Education Committee- House

So members, just a couple updates on the agenda this morning, uh, as with a lot of legislative work there's an ebb and flow to what we do and sometimes we don't know exactly where we're going until we get there, uh, so this morning we're only gonna be hearing one bill that's representing Brown's HB 1085, uh, she is on the way here and almost here from what I hear, uh, so hopefully, uh, we'll do our best to stall um until she gets hers so we can do that, uh, Representative Richardson is on members own this morning with an amendment. Uh, and then Representative McKenzie and Wootens have both been. I was asked by the sponsor to put those in deferred while they add amendments and work on the bills and so, uh, that's where we're at it, it, I would encourage you, uh, to, if you have bills that you're gonna be filing uh relative to education, please go ahead and get them in because as you know as we pick up speed here in a few weeks, uh, the agenda will be full of a lot of these have come off a fiscal impact, uh, and the deferred list and so we will have a very full agendas, uh, so let's, uh, take this and enjoy uh the piece for. just a few days at least, uh, another, um, announcement relative to calendar, so on Thursday, uh, we're gonna be meeting in joint special order business with the Senate, uh, currently we technically have that scheduled for one o'clock, that's if we go into session at 11, uh, Speaker Evans was not sure about that as of yet, but that's tentatively where we have it scheduled, uh, to meet in joint with the Senate so that we can give Secretary Oliva the opportunity to review the NAEP scores, which I believe come out today, Secretary. Um Tomorrow, sorry, uh, come out tomorrow, so Nate scores, uh, most recent NA scores will come out tomorrow and so we're gonna give the secretary the opportunity to review uh Arkansas's progress as well as uh discuss where we're continuing to go and answer questions on those and so I know that uh one o'clock on Thursday may not be the ideal time relative to travel, but I want to put that on your uh calendar as soon as we could get it there. So again, 1 o'clock is uh currently uh our anticipation for special order of business on Thursday. We will not meet at 10 o'clock on Thursday morning, uh, the one o'clock will be our meeting for Thursday, uh, so, um, pending Representative Brown's arrival, uh, we're going to recess momentarily. Yes sir, representotar. Uh, we will be doing pictures on Thursday, uh, stay tuned for a time, yes, sir. Uh, so, uh, we're going to momentarily recess the committee while we were on Representative Brown to get here so that we could continue with a little bit of business so we will stand in recess until Representative Brown arrives. He education will uh come back to order. Welcome, Representative Brown. If you would please introduce yourself for the record and then you'll be recognized to present uh HB 1085. Thank you, Mr. Chair. um. Sorry, as amended, my apologies as amended, um, we have the, um, financial impact statement. Um It was It might have any questions about that? That Any questions from the committee. I believe if, if I recognize it right, it looks like that's, it's less than what it was, maybe about half the original uh financial impact statement on um. On the way the federal government calculated it, which was a, a broad, uh, look at the entire United States and how it might impact other, you know. Communities other than communities like ours, so what they did then is looked specifically at how it might affect Arkansas in particular, and that's why the number is, uh, I think it's more realistic. Um Then as far as the bail is concerned, it's just basically, uh, what we're doing is we're bringing our 529 plan, which we call uh. Brighter future plan for our, um, education savings accounts. Um, those accounts can be used K through 12 or for uh post-secondary education. And previously when you had money left over that it didn't, you know, the owner of the account had designated a beneficiary, and it did not appear that that beneficiary or it became apparent that the beneficiary was not going to need that money for education. Then the owner of the account was allowed is now. Allowed to roll that over to a Roth IRA, which is similar to these plans because um. You put money into a 529 plan on after-tax dollars just like you do in a Roth IRA. Like in Brown represent Beck you recognize. I, I agree with the bill. As soon as I get my mic out. All right. I, I agree with you. I, I think it's the way to go, but the question I have is, This bill really does nothing in terms of education changes in terms of education, it does change tax and revenues for the state. So why is this not a tax and revenue bill. uh, this question. The Chair. Uh, I don't know