As mandated by the constitution, the fiscal session will focus almost entirely on budget issues. A few legislators have said they hope to introduce a couple of non-budget bills, but under the constitution it will require strong support from a solid majority of lawmakers for the measures to be filed.

During the fiscal session, legislators will approve state agency budgets for Fiscal Year 2013, which begins on July 1 of this year. The vast majority of budgets are non-controversial and will authorize slight increases in spending over the current year. Spending from the general revenue fund is projected to total $4.7 billion and the governor has proposed a 3.5 percent increase, which means authorizing about $163 million in additional spending.

The additional spending, under the governor’s plan would be mainly in the Medicaid program. It would receive about $114 million of next year’s increase. Public schools from kindergarten through grade 12 would get $56.6 million of the increase. Some institutions of higher education would get $3.62 million in additional funding, but not every campus would get an increase under the governor’s proposed budget.

After he presented a proposed budget for Fiscal Year 2013, the governor next presented a series of proposed supplemental appropriations, totaling $30.5 million. They would authorize spending by certain state agencies between now and the end of the fiscal year on June 30.

The most highly publicized supplemental appropriation is the governor’s $2.7 million request for the Forestry Commission, which has had to lay off 34 employees and is unable to fill two other positions that were vacated when employees retired.

The agency relies on revenue from a severance tax on timber, which has declined because of a slump in construction. Its budget shortfall is a matter of concern in rural areas because 20 of the laid off employees work in fire protection.

It’s also a matter of concern to lawmakers who believe the Forestry Commission’s budget woes are due to mismanagement. Those legislators are reluctant to authorize additional funding unless they have assurances it will be spent wisely. Auditors are looking into the financial practices of the Forestry Commission and their report is due before the fiscal session begins.

Another supplemental appropriation requested by the governor would provide about $9 million to the Correction Department, which runs state prisons, so it can pay security officers overtime and the pay they accumulated over the holidays. Another $2 million supplemental would allow the department to reimburse county jails that have been housing inmates when state prison units are full. Also, the department would get a $1.4 million supplemental for a barracks in Little Rock to house prisoners whose work detail is in the capital city.

The Department of Community Correction, which also works with convicted inmates, would get $1.9 million for drug treatment, more electronic monitors, mental health treatment and reducing the case loads of parole officers.

About $3.4 million in supplemental funding would go to the State Hospital, a facility in Little Rock that houses and treats people with mental illnesses. The money would help bring the hospital up to national standards and ensure that it continues to receive federal funding.

Every year the state Department of Higher Education counts the number of entering freshmen who must take remedial classes their first year in a four-year university or a two-year college. Students are required to take remedial classes if their standardized test scores in English, reading and math are not high enough. On the popular ACT test, the required score is 19 or higher. A total of 23,176 students took the college admission tests.

This year’s report shows that 49.3 percent of students enrolling in an Arkansas public college or university had to take at least one remedial class. That is the lowest percentage since the fall semester of 1993. Our worst performance was in the fall of 2002, when 59.6 percent of new students had to take a remedial class.

There is a large difference in remedial rates between students entering a four-year university and those entering a two-year college. At the state’s four-year universities, 34.5 percent, or 5,101 students had to enroll in a remedial class. At two-year colleges the remedial rate was 75.5 percent, or 6,335 students.

One reason the remedial rate is higher at two-year colleges is that the students frequently are older, non-traditional students. When they enter college they have been in the work force or they have perhaps raised a family. Most importantly, they have been away from the classroom for several years by the time they take admissions tests.

The importance of remediation rates is that they measure the likelihood of students’ eventually earning a degree. Students have to pay for remedial classes, but they don’t get college credits for completing the courses. Therefore, having to take remedial classes throws them off schedule both financially and academically.

Universities and colleges have adopted several strategies to help remedial students, such as providing tutors, making classes smaller, offering preparatory programs in summer and grouping students together in several classes so they can support each other.

