Education Committee- House

Thank you, Representative Cozart. Uh, members welcome this morning and audience, thank you for being here. We have a uh a full house I'm gonna allow Representative McKenzie to recognize some folks here in just a moment, those wishing to speak for or against the bill, please make sure that you sign in. There is a sign in sheet. At the door to let you know we're only going to hear two bills today will be hearing HB 1085 by Representative Brown and HB 1133 by Representative Unger, uh, the other bills are being passed over for various reasons couple members not here, uh, and some of the things so uh those will be the only two bills that we are hearing, so if you sign up to speak on a different bill, uh, then I would encourage you to get with the sponsor of that bill to ensure that there are questions that may need to be answers relative to it or or other. issues. Uh, let me recognize representing McKenzie. Thank you, Mr. Chair. I'd like to take a moment and uh for everybody on the committee as well as in the audience to recognize we have 21 illustrious members of the Arkansas student government from Fayetteville here today, um, coming to see democracy in action, um, probably some of the future minds that will occupy these seats. So if we give them a warm Little Rock welcome. Thank all of you for being here. Glad you made the drive down and, and uh look forward to, to seeing, uh, seeing what your engagement looks like and uh just proud, proud to have you being engaged in the process, uh, members, we will go ahead and start with Representative Carolyn Brown, HB 1085. There is an amendment, so Representative Brown, I'll recognize you to present your amendment. Just as a point of housekeeping, there will also be an amendment to Representative Unger's bill as well. Thank you, Mr. Chair, and thank you all for being here today, um, I need to, um. Passed this amendment before we get to the bill. The amendment is to simply add Senator Jane English as the Senate sponsor. And I asked for a good vote. Are there any questions on the amendment? Have a motion do pass the amendments, all in favor of CI all opposed. Your amendment has passed, you're recognized now. Representative Brown to present HB 1085 as amended. HB 1085 is basically uh bringing Arkansas into sync with the federal 529 plan. Ours is our 529 plan is called the Brighter Future plan. It's doing quite well, um, and we're distributing money, um, I think if I remember correctly on the website it said we distributed $55 million last year for higher education from 5 to 9 plan, so that's uh that's really wonderful, um. This particular bill simply. The title pretty much spells it out, um. It allows a person, um, if the beneficiary of the 529 plan, which is a higher education savings plan. It's a tax advantage plan you put money in after taxes and if you take it out for um. What are they, what's the word they use, um, qualified expenses then the person taking it out pays no taxes on those withdrawals or those disbursements and you pay no taxes on the gains in the account, so it's simply helps. Parents, family, friends, provide the finances that uh. Students are going to need for higher education, um. And now there's another advantage sometimes if you see that you're beneficiary is not gonna use the money for education it is possible then to roll it over into a Roth IRA, which is also a tax advantage plan if you put in after tax dollars. And then. You take it out with no income tax on it. You don't have to put it on your tax return is. Income. Um, you have any questions or any questions from the committee? I read this whole thing cause I thought somebody was going to ask me a question and I didn't want to have that deer in the headlights look so, um, you could ask a question. I can probably answer it. All right, no motion proper time. Uh, is there anyone in the audience who'd like to speak for or against the bill? Uh. Go ahead I'll let him speak. If you would come to the table and identify yourself and you're recognized. Thank you committee. My name is Keith Linder. I'm an attorney with the Department of Finance and Administration. This bill will cause a revenue reduction. So we are working on fiscal impact statement. There were people working on it, finalizing the numbers as early as this morning. Um, it should be ready by your next meeting. We just do not have it ready at this moment, so I'm not here to speak for or against the bill just to give you the status of the fiscal impact. Are there any questions about a committee for Mr. Linder? Yeah by McKenzie. Thank you, Mr. Chair. So do we have the standard uh education committee fiscal impact attached to this bill, or is this a separate and different one? So this would be from the Department of Finance and Administration. This would just be a revenue impact. So this will have tax implications with the 529 withdrawals no longer being taxable if rolled over into an IRA. Do you have an estimate of time? We will have it ready by the next meeting. People were working on it this morning. OK, thank you. Represent fault you recognize. Thank you, Mr. Chair. I thought these were already taxed, non-tax, if you roll it what he just said is if you. There could be implication. I'll let him