Senator Missy Irvin Okay, members, if you could take your seats. The chair sees a quorum and we're going to call this meeting to order. Members, thank you for being here this morning. We're going to go quickly. So welcome. Without objection, I'm going to take our agenda out of order today, just for various reasons. But I want to go ahead and move to item E first. This is a request for approval of the program to reduce or eliminate prior authorizations for health care provider pursuant to Act 575 of 2023. If they could come forward, please. And members, after our previous Public Health committee meeting, we, meaning myself and Representative Johnson, had made some suggestions. And to their credit, Empower Healthcare Solutions made those changes. I'll let them go through. Hi, Dr. Diner. It's so good to see you. And anyway, we go way back. And so they've made some changes. And so I'm going to go ahead and let them present them and then we'll move forward with the actions that we need to take to get everything square. If you'll state your name for the record, you're recognized.

 

Mitch Morris Good morning, Senator Irvin. Committee members. I'm Mitch Morris, CEO of Empower Health Care Solutions.

 

Brad Diner I'm Brad Diner. I'm the chief medical officer.

 

Senator Missy Irvin Hi. Go ahead.

 

Mitch Morris Okay. Yes. Thank you. Senator Irvin. So we were here, I think it was November 25, and we presented a version of our prior authorization transparency or gold card policy. To my recollection, we received two primary questions related to this policy. And so we made some adjustments and revisions to the policy we had previously submitted to address those questions and to try to provide full clarity to those issues. And so if you have the document, I would direct you to those adjustments and those revisions that we made. In Section three of the policy section, beginning with paragraph three. One of the main questions we received back during the prior committee meeting was related to the differences in our policies or in our processes prior to the Prior Auth Transparency Law Act 575 and how we're operating today. 

So what we tried to do was answer that question and show a level of detail to what has changed since that law was passed. So we provide a list of services that prior to 2023 we did manage through prior authorization and since the passage of the law and then subsequently the law taking effect, those services have been removed from our prior authorization review. It's kind of a long list and I wasn't planning to read all the way through that.

 

Senator Missy Irvin That's okay. We've got it in front of us in an exhibit.

 

Mitch Morris And then the second question was some clarity around what areas, what categories of service we'll continue to manage through prior authorization review. And that's the last section in that number three policy area. And so it's a shorter list, but it's basically the waiver services that are kind of the focus of the PASSE program. Also, elective inpatient admissions. Emergency admissions do not require prior authorization. Elective surgical procedures, psychiatric residential, skilled nursing, inpatient rehab, personal care services that are provided in the community or in the home, admission to an institution, a mental disease, immediate care facility admissions, and also pharmacy and prescription drug services. And then last thing I'll say real quick is that no change in Section 4 procedure, but that is a more detailed list and breakout of services that we will consider gold carded and not managed through prior authorization.

 

Senator Missy Irvin I like that. I appreciate that approach. Dr. Diner, do you have anything additional?

 

Brad Diner No, I think he's summarized our position.

 

Senator Missy Irvin I appreciate you being part of that team.

 

Brad Diner Sure. And that's why I'm here, to answer any questions that I can from a medical point of view.

 

Senator Missy Irvin Absolutely. And we appreciate it, lots of expertise you have. Are there any questions from members of the committee? Okay. Senator Dotson, hold on just a second. Are you logged in? Are you logged in? You're not doing anything? Okay. Are there any other questions? Sorry. Your light keeps coming up. No questions? All right, So, members, what I will need is a motion to expunge the recommendation regarding the prior authorization proposal previously submitted by Empower Health Care Solutions. Do I have that motion? Motion. And Is there a second? Second. All those in favor, say aye. And oppose? Ayes have it. So we expunged the recommendation that was previously made. And now I would need a motion to recommend approval of the updated prior authorization proposal presented by Empower Health Care Solutions. Do I have a motion and a second? Second. All those in favor, say aye. And opposed? Ayes have it. And we approve your recommendation. Thank you so much for being here and thank you for addressing this. I think this is more clear and that's what we're trying to get to is just transparency, clarity so everybody knows rules of engagement.

 

Mitch Morris Very good.

 

Senator Missy Irvin Thanks, guys.

 

Mitch Morris Thank you.

 

Senator Missy Irvin Appreciate it. Y'all have a great time. Merry Christmas. All right. Okay. We'll go back to the top of the agenda. I do need a motion to approve the minutes of the previous meeting. And second? All those in favor, say aye. And opposed. Ayes have it. The meeting minutes will be approved. And now item C. We will go to a presentation on Reality Check. If you will, come forward. All right. If you will please state your name for the record. We're happy to have you this morning. You'll just have to touch your buttons.

 

Ananda Martin My name is Ananda Martin from Health Connections over in the western side of the state. .

 

Lizabeth Bryant My name is Lizabeth Bryant with Reality Check, Inc., and I'm from the Northwest Arkansas and the River Valley area.

 

Thelma Moton My name is Thelma Moton and I'm with Choosing to Excel from Central Arkansas and part of the Delta.

 

Beth Prine Beth Prine with Prevention Education Programs in Stuttgart. And I'm in the southeast area.

 

Senator Missy Irvin All right. Thank you all ladies from traveling from all corners, it looks like, from the state of Arkansas to be here this morning. So appreciate it. We had a member that requested more information on this. So thank you for coming and providing this information and we'll just turn it over to you. You may proceed.

 

Ananda Martin First we want to go through and introduce our programs just briefly. Health Connections, like I said, is from the western side of the state. Back in 1998, it was formed out of a coalition to prevent child abuse. One of the findings that came from that coalition was the high rates of teen pregnancy. And so an outreach program was started, HCI was formed and received a 501c3. From that point, Health Connections has gone on to become a federally qualified health center. We have 15 sites currently operating around the state, including some school based health centers and lots of community centers. But our program specifically for SRAE, it is sexual risk avoidance, but mostly positive youth development. And we have been doing these types of programs since the early 2000s in Health Connections. 

Back in 2012, we received funding and formed a collaboration with these organizations. So there's four groups that have worked together for the last 14 years. Health Connections has acted as the fiscal agent for the collaboration. But we have in-school programs in multiple schools that provide education for youth development, everything from specifically risk avoidance, but also job readiness and positive focus on preparing kids to be in the world after they graduate and getting them there.

 

Lizabeth Bryant My name is Lizabeth Bryant and I'm the executive director for Reality Check Incorporated. We began as a community based nonprofit back in 2003, so we're in our 21st year. We serve seven counties.

 

Senator Missy Irvin Can you pull your mic down? That's okay. Thank you. There you go.

 

Lizabeth Bryant That good?

 

Senator Missy Irvin Yeah. Just speak a little bit into the mic. That would be great. Sometimes some of us are hard of hearing.

 

Lizabeth Bryant All right. We have, again, we got our nonprofit in 2003, so we've been providing positive youth development programs and risk avoidance programs since that time, for about 21 years. Last year, we served seven counties, 7,000 students in 32 schools across that area. We serve from fifth grade puberty classes all the way to 12th grade. And we do some college classes for freshmen. We also have parent classes as well. 

As you can see on the PowerPoint, we do a positive youth development, which is our classroom programs, and they are multi level programs for students. So it's not just a one time relationship intervention. It is a year or two year building as they gain readiness. And so everything that we do is age appropriate. We start with a puberty program for fifth grade. We have a parent component for that. So the parents know exactly what their child is getting. We invite parents to come and spend that hour with their student while they're getting that program as well. As you can see, sixth grade, we have a program specifically for that age group and we go on down through that 12th grade age. 

We do what's called Project 479. That is a daily intervention with our alternative school and high risk students. We help them with learning self regulation. As the superintendent of the school where we have our largest project room located said, They give us their toughest young people and we give them back children that can actually function within a classroom and that are going to be great adults for the state of Arkansas. We are a professional development provider for the state of Arkansas, so we help teachers with learning classroom training as well. We have professional development in a variety of areas and we have been a training center as well. So that is Reality Check.

 

Thelma Moton Choosing to Excel, we started our initiative and involvement in the community in 1991. Our goal was to provide character education and also with the goal of reducing teen and out of wed births in our area. The desire right now is to continue to spread our programs throughout central Arkansas and the counties that we serve. We are currently serving all of Faulkner County, Conway County, Lonoke County, White County, and we are in the Jefferson County area. We're into Desha. We're also in Clinton County. And we have a footprint across about 11 counties throughout the state. We're serving anywhere between 9,000 and 10,000 students per year. 

The primary way of us addressing our students is through classroom presentations. And in those classroom presentations, we are providing students with information as to how to make healthy choices. And for those who possibly need to start over, how to do cessation. And we're giving them skills on how to start over. What we call in our classrooms, we call that somewhat of an information dump. We come in and we give kids information, healthy information. But you guys know, information without relationships does very little for relationships and behavioral changes. And so we've developed an opportunity for young people. Once they've gone through our classroom presentations, young people have an opportunity to voluntarily meet with us on a weekly basis to provide ongoing intervention and also provide a platform where our young people's voices are heard.

 Our young people are given an opportunity to share with us what are those things that you really want to discuss. Some of them really want to go into cessation and how do we start over. What is consent and what does that look like. Pornography. They really are interested in the things that sometimes we're not covering in the classroom. So we provide that through small groups on a weekly basis. And we do that also in our summer program because as some of you know, summertime and after school are probably the most vulnerable time of the day and year for young people who are left alone without adult supervision. 

