Joint Budget Committee – January 12, 2010

Posted on January 12th, 2010

Date & Time: Tuesday, January 12, 2010 at 9:00 AM
Location: Room 171, State Capitol
Committee Information: Members on Committee
Agenda and Attachments

Budget Materials:

• Arkansas Public Higher Education Operating Recommendations FY10-11 Volume 1: Universities
  
• Arkansas Public Higher Education Operating Recommendations FY10-11 Volume 2: Colleges
  
• Arkansas Public Higher Education Personal Services Recommendations FY10-11
  
• Arkansas Public Institutions of Higher Education Appropration Requests (including Legislative Recommendations) FY10-11
  
• Arkansas Four Year Institutions of Higher Education Non-Classified Personal SErvices Requests (including Legislative Recommendations) FY10-11
  
• Selected Statistical Financial Data
  
• Arkansas Legislative Tax Handbook
  
• Summary of Expenditures and Construction Expenditures for State Agencies and Institutions for Fiscal Years 1998099 through 2007-08
  

The Joint Budget Committee provides for consideration of appropriation bills and budget proposals submitted by the General Assembly. The Joint Budget Committee is authorized to meet during the interim to work on budgetary and other matters. When the Legislative Council holds pre-session budget hearings after October 1 (preceding the next regular session of the General Assembly) all members of the Joint Budget Committee appointed to serve at the next following regular session are authorized to attend. (A.C.A. 10-3-509)

9:03 am – The meeting called to order by Rep. Bruce Maloch and Sen. Gilbert Baker. Rep. Maloch said that we are now plowing new ground. This it the first time that budget hearing have been held at this time of the cycle.

9:04 am – [There is an interesting dynamic going on with the budget hearings that we have never had before. This is the first time the same group of legislators will be voting on the budget as are involved in the budget hearings. Usually the budget hearings are heard by third term members who will not be participating in the session.]

9:06 am – Sen. Gilbert Baker is asking that legislators do the hard work now so that we can have a quick efficient session.

9:08 am – We have a large stack of essential stuff on our desks this morning. Hopefully I can find this information online that I can link to.

9:09 am – BLR Staff is current covering the pre-fiscal session budget hearing parameters. You can view that information in the Attachments. Also covered in that attachment is the Budget Hearing Special Rules.

9:18 am – The Budget Hearing Special Rules were adopted by the committee by a voice vote. No audible objection.

9:21 am – Mr. Kim Arnell is currently reviewing how to read the budget manuals and describing the features.

9:23 am – [It looks like the current budget materials are not current. These we currently have appear that they do not reflect the recent $106 million in cuts.]

9:28 am – The manuals above that are labeled (including Legislative Recommendations) appear to have updated information.

9:35 am – Senator Glover is asking about if there is going to be a difference between the legislative recommendations and the Governor’s recommendations.

9:38 am – Richard Wiess is presenting the revised economic forecast (second edition) .

9:39 am – The net available general revenue forecast for FY 2010 will be reduced by $106 million, equivalent to a 2.4 percent reduction. Therefore, effective January 11, 2010, the new funding level for 2010 is $4,302.77 million or 95.64% of A.

9:41 am – They are still predicting a 4.1 percent growth for FY 11. [I really don't understand the constant and ongoing hyper-optimism by DF&A.]

9:45 am – Sen. Steele asked how much is left in the “rainy day fund”. The answer is about $32 million. He followed up with a question if there would be any job cuts. The answer was that there will be no reductions in the state workforce.

9:47 am – 95.6% of “A” category appropriations will be funded. There is discussion that increases in the pay plans will be suspended.

9:49 am – The Governor is directing growth revenues into the balanced budget revenue reserve fund, also known as the rainy day fund. I don’t think that most of the members of the legislature fully realize the consequences of that yet, otherwise they would be howling. You see… if the surplus revenues go to the revenue reserve fund, then they don’t go into the General Improvement Fund.

9:55 am – Senator Percy Malone is asking why any surpluses would not be applied to those areas that have previously been cut. He also wanted to know what happens to the surplus revenue stream once it goes above the predicted $32 million difference. [I think that this would essentially mean that the Governor will have consolidated control of 100% of surplus revenue and left the legislature with empty General Improvement Fund coffers.]

10:04 am – Senator Johnny Key is asking questions to determine how the forecasts were determined and how much confidence we can have in the forecasts that DF&A uses from “Global Insight”. Of course, they have to say they are confident but they did note that everything has been volatile lately.