answer that. Withdrawals it previously would have been taxable, could be rolled over into the IRA as a tech. OK, thank you. That's, that's the main change here is that you can roll them into a Roth IRA. With no tax consequences. For the same beneficiary. Whoever's a beneficiary on the 529 would be the beneficiary of the Roth. Represent meeks recognize. So just to summarize what this bill does is that if there's any leftover or unused money in the 529 plan, it just allows people to rolled over into a Roth IRA to start preparing for, uh, retirement. Yes, it's just one of the options. I mean, you can name a different beneficiary you can there's different options. This is just a new option. OK, thank you. Representative Mayberry. Yes, thank you. um, I'm fully supportive of this and would like to see it go through as fast as possible, but I, I do want to make the committee aware that I have a bill that's through the treasurer's office, similar to 529 plan. It's an AB Act and there's only a $20,000 fiscal impact, and I just spoke to the chair of revenue and tax, and she has explained to me that No matter how much the fiscal impact is for right now, nothing's getting through that committee. Um, so, uh, I, I just think possibly waiting until we get the DFNA fiscal impact because when it gets to the house floor, The chair might Ask some questions. About it without knowing what the fiscal impact is. I, I, I'm, I'm just making the committee aware, um, that. That might be an issue when it gets to the House floor, and I'd rather have that information at hand. Thank you, Representative Mayberry, and I had a question in my mind when Uh, I was informed that uh we needed a fiscal impact statement and it and it's not available yet if we could even pass this this morning. I, I. Are there additional questions about the don't think it's gonna be anything major, a major hit to the budget, but you know if that is required then can we even pass it given that represented back. Thank you, Mr. Chair. Would you be appars to just pulling the bill down until we get a fiscal impact study on it. That'd be fine. OK, yes, Representative Micks. Well, let me ask the, the gentleman from DFNA because we're, we're taking post-tax money or putting it into the 529 plan and then from the 529 plan we're moving it into a Roth IRA, what fiscal impact would there be because there's no tax revenue that would additionally come from that. Uh, money, so I don't see how there would be any fiscal impact whatsoever unless I'm misunderstanding what we're doing here. Thank you. The, the numbers are still being finalized, so we have determined there will be a revenue impact. I think it's because that leftover money that would be in the account previously there was not a tax-free way to roll that over into the IRA. So even if the money Under the bill going to the IRA wouldn't be taxable in the end. Currently, that money would be taxable, so we're changing the status of that as long as it stays in the account, it's not taxable, but you're not gonna leave your money just sitting there if you don't have a use for it in that kind of account, you know, you wanna do something with it, so you'd probably take the tax hit. And that isn't there, there's also a 10% penalty if you withdraw money, uh, from the account and it's not for um a qualified expense, so they pay also a 10% penalty to the federal government and then lose any kind of tax advantages they'd had from. Are there additional questions by the committee? So just to clarify, uh, Representative Beck's recommendation, uh, Represent Brown, you want to pull the bill down until we get a fiscal impact. Let's do that. Thank you. Thank you. Committee will now move on to HB 1133 representative Unger, you are recognized to present your amendment. There is an amendment to this, uh, staff is passing out, it's also available online. description monger you recognize. Thank you, Mr. Chair, committee, Representative Steve Unger, District 19. The amendment to House Bill 1133 is basically to declare an emergency. The bill is on behalf of Northwest Arkansas Technical Institute who is currently looking for a president. The president was unfortunately felled by a stroke, I think roughly a year ago, they do have an interim and they have a board actively looking the emergency clause would allow them to start looking sooner rather than later, which would be very beneficial to this school that's the last true Votech school in Arkansas. Are the questions on the amendment? So we would like to speak for or against the amendment in the audience? And we have a motion to adopt the amendment. Uh, yes, ma'am. So does this one have a financial impact statement? Because if it doesn't, then we can't pass this one out of this committee either. Not all bills have a financial impact on them. Well, they're all education bills are supposed to have one, not OK, just K-12. OK, that makes better sense then. I was like, if we can't do that one, how can we do this one? Thank you. Thank you for the question. We have a motion of do pass. Oh, did you have a question, yes, yes, I was. I was just wondering. Related to appoint a president with an industry background. Can you define what that would be. So just one, if I could clarify right now we're