Based on the results of standardized tests, math is the toughest subject for students going to college. Of the incoming students who took the tests, 39.4 percent needed remedial help in math, while 30 percent needed remedial English and 25.6 needed remedial reading.

Of the Arkansas students who had to take remedial classes, a third had to take all three subjects – math, English and reading. About a fourth had to take remedial classes in two subjects and 41 percent had to take one subject.

Unemployment Insurance Trust Fund

Officials of the state Workforce Services Department reported to a legislative committee that the agency is paying down its debt to the federal government and is on track to eliminating its debt by 2015. The state will likely make a payment of $30 million this year on a debt of $330 million.

The legislature has taken action to stabilize the unemployment insurance fund, prompted by the state’s rising debt to the federal government. Act 861 of 2011 froze benefits for unemployed workers and Act 802 of 2009 raised the basic wage on which employers pay unemployment taxes, from $10,000 to $12,000.

The grants were awarded under a program called STEM Works. The long range goal is to better prepare students in the fields that are most likely to provide well paid and secure jobs, now and in the future. STEM Works helps local high schools pay for the technology needed in modern classrooms. It also helps state colleges train a new generation of teachers who will work in technology fields.

Pilot projects were announced last summer, when Cross County High School in Cherry Valley and Lincoln High School in Washington County became the first “New Tech High Schools” to follow the STEM Works model.

At the time, state education officials said they wanted to add 10 more schools to the program, so they were pleased to announce last week that they have added 15 new schools and the technical center.

The Northark Technical Center, which serves 14 school districts in north Arkansas, will offer classes in engineering and biomedical sciences, with an emphasis on how those subjects are used in real workplaces. It is called “Project Lead the Way.” Also receiving money to initiate “Project Lead the Way” are these school districts: Gravette, Jonesboro, Prairie Grove, Riverview and Star City.

Nine districts will join Cross County and Lincoln as schools in the “New Tech Network.” Students will learn technology through hands-on projects, rather than using traditional classroom methods.

The nine districts are Arkadelphia, Dumas, El Dorado, Highland, Hope, Marked Tree, Riverview, Russellville and Van Buren. They will each receive $150,000. Cross County and Lincoln, the existing schools in the New Tech Network, will get $75,000. The districts in Project Lead the Way will get varying amounts of up to $95,000.

Another model that STEM Works will promote is based on the successes of the EAST Initiative in numerous Arkansas high schools. That stands for Environmental and Spatial Technology. Various state agencies have allocated $2.25 million for the STEM Works program and private industries have donated significant amounts.

Tiered Lottery Scholarships

The Senate and House Education Committees will look into changing how lottery scholarships are awarded, with a mind to encouraging students to stay in college to earn a degree. Currently, eligible students receive lottery scholarships in the same amount for up to four years. Students at four-year universities get $4,500 and those at two-year colleges get $2,225 a year.

With tiered scholarships, students would get greater amounts each year. Before the lottery scholarship program was established, Academic Challenge Scholarships used to be tiered. Freshmen received $2,500, for example. If students maintained the required grade average, they would get $3,000 as a sophomore, $3,500 as a junior and $4,000 for their senior year.

Legislators will look at how such a plan would affect lottery scholarship financing, and perhaps introduce a bill to establish tiered scholarships in the 2013 regular session.

First, the governor and the director of the Human Services Department reported that the state Medicaid program appears to have enough money to get through the next fiscal year without a major shortfall.

Medicaid officials had been concerned that the health care program would fall short of revenue by about $60 million next fiscal year, in part because of increased enrollment. They expected increases in Medicaid enrollment of 5 percent a year because more people become eligible when unemployment worsens. However, enrollment growth has remained at about 2 percent a year.

Another piece of good news came in the December revenue report, which showed impressive growth over the same month last year. Net revenue for December was more than 9 percent greater this year than last year. Tax rates have not gone up, so the increase is a very accurate indicator of increased economic activity.