And so we continue our intervention through the summer. So we're providing a 5 to 6 week intervention for young people to have a safe place, a safe, adult supervised place in the summer months. And in addition to what we're doing there, we're also providing education for kids, somewhat like Reality Check in Northwest Arkansas with the Project 479. We have a specific intervention for young people who are stuck in places they don't belong in the alternative programs. Those kids are there. They are set aside and sometimes sort of forgotten. These are some of the smartest, most intelligent young people, but they don't have the guidance that they need. 

So our goal there is to meet these young people where they are, and we meet with them 2 or 3 times a week. We've been able to graduate young people out of the alternative programs who have been in alternatives, some since kindergarten, and we've been able to graduate them into a regular classroom setting. So those are some of the things that we've provided over the 30 plus years that we have been doing, risk avoidance, education and character building.

 

Beth Prine Beth Prine. I'm the founder and director of Prevention Education programs founded in 2007. But my beginning with this risk avoidance education began when I was hired by the Stuttgart School District in late 1999 to develop and implement a countywide abstinence education program at that time to combat the high rate of teen pregnancy in Arkansas County. At that time, the rate was in the 80s. So you're going to see some rates in a little bit that Beth Bryant will share. But our rate in Arkansas County was in the 80s. 

And so I'm a registered nurse and that was what the position was for. So I took that position and through various pots of funding-- you know, nothing lasts forever-- started with teen funding, which was part of the Welfare Reform Act, and then some other federal and state grants. That program continued through the school district for several years. It became apparent to me that it was not going to be able to continue that way. That is why I started the nonprofit in 2007 and so I have been my own entity since 2007 continuing this important work in Arkansas County but also then expanding into Prairie County and Monroe County. 

So my program is smaller, in rural Arkansas, but I do serve those three counties, five school districts, 1,200 plus students per year. We have five different programs that we go into the schools and present. We start with sixth grade. And we have a sixth, seventh, eighth and then two high school programs that we do. They're very intensive. They range anywhere from 8 to 14 days. And we have an added component where we use infant simulators to enhance our discussion on teen parenting and what that would look like. And they get a little small glimpse of how their life would change if they were to become a teen parent. But the programs are very holistic in talking about-- and they've mentioned a lot of these things-- but goal setting, how to handle peer pressure, what healthy relationships look like, the dangers of pornography, some of the Internet dangers. 

The various topics that we cover are so much needed and we're happy that we've been able to provide this education. I want to say one more thing. Last year, I piloted a program, it's called Rite of Passage, in Harrisburg. It's a juvenile facility for girls. And we were able to do our 14 day program there. And actually, I know that's a need. I know those facilities would like for other programs to be able to serve them as well. And I just couldn't. It just wasn't in the budget for us. But that was very well received and that was in Poinsett County.

 

Lizabeth Bryant As you all are aware, you may not have been aware that teen births in Arkansas, as well as across the United States, have been declining since the early 1990s. What we hear a lot in this state is, well, why is Arkansas one of the highest in the rates of teen birth? And we are. We are one of the highest in the rates of teen births in the United States. However, 76% of those teen births occur in teen age women ages 18 and 19. Only 24% of those teen births occur in women ages 15 to 17 years old. 

And the areas where we have been serving for the last 20 years, because all of us have over a 20 year experience of serving in the areas where we're at, you can look at-- the teen birth rate is defined as births per thousand. In the United States, it is 14 births per thousand. The teen birth rate in Arkansas has fallen from 51 to 25 per thousand over the past decade. That's a 45% decrease. And it's consistent with the decrease of 50% that has occurred across the United States. If you look at the organizations that are listed there, PEP, which is Beth Prine's organization, you can see that percentage of decrease over that 20 years. And again, that is a difficult area of our state. 

HCI, which is western Arkansas, takes in Polk County, had a higher than the Arkansas rate of decrease and higher than the U.S. rate of decrease at 51.1%. Choosing to Excel, again, that is the mid part of our state. You can see the decrease for them. And those areas are 50.5, 50.7, 55.6 and 58.7, all higher than the decrease in the rate in the United States. And then Reality Check Incorporated, our organization across Northwest Arkansas and River Valley, you can look at those rates of decrease per county. The lowest is 47.2 on up to the highest of 70% decrease that has taken place in that 20 years. 

The programs that we use, the programs that we do are effective because they're built on relationships and they're built on understanding the community that we live in and the needs of those specific schools and the needs of that community. We cannot use a one size fits all type of curriculum across this state because it will not work. It will not be effective. But we have been highly effective over the last 20 plus years. Now, this is off our data from Reality Check. We were under evaluation through the Institute for Research and Evaluation, and this chart is regarding our end of the year performance measures. You can see in the remaining abstinent pre to post what the goal was. The goal was 40% and we had over 80, almost 90 something, percent of students making that commitment. And a year later you can see that there was not a lot of regression in that. 

YRBS data, the Institute for Research and Evaluation, compared our data to the Arkansas YRBS data, and you can see those. That was in 2010 when we were under their evaluation. Seventh graders, our state rate for sexual interaction, sexual activity by definition of vaginal intercourse, our rate for seventh graders was 19% of seventh graders saying they were engaged in sexual activity with the definition of vaginal intercourse. In the schools that we had that had programs, fifth grade, sixth grade, seventh grade, we had only a 3 to a 5% sexual activity rate. That's a paradigm shift. If you go in and one out of 20 of your friends in school are being sexually active, you feel like you've got to get on board because you're going to be left behind. 

But when it becomes only 3 or 5 out of 100-- and we talk about those things such as maturity. What does true maturity look like? How do you set boundaries? What are your future goals? Then you've created that paradigm shift that leads to a decrease such as this. And so again, those numbers, well, personally, for me, I think that's still too high. Look at what has taken place when students are armed with truth and they're armed with the how to's of how do you set a boundary, what does that look like for any risk behavior. Again, this is our last year's evaluation and you can still see the A and B rating. You've got-- what is that-- let me do the math. 88% rated the program an A or B, which means it was life change and a commitment, and they honored the information that's being given to them. What does that look like across the state? 

So, again, having my numbers, I sat down and put this together. We all have similar stories and they could bring their numbers to you as well. But when you look at we're in seven counties, there's a total of 153 middle schools at the high schools in those counties. We serve 51. Last year, we were able to only reach 32 of those schools, not because they didn't want us, but because we did not have the funding to reach all the schools that are in line waiting on programs. And we have schools who are in line waiting to have a program. The total number of students in those seven counties is 36,351. We served a total of 6,929 of those students in those seven counties. So if you think of our state rate of teen births as being 24.6 per thousand. Of those numbers in just those seven counties would be a total of 894 teen births, which would cost our state $16,986,000. 

If you use RCI and our average decrease that has been proven over the last 20 years, that would have brought that number down to 186 teen births, not 894. That is a cost savings to the state of $13,452,000. These programs, again, they're effective in reaching, not just decreasing that teen birth rate, but you look at the potential savings in the area of sexually transmitted diseases, mental health costs. Again, we as a collective have documented effectiveness, not just in the reduction of those teen pregnancies in studies, but also are creating savings to the state in the following areas: youth mental health, addictive behaviors such as alcohol, drugs, vaping, juvenile delinquency and failure to thrive educationally. 

These savings to the state and these areas are incalculable at this time. Again our footprint across the state is right up there. The yellow, that's RCI. The purple and the blue, that is Miss Moten here in Choosing to Excel. Light blue on the end, that is Prevention Education. And the green is the Health Connections. This is the footprint across the state without these four organizations. That's what your positive youth development education will look like. Do you all have questions? We would be happy to answer any questions that you might have.

 

Senator Missy Irvin Thank you so much, ladies, for the presentations. I think it's just so appropriate to have this discussion and talk about teenage pregnancy, which the majority of those are going to be covered on Medicaid. Is that correct?

 

Lizabeth Bryant Yes.

 

Senator Missy Irvin Okay. So when you talk about the savings that we're talking about, it's really a Medicaid savings that you're– So this is about preventive-ness and preventive education and trying to prevent this from occurring. How old are you in seventh grade?

 

Lizabeth Bryant Our seventh graders are 12.

 

Senator Missy Irvin 12 years old. So 12 year olds that are having sexual intercourse?

 

Lizabeth Bryant That is correct.

 

Senator Missy Irvin So I think in our discussion about everything maternal health that's happening in the state and the governor's focus on that, and I know this is going to be a focus that we're going to have, I think, in the upcoming session, which is appropriate, that we really have to look at this specifically, because when you're an 18, 19 year old or 12 year old having a baby-- and my husband, sadly, when he was in medical school and residency, there are these are babies having babies. 

And that poses a significant risk to both the baby and the mother. And there's so many complications that can occur from that because your body's just not, you're not ready for that. So I just think it's an appropriate conversation to have at this time. I understand this information and your data, this was reviewed and audited by the third party, the institute, is that correct? So I think that's one thing I definitely wanted to point out was that this data has been verified through a third party audit review, which I very much appreciate, that it shows that it's proven that it's been successful over these years. 

So I applaud you, absolutely applaud you for the successes that you've had. Clearly, in my perspective, it should be in every single county and every single school district across the state. And we should prioritize that if we're really going to be thoughtful about our policies as it relates to getting our numbers better outcomes, you've got to start here. So I appreciate that you all are here. I think it's an appropriate time to have this conversation. How are you funded?

 

Lizabeth Bryant Right now?

 

Senator Missy Irvin Yes.

 

Lizabeth Bryant We're not.