just speaking on the amendment. Uh, we will get to the bill in just a moment. Thank you, Representative for the question. Uh, so we have a motion, uh, do pass, uh, of the amendments, all in favor say aye, all opposed. Congratulations, your amendment is passed. You're now recognized to present HB 1133 as amended. Thank you, Mr. Chair. Thank you committee. Uh, basically, as I said, Northwest Arkansas Technical Institute is sort of a unicorn institution. It's the last true tech school left in Arkansas, uh, and frankly within the world of higher ed, uh, Votech schools are sort of the unloved stepchild. Um, is to rep to uh representative uh Gonzalez Point. I have to say some of the best instructors I've ever had in my life were Navy Chief Petty officers. When I was trained to be a hospital corpsman both at Corpsman school and at field medical school where I trained to be a combat medic. There were guys who had been doing this since World War II, Korea and Vietnam. And they may have had a high school education, now not every one of these people were leaders and mentors, and we know that. And so I believe we can trust our board up there to look for somebody who has knows their way around the shop floor, knows their way around the top floor, and if you know our director of workforce, uh, Mike Rogers, I would love to clone 100 of him and put him in that office. Thing is he's not qualified for that job right now until this bill passes, and so, uh. If it's somebody who had if they actually find somebody with an educational background that knows their way around the shop floor to the top floor, that would be great, but, uh, those seem to be really few and far between. Like you some other questions from the committee. of Cozer, do you have a question? Yes, sir. Thank you, Mr. Chair. Uh, is that gonna be the only qualification or will there be other qualifications that come along with that other than just being from the industry or they gonna have to have any other. qualifications such as what a president of a I guess the best way I can answer that is it's not a normal institution. They're not working on a stackable degree to get to a bachelor's degree, which has sort of been their focus. And unfortunately their focus is sort of they'd lost focus. And so what industry needs Tyson's JB Hunt, everybody that's got stuff with refrigeration, diesel mechanics they're looking for short term certificates. Trying to answer your question the best I can. Short term certifications where somebody can come there for 2 weeks, get this thing they need to upgrade to new equipment and then move on. And so, um, I, I can stop you. I believe you. I understand what you're trying to do. We've worked for this for years to get there. I just want to make sure is there any other qualifications they will have to have other than just like Mike Rogers being from the industry, um. Something like that just. I'd say not necessarily. I just go back to we we trust the board. OK, thank you. Thank you, Mr. Chair. Orson Gonzalez Worland, you recognize. I was just curious, I think, um, Representative Cozart helped to answer my question, but. Looking at the overall of what's required. So basically, A bachelor's degree. With technical training or. Um, master's or in that all of that would be pretty much by the wayside, just having um A technical certification. And the like would be all that would qualify for. This position. Is that correct? In terms of education requirements. I don't know about education requirements. I think a Thomas Edison or Henry Ford would do quite well in something like this or the Wright brothers who didn't have master's degrees either. Vice Chairman McKinsey. Thank you, Mr. Chairman. Uh, just to be clear, this is a permissive bill. So all we're doing is establishing language that kind of takes it non-existent or an existing barrier way, but NTI still has a board of trustees. They're gonna likely hire some kind of a search firm or headhunter. I mean, a, an institute like this is still gonna go through the, the natural machinations of hiring a president for higher higher ed posts, correct? Yes, this just allows them to open that. OK. Very good. Thank you. Versus back you recognized. Thank you Mr. Chair. So the question the board that you're referring to, that would be the one that would select the individual. I like the concept of what you're doing here. How's that board put together? Is it an appointed board? It's not elected board, is it? It's an appointed board appoints them leaders in the community. They have established. OK, thank you. Representative painter you recognize. Thank you, Mr. Chair. Just motion at the proper time. Are there additional questions by the committee? Is there anyone in the audience who has signed up to speak for or against. All right, uh, Representative Mar, would you like to close for your bill? Yes, I'd like to close the bill, and I asked for a good vote. Thank you. Representuger is closed for his bill. We have a motion on the floor to pass uh HB 1133 as amended. What's the will of committee all on paper CI all opposed? No. Congratulations Representative Unger. your bill has passed as amended. Thank you Mr. Chair. Thank you committee. Seeing no additional business, House education is adjourned.