State revenue officials cautioned that the December revenue report reflected only one month’s activity. It gives state agencies a small cushion against an economic downturn, but until the economy gets stronger we should not expect every month to produce such good numbers.

The long term prospects for Medicaid finances are mixed, paradoxically, because of the improved economic situation in Arkansas. Medicaid is a government-subsidized health care program that last year helped pay for medical services for 770,000 Arkansas residents.

The federal and state governments share in the costs of Medicaid. In poor states the federal government pays a higher percentage than in relatively prosperous states.

Per capita income in Arkansas grew faster than in many other states, and as a result the federal government share in Medicaid funding will drop from 71 to 70 percent in October. That decrease of 1 percent amounts to the loss of about $50 million in federal matching funds for Arkansas Medicaid. State government will have to come up with an equal amount, or else cut $50 million in services.

In other state budget news, the governor said he would ask for a supplemental appropriation of $2.7 million for the state Forestry Commission to get through the current fiscal year. The legislature will consider the request at the fiscal session, which convenes on the second Monday in February as mandated by the state Constitution.

About $1.2 million of the Forestry Commission appropriation would pay back a grant from the federal government that the Commission has already spent on operations. The other $1.5 million would pay Commission expenses until the end of the fiscal year, on June 30.

Also, the governor has said he may recommend asking for two other supplemental appropriations – one for the Correction Department and one for the Department of Community Correction. If the legislature approves the supplemental appropriations, they would authorize additional spending for the current fiscal year.

During the fiscal session, legislators will approve budgets for all state agencies. In preparation for the session they will conduct budget hearings in late January. State general revenue is projected to be about $4.6 billion for the current fiscal year. The bulk of that revenue is from state sales taxes, individual income taxes and corporate income taxes.

The ruling came in a lawsuit out of Lonoke County filed by rice farmers against a German multi-national corporation. The farmers claimed that their rice was contaminated by genetically altered strains that had not been approved for human consumption. The rice farmers won $5.9 million in compensatory damages and $42 million in punitive damages.

One of the more important provisions in Act 649 of 2003, Arkansas’ tort reform law, had limits on punitive damages of $1 million. The Supreme Court ruling upheld a Lonoke Circuit Court ruling that the limit on punitive damages was unconstitutional.

Act 649 also limited awards in medical malpractice cases to the amounts actually billed. That provision was stricken by a state Supreme Court ruling in 2009. Another 2009 ruling by the Supreme Court struck down a provision in Act 649 that changed how fault and liability would be assigned among numerous parties who are found to be at fault. Defendants would pay according to a formula, based on their degree of fault, rather than having the defendant with the most money paying the most in damages.

In each case the Supreme Court relied heavily on the separation of powers articles in the constitution, which outline the powers of the legislative, the judicial and the executive branches. The court ruled that provisions in Act 649 are the prerogative of the Supreme Court and its committees on rules, evidence and procedure.

Last week’s ruling by the high court struck one of the last remaining significant provisions of Act 649.

The German corporation had been conducting field trials of the genetically altered strains of rice. The tests took place in Louisiana, but the strains began showing up in Arkansas. The Lonoke County farmers argued that during the testing, the corporation had negligently allowed cross pollination with conventional strains of rice.

The presence of contaminated rice caused a severe decline in exports of Arkansas long grain rice from 2005 through 2008, because in many foreign markets genetically altered crops are prohibited. The loss of markets drove down the price of long grain rice and the rice farmers filed suit in Lonoke County Circuit Court in 2006.

In a pre-trial motion the rice farmers asked the circuit court to declare unconstitutional the limits on punitive damages in the Arkansas tort reform law. Their argument was that the limits violated the separation of powers doctrine in the state constitution.

