Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Government Transformation topic
No spam. Unsubscribe anytime.
Audit questions claimed savings from Arkansas’ government transformation; agencies cite reallocations and data limits
Summary
A Legislative Audit review of Act 565 (2019) found many claimed savings from Arkansas’ government transformation could not be verified with department documentation, flagged $43.3 million in bonded debt tied to two purchased buildings and $6.4 million in relocation/renovation costs omitted from DTSS reporting; agency leaders said some savings reflect reallocations and that DTSS will improve data collection.
A legislative audit presentation to the Senate State Agencies & Governmental Affairs committee on Wednesday concluded that many of the savings the Department of Transformation and Shared Services (DTSS) reported under Act 565 of 2019 cannot be verified in department records.
"A reduction in appropriation or funding is not equivalent to a reduction in actual expenditures," Andy Babbitt of Legislative Audit told the panel as he summarized the agency's review of the Act 565 report and a November 19, 2020 DTSS presentation. The audit verified some lease reductions but said leased square footage overall rose while annual lease costs fell, and it identified new or previously unreported expenses.
The audit listed several notable findings: auditors said the state now carries about $43.3 million of bonded debt issued to purchase and renovate two buildings (the Timex Building and Verizon Building Number 4), with bond payments expected to exceed $2 million a year over the next decade; cumulative relocation and renovation expenses totaled about $6.4 million as of Sept. 30, 2020 and were not included in DTSS' summary; and many departments did not provide documentation that would corroborate the savings summarized in the front of the Act 565 report. Audit staff concluded that some items DTSS labeled as "savings" were reallocations or redirected costs rather than cash expenditure reductions.
Babbitt also reported personnel changes: audit verified the department's figure that roughly 1,400 employees left state service (plus an additional 13 employees identified by audit) but said salary expenses nonetheless rose by about $13 million over the period reviewed. The auditors estimated the annualized payback for relocation and renovation costs at roughly 9.3 years based on the lease reductions identified.
DTSS officials acknowledged the audit's points but disputed some inferences. "We gave them copious amounts of documentation," Amy Fecher, secretary of the Department of Transformation and Shared Services, said, urging committee members to follow up with individual department secretaries for program-level detail. Fecher said DTSS had produced a November supplemental report and a quick dashboard but that the agency needs better systems for routinely collecting the specific metrics the legislature requests.
Agency leaders who joined Fecher at the table described examples they said constitute meaningful efficiencies. Secretary Mac Preston (Department of Commerce) and Anne Laidlaw, director of the Division of Building Authority, said the Commerce/Verizon building consolidation — a purchase that preceded transformation — allowed the state to consolidate several Commerce divisions and realize roughly $1 million a year in rent savings by backfilling other state space. Laidlaw said lease records came from the statewide leasing database.
Jamie Cook, secretary of the Arkansas Department of Public Safety, described a department-level accounting action: her agency found special revenue in the Arkansas Crime Information Center (ACIC) had grown, and the department moved about $2 million back to general revenue in 2019 and reallocated funds internally (from ACIC to the state crime lab) to address gaps without requesting additional appropriations.
Lawmakers pressed both sides for clarity. Several members said they were troubled that departments could not submit supporting records for claimed savings and called for clearer definitions of "savings" versus "reallocation." Committee members and audit staff recommended continued legislative oversight; DTSS officials said they would work with the legislature to improve documentation and reporting, including enhancing the dashboard and standardizing metrics.
No formal votes were taken. The committee ended the hearing after additional brief questions and adjourned with agency representatives available for follow-up. The Legislative Audit report and agency responses are appended to the hearing record for further review.
