
as they come in okay and then the second question that I had is on
finding three the audit mentioned here that there was no way to see if those reports were being reviewed monthly where are we at with that is that something you can give us assurance that they are being reviewed or where are
Speaker 137
41:24
we at with that yes they have all been reviewed
Representative Stephen Meeks
Unverified
41:28
and we're reviewing them monthly. Okay. Um, slightly related question.
Do y'all implement, or are you in the process of looking at, has there been any discussion of trying to implement any, uh, AI to help look at this? Because like with these overpayments and stuff, I think, uh, an AI system could find those discrepancies maybe a lot more efficiently than a human trying because just the sheer numbers y'all are having to work with is that something y'all are looking at have looked at have any interest in looking at
Speaker 137
42:00
or yes patty and i left an ai class early today to come to this meeting okay over with ost um we're using ai to do some
things and this is a great test case that we'd love to
Representative Stephen Meeks
Unverified
42:13
implement excellent excellent i'm glad glad to see you guys are y'all are looking into that okay uh
Representative Dwight Tosh
Unverified
42:22
representative uh tosh thank you mr chair good evening good to see y'all i just got a quick question and look and i'm picking this up on finding number three and here's what i'm not understanding it looks like back in 2022 there was some audit issues uh and in in regards to that it looks like abers uh implemented
a system called the Benefit Reconciliation Audit Report, and that was in 2022. And I get that. But what I'm having a little trouble understanding here is since that was implemented in 2022 to address some audit findings and some problems, it looks like since then, a lot of these findings that have occurred since that program was implemented by your agency, it looks like there's been several discrepancies or several issues that have popped up since then so i guess
i'm just trying to figure out i really appreciate you implementing that program in 2022 but i'm not sure how effective that's been based on the recent audit findings that was just discussed with some discrepancies so noted so would you kind of address that for me please yes
Speaker 137
43:32
sir thank you there will always be findings in this or there'll always be incidences of it because we do pay at the beginning of the month. So if you retire on June 30th, you're going to get a check on July 1 for the month of July. So there's always a reconciliation there. We have been doing
these, the benefit reconciliation audit. We were not doing it on a monthly basis, and now we are. okay all right colleagues any other questions okay all right
Representative Stephen Meeks
Unverified
44:09
seeing none now thank you for your being here and for your work on this and without objection we'll file that report and it looks like we have one more department of military thank you mr. chair and yes sir
Speaker 6
44:21
the last report is the arsenal military department fy25 report which contains two findings The first finding, after receiving an email request that appeared to be from an employee, the agency's Human Resources Department changed the employee's direct deposit banking information without verifying the authenticity of the request. It resulted in a loss of funds tolling a little over $1,000. Before the change was identified as unauthorized, a direct deposit was issued to the new bank account. The agency failed to report the loss to us as required by Arkansas Code, and as of our report date, the funds had not been recovered.
This finding was referred to the prosecuting attorney and the attorney general. In the second finding, our review of the department's federal receivables balance revealed an overstatement totaling over $20 million, which was caused by the agency preparing the entry using inaccurate data. The actual amounts included in the calculation should have been only those transactions that occurred at or near the fiscal year-end that had not been receded prior to June 30th. Additionally, because of the federal accrual overstatement, the deferred inflows reported by the agency were overstated by over $18 million. Mr. Chair, that concludes the findings for the Miller Department.
H representative here to answer questions. Okay, representatives
Representative Stephen Meeks
Unverified
45:25
would come forward And then when you ladies get settled in if
you would go ahead and introduce yourselves to the committee Good afternoon.
Bethany Weaver
Unverified
45:40
I'm captain Ashlyn Garrett. I'm the legislative liaison for the Arkansas National Guard and the adjutant general Good afternoon, my name
Speaker 154
45:48
is Bethany Weaver. I'm a budget analyst for the Department of the military
Speaker 156
45:53
Good afternoon, Sherry Bullitt, Fiscal Support Administrator for Department of Military. Good afternoon,
Speaker 158
46:01
I'm Michelle Young-Hobbs, I'm the HR Administrator for the Department of Military. Okay, thank
Representative Stephen Meeks
Unverified
46:06
you for being here and for your service. I guess my first question goes back to the employee with the direct deposit. It seems like this is a wash, rinse, repeat from what we just heard, and so I'm thinking maybe at some point we might need to get OPM to come visit with us
and see what's happening with this. But tell us how that has been handled and where we're
going, because obviously we've got two incidences that have been caught, so that probably means there's some that have not been caught. So what is your department doing to try to prevent that from happening in the future? Okay. Thank you, Representative.
Speaker 158
46:55
What we have done thus far immediately when that happened,
immediately everybody that asked for a request to change anything had to come in person and bring us an ID. the issue the only one issue with that is that we also the Department of Military is not just at Camp Robinson but it's also at Little Rock Air Force Base and in Fort Smith so but we have liaisons put in place there that if anyone has a request that they have to have an ID before we will make any changes that sounds
Representative Stephen Meeks
Unverified
47:29
like that go a long way towards correcting that
representative Richmond you're up sir thank you
Representative Marcus E. Richmond
Unverified
47:37
mr. chair just a little bit of information concerning the departments and the people that are responsible for this are they primarily civilian personnel working for the department military or is it a mix or any military personnel involved working in the Department of Military concerning these type of issues
Speaker 161
47:56
it's just it's civilian state agency just state employees
Representative Marcus E. Richmond
Unverified
48:00
okay so there's no military How does that work for you?
Bethany Weaver
Unverified
48:07
Yes, sir. Normally, Brigadier General Wood would be here, who is technically a state employee, but obviously is a Brigadier General in the Arkansas National Guard as well. He couldn't be here today, neither could the Adjutant General, so I am filling in. And I am the legislative liaison between the Arkansas National Guard, the Department of the Military, the federal, congressional, and then also the state legislature as well, which is why I'm here today. So you drew the short straw.
Representative Marcus E. Richmond
Unverified
48:29
Okay, congratulations. Thank you. it will not be the last time in your military career all right thank you mr chair thank you okay and then on just so I'm understanding the second finding
Representative Stephen Meeks
Unverified
48:40
with the 18 million that was basically a bookkeeping error in layman's terms okay so that's all been resolved as well yes sir okay all right any other questions okay all right seeing none pretty painless thank you all for for being here this afternoon all right colleagues without objection we will file
that report and is that all our on our agenda for today okay all right so somewhere on here
get my agenda here all right our next meeting will be on october 8th and with no further business we are adjourned You
Agenda
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - STATE AGENCIES, Sep 10, 2026 | Agenda | 2 | Official source ↗ |
Speakers
Representative Stephen Meeks
Unverified
Speaker 6
Speaker 18
Chair
Unverified
Representative Mary Bentley
Unverified
Matt Gilmore
Unverified
Speaker 29
Don Adams
Unverified
Speaker 35
Speaker 44
Speaker 46
Speaker 43
Speaker 34
Representative Robin Lundstrum
Unverified
Speaker 80
Representative Dwight Tosh
Unverified
Speaker 79
Speaker 96
Speaker 102
Speaker 98
Speaker 12
Speaker 118
Jami Fisher
Unverified
Speaker 127
Shea Lewis
Unverified
Speaker 137
Speaker 138
Speaker 139
Bethany Weaver
Unverified
Speaker 154
Speaker 156
Speaker 158
Representative Marcus E. Richmond
Unverified
Speaker 161