States Against Robo-calls to Cell Phones

The Arkansas attorney general is one of 53 attorneys general from the 50 states and U.S. territories who have asked Congress to reject a federal bill that would allow telemarketers to make automated “robo-calls” to cell phones. Robo-calls for commercial purposes are prohibited in Arkansas and many other states, but federal laws pre-empt state laws.

A robo-call is a tape recorded message, rather than a call from a live person. Computers can cheaply generate thousands of robo-calls in brief periods of time. When a person receives a robo-call on his cell phone, it costs in either minutes or money.

H.R. 3035 is in the Committee on Energy and Commerce of the U.S. House of Representatives. It would open loopholes in state and federal “Do Not Call” statutes, under which people can sign up to prevent telemarketers from calling them. H.R. 3035 is supported by collection agencies and financial service industries.

Picture it: a single parent maintains a full-time job while working to complete a college degree to learn the job skills needed to better provide for his or her family.

It’s a common scenario, and many people can make it work by taking advantage of the flexibility and accessibility of online courses. Most of Arkansas’s higher education institutions offer courses online. Last school year, Arkansas students enrolled in more than 10,000 web-based classes offered at Arkansas campuses. Increasing the availability of online classes is key to improving the state’s college graduation rate.

The trend has spread across the country. According to Pew Research Center, nearly half of all degree holders nationwide who graduated in the past ten years took a class online.

However, online classes are out of reach for many Arkansans in rural areas that don’t have broadband Internet access.

“As former educators, Representative Cheatham and I recognize the impact that technology has on learning at all levels. Broadband allows students to overcome barriers and connect with their peers, with educational institutions and with the world,” Jeffress said.

“We have some catching up to do,” Cheatham said. “Arkansas is last in the nation in the percentage of households with Internet access and 46th in the nation in the percentage of homes with broadband access. High-speed Internet isn’t available where they live.”

“The lack of broadband access threatens to hold back development in our rural communities,” Jeffress said. “It means more than providing access to education, it also means being able to compete for job opportunities.”

Publicly and privately funded groups have stepped up to identify high-need areas where the most work must be done to increase Arkansans’ access to wireless broadband services.

One group is the Internet Innovation Alliance (IIA), a coalition that supports broadband availability for everyone, including in underserved and rural communities. IIA recognizes that access is essential for economic growth, and the state’s ability to compete nationally and globally.

“We are making progress,” Cheatham said.

The grant program was cut earlier this year, leaving state and local governments with the bill for cleanup.

When the police shut down a meth lab, officers cannot simply walk away from the scene. It requires trained personnel who know how to handle and dispose of hazardous materials. It costs as much as $2,000 to clean up a single meth lab and sometimes more. If it is a large operation the costs can be much greater.

Training is essential to avoid injury. Improper handling of the substances left behind at a meth lab can cause flash fires, and inhaling the chemicals can severely damage your health.

Last year, before the federal grants were cut off, Arkansas law enforcement agencies received $925,904 for cleanup of meth labs. That was the fifth largest amount awarded to a single state.

Arkansas will probably not get as much when the new round of grants are disbursed, because the total amount of the federal grant program is not as large. Last year it totaled $19.2 million nationwide and the new program is for $12.5 million.

Spokesmen for police departments and sheriffs’ offices in Kentucky, Missouri, Indiana, Oklahoma, Michigan and many other states welcomed the announcement. The abuse of methamphetamine has dramatically affected rural areas throughout the United States, straining the capacity of jails and prisons to hold convicted offenders and straining the finances of local governments that must clean up the lab site.

During the period when funding was not available, many law enforcement agencies responded by training a few officers how to neutralize and dispose of chemicals. In many cases they transported the hazardous materials to a privately operated disposal site.

Some states are setting up depots where law enforcement can bring chemicals and hazardous substances from a meth lab. If several depots were spread throughout the state transportation costs could be lowered significantly. When private companies get a contract to clean up meth labs, one of their major costs is transportation.