 

Senator Missy Irvin Where do you receive your funding from?

 

Lizabeth Bryant We did receive funding through the Arkansas Department of Health through an SRAE-- that's sexual risk avoidance education-- federal passthrough grant that ended September 30th. We have not been funded since September 30th, but we are continuing to serve students. I know our organization will serve 3,000 by the end of December. So just another week when we break for Christmas, we will have served 3,000 without funding. I know the other ladies have similar stories. Listen, this is the right thing to do and our students deserve it and our schools request it. And we're going to keep working until we can't do it any longer.

 

Ananda Martin Can I share one other quick story as far as a transition from-- I've worked for Health Connections for 22 years, and when I first started, I was a home visitor. I worked with pregnant and parenting teens. So by the time they were referred to me, they were already there already in the situation that they were in. And so it was my job to try and help them through it the best that we could. And we developed a case plan and we worked with them through their entire pregnancy, delivery, and up through the third year of life of their baby. 

One of the things that I started to recognize over the last couple of years that I was working in that program is that the referrals that came to us were younger and younger kids. And one month I had three 13 year olds referred to me all in the same month, all pregnant. Two were in the seventh grade, one was in the sixth grade. I had to go do the intake for those students, which I was gearing myself up, and, mind you, I had done this for five years and so I felt like I'd kind of heard just about anything I could hear from a teenager. I was wrong. 

I did the intake for the two seventh graders, which was hard enough. I go to do the intake for the little sixth grader. She was an English as a second language student, so that's the reason she was in the sixth grade but 13. And about halfway through, she asked me if she could ask a question. I said, You can ask me anything you want. And again, I'm thinking that she can't shock me. And she said, Can you tell me what part of what me and my boyfriend did got me like this? And it broke my heart because she didn't have a clue. She didn't know how her body worked or her reproductive system. She said she knew that they had done things that maybe they probably shouldn't have, but she didn't know what part of that got her. She weighed 72 pounds, you guys. She was the size of a fourth grader. And my first thought when I walked in is how is this child going to survive this? She did. And she had great family support. We worked with her through all of that. And her child, when he graduated kindergarten, she graduated her senior year. But that's what led me to start researching what can we do to give some education before they are referred to us and we're working with them on the other side.

 

Senator Missy Irvin Yeah. And I mean I could share a similar story with someone who we were familiar with but also had just similar questions, had no knowledge about what had happened or about her body. And it was quite remarkable. That's an amazing story.

 

Lizabeth Bryant That's why I think it's critical that not only that we have good information, honest information and full and complete information going to our young people. And  I'm very proud of the fact that in this collective we do that. We are very careful and we're very well trained and our instructors going in are certified and highly trained not only to address those type of events, but to give full information for young people. But pregnancy, can I just say, is not the worst thing. When you look at the young people, for every teenage girl who gets pregnant, four will get a sexually transmitted disease. 

And there are those young men who are suffering with that as well. There are young people who have no idea how to have a healthy relationship since Covid. And with the different changes educationally, we have young people struggling with mental illness and mental health issues that are also addressed. When you talk about goal setting, boundary setting, what do you want your future to look like and you have the potential to get there. So we get lost in that looking at the pregnancy. But what we're doing is we're helping young people set a solid foundation to grow into adulthood and knowing how to address all risk behaviors, all risk behaviors by the things that they learn through these programs.

 

Senator Missy Irvin I have a list of folks waiting to ask questions. But I thank you so much for saying that and bringing that up, because you're absolutely 100% right. When you cannot establish boundaries for yourself, it leads you into a path of chaos. And that can manifest itself through your choices that you make, whether that's education choices, professional choices, relationship choices, relationships with family or with anybody, it really does manifest itself in a not positive way. And it's not being addressed. And so that is so critical because, especially for a young girl, your self-worth and the way you view yourself is so critically important to your mental state of mind. And if you cannot set that boundary or understand why you are significant, your body is significant, you should covet it, covet your body. 

And if you don't have somebody understand why, then it just worsens. And that affects your mind as you grow and develop and then leads you into these abusive relationships, manipulative situations. And so I have seen that so often play out. And so you're so correct when you say you've got to address it and set those boundaries at an early age and understand and covet your body as your body and understand what that will do to a young girl when they're just not ready for all of that because they're going to wake up and go, you know, gosh, now I feel violated. And I allowed it to happen. And so we can't stress that enough. And I think that's what leads us down the path of all the different things that we see as it manifests itself in poor choices, whether it be alcohol, drugs or abusive relationships. So thank you so much for saying that. Senator Dotson, you're recognized.

 

Senator Jim Dotson Thank you, Madam Chair. If I could just ask on your breakdown of the seven counties, the RCI, that one, anyway, the total number of students in the seven counties, it says, are 36,000 students. But you're only serving 6,900 of those. So obviously, there's a large gap right there just within the seven counties that your organization is able to reach and serve. Do we have any idea what the total number of students across the state are that we're not currently reaching with all four of your programs collectively? And I think I remember from previous discussions that you're combined serving around, is it 13-15,000 a year right now?

 

Thelma Moton Around 13,000.

 

Senator Jim Dotson Around 13,000. So we're only touching a fraction of the total number of students in the state. And you're making an incredibly positive impact just amongst the ones you're doing in bending the overall per county that you're touching. But there's a lot of counties that you're not touching and a lot of schools. If you're only reaching 32 schools out of the 153 schools, there's a lot that are not. What would be the number one thing that we as a state could do to impact and get this type of thing in front of all the students in the state so that we're really addressing the issue collectively.

 

Lizabeth Bryant It takes funding to go across the state. We, because of the level of experience that we have, the years that we've been doing this, we've sat down many times and said, what would it look like to go across the state? What would it take? And we have a very concise plan. Again, our footprint, if you notice that map spreads across the state and it would not be difficult to move into and provide programming across our state. One thing about it, when you have a good, effective program, those kids talk. That's why we can go into a school where we've never been and the kids go, we know who you are and we know what you're here to talk to us about. I learned it from my cousin. And they'll share things, you know? And again, good truth given in an effective manner spreads. And so it would be easy for us to spread across the state. Would you like to say something?

 

Thelma Moton Not only that, but the programs and the schools where we are currently serving, when teachers are moving and they're transferring across the state, they request us when they move. For instance, we were in Forrest City and we are covering Forrest City High School and Forrest City Middle School. Well, a couple of those coaches moved into the Pine Bluff area. And as soon as I got there, they requested through their principal, We need this program here. So word travels when you're doing good work. The other thing I want to point out is when we're dealing with teen and out of wed births, STDs, sex trafficking, you're perpetuating a cycle of poverty as well. And so what we are wanting to do is to eliminate some of the poverty and the generational things that go. 

One of the young people in one of the areas that we were serving is here in the Little Rock area. We were talking about that these are decisions that you don't have to make. And it's not enough to tell a young person what not to do. It's important to tell them what they can do and then show them how to do it and give them skills. And one young lady said, So you mean I don't have to be sexually active? And we said, absolutely not. She said, Well, that's all I've ever known is my mom, my aunt, that's all I know. And so we give kids an opportunity to see their possibilities out here. There are other ways for you to express affection other than just following the pattern that's set before you. So it's so much broader than just not getting pregnant. We're showing those kids those internal assets and those possibilities for them to get them out of places they're stuck in. 

A lot of families don't know how to guide their kids out of those places. And so we're giving not only information for the young people, we're also empowering parents, too, as to how to encourage their kids to start over. Some moms say,  how do I tell my daughter not to do what I've done. And what my response to that is, it's a sign of maturity when you want more for your child than you had. So it removes that shame or guilt, like, I can't tell my daughter no. That is a sign of maturity that you want more for your son or daughter than you have. So we are giving them some tools as to how they can help educate and come alongside their young people.

 

Senator Jim Dotson And then if I might just jump in there with regards to the slide that we have up here, it says that you serve 51 schools, but currently you're serving 32. So you have 19 on a waiting list. How many schools-- I guess it might be more than 51-- how many are calling you and how long is that waiting list that you turn them away and you're not able to serve them right now?

 

Lizabeth Bryant We stopped soliciting schools in 2010, and the schools get on the calendar by them contacting us. We never contact a school and asked to come in and do a program. So all the schools that we serve are schools that call us directly and say, please put us on your calendar. When our calendar is full, we cannot take any more schools because we do not have the funds to hire more instructors. I could do as many schools as I can hire instructors for. So this is strictly a funding issue.

 The not being able to grow forward is because there hasn't been the funding to grow forward. And we pinch pennies like you've never seen pennies be pinched before. It's very few organizations in the state that can say they serve 13,896 students for $711,000. That has been extreme penny pinching at its best. Again, we have schools waiting for us to be able to go into some of the larger schools-- our area, a lot of our schools are so large, it takes sometimes four and five instructors to cover that school. And they all want their program at the same time. I have a program manager that manages the calendar and he keeps us sane. But it is creative calendar fixing just to make sure that we can get as many schools in as we can each year.

 

Thelma Moton I think one of the most heartbreaking things, I have one of my colleagues with me from Clinton County in the Earle School area. It is so difficult where we were there and then money is gone and we have to cut the program. We get a little bit of funding, we come back, and that cycle is broken. And if we could just have funding where we can be consistent so we can follow our young people. Beth, you got from fifth grade. We start at seventh grade, and our goal is to mature with our kids from seventh through 12th. And not just with the classroom, but also matching them with you guys call them mentors, we call them encouragers, to walk alongside these young people once they receive information. So when we can stay consistent in areas like Earl and Crittenden County, which is one of the hardest hit counties in our state, these kids are smart, they are brilliant, but they need someone to walk alongside them to say, you matter and we're going to be consistent with you. But funding is key.