that I have a, a firm answer we could uh possibly defer to Representative Brown, uh, obviously, the, uh, the decision of the, the parliamentarian was to put an education, uh, it's dealing with education matters, um, specific to students of, of a certain type, so perhaps that's why, but we, I will be glad to circle back around with the parliamentarian to see. McKenzie, so I believe because of the creation of the brighter the brighter funds, the brighter Future Fund was created in education code title. So anything that again this has a general revenue impact now after its creation, since it's touching, I don't know, Title 19, Title 18, it gets automatically referred to here. You're right, it has a GR score, but. Anything that falls in those titles, that's the, the guiding method of what committee it goes to. Representative makes you recognize for a question. Thank you, Mr. Chair. On this, um, uh, GR impact. This is, it's not, we're gonna be paying out $190,000 according to this. I just want to make sure I'm correct. It's the expectation is that we will lose $190,000 in revenues that we might otherwise get. Yes, and that's based on the assumption based on the number of people who have previously, uh, withdrawn everything from, you know, whatever was left and they had no other way to they didn't have a way to roll it into a Roth IRA. It's anticipating. Then that everybody's gonna roll, I think, um. The treasurer's offices here, uh, if you want to ask them for sure or the DFNA may may be here they could answer that, but anticipating that those people who have previously just withdrawn surrendered their money, and then had to pay the the uh taxes on it, they won't have that revenue, so that's how the Brown, I'll go ahead and recognize Mr. Lander if you want to come to the table, introduce yourself with DFNA and can provide additional clarification. Good morning, committee. Keith Linder, DFA and US Representative Meeks, you are correct that these would have been taxable events in the past. They won't be anymore, so this will be a reduction in general revenue, not money being paid out. All right, thank you. Rep some Cozar, you're recognized for a question. Thank you, Mr. Chair. I just, on the back of this sheet, it just talks about the time frame, so I, I think the time frame is unknown because of the tax forms computer updates and uh implement the implementation uh for the employees to be educated on how to do this, do you have any kind of idea exactly how what that time frame could be though. Were this bill to pass, the department would be able to implement it at the time it went into effect. There wouldn't be any sort of delay. OK Thank you Mr. Chair But sure we can, do you? Thank you. So just to be clear, so we're all speaking from the same hymnal, uh. The $190,000 represents taxable but the penalty for withdrawal out of the 529, not for the purposes of education, correct? It Go ahead. Well, it's not necessarily a penalty. You, you You pay the taxes you pay the taxes on the growth, not, not the seed money, but you pay taxes on the growth, am I correct? So, yes, ma'am, the. What would have happened under current law is you've got to the, you realized you weren't gonna need this money for education, you would have withdrawn it, it would have went to the beneficiary. It would have been taxable income to that beneficiary, so they would have paid income taxes on it. Under this bill, they will have an option to divert that money into the Roth, so then that taxable event of them receiving the money wouldn't occur. So it's just a reduction in taxes that would have been collected. Uh To that end, this is all post-tax money to begin with. All 529 contributions are already taxed prior to being put into the account prior to growth. Correct. See no additional questions. We do not have anyone who has signed up to speak for or against, is there anyone in the audience would like to speak for or against the bill, seeing Representative Brown, would you like to close for your bill? my bill and I would like to just interject that the Arkansas 529 plan is the fourth rated. 4th highest rated 529 plan in the country. So I think that's, that's pretty magnificent, our contributions are considerable. Yes, I would like to close for the bill and ask for a good vote. Epson Brown has closed for a bill. I have a motion of do pass. All in favor say aye as amen Dupa hasitted, uh, all post. Congratulations, Representative Brown, your bill has passed. Thank you. So see no further business again just a reminder of the announcement, uh, tentatively 1 o'clock on Thursday we will meet in Big Mac A with the Senate Joint Special Order of Business to hear Secretary Le discuss NAEP scores and see no other business, uh, house education is adjourned. Yeah, there's, yes, I'll send it back out, um.