House Education Committee
January 21, 2025
Representative Keith Brooks [00:00:01] Members, welcome to House Education. I'm going to recognize Representative Cozart to start us off in prayer if you'd stand, please. [Prayer] Thank you, Representative Cozart. Members, welcome this morning and, audience, thank you for being here. We have a full house and we'll allow Representative McKenzie to recognize some folks here in just a moment.
Those wishing to speak for or against the bill, please make sure that you sign in. There is a sign in sheet at the door. Just to let you know, we are only going to hear two bills today. We'll be hearing HB 1085 by Representative Brown and HB 1133 by Representative Unger. The other bills are being passed for various reasons, a couple of members not here and some other things. So those are the only two bills that we are hearing.
So if you signed up to speak on a different bill, then I would encourage you to get with the sponsor of that bill to ensure that there are questions that may need to be answered relative to it or other issues. Let me recognize Representative McKenzie. You are recognized to present.
Representative Brit McKenzie [00:01:26] Thank you, Mr. Chair. I'd like to take a moment, and for everybody on the committee as well as in the audience, to recognize we have 21 illustrious members of the Arkansas student government from Fayetteville here today coming to see democracy in action. Probably some of the future minds that'll occupy these seats. So if we could give them a warm Little Rock welcome.
Representative Keith Brooks [00:01:49] Thank all of you for being here. Glad you made the drive down and look forward to seeing what your engagement looks like. Just proud to have you being engaged in the process. Members, we will go ahead and start with Representative Karilyn Brown. HB 1085. There is an amendment. So Representative Brown, I recognize you to present your amendment. Just as a point of housekeeping, there will also be an amendment to Representative Unger's bill as well.
Representative Karilyn Brown [00:02:54] Thank you, Mr. Chair, and thank you all for being here today. I need to pass this amendment before we get to the bill. The amendment is to simply add Senator Jane English as the Senate sponsor. And I ask for a good vote.
Representative Keith Brooks [00:03:13] Are there any questions on the amendment? I have a motion do pass on the amendment. All in favor say aye. Opposed. Your amendment has passed. You're recognized now, Representative Brown, to present HB 1085 as amended.
Representative Karilyn Brown [00:03:27] HB 1085 is basically bringing Arkansas into sync with the federal 529 plan. Our 529 plan is called the Brighter Future Plan. It's doing quite well and we're distributing money. I think if I remember correctly on the website, it said we distributed $55 million last year for higher education from 529 plan. So that's really wonderful. This particular bill simply, so the title pretty much spells it out.
It allows a person, if the beneficiary of the 529 plan, which is a higher education savings plan, it's a tax advantage plan. You put money in after taxes and if you take it out for-- what's the word they use-- qualified expenses, then the person taking it out pays no taxes on those withdrawals or those disbursements. And you pay no taxes on the gains in the account. So it simply helps parents, family, friends provide the finances that students are going to need for higher education.
And now there's another advantage. Sometimes if you see that your beneficiary is not going to use the money for education, it is possible then to roll it over into a Roth IRA, which is also a tax advantaged plan. If you put in after tax dollars and then you take it out with no income tax on it, you don't have to put it on your tax return as income. And that's basically it.
Representative Keith Brooks [00:05:33] Thank you, Representative Brown. Are there any questions from the committee?
Representative Karilyn Brown [00:05:38] I read this whole thing because I thought somebody was going to ask me a question and I didn't want to have that deer in the headlights look. So you could ask a question, I can probably answer it. All right. No questions.
Representative Keith Brooks [00:05:53] Representative Meeks, you have a motion at the proper time. Is there anyone in the audience who would like to speak for or against the bill?
Representative Karilyn Brown [00:06:05] Go ahead. I'll let him speak.
Representative Keith Brooks [00:06:07] If you would, come to the table and identify yourself and you are recognized.
Keith Linder [00:06:19] Thank you, Committee. My name is Keith Linder. I'm an attorney with the Department of Finance and Administration. This bill will cause a revenue reduction. So we are working on a fiscal impact statement. There were people working on it, finalizing the numbers as early as this morning. It should be ready by your next meeting. We just do not have it ready at this moment. So I'm not here to speak for or against the bill, just to give you the status of the fiscal impact.