 

Senator Missy Irvin I've got a bunch of questions, so I'll just ask you-- because we got to move to the next thing-- if you keep your answers brief, that would be great. Representative Rose, you're recognized.

 

Representative Ryan Rose Thank you, Madam Chair. Just a couple of quick questions. I was curious, where do you guys get your curriculum from for your small groups and your classroom discussions and those kinds of things?

 

Thelma Moton Our curriculums are all evidence based and evidence informed. Through the federal government, years past, there was a requirement that whatever you're teaching must have clarification and be evidenced based. And we utilize several depending on the counties and the schools that we serve. We use Choosing the Best, Real Essentials, Yes, You Can. Those are the curriculums that we use.

 

Representative Ryan Rose Follow up. Would it be possible to get just a list of those? I wasn't able to write those down.  And the other question I had is if somebody wanted to see those curriculum, curricula-- the plural of one curriculum-- how would we go about doing that? Just a request.

 

Thelma Moton  And we can also give you the links where you can just go directly to the publisher to see each one of those.

 

Representative Ryan Rose Yes. Madam Chair, I'd like to request we get that list and then maybe those connection points. Thank you for your work. Thank you for your time.

 

Senator Missy Irvin Thank you, Representative Magie.

 

Representative Stephen Magie Thank you. Thank you, Madam Chair. So we've talked some about funding. How are you presently funded? What do you do to get the money that you're getting now, the $700,000 a year? I know Ms. Moten and I have had several conversations over the years where around September they just ran out of funds. And this year it was something about you were coming up on a seven year cycle or something and everybody had to reapply. How does all that work?

 

Beth Prine The 711,000 we've been funded under as a pass through of federal funds through the Arkansas Department of Health, because of procurement laws every seven years, it has to go out as a competitive bid. And so this was our seventh year. The funding was given to another organization. And so as of October 1st, that's when the funding expired. September 30th was the last day. But for the last 14 years, we've been funded under the Arkansas Department of Health.

 

Representative Stephen Magie So follow up. Okay. So is that a competitive process? You said it was given to another organization. So then essentially, you guys are not funded.

 

Beth Prine Not funded.

 

Beth Prine Correct.

 

Representative Stephen Magie At all.

 

Beth Prine At all.

 

Representative Stephen Magie Okay. Thank you, Madam Chair.

 

Senator Missy Irvin Thank you. Representative Wooldridge, are you out? Okay. Representative Beaty.

 

Representative Howard Beaty Thank you, Madam Chair. My question is going back on some of the statistics that you provided on the 18 to 19 year old teen pregnancy, is that information married, unmarried, planned, unplanned pregnancy? Or is it just in general, teens 18 to 19?

 

Lizabeth Bryant In general, teens 18 to 19.

 

Representative Howard Beaty Do you know what rate Arkansas has as far as child marriage? Is that rate higher than the national average?

 

Lizabeth Bryant I have not been able to find that information available in the state at all, and I have searched.

 

Representative Howard Beaty Well, I did a quick search on that and found that information.

 

Lizabeth Bryant Did you find it?

 

Representative Howard Beaty I did. And it's out there. We have one of the higher, I guess, teen marriage or child marriage in the nation. I think Nebraska leads that, but we're in the top five in that category. So I think that correlates in with that number there. My concern is more the planned-unplanned and the educational side of the process. Another question that I would have for you is you're in the schools you're dealing with-- and the lady on the end I'm sorry, I didn't get the name-- mentioned dealing with actually the teen mothers, the pregnant students. What type of education do you provide for those students or do you direct them to someone for the maternal health education and in things that will assist them in making this process easier, more understandable? I didn't see that mentioned. I know this focused more on prevention. But if you're going to be on the prevention side, you are definitely going to see the other side.

 

Lizabeth Bryant Many of our organizations also have home visiting programs for young moms. That's not part of this particular topic, as you said. But three out of four of our organizations go on to have a home visiting program for young moms. So they're enrolled prenatally and they're served until their child's three years old. It's very intensive. It's a Healthy Families America model, which is under the Prevent Child Abuse America entity.

 

Representative Howard Beaty And just to follow up on that, is that funded through the same funding mechanism that was funded before or is there a separate funding?

 

Lizabeth Bryant So it is a separate funding stream called MIECV. Maternal infant, early childhood and visiting.

 

Representative Howard Beaty And then just one final question, if the chair will allow.

 

Senator Missy Irvin Yes.

 

Representative Howard Beaty I guess on page three of your organizational structure and programs, under the project partners supervised by Thelma, is it Moton?

 

Thelma Moton Yes.

 

Representative Howard Beaty The second point, the Arkansas voices training on LGBT relationships. Could you explain some of that to us, exactly what type of training you have there? Is there also training on just maybe relationship training?

 

Thelma Moton It's basically relationship training. A lot of our young people who are in this particular portion of our population feels that some of the information does not pertain to them. So our goal there is to make sure our facilitators and our educators help young people understand that healthy relationships is for everyone across the board and how to be sensitive to those young people who feel that this is not pertaining to them. So we want to make sure that all of our young people understand that this information is for all of our young people, no matter what part of decisions that they are making. 

So we make sure that we take all of our facilitators through training on how to address specifically, because this is a topic that the federal government has put out for funding that we have the ability to address this population. So we train our young people through ways of how to make sure that these young people understand that the information is for all students no matter what. Because all young people, all people want to have healthy relationships.

 

Representative Howard Beaty Well, and that was kind of my point, is that all relationships are important and how you deal with those. So it was specifically listed on LGTB. So I thought there might be something that was insightful there on those relationships compared to normal relationships that teens have.

 

Thelma Moton We want to make sure they understand that this information is just as important for them.

 

Representative Howard Beaty So all relationships.

 

Thelma Moton All relationships.

 

Representative Howard Beaty Thank you.

 

Senator Missy Irvin Thank you. Okay. I see no other questions. Thank you so much for your presentation today. One last question. Are you funded by any school district specifically?

 

Speaker 3 Each school district for us, since 2010, we have requested that schools pay a small fee for service. You value what you invest in. And so we want our schools to invest in program. We don't ask a large percentage, but we do ask schools to provide some fee for service.

 

Thelma Moton  A large number of the schools that we're serving are very rural, small school districts. And we have one school district that provides a very small percentage for us.

 

Senator Missy Irvin Okay.

 

And I have two very, very small schools that provide some.

 

Senator Missy Irvin Okay. All right. Thank you. Thank you for being here.

 

Speaker 3 Thank you all.

 

Senator Missy Irvin Thank you. Merry Christmas. Okay. We're going to move to the ISP. I'm going to recognize Senator Payton as the folks are coming up. We are on item D members. So I filed this ISP. It's my ISP, but it's really Senator Payton and mine together. Senator Payton, if you'll just state your name for the record and I will recognize you to proceed.

 

Senator John Payton Thank you, Madam Chair. Senator Payton, District 22. And I really appreciate the opportunity to be back in front of the Health Committee. Spent a lot of years serving on the Health Committee in the House, and I will be rejoining the Health Committee in the Senate this next term. So look forward to that. Members, as we talk about the waste tire program, those of us that have been here very many years are tired of it and would like to have it off the desk. But the bottom line is, when your outgo exceeds your income, your upkeep will be your downfall. And that's what this program has been suffering for a long time. 

We have investigated and studied and looked for efficiencies and looked for waste, fraud and abuse and audited. And I came to the realization a couple of years ago that I think the program is working very efficiently. We passed legislation two years ago that consolidated the 11 districts into 4. And we reorganized the boards for those four districts and gave them broad authority to look for efficiencies and find the best way to collect and process these tires in an attempt to get it off our desks. But we did leave it short on funding. 

And the bottom line is you can't transport, handle, process these tires without it costing a certain amount of money per tire, and different tires cost different amounts based on size. And so I think it's very important that we understand as legislators that this program is-- you know, government does garbage collection very well, city governments, local governments. Our citizens and our constituents have always supported that type of thing. I grew up in the car business. I've been in the car business all my life. 

And I didn't campaign on fixing the tire program or working on the tire program. But I have experienced the handling of new and used tires being in the car business and there's a difference between a waste tire and a used tire. One of the best ways to find efficiency in dealing with waste tires is to make sure that we get all the miles out of those tires that we can. And so when somebody is replacing a set of tires on their late model, nice vehicle and those tires coming off have 20 or 30% of their life left, it's much more efficient for those tires to make it through the supply chain and get on the next vehicle and be worn out than for us to process them as waste tires. And so government is very good at putting in obstacles like regulations and taxes that discourage the very behavior that we want. 

And a few years back when we passed the rim fee that applied to all the used tires and charging a tax of $2 every time or a dollar every time that tire changed rims, we were discouraging that used tire program or used tire logistics, get that tire to the next vehicle and get it worn out. When we put regulations in and require permitting and manifest lists of everybody that handles those used tires, we're discouraging the logistics that get that used tire to an end point where it can be put on another vehicle and worn out. So I do have motivation to eliminate the tax on the used tires. I think whoever came up with the idea that we would collect a disposal fee when the tire is sold new, I think that was a very good idea.