A spokesman for the federal Drug Enforcement Administration said the agency was working on how best to disburse the new round of cleanup funds. He indicated that a portion of the grant funds would be dedicated to setting up containers in centralized locations.

The example of Missouri shows how placing containers around the state can hold down transportation costs. Missouri’s Department of Natural Resources had already placed them in more than 20 locations when federal grants were cut off earlier this year. However, the effect on Missouri’s cleanup programs was not as bad as it was in other states, in large part because the cost of cleaning up an individual meth lab averaged only $500 to $600 in that state, according to news reports out of Missouri.

In talking about the role of the Missouri Natural Resources Department in setting up safe sites for disposal of chemicals, a spokesman for sheriffs said that cleaning up contamination from meth labs is a job that combines law enforcement and environmental protection.

However, the funding problem of the trial courts likely will continue unless there is a sudden turnaround in collections of filing fees and court costs. They have gone down dramatically since the summer. The salaries of the trial court assistants are paid from filing fees and court costs.

The legislature can address the problem during the fiscal session, which convenes in early February, 2012. Some legislators had hoped that the governor would use enough money from his emergency fund to pay the trial court assistants until the fiscal session, when the General Assembly could replenish it. They expect the problem to recur in January.

Judges are taking steps in hopes that trial court assistants will not have to cut salaries of the assistants. For example, reimbursements for their travel expenses have been canceled. Also, when the assistants are absent from work the trial courts will not hire substitutes.

The Arkansas Judicial Council is made up of Arkansas circuit judges and Court of Appeals Judges, as well as justices of the Supreme Court and retired judges. The Administration of Justice Fund is where court costs and filing fees are deposited. Besides trial court assistants salaries it pays for a couple of dozen other programs and all of them have been forced to reduce spending.

Finding a steady source of revenue for the 41 drug courts in Arkansas is another issue that some legislators want to bring up during the fiscal session.

Funding for drug courts was scheduled to run out in October, but the state Health Department released enough money from a tobacco settlement account to keep drug courts operating until the fiscal session.

When the state resorts to stopgap measures to maintain programs, in this case drugs courts and trial court salaries, it raises the question of how to most efficiently and wisely spend tax revenues.

Many elected officials strongly believe that it is misguided to use “one time” money to pay for continuing operations. The money in the governor’s emergency fund is a text book example of a fund that is dedicated to “one time” expenses such as helping people after a flood or a tornado. Salaries and the operations of trial courts are good examples of ongoing expenses. The legislature expects to budget for them every year.

Arkansas Law on College Athletics

The National Collegiate Athletic Association (NCAA) recently sponsored a summit at Washington, D.C., to address concerns about violations of its by-laws and the corrupting influence of money, unscrupulous boosters and agents who don’t follow NCAA rules.

Delegates discussed the possibility of using Arkansas Act 204 of 2011, the Athlete Agent Reform Act, as model legislation for other states to enact to effectively curb many of the abuses caused by agents.

Act 204 increases the penalty for agents who initiate contact with college athletes before the athlete is eligible to turn professional. The fine had been $50,000 and now it is $250,000.

The state Attorney General’s office sent a representative to explain the Arkansas law at the summit, which was attended by university officials, agents and National Football League officials.

The Board postponed making a final decision on a fifth application, for a regional charter based in Marianna that would offer alternative education for students who have been expelled or have dropped out.

A new law enacted by the legislature earlier this year removed the limit on the number of open enrollment charter schools that can operate in Arkansas. The limit had been 24 and there are 17 in operation.

Act 987 of 2011 says that when the number of charter schools gets to within two of the existing limit, the limit automatically goes up by five. That means when the Board of Education approves 22 charter schools, the limit will go up by five from 24 to 29 schools.

When the application period opened 14 organizations wrote to the Board indicating their interest in applying for a charter school. However, not all followed through and only five official proposals were presented to the Board.