Representative Keith Brooks [00:06:43] Are there any questions by the committee for Mr. Linder? Vice Chair McKenzie.
Representative Brit McKenzie [00:06:49] Thank you, Mr. Chair. So, do we have the standard Education Committee fiscal impact attached to this bill, or is this a separate and different one?
Keith Linder [00:06:56] So this would be from the Department of Finance and Administration. This would just be a revenue impact. This will have tax implications with the 529 withdrawals no longer being taxable and rolled over into an IRA.
Representative Brit McKenzie [00:07:08] Okay. Do you have an estimate of time?
Keith Linder [00:07:10] We will have it ready by the next meeting. People were working on it this morning.
Representative Brit McKenzie [00:07:14] Thank you.
Representative Keith Brooks [00:07:17] Representative Vaught, you're recognized.
Representative DeAnn Vaught [00:07:18] Thank you, Mr. Chair. I thought these were already nontaxable.
Representative Karilyn Brown [00:07:23] Well, if you roll it, what he just said is only if it--
Representative DeAnn Vaught [00:07:27] Goes into the Roth.
Representative Karilyn Brown [00:07:30] It could be implicated. I'll let him answer.
Keith Linder [00:07:34] Withdrawals that previously would have been taxable could be rolled over into the IRA as a tax free event under the bill.
Representative DeAnn Vaught [00:07:43] Okay. Thank you.
Representative Karilyn Brown [00:07:45] That's the main change here, is that you can roll into a Roth IRA with no tax consequences for the same beneficiary. Whoever is the beneficiary on the 529 would be the beneficiary of the Roth.
Representative Keith Brooks [00:08:04] Representative Meeks, you're recognized.
Representative Stephen Meeks [00:08:06] So just to summarize, what this bill does is that if there is any left over or unused money in the 529 plan, it just allows people to roll over into a Roth IRA to start preparing for retirement.
Representative Karilyn Brown [00:08:17] Yes, it's just one of the options. I mean, you can name a different beneficiary. There's different options. This is just a new option.
Representative Stephen Meeks [00:08:24] Okay. Thank you.
Representative Keith Brooks [00:08:27] Representative Mayberry.
Representative Julie Mayberry [00:08:28] Yes. Thank you. I'm fully supportive of this and would like to see it go through as fast as possible, but I do want to make the committee aware that I have a bill that's through the Treasurer's Office similar to a 529 plan. It's an ABLE act and there's only a $20,000 fiscal impact.
And I just spoke to the Chair of Revenue and Tax and she has explained to me that no matter how much the fiscal impact is for right now, nothing's getting through that committee. So I just think possibly waiting until we get the DFA fiscal impact, because when it gets to the House floor, the chair might ask some questions about it without knowing what the fiscal impact is. I'm just making the committee aware that that might be an issue when it gets to the House floor. And I'd rather have that information at hand.
Representative Karilyn Brown [00:09:28] Thank you, Representative Mayberry. And I had a question in my mind when I was informed that we needed a fiscal impact statement and it's not available yet if we could even pass this this morning. I really don't know.
Representative Keith Brooks [00:09:46] Are there additional questions?
Representative Karilyn Brown [00:09:48] I don't think it's going to be anything major, a major hit to the budget. But if that is required, then can we even pass it?
Representative Keith Brooks [00:09:55] Given that, Representative Beck?
Representative Rick Beck [00:09:57] Thank you, Mr. Chair. What would you be opposed to just pulling the bill down until we get a fiscal impact study?
Representative Karilyn Brown [00:10:03] That would be fine.
Representative Keith Brooks [00:10:08] Okay. Yes, sir. Representative Meeks.
Representative Stephen Meeks [00:10:11] Well, let me ask the department from DFA, because we're taking post-tax money. We're putting it into the 529 plan and then from the 529 plan, if we're moving it into a Roth IRA, what fiscal impact would there be? Because there's no tax revenue that would additionally come from that money. So I don't see how there would be any fiscal impact whatsoever unless I'm misunderstanding what we're doing here.