 Every tire that is sold new is going to have to be disposed of at some point. And collecting that fee on the front end means that we can allow people to take those waste tires to the dump and dispose of them free of charge at that point. So there's no incentive for them to end up in the ditch or in somebody's fence row when it costs nothing to take that tire to the collection site and dispose of that waste tire. So I think it was a very good program in the beginning. We never collected the new tire disposal fee on all new tires. 

There was a large percentage of new tires that hit the road and later became waste tires that we never collected that fee on. So in the legislation that was proposed two years ago, it originally had the broadening of that fee collection to include new cars. I was a franchise dealer, had two different franchises for many years. Why did the franchise dealers not come out in opposition to that? Because they recognized the importance and the value of collecting that fee on the front end so that we have the money in the program to process that tire on the back end. As the cost of processing those tires has gone up and we can look at all the reasons why-- obviously transporting requires equipment, trucks, trailers, insurance, labor, fuel, which is going through the roof. All those things have gone up in cost. 

And then the processing and the shredders and that equipment, maintenance on that equipment. But the fee did not ever go up. And I'd say that the fee doesn't necessarily have to go up yet if we would just collect it on all the new tires. And then on the oversized tires, we have ag tires that can cost over $100 to process one tire. We have oversized tires that can cost 10 or 15 up to $30 to process those tires. But Farm Bureau and the farming community had recognized the fact that those ag tires are going to cost more and they were not in opposition to allowing the four district boards to set a fee on those ag tires. And we were going to cap that at $30 and let the four district boards set that fee based on what they felt like they needed for the ag tires, oversized tires. 

I don't want to get into too much of the weeds, but for those of you that may not have been here for 6 or 8 years and heard all this, trying to give you a brief overview. And as we filed this interim study, it's to look at new ideas and efficiencies and suggestions that might make the program work more efficiently, look at how other states are doing it. And we have some experts from the industry that are here today to answer our questions, to give us any information, any ideas that they have. But Senator Irvin will tell you, we filed this interim study nine months ago, maybe a year ago, quite some time ago. And there just hasn't been a lot of people come up and say, We've got a great new idea on how to do this. We decided we needed to have this meeting before we go into session next month. But the truth of the matter is, we put a new program in place two years ago, and we have reorganized the four districts and reorganized those boards. They took what we thought was six months worth of funding and stretched it into about 18 months. They're going to run short just as we knew they would this next six months of this fiscal year. 

And so I also have a supplemental appropriation that I filed the other day that would put $5 million in the program, which is basically 18 months of shoring up the program. But I want to say this. If you can imagine yourself in business trying to be one of the providers that manages this program for the state, and you have to own trucks and trailers and equipment and you have to own expensive shredder equipment and things like that, and your business plan can't extend beyond the next month or two because the state's not funding the program, that makes you operate very inefficiently. 

As you hear from these providers, you need to understand that they've got their personal well-being at stake and they're investing in equipment and things in their business plan. We can't continue to have this program run out of money every six months and have to shore it up. At some point, we're going to need a dedicated revenue stream to shore up that funding. And I'll close with that. Unless anybody wants to ask me a question, I'll go back to my seat and we can bring up the experts.

 

Senator Missy Irvin If they'll go ahead and come up to the table. Representative Wooldridge, you're recognized.

 

Representative Jeremy Wooldridge Thank you, Madam Chair. And thank you, Senator, for your work on this. My question may be better for one of them, but you had said something about the fee that we charge on every new tire sold. Is there also a disposal fee charged on the tires that you take off of your vehicle?

 

Senator John Payton No. So when you buy new tires, there is a disposal fee because that tire will become a waste at some point in its life. We currently have a fee that's charged on used tires when you mount it on another rim. And that's what I have proposed eliminating because I think that discourages the logistics of getting those used tires from one location to the next and sold to somebody that's going to wear that tire out. In my first years down here, as people saw that the program was running short on money, there was concern that the waste tire districts were-- one district would process way more tires than what we collected fees for in that geographic location. Well, that's because geographically you have wealthy parts of the state, not so wealthy. You have very rural. Those used tires that are not worn out, they need to flow from one geographic location to another. And southeast Arkansas was always getting it on the chin because they would process a lot of tires that had a lot of waste tires, but they didn't collect very many fees because there wasn't many new tires being sold in southeast Arkansas in the Delta. 

That's a prime example of what I'm talking about. We need to recognize that when we put a tax on the used tires and we required permitting of people that carried them and manifest lists of every tire where it came from, where it's gone, we discouraged those logistics. It became a lot easier to go ahead and shred a tire with 20% of its life left. So that's something that we don't want to discourage because ultimately the more miles we get out of every tire, the fewer waste tires we're going to process. 

And I'd like to add this also. For many years, we just landfilled those tires and now we require that they be processed. And it's a little more expensive when you have to get them transported to a processor and get those tires shredded and processed. The good news is those byproducts are beginning to have a demand and a market of their own.

 

Senator Missy Irvin Yeah, I'm glad you brought that up, because if y'all go ahead and take seats-- it's fine. I'm glad you brought that up because that's my biggest concern, is these landfills-- yep, that's fine-- the landfills that are filling up. And to me as just somebody-- I mean, Arkansas is the Natural State. And our nature and our natural resources are so critical and beautiful to our tourism and to our state. And just as a conservationist, I just don't want to be in the business of landfills of used tires. 

There are wonderful options now that are coming on the market, and I'm glad to hear from you. I've been able to see some of these. I was in a big ranch down in Texas and they have the molded, I guess, kind of like a tile, but they're out of used tires and it's great. The horses were walking on those, which is better than concrete or asphalt. And it's softer. It has give. You can imagine. But they're actually very beautiful too. I just love the look of it. So anyway, it's good to know that. And that's where my interest is, is how can we recycle these tires into other products? So if you will state your names for the record and then please proceed. Members, you're in exhibit D2.

 

Philip Davis I'm Philip Davis with Davis Rubber Company.

 

Paige Davis I'm Paige Davis.

 

Senator Missy Irvin Push your button, please. Light screen. And you may have to pull it toward you.

 

Paige Davis Can you hear me? I'm Paige Davis, CFO of the Davis Rubber Company.

 

Robyn Reed I'm Robin Reed with the Boston Mountain Regional Solid Waste Management District.

 

John Dillon And I'm John Dillon, the regional vice president with Liberty Tire Recycling.

 

Senator Missy Irvin Thank you. Please proceed. You just may have to speak right into that mic.

 

Paige Davis Okay. We are here to talk about the importance of the waste tire program. The waste tire program plays a vital role in maintaining Arkansas' reputation as a natural state by keeping old tires out of landfills. The program prevents illegal tire dumping and protects public health. Discarded tires often end up in rivers, lakes, ditches and our state parks, creating environmental hazards. Used tires serve as breeding grounds for mosquitoes, habitats for stray animals and sources of leachate runoff. The program's efforts significantly mitigate these risks, safeguarding Arkansas' natural beauty and public well-being. Davis Rubber Company has made some significant investments in tire processing equipment throughout its long standing partnership with the Arkansas waste tire program. 

For the District 2 contract initiated in April of 2024, Davis Rubber Company invested $500,000 in a new shredder, $300,000 in trailers and an additional $200,000 for installation, electrical work and spare parts. These investments ensured the company could fulfill its contractual obligations effectively to meet the demands of the District 2 contract. Davis Rubber Company increased its workforce, now employing approximately 25 individuals. This program directly benefits small tire retailers for all cities and counties across Arkansas. Eliminating the current program would disproportionately affect these mom and pop shops that sustain local economies in rural areas. Davis Rubber Company strongly advocates for maintaining the waste tire program to ensure sustainable tire disposal and recycling. 

The program's sustainability faces significant challenges, primarily due to operational uncertainties. These include inconsistent payment schedules from the state and uncertainty about contract renewals. Such unpredictability hampers Davis Rubber Company's ability to plan investments in the waste tire program. Another critical challenge is the lack of sustainable collection centers across the 27 counties served by District 2. Currently, there are no incentives for these types of retailers or counties to operate collection centers. Furthermore, the stringent requirements outlined in Regulation 36 exacerbates operational and logistical difficulties. To address these challenges, Davis Rubber Company proposes reinstating the $5 fee on truck tires. 

This fee could generate substantial additional revenue for the waste tire program. For example, from April to November alone, truck tire fees in the 27 counties serviced by Davis Rubber Company could have contributed significantly to the program. Additionally, with approximately 100,000 new cars sold annually in Arkansas, a tire processing fee on new car tires could potentially yield an additional 1.2 million to support the program. Under the current contract, Davis Rubber Company is on track to process 1.3 million passenger tires in its first year, along with significant quantities of truck and extra large tires. The company maintains an impressive recycling rate of 93% as of quarter three of 2024. Davis Rubber Company collaborates with Nucor, Yamato Steel and exports tire treads to countries such as India and Japan. The company also produces tire drive fuel, clean steel, mulch and playground safety surface, demonstrating its commitment to innovation and environmental stewardship. Davis Rubber Company remains dedicated to working with the state of Arkansas to fulfill its District 2 contract and uphold the waste tire program. 

The program not only protects public health and the environment, but also supports small businesses and local economies, particularly in rural areas. As a 100 year old family owned and operated Arkansas business, Davis Rubber Company looks forward to continued growth and collaboration with the state. Thank you for your ongoing support and commitment to this critical initiative.

 

Senator Missy Irvin Thank you.

 

Paige Davis Thank you.

 

Senator Missy Irvin All right. If you have presentations, you may have to play musical chairs so we can get your presentation onto the screen.