The Board determined that the application to open a regional charter in Marianna needs more work. It is scheduled to come back before the Board in January. The school would be a technical institute geared for students who have dropped out, have been expelled or have got into legal trouble. It would serve a five-county area in eastern Arkansas.

Charter schools are publicly funded. They do not have to comply with all the regulations that govern traditional public schools, as an incentive to experiment with innovative learning strategies. Charter schools often focus on teaching children from disadvantaged backgrounds, or children with exceptional skills.

Hot Springs Rehab Center Changes

The Arkansas Career Training Institute may be better know by most people in Arkansas as the Rehab Center. A prominent sight in downtown Hot Springs, the facility rises up the mountain at the south end of Bathhouse Row.

The institute will close its 24-bed acute care hospital, at the urging of federal officials who believe it would be more efficient for the institute to pay for medical treatment of clients elsewhere, rather than operating a full time hospital. The rehab center’s hospital has averaged three patients a day for the past several years.

The decision means that the institute will no longer need to buy expensive medical equipment to keep up with medical providers that routinely purchase state-of-the-art technology. It also means the loss of 20 to 30 full time positions, depending on how much care the institute will continue to provide. It now offers physical and occupational therapy, in addition to psychiatric counseling, medical care and a broad range of other services.

The rehab center, which can house up to 320 people with disabilities, provides vocational rehabilitation to help people find jobs. A task force, with input from employees, will determine the center’s new medical role over the next six to 12 months.

The institute is a part of the Arkansas Rehabilitation Services division of the state Career Education Department.

The bonds must be issued by December, 2015 but most will be issued in 2012 and 2013, a Highway and Transportation Department spokesman said. Issuing bonds is a way of borrowing money. The statewide vote authorized the Highway Department to issue bonds of up to $575 million. Combined with other sources of state and federal revenue, the vote clears the way for a $1 billion program to upgrade Arkansas interstates.

The bonds will be paid off with future federal highway funds and with the revenue from four cents of the state’s motor fuels tax on diesel. The diesel tax will not go up as a result of the vote, and it would not have gone done had voters disapproved the bond issue. The issue was whether the state should borrow money in order to repair highways more quickly, as opposed to scheduling highway projects on a “pay as you go” basis.

The bonds will be for 12 years. The highway improvements they finance should outlast the debt. An argument that some opponents made against the bond issue was that the state would still be paying off debt after the roads need to be repaired again. That should not happen, a Department spokesman said.

A factor in support of issuing bonds was that immediate repairs would be less costly, over the long term. Waiting for revenue to flow under the traditional “pay as you go” method means that the condition of highways is worse when money finally becomes available.

After Arkansas voters approved a similar $575 million highway bond issue in 1999, projects to repair 355 miles were in progress within three years. Under a “pay as you go” method it would have taken 20 years, according to the Highway Department spokesman.

It costs from $1 million to $4 million per mile to repair interstate highways. Sections with a bridge or an overpass are more expensive. Arkansas has 655 miles of interstate highways.

The total net interest paid on the bonds approved by voters in 1999 will be $208 million, according to a fact sheet prepared by the Highway Department. Over the 14 year life of the bonds that averages less than $15 million a year in interest expense.

The outstanding balances of three issues of the 1999 bonds were combined and refinanced last year to take advantage of lower interest rates. Their interest rate is 1.404 percent. According to the Highway Department, current interest rates on 12-year bonds is 2.9 percent.

Other expenses included in the 1999 issue were for bond counsel, rating agencies, financial advisors and printing costs. Those expenses total $938,000.

Turnout in the special election was very low. Late on election night it was estimated to be slightly more than 6 percent, but results were not complete from all the 75 counties in Arkansas.

Early and unofficial results showed that support for the bond issue was about 80 percent. A factor cited frequently by supporters of the bond issue was the fact that highway construction projects financed by the interstate repair program would create thousands of jobs.

Revenue from the bonds may not be used to build new interstates, nor to add lanes to existing interstates. However, it can be used to improve interchanges.