Keith Linder [00:10:37] Thank you. The numbers are still being finalized, so we have determined there will be a revenue impact. I think it's because that leftover money that would be in the account previously, there was not a tax free way to roll that over into IRAs. So even if the money under the bill going into the IRA wouldn't be taxable in the end, currently that money would be taxable. So we're changing the status of that.
Representative Karilyn Brown [00:10:59] And as long as it stays in the account, it's not taxable. But you're not going to leave your money just sitting there if you don't have a use for it in that kind of account. You want to do something with it. So you probably take the tax hit. And there's also a 10% penalty if you withdraw money from the account and it's not for a qualified expense. So they pay also a 10% penalty to the federal government and then lose any kind of tax advantages they'd had from the state.
Representative Keith Brooks [00:11:33] Are there additional questions about the committee? So just to clarify Representative Beck's recommendation, Representative Brown, you want to pull the bill down until we get a fiscal impact?
Representative Karilyn Brown [00:11:43] Yeah, let's do that.
Representative Keith Brooks [00:11:44] Thank you.
Representative Keith Brooks [00:11:52] Committee, we will now move on to HB 1133. Representative Unger, you're recognized to present your amendment. There is an amendment to this. Staff is passing it out. It's also available online. Representative Unger, you're recognized.
Representative Steve Unger [00:12:12] Thank you, Mr. Chair. Committee, Representative Steve Unger, District 19. The amendment to House Bill 1133 is basically to declare an emergency. The bill is on behalf of Northwest Arkansas Technical Institute, who is currently looking for a president. Their president was unfortunately felled by a stroke, I think roughly a year ago. They do have an interim and they have a board actively working. The emergency clause would allow them to start looking sooner rather than later, which would be very beneficial to the school. That's the last true vo-tech school in Arkansas.
Representative Keith Brooks [00:12:51] Other questions on the amendment? Is there anyone who would like to speak for or against the amendment in the audience? And do we have a motion to adopt the amendment? Yes, ma'am. Representative Vaught.
Representative DeAnn Vaught [00:13:08] So does this one have a financial impact statement? Because if it doesn't, then we can't pass this one out of this committee either.
Representative Keith Brooks [00:13:17] Not all bills have a financial impact on them.
Representative DeAnn Vaught [00:13:21] Well, I know that, but all education bills are supposed to have one. Okay. Just K-12. Okay. That makes better sense then. I was like, if we can't do that one, how can we do this one? Thank you.
Representative Keith Brooks [00:13:33] Thank you for the question. We have a motion of do pass. Did you have a question?
Representative Diana Gonzales-Worthen [00:13:37] I had a question. Yes. Okay. I was just wondering, related to 'appoint a president with an industry background.' Can you define what that would be?
Representative Keith Brooks [00:13:48] So just ,if I could clarify. Right now, we're just speaking on the amendment. We will get to the bill in just a moment. Thank you, Representative, for the question. So we have a motion do pass of the amendment. All in favor, say aye. All opposed. Congratulations. Your amendment is passed. You're now recognized to present HB 1133 as amended.
Representative Steve Unger [00:14:08] Thank you, Mr. Chair. Thank you, committee. Basically, as I said, Northwest Arkansas Technical Institute is sort of a unicorn institution. It's the last true vo-tech school left in Arkansas. And frankly, within the world of higher, ed vo-tech schools are sort of the unloved stepchild.
As to Representative Gonzales' point, I have to say some of the best instructors I've ever had in my life were Navy Chief petty officers. When I was training to be a hospital corpsman, both in corpsman school and at field medical school where I trained to be a combat medic, there were guys who had been doing this since World War II, Korea, Vietnam, and they may have had a high school education. Now, not every one of these people were leaders and mentors, and we know that.
And so I believe we can trust our board up there to look for somebody who knows their way around the shop floor, knows their way around the top floor. And if you know our director of workforce, Mike Rogers, I would love to clone 100 of him and put him in that office. Thing is, he's not qualified for that job right now until this bill passes. And so if it's somebody who, and if they actually find somebody with an educational background that knows their way around the shop floor to the top floor, that would be great. But those seem to be really few and far between.