 

Robyn Reed Which presentation are you going to put up first?

 

Senator Missy Irvin Just whatever you would like. She'll come down and assist. Okay. Also, if you have the letter that you just presented, if you don't mind giving us a copy of that and then we can circulate that to the members as well. You can just hand it to our staff. All right. Thank you.

 

John Dillon Again, I'm John Dillon, RVP at Liberty Tire. I started in the business roughly 27 years ago, and it was a family owned company similar to Davis. I'm one of the very early acquisitions of Liberty Tire. I think we're the fifth acquisition since then when the different roles to where currently I'm over 18 sites operating throughout Georgia, the Carolinas, Tennessee, Kentucky, obviously Mississippi, which then introduced me to Arkansas, which I have to admit I'm not super familiar with. It's my third trip down here. Great state. 

I got asked to come and just discuss the programs we're used to operating with around the country and different areas to make suggestions. I personally do not have a suggestion. I'm happy to take any questions and answers, but I would love to come with the exact answer on what to do in Arkansas. I do not have that. But any questions about how we operate throughout different parts of the country, what would be helpful? So I'll run through the presentation here. Liberty Tire. We're began back in 2000. I'm going to touch on a different slide. And right now we have 50 plants processing around the country. I'm in charge of an area I can't show you, basically, Illinois, Indiana, Michigan, down through all the Southeast. And every site is different. Every market's different. 

Everybody has their own challenges. And no state program is the same. No market is the same. And every single plant makes different products. So it does make our business pretty unique. And we do manufacture about 500,000 tons of TDF, 300,000 tons of mulch. I'm not positive on the crumb plants, I believe 11 crumb plants. So over the years we've reinvested into our company just to make sure we can continue to move rubber up the chain. And that comes with its own challenges because you have to have customers to buy that product. So while we all love to not see a landfill, and unfortunately we are in business to make money, so we picked that option first. If there are good outlets for TDF or mulch or crumb, we'll invest capital. It is stressful as a smaller company. It's stressful for us. Probably not as stressful, but I came up in a small business, so it's still a challenge. We watch all of our money pretty closely. We've gone through a lot of acquisitions like I mentioned. 

We just started North Carolina in 2000. There's two large sites down there. Our two largest sites process about 12 million tires each. As a company, we process about 200 million around the country. The sites I'm over have 80 million. So that's a lot of tires to move around. So you have to be creative. You have to understand the states. You have to understand a lot. And it is very difficult to make money in our business. So that's our company there. And that looks a little weird. Yeah, it's not how it normally looks in the presentation.

 

Senator Missy Irvin We have it. We have that slide. We have it.

 

John Dillon Okay.

 

Senator Missy Irvin Go ahead.

 

John Dillon What we looked at is basically free market states. In America, there's 24 where there is a fee collected by the state. But then the private sector negotiates with a company such as Liberty Tire to pick up their scrap tires. And everybody has their own contract, their own relationships. The free market with no state fee, there's 14 that-- I honestly don't know of one that there's no state fee that gets paid in. You know, normally the free market, if a fee comes in, and we'll talk about it here later. 

But then there's seven with incentive driven, which is if you make a higher end product, TDF, crumb, something along that line, then there's an incentive paid by the state. So it motivates you to invest in the equipment. Again, you need a market for it to move to. And then five that arecounty led public systems as we describe it, which is similar to Arkansas, North Carolina, Tennessee, Oklahoma and Utah that we're aware of. So I'm not going to talk to you about Arkansas. Everybody in the room knows it, probably all better than me, how the system is working here. I do agree that I've spent the three trips, as I said, it's, I believe, 30 or 40% underfunded. The OTR, ag tires not being addressed in the state is rather shocking to me because there's a lot of them and it is by far the most difficult and expensive tire to make go away. 

So I'm not going to make any proposals to that side about how you address the funding piece. But I've not worked in a state where everything is completely run with the government involvement. We operate in different states, which I'll lay out here in a minute. But for right now in Arkansas, we don't deal directly with any of the UTP districts right now, but we do still pick up about 800,000 tires in the state. So I think it surprised everybody I was talking to. They didn't realize that we deal directly with the Discounts, the Goodyears, the Bridgestone. 

We have sub-haulers that pick those tires up and they do still take them to the approved districts' drop off areas. So, I mean, 30% of the tires are essentially already privatized in Arkansas that go through us. These customers pay us a fee and they pay the state a fee. So that does exist out there. So it is doable. It's not nonexistent. I just want to make sure we pointed that out. And you see in the map where they're at, located all around there. So we have national contracts that we're obligated throughout the entire country to take care of these larger retailers. The free market, basically, the retailers negotiate everything, whether it's on a national level by state or directly with us at the state level. And they pay a fee. The average is around a dollar per tire, PTE. So for a semi tire, it would be in the $5 range. OTR, ag would be more like $20. Those fees go to the state. They do not pay them out to take care of scrap. 

They use the money for grants, for equipment, for cleanups, which still happen in every state in America, unfortunately, and anything else that might need to be to subsidize a program. But they do not directly pay for any of the disposal of the tires. The retailers pay the recyclers for that and they negotiate it. And sometimes it's a heck of a lot more competitive than I wish it was. So we do a lot of things that doesn't leave us a lot of money. So there's 36 states that charge some sort of state fee ranged from 25 cents, which I'm proud to say my home state of Indiana is the cheapest in America. And they're still sitting on $6 million in reserves because they only use it to pay for cleanups and give grants, which they never do. And we don't have a lot of cleanup issues. They do manage it pretty well. 

If you create tire piles in the states where I'm used to coming, or if you have large piles of shred, you get massive fines, you eventually get shut down. I would be fired and eventually go to jail. So they enforce it pretty strict up north. But which is okay because they allow us to negotiate our own system. So if we're collecting tires and not charging enough, not paying our bills, that's our problem, not the state's. So it's worked fairly well. That's the entire world that I've known most of my career until this past year, where I got involved more in North Carolina, Tennessee and Arkansas. 

The systems with incentives, it's interesting. It just basically motivates you to move rubber up the chain. And sometimes incentives to me don't really offset the cost to do it, but it does motivate you a little bit. If you don't have good markets, you can make TDF all you want, if you don't have a customer within a reasonable range we can deliver at a fair price, you're not going to do it. You go in the landfill. You try and move it up if you can. But we only make higher end products if it makes more money and we're all showing up to work every day to make money, not to do anything more exciting than that. We want to do the responsible thing, which all of those are legal and responsible. But some of the states, I think Utah and Oklahoma are the only two that I'm aware of. 

A lot of states do give grants for equipment. We've been involved in Ohio. For 20 years they've given us grants. Tennessee has given us grants. It's pretty common around the country to give grants to help pay about 50% of the equipment to be able to make crumb, TDF, mulch, to move it up because it's expensive. It is not cheap. It's just getting more and more expensive. It's a learning curve. The county led system, again, obviously, everybody in Arkansas understands how your system operates. We have a unique one in North Carolina and Tennessee that I'm hoping within a year I'll understand that and then I'll fully understand Arkansas. But they allow a lot of privatization also. So you can contract directly with a customer like we do in Arkansas. But if you have a county contract, you agree to so much per ton. And you spot a trailer, you leave the trailers there.

And if you pick up a customer in that county, you can bill that fee back to the county. And the customer pays us maybe transportation fees. Then we do bill the county back. So the county, based on population, they have so much per year available to them based on population, estimated PTE. If they take in more of that and they need extra funding, it's on them, and they have to find ways to raise that money. Tennessee is similar, but every single county negotiates, does an RFP. It's a bit exhausting, but there's, between Tennessee and Carolina, 150, 160 different RFPs we deal with. But it's similar to privatization. It's kind of a mix of the two. So I think there's a bit of a benefit to both, but I think that is it. That's the world that we live in.

 

Senator Missy Irvin Okay, before we get to the next presentation, we have a few questions. Senator Payton.

 

Senator John Payton Thank you, Madam Chair. So, Mr. Dillon, you mentioned I think 200 million tires a year that your company handles.

 

John Dillon Correct.

 

Senator John Payton And 700,000 from Arkansas?

 

John Dillon Yes. 800,000.

 

Senator John Payton 800,000. So I'm interested in what percentage of the 200 million are being landfilled versus processed? And the same question with the 800,000 from Arkansas. What percentage of that's getting landfilled?

 

John Dillon Well, all the Arkansas tires are through sub-haulers. We're not picking any of them up with our company trucks right now because of the national contracts we have. So they're all going to your districts when they can. They've been shut off a few times. I'm aware of that. But they pick them up  and they follow the same procedure as everybody in the state. None of that tires leave the state. I had asked on that. So they do all stay here. For the rest of the country, to give you an exact percentage on landfill, I would say we're probably 20 to 25% on the high side. The vast majority goes into tire dry fuel. It's about 400,000 tons a year. Mulch has eclipsed that now. It is 450,000 tons a year. We sell through Home Depot, Wal-Mart, Menards, Lowe's. 

We bought a company six years ago and they had a really good network built with all of the major big box stores that has grown really well. It's stressful because you make it, you tie up millions of dollars. If they don't buy it, you still tied up millions of dollars. And then crumb, we have, I believe, 11 plants around the country. We are commissioning a new one in Chicago next month. And a lot of that goes into the carpet industry, the mat market. A lot goes into track. Our Ohio plant just makes it for tracks, the infill football fields. A lot of them make it for that. And we'll move 200,000 tons alone in North Carolina. And Georgia and Florida moved into two companies in Georgia that make doormats, which is kind of shocking.

