2 officials get a pass on paying for car use
State officials opted against asking Education Commissioner Johnny Key and another department official to reimburse the state more than $6,700 and more than $2,600, respectively, for commuting between their homes and offices in government-owned vehicles, a spokesman for the state Department of Finance and Administration said Friday.
In October, a deputy legislative auditor told lawmakers that Key and Deputy Education Commissioner
Ivy Pfeffer traveled in state vehicles between their Little Rock homes and workplace from the time they started in their posts until legislative auditors questioned the state Department of Education about the practice.
Key and Pfeffer surrendered their state-owned vehicles in April, education Chief Communications Director Alisha Lewis said Friday.
Key has been education commissioner since the state Board of Education appointed him March 25, 2015, at the recommendation of Gov. Asa Hutchinson, according to Arkansas Legislative Audit. Pfeffer has been deputy education commissioner since July 1, 2017.
Key’s salary is $239,361 a year and Pfeffer’s is $166,999, according to the Arkansas Transparency website.
Key and Pfeffer didn’t maintain the required vehicle usage logs for the state-owned 2015 Dodge Durangos or reimburse the state for commuting and other personal mileage, Deputy Legislative Auditor Tom Bullington reported in October. State law and finance department regulation require reimbursement to the state for all commuting and other personal use of state-owned vehicles at the rate of 42 cents a mile, he said.
This finding by legislative auditors came up for discussion Friday during the Legislature’s Joint Budget Committee hearing on the Education Department’s budget request for fiscal 2021, which starts July 1. The committee started budget hearings Wednesday in advance of the fiscal session starting April 8.
“We discussed this finding [and] I looked into the documentation and support behind the decisions made by the director and the deputy director and the CFO,” Paul Louthian, a deputy director at the finance department, told the Joint Budget Committee.
“Quite frankly, they used an old piece of authorization — not the current language in the law — to authorize this in the past,” he said. “We discussed it and the decision was made that we would correct it going forward and not ask for reimbursement by these individuals; as a matter of equity is how we handled some of these others in the past.”
Afterward, Louthian said in a written statement that “others in similar situations have not been required to repay the calculated amount due.”
During the the budget hearing, Sen. Gary Stubblefield, R-Branch, asked Louthian, “How long have those old documents been around?”
Louthian said, “The one [education officials] were using I think was probably 6 or 7 years old at the time they used it, and we had changed the law and updated that policy after that documentation has been sent out.”
Stubblefield then asked Louthian: “So, in other words, you are just going to eat this?” Louthian replied, “Yes.” For Key, the reimbursement would have been $6,743.52 from December 2015 until December 2018, finance department spokesman Scott Hardin said after the hearing.
For Pfeffer, the reimbursement would have been $2,615.76 from December 2017 until December 2018, Hardin said.
In response to a question from Rep. Johnny Rye, R-Trumann, Louthian told lawmakers that Key and Pfeffer routinely traveled in the state vehicles on official business, and “they were granted a commuting waiver to allow them to come to and from their home, so they would be prepared to do that travel or in the event that they left from home or arrived back at home without going back to the office.
“What they should have done was track any time that they came from their home to the office or from the office back home without any additional travel involved that day, and they would place a $1.50 per trip on their W-2 as income, so you figure it is $15 max for a week, depending on how much travel they did, and that would be added to their W-2 at the end of the year,” he said.
Afterward, Key said, “The moment he got feedback from legislative audit that we were doing it wrong, we stopped that day.”
“One thing that I will take a bit of issue with … that amount had been included as part of my W-2 up until that point, so that part I think was left a little bit unexplained,” said Key, who is a former Republican state senator from Mountain Home. “But we had an amount every year that got added to the W-2.”
Key said he didn’t know if finance department officials had calculated an amount that he would have to reimburse the state.
On another matter, Sen. Will Bond, D-Little Rock, pressed Key on the state’s goal for setting teacher pay, regarding the governor’s proposed general revenue budget for fiscal 2021. Hutchinson has proposed increasing the budget for the public school fund by $9.7 million to $2.2 billion.
“The emphasis that the governor has put on is lifting that starting salary,” Key said. “This budget reflects the continuation of his priority to lift the minimum teacher salary in this state, so that’s the emphasis currently.”
In 2019, the Legislature enacted Act 170 to raise the mandated minimum teacher salary from $31,800 to $36,000 by 2023.
Key said $60 million from the educational adequacy fund had been set aside to help school districts cover the cost of the increased starting salaries.
About $13 million has been distributed to districts this year, and “we have about $47 million left in that,” Key said.
State officials expect to transfer $589 million, including that $60 million, from the educational adequacy fund in the public school fund in fiscal 2020, which ends June 30, Hardin said.
“We are demanding worldclass results from our teachers; everybody is,” Bond said. “Why don’t we set the goal as a state that we are going to lead the region, the SREB [Southern Regional Education Board] states, the surrounding states, in teacher pay?”
Key said, “That is a goal that would be a worthy goal that we could set.
“I think when looking at the priorities, the governor said we need to make a stand that our starting teachers need more money,” he said. “That was a first step. This [budget] cycle is a continuation of that.”
But Bond said, “It appears to me that we have the money to make some bold goals and go after some bold goals,” noting the educational adequacy fund had a carry-forward of $286 million at the end of fiscal 2019, on June 30.
The fund is financed by a 0.875% sales tax approved by the Legislature in a special session in 2003-04, which raised $516.3 million in fiscal 2019, according to state officials.
“Why are we hoarding $286 million in the adequacy fund?” Bond asked.
In response, Key said, “I wouldn’t characterize it as hoarding. It’s a strong economy, and we are seeing that, so that’s why we have seen the growth of this fund.
“We try to maintain in the public school fund a $60 million to $80 million balance there, and as this has continued to grow, we have been able to back off on the [general revenue] that goes into it, which I believe puts us in a good position moving forward in case there is any economic setbacks, anything that comes forward, [so] that we don’t diminish in any way the funding, that we can maintain the adequacy commitment.”