Representative Keith Brooks [00:15:33] Thank you, Representative Unger. Are there questions from the committee? Representative Cozart, do you have a question?
Representative Bruce Cozart [00:15:40] Yes, sir. Thank you, Mr. Chair. Is that going to be the only qualification or will there be other qualifications that come along with that other than just being from the industry? Or are they going to have to have any other qualifications, such as what a president of a normal institution would have?
Representative Steve Unger [00:16:00] I guess the best way I can answer that is it's not a normal institution. They're not working on a stackable degree to get to a bachelor's degree, which has sort of been their focus. And unfortunately, they've lost focus. And so what industry needs, Tyson, JB Hunt, everybody that's got stuff with refrigeration, diesel mechanics, they're looking for short term certificates. I'm trying to answer your question the best I can. Short term certifications where somebody can come there for two weeks, get this thing they need to upgrade to new equipment and then move on.
Representative Bruce Cozart [00:16:40] I can stop you. I believe you. I understand what you're trying to do. We've worked for this for years to get there. I just want to make sure. Is there any other qualification they will have to have other than just, like Mike Rogers, being from the industry, something like that?
Representative Steve Unger [00:16:56] I'd say not necessarily. I'd just go back to we trust of the board.
Representative Bruce Cozart [00:16:59] Okay. Thank you. Thank you, Mr. Chair.
Representative Keith Brooks [00:17:03] Representative Gonzales Worthen, you're recognized.
Representative Diana Gonzales-Worthen [00:17:09] I was just curious. I think Representative Cozart helped to answer my question. But looking at the overall of what's required, so basically a bachelor's degree with technical training or a master's or all of that would be pretty much by the wayside. Just having a technical certification and the like would be all that would qualify for this position in terms of education requirements.
Representative Steve Unger [00:17:46] I don't know about education requirements. I think a Thomas Edison or Henry Ford would do quite well in something like this,or the Wright brothers, who didn't have master's degrees either.
Representative Keith Brooks [00:18:03] Vice-Chair McKenzie.
Representative Brit McKenzie [00:18:05] Thank you, Mr. Chair. Just to be clear, this is a permissive bill. So all we're doing is establishing language that kind of takes an existing barrier way, but NTI still has a board of trustees. They're going to likely hire some kind of a search firm or headhunter. I mean, an institute like this is going to go through the natural machinations of hiring a president for higher ed posts, correct?
Representative Steve Unger [00:18:29] Yes. This just allows them to be [unclear] candidates, which they need.
Representative Brit McKenzie [00:18:34] Yeah. Very good. Thank you.
Representative Keith Brooks [00:18:35] Representative Beck, you're recognized.
Representative Rick Beck [00:18:39] Thank you, Mr. Chair. So the question is, the board that you're referring to, that would be the one that would select the individual. I like the concept of what you're doing here. How is that board put together? Is it an appointed board? It's not an elected board, is it?
Representative Steve Unger [00:18:57] It's an appointed board.
Representative Rick Beck [00:18:58] Who appoints them?
Representative Steve Unger [00:19:03] The leaders in the community. They have established rules for appointments.
Representative Rick Beck [00:19:09] Okay. Thank you.
Representative Keith Brooks [00:19:13] Representative Painter, you're recognized.
Representative Stetson Painter [00:19:15] Thank you, Mr. Chair. Just motion at the proper time.
Representative Keith Brooks [00:19:20] Are the additional questions by the committee? Is there anyone in the audience who has signed up to speak for or against? All right. Would you like to close for your bill?
Representative Steve Unger [00:19:35] Yes, I'd like to close for the bill and I ask for a good vote. Thank you.
Representative Keith Brooks [00:19:38] Representative Unger has closed for his bill. We have a motion on the floor to pass HB 1133 as amended. What's the will of the committee? All in favor, say aye. All opposed No. Congratulations Representative Unger, your bill has passed as amended.
Representative Steve Unger [00:19:55] Thank you, Mr. Chair. Thank you, committee.
Representative Keith Brooks [00:19:57] Seeing no additional business, House Education is adjourned.