 

Senator John Payton So, Madam Chair, if I could follow up.

 

Senator Missy Irvin Yes, please.

 

Senator John Payton So I have another question. It's not really a follow up. And I don't know. This might be pretty difficult to answer, but one of the things I'm most concerned about is what is the end cost to the consumer? Because obviously, the consumer is going to pay a tire shop for the tire. Whatever the tire shop is having to pay to dispose of that tire is going to be-- hopefully they're not losing money. It's going to be collected from the customer. 

So as you look at the different programs in the different states that you operate in, what do you think the average cost is to the consumer? So you have a state that is privatized and the tire dealer is paying Liberty or whoever to come pick up these waste tires and they're having to pay so much for a tire. Or you have a state like Arkansas, we're collecting that on the front end and the state is reimbursing the processor. Can you give us any idea-- maybe it's just your professional opinion-- what that average cost is to the consumer and which program lowers or raises that cost to the consumer?

 

John Dillon By consumer, you mean retail, like the tire shops?

 

Senator John Payton No, I'm talking about the citizens.

 

John Dillon Individuals?

 

Senator John Payton That are buying and running and driving these tires.

 

John Dillon Well, I mean, in every state that I've been used to operating in, each retailer is allowed to charge whatever rate they want. That's an argument we've had with a lot of our customers. They make more money, more profit than we do. So they charge a fee to the consumer and it's going to cover what our cost is. But they make profit on it. They make very good profit on it.

 

Senator John Payton So do those consumers have the option of carrying that tire home with them instead of paying that fee?

 

John Dillon Yeah, they have that option. In every state that I laid out where it's privatized, almost every county in all those states will have an event once a year where the local residents can bring tires and drop them off for free with no limit as long as they have a license, they live there, to help them with that. So they do have an offset in almost every state to where it's just once a year. In Kentucky, they rotate counties every three years. Even the tire retailers can get rid of them for free. So they do have government involvement with different outlets like that. But in the private systems, each retailer is allowed to charge whatever they want and they charge enough to cover our fee and they charge enough to keep plenty in their own pocket.

 

Senator John Payton Okay. Thank you. Thank you, Madam Chair.

 

Senator Missy Irvin Representative Beaty.

 

Representative Howard Beaty Thank you, Madam Chair. My question is for Ms. Davis. What's the biggest challenge that you face in running the Zone 2 contract?

 

Paige Davis I would definitely say the collection centers and being able to have a sustainable collection center. The regulations around them can be a lot, accompanied with the fact that you are asking people to manage these collection centers free of charge. There's no incentive for someone to keep up with them, to count the tires, to make sure the amount of tires that someone is putting on a manifest is actually the amount of tires going into that trailer. On top of that, we have actually gotten larger trailers. They're now 53 foot box trailers. And if you don't stack those tires correctly, you're not going to get as many tires on them. And if you don't get as many tires, you have to go back and forth and there's going to be a lag in the system there.

 

Senator Missy Irvin Thank you. Representative Wooldridge.

 

Representative Jeremy Wooldridge  Thank you, Madam Chair. So I'm going to ask you kind of the same question that I asked to Senator Payton earlier. So the fee that's charged on the front end, the retailers that you work with, are they charging these fees even if folks take tires with them? I know it's maybe been a little bit since I bought a new set of tires, but I kind of think that I remember that you could take the tires with you and then you could waive that fee. Is that changed now or are you having that experience with retailers?

 

Paige Davis They're paying the fee regardless. They are paying the fee regardless.

 

Representative Jeremy Wooldridge Okay. So then ultimately, the issue is that the fee is just not enough to warrant you coming to get them. So let's just say my local tire shop, they charge that fee now whether I take my tires or not. So I leave my tires, obviously. They then turn around and they pay you that entire amount of that fee.

 

Paige Davis No, sir.

 

Philip Davis We get paid through the tire district. So we don't charge them a fee. People bring tires to us, and if they've got a waste tire number, there's no fee.

 

Representative Jeremy Wooldridge Okay, so then the entire district will bill each retailer for the fee that they have charged on the tire?

 

Paige Davis So I do the billing for all 27 of our counties, and on each one of those manifests, you get the waste tire tax ID number. So I type that in. I account for all of those tires every single month for all the vendors that make up the 27 counties. Then I turn that over to District 2. They review it and send it off to the state, and then that's how we get paid. That's how they're accounted for.

 

Representative Jeremy Wooldridge Okay. Can I have a follow up, Madam Chair? I just want to make sure I clarify that I'm understanding the process. So my local tire dealer in Greene County sells me a new set of tires and they charge me a fee. Now, how does that fee get reported and then turned in to the state or to the tire district or whoever is going to come and pick those tires up?

 

Paige Davis So that fee goes underneath their tax ID number, that WST number. So they should have a tally of that. They put that into their trailer or bring them to us, however they do. So if you dropped off four tires and they had 24, four of those tires are yours on that trailer. It's underneath that waste tire tax ID number. I put that into a spreadsheet and it is accompanied with the manifest that is signed by them, by one of our drivers, and by a foreman on the lot. And then, as I said, I turn that into District 2. They revise that bill with the manifest, making sure everything adds up across the board and then they turn that into the state.

 

Representative Jeremy Wooldridge Okay. Thank you, ma'am.

 

Paige Davis Yes, sir.

 

Senator Missy Irvin Thank you. Before we go to any more questions, I want you to go ahead and present because you might answer some of these questions.

 

Robyn Reed Yeah. Okay. Hello, I'm Robyn Reed with Boston Mountain Solid Waste District, and we currently serve as the administrator for UTP 1. Boston Mountain is Washington and Madison counties in northwest Arkansas. So as Senator Payton mentioned, for the past three legislative sessions, we've been talking to you all about tires. The 2017 legislative session, we set up the new tire program. 2019, funded one year extra large tire processing. In 2021, the legislature considered applying the removal fee to new cars. That bill died in committee.

 And in 2023, tire districts were consolidated and new boards were formed to improve efficiency. Aren't you all tired of tires? In 2023, over 3 million tires were collected, transported and processed. We believe there are many more waste tires in dumps and the ditches. Arkansas is on track, we're going to collect even more this year. The $3 rim removal fee set in 2017 is now applied to all tires removed from the rim and replaced by new tires. The fee is supposed to cover the cost of all tires, regardless of size and cost of transporting and processing. The effective rate for the $3 fee is $2.31, which is the net available revenue to cover the statewide program. However, next slide, the DEQ approved reimbursement rates for the four tire districts, as you can see in this slide. They're listed here. 

And according to legislative audit, $2.31 is available for per tire reimbursement. But the approved rates based on actual cost is anywhere from 49-59 cents greater per tire than the net amount available. It's simple arithmetic. You will recall that over a little over a year and a half ago, the program ran out of money. And the legislature had to move $1 million of emergency funds into the program to take care of one quarter's shortfall. Prior to that emergency funding, tires piled up because transporters and processors had not been paid for the previous quarter's cost transporters and processors bill monthly. But the state reimbursement reimburses only quarterly. 

All tires eventually wear out. The $3 fee is not collected on all tires in the state that eventually wear out and needs to be collected, transported and processed for recycling. The tires on which the fee has not been collected, nevertheless are collected and processed by the tire districts. One proposal is to keep the $3 fee as it is. Do not increase it, but fairly apply it to new car tires which will eventually wear out and need to be collected, transported and processed. Applying the existing fee to new car tires is estimated to raise approximately $1.2 million alone, although new projections from DFA are needed. To provide additional relief to those who buy used tires, we propose to remove the $1 fee on used tires. 

You'll recall that the 2019 session appropriated $300,000 as one time revenue to fund the extra large tire program. That money was used to collect and process XL tires back in 2019 and 2020. There is no more money for XL tires. They are funded by the $3 fees, but sometimes cost as much as $200 plus to haul and process. We propose allowing districts to set an EL free not to exceed $30 per tire. Districts can currently set an individual fee, but with no consistency and no limit. The current four district tire program from a logistics and administrative standpoint is working. It's underfunded, but it is creating administrative efficiencies by reducing back office operations from 11 districts to four. What is needed now is to make it easier for volunteer collection centers to be permitted for the more consistent collection of tire manifest to ensure proper reimbursements and for manifests to follow the tires. 

We also want to make sure there's enough money in the program to pick up waste tires in rural areas which require longer hauls for less tires. Tires are recyclable. The district needs greater support from an economic development standpoint to develop markets for waste tires such as the steel industry, engineering and rubber modified asphalt. This legislative session can solve problems with the entire program, starting with adequate revenue, not raising the tire fee but fairly applying it to new car tires or providing through other means to increase the net available revenue by at least $2 million. And maybe more to take care of abatement of tire dumps around the state, dumps like Cotton Plant and others, plus eliminating the used tire fee, restoring the truck fee to $5 per tire, which was reduced from $5 to $3 in 2017, allowing the districts to set a $30 XL fee, reimbursing districts monthly instead of quarterly for per tire costs and making permitting easier. 

For some reason it's not going to my last slide. Thank you for your time and concern, and I'll be happy to answer any questions you all have.

 

Senator Missy Irvin Thank you so much. Representative Ladyman.