10:08 am – Sen. Percy Malone voiced his opinion that he doesn’t see anything that would indicate 4% growth. He is pointing out that to have a 7% swing from 3% down to 4% up. He is struggling to find a way to ask the question that gets the information that DF&A doesn’t want to say. Sen. Malone is an experienced legislator, when guys like him start digging, it is because they know there is some information there somewhere that he needs to know but isn’t being told.

10:15 am – Sen. Miller is asking about the Governor’s proposal. He is asking if the language of the proposal means that the Governor would control these funds without approval of Legislative Council. Richard Wiess hedged his answer saying that it will be according to what we allowed him to do. Sen. Miller is asked about the 25% of the previous one time money, asking if the Governor was using that too. Apparently the answer is yes.

10:20 am – Both of the Budget Committee Chairmen started asking clarifying information. I think the questions that both ask has less to do with not knowing the answer, but so members of the committee would have the answers they needed to know.

10:25 am – Rep. Pennartz is asking what portion of the Governor’s surplus funds is remaining. The Governor has $113 million but there was no requirement that 25% would be retained like the legislature’s. Rep. Pennartz has determined that the Governor still has about $94 million remaining.

10:31 pm – The meeting has adjourned for lunch and will reconvene at 1:00 pm.

1:06 am – The committee has reconvened. We are currently reviewing infromation in Higher Ed. Operating Recommendations.

1:18 pm – Alot of this information currently being covered are difficult to describe without being able to reference to the documents that we are looking at.

1:35 pm – State higher education funding per student full-time equivalent is declining. The state funding covers less than half of the cost. If state support is reduced, the student’s burden is increased.

1:37 pm – The lottery revenues change who pays the cost of college, it will not impact the higher education budgets. [Except for the fact that it may increase enrollment which could impact the budget from both positive and negative ways. Increased enrollment means increased revenues but also increased need for educational infrastructure.

1:39 pm – Several higher ed. institutioins were financially unable to fully implement the pay plan because 1) half the pay plan was to be paid from A funds and the other half from B-1 funds which were cut due to budget shortfalls, 2) the legislature ultimately decided to take $11 million from B-1 and replaced it with Stimulus money but Stimulus funds cannot be used for continuing obligations such as pay raises.

1:44 pm – Other funding for higher ed comes from the Allotment Reserve Funds for $17 Million. Since there is not assurance that the Allotment Reserve Funds will continue to be available, therefore these funds cannot be used for continuing obligations such as pay raised.

1:47 pm – I just saw Representative Les Carnine who grew a goatee over the holidays. He now bears a striking resemblance to Ed Rollins.

1:53 pm – The Arkansas Higher Education Coordinating Board recommended the state portion of the 2.3% COLA, $7.6 million for initiatives that have been funded from grants and/or General Improvement Funds are not covered by the funding formula, $0.5 million to match Federal Land Grant Funds increase. The total request for new funds is $20,148,122.

1:59 pm – The “non-formula” additional fund recommended are 1) the Arkansas Delta Training and Education Consortium (ADTEC)/Arkansas Delta Workforce Innovations for Regional Economic Development (ADWIRED) and the Crossroads Coalition ($3.2 million), 2) ASU Arkansas Delta Heritage Centers ($2.1 million), 3) UALR Nano-Technology Center ($2.3 million), and 4) UAPB Federal Land Grant Matching Funds ($0.5 million)

2:03 pm – Ultimately what this means is that higher education institutions will be seeking tuition increases. Legislators have been asking questions on how cuts can be made without increasing tuition. Some legislators have suggested that by not providing raises that tuition increases could be avoided. The pushback was that the salaries are lower in higher ed in Arkansas than in other SREB states. It was also pointed out that tuition rates are lower than other SREB states.

2:15 pm – Rep. Steve Cole, who is also a vice chancellor of a small Arkansas college is pleading the case for prioritizing funding for the smaller colleges. He made a compelling case, but like everything else it will be put within the context of all the obligations of the state.

2:28 pm – We are currently reviewing Arkansas Public Higher Education Operating Recommendations FY10-11 Volume 1: Universities. As you can see I found a link to the manual. I have also linked it at the top of this page for easy future reference.

2:41 pm – Rep Bruce Maloch, house co-chair, made a motion to adopt the legislative recommendations with a few exceptions recommended by the AR Higher Ed Coordinating Board.

2:45 pm – This whole process is odd, this motion is for appropriations that do not actually take into effect they economic downturn. Appropriations are actually fair higher than actually get funded through the Revenue Stablization Process. Appropriations only limit the maximum amount that can be spent, and are not determinative of how much is funded.

2:49 pm – Agenda completed for today. We will meet again tomorrow.

Filed under Uncategorized |

Comments are closed.