 

Representative Jack Ladyman I'm over here. Thank you. Thank you, Madam Chair. This might be for Mr. Dillon. Maybe someone else can answer this. But recycling is expensive, and it's been around. These products that Senator Irvin mentioned earlier that she saw in Texas, those have been available for years and years and years, but they have not been competitive. So you mentioned that you make a lot of mulch and crumb. I think you call it crumb. And that goes into you mentioned playgrounds and ball fields and that sort of thing.

 

John Dillon She mentioned molded goods. Molded products.

 

Representative Jack Ladyman Multiple products. I understand that. But,  we have a Miracle League there in Jonesboro. The field is all rubber matting. And then when I was mayor, we did playground equipment and we would look at the competitive products, to your mulch for, say, where you get swings, it's a good use of that. But it was not competitive with, say, woodchips or other products. Is it more competitive today? Are you competitive with competitive products?

 

John Dillon I think more so because if you buy the rubber mulch, I put on my pool 11 years ago, I'll buy 3 or 4 bags a year and fill a few spots in. The wood mulch I buy every year. So that's a selling point on it. Its  color is guaranteed for ten years. It's going to outlast everything else. It's going to outlast the wood mulch. So upfront it does cost more, without a doubt, because it costs a lot to make.

 

Representative Jack Ladyman So are you gaining more market share in those areas of selling that product?

 

John Dillon Yes, growing 20% every year for the last five years.

 

Representative Jack Ladyman Okay. All right. Thank you very much.

 

Senator Missy Irvin Do you manufacture the molded tiles that lock together that create the sidewalks and the pathways?

 

John Dillon Yeah. We have a plant in Godfrey, Illinois, which is about Saint Louis and then one in New Jersey.

 

Senator Missy Irvin Those are incredible. I mean, I don't understand why those aren't on the market, because I would put those every-- when you think about just even the stress on somebody's backs and joints that are standing on concrete all the time, I just don't know why we wouldn't put those and utilize those on sidewalks.

 

John Dillon The price it's not cheap. I look at things sometimes like some of the edging and I'm not going to say-- I try and buy our products, but sometimes I think it's a little high. But you gotta decide the life of it, if you're going to stay at that home or if it's for a school. It's the longevity. And it's not us putting crazy profit in our pocket. We try to make money at it, but we don't want to lose money.

 

Senator Missy Irvin It's a lot lighter too. As somebody who lays rock, which actually I do, it's a lot lighter to be able to do those than pavers.

 

John Dillon I'm not going to argue with you.

 

Senator Missy Irvin Yeah, okay. I just don't understand why they're not more utilized. But I hope that it grows. And so is it safe to say that there's not a lot of recycling of these tires that are happening in the state of Arkansas?

 

Robyn Reed Yes, there is.

 

Senator Missy Irvin There is?

 

Robyn Reed Yeah. 99% of the tires we receive are recycled.

 

Senator Missy Irvin Okay. Or you are recycling them through other products?

 

Robyn Reed We are sending them to processors that recycle them or use them for a secondary product.

 

Senator Missy Irvin Okay. Okay. And same with y'all?

 

Paige Davis Over 93% in quarter 3 of this year were recycled out of our 27 counties.

 

Senator Missy Irvin Okay. Thank you. Representative Tosh.

 

Representative Dwight Tosh Thank you, Madam Chair. And we'll follow up a little bit on Representative Wooldridge's question. A while ago, he asked you about the process from the tires, you know, when they're first bought and then when they're removed from the vehicle and who handles those tires as they make their way to the landfill. And it sounds like they go through several different groups or exchange before they make it there, if I understood your answer correctly. And I'm just curious, each one of those, I'm sure. Is reimbursed along the way for their handling of those tires. Over the last, let's just say, five years, can you tell me how many incidents you've had where people have actually reported the number of tires that they said they handled and wanted reimbursed for that you found out that that was not correct, that they actually did not handle those many times? Have you had many incidents like that where you've had people that actually tried to receive money through fraud for reporting more tires than they actually handled and wanted reimbursed for it? Does that happen very often or does it happen?

 

Paige Davis I really don't think so. Davis Rubber Company has been one of, in regional recycling, the counties that we've dealt with, has been one of the tire counties that have always dealt with manifests. So that was a very good thing going into it is we knew how to go out and talk to some of these other counties that maybe had a different way to handle the situation. But knowing that they have the tire count on the list right there and us being able to take those tires off and we count those trailers that come in to our location. There's really not a very big difference. I don't believe that that's a problem that we've necessarily ran into. I think sometimes people may get rid of more tires than what they've previously paid taxes on. That's taken care of through DFA. But as far as people trying to get reimbursed for tires that they don't have, they don't have them for us to count. So that is a good thing.

 

Representative Dwight Tosh So your answer to me is that the system that you have in place is the check and balance prevents that from happening. And is that what you're saying?

 

Robyn Reed I would think so. The current manifest, it's a chain of custody manifest that you use in several different professions and it tracks the number and it goes from the dealer to the transporter to the collection site. And there's a signature confirming every step of the way for the number of tires received at each facility.

 

Philip Davis The biggest problem with that is going to be your collection centers. Like I said, these people don't get paid and they're not really interested, most of them, in being a collection center. And they're not manning the location. So they come in, bring in x number of tires. If there's nobody watching, no one's gonna know the difference. So the collection centers are the bottom. That's where the problem in the program is to me.

 

Representative Dwight Tosh So no incidence of this occurring in the last 4 or 5 years that you have had to deal with?

 

Robyn Reed None that I'm aware of.

 

Paige Davis Not that has been brought to my attention.

 

Representative Dwight Tosh Okay. All right. Thank you.

 

Senator Missy Irvin All right. Thank you. One last question, Representative Moore.

 

Representative Kendra Moore Thank you, Madam Chair. Boston Mountain Solid Waste District is in my district, and Ms. Reed runs that very, very efficiently and very proud of the work that she does there. So last year in my freshman term, when the tire issue came up and I was very confused about it, as I think most of us were and still are, she was a great resource for me. But I just wondered, Robyn, if it was worth describing the recycle facility that you have on campus there and the great work that's being done there through tire recycling.

 

Robyn Reed Yes. Thank you. So we're really excited about this facility that we had constructed about a year and a half ago. It's a public private partnership that we entered into with Jordan Disposal. The tire processing facility is net zero. So this facility went online about a year and a half ago, and they shred all the tires, sell it as a crumb rubber, as a tire dry fuel, and then the scrap metal is also recycled. So 100% of their material for passenger and semi tires is currently recycled. But when this facility went online we were able to reduce our transportation costs by 33%, because as I mentioned previously with the rural counties, transportation is our highest cost for every facility. So it's been a great opportunity for us to have this facility at our location.

 

Senator Missy Irvin Thank you. I appreciate that. Thank you so much for being here and for your presentation. Senator Payton, you want the last word? And before I go to you, I've been in discussions with Nucor, and I appreciate that you brought that up. As you know, Nucor-- and I would just remark that Mississippi County, where Nucor and Big River Steel are both located-- Mississippi County was one of the top ten counties with growth in their GDP, which is significant because that county is now the largest steel producing county in the United States of America. It's pretty significant. So in working with Nucor, we've been trying to get a Public Health Committee meeting there. 

And I know we've had other committees go to Nucor and meet, but we're working on that. We will try to get that scheduled even if it's during session. But I just wanted to state Nucor is currently taking tires now and using them in their steel making process. They can take more tires moving forward if they can get them in the correct sizes and quantities. And they are working with the state in trying to find a solution. So that's a big part of we'd love to see that continue. And recycling into the steel industry obviously is beneficial for all. So that's another piece of this puzzle. They aren't here today, but I wanted to read that on their behalf and I appreciate their efforts towards that end. And in closing, Senator Payton, I'll go to you.

 

Senator John Payton Thank you, Madam Chair. And I didn't necessarily want the last word. I just wanted to maybe clarify a couple of things. The $3 fee that the state imposes that's collected by the tire dealer and then remitted to the state sales tax and then that goes into the fund that's managed by Energy and Environment in the waste tire program. And the problem is that fund is living hand to mouth, so to speak. And the people that you've heard from today that are running the processing and transporting the tires, they're looking at a purse that's empty and hoping to get reimbursed. 

And so that's one of the things that we as state legislators need to take seriously when we have people with their business on the line and we have a program that's continually operating on tomorrow's dollars instead of yesterday's. And then on the manifest list, I think it's great that we do the manifest list on the waste tires. When I mentioned the manifest list being an encumbrance to the used tires that I hope would make it on down the chain and be used and worn out. Once we say it's a waste tire, tracking it with the manifest list and knowing that we're being reimbursed only for the tires that are handled, that's checks and balances. That's great. But I just didn't want anybody to take what I said about the manifest and think that we don't need to track that on the waste tires. 

But we need to somehow unencumber the used tires that should go to the next person and put on the next vehicle and worn out. So I just wanted to get those clarifications and I certainly appreciate your being here today and the work that's gone in to our suggestions that we've made over the last 2 or 3 years. And I appreciate your help on all that. Thank you. Thank you, Madam Chair.

 

Senator Missy Irvin Thank you. Thank you so much for being here. Merry Christmas. Okay, members, we're going to move to the last item on the agenda. Are there any of these sponsors that want to make any comments about their ISPs? None. Okay. Generally, I always say this caveat. I kind of consider this is professional courtesy to adopt these without objection. But that does not mean that they are approved by this body. They're just accepted. So without objection, we will accept these ISPs on the agenda. Are there any other business to come before the committee? All right. Seeing none, thank you, members, for being here today on a Friday. Merry Christmas. Our work continues. See you next week. We are adjourned.