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story.lead_photo.caption FILE — The state Capitol is shown in this file photo.

A state panel on Wednesday endorsed the state Department of Transformation and Shared Services' request for up to $33.5 million in federal coronavirus relief funds to finance the department's cybersecurity data center modernization plan.

In a voice vote with three state lawmakers dissenting, the Arkansas Coronavirus Aid, Relief and Economic Security Act steering committee recommended approval of the transformation department's request, contingent on the federal government extending the period for spending federal coronavirus relief funds beyond the current Dec. 30 deadline and the availability of these federal funds.

Sen. Will Bond, D-Little Rock, called funding the department's request CARES Act malpractice.

But Larry Walther, secretary of the state Department of Finance and Administration, disputed that.

The CARES Act steering committee, appointed by Gov. Asa Hutchinson, recommends the best use of $1.25 billion in federal coronavirus relief funds. The committee includes nine Hutchinson administration officials and six state lawmakers.

[CORONAVIRUS: Click here for our complete coverage » arkansasonline.com/coronavirus]

Walther said the state now has about $18.9 million in unallocated federal coronavirus relief funds, plus another $29.6 million unused by the state agencies that were assigned the money.

"Now having said that, there is a significant number of dollars that agencies like [Department of] Commerce and the Department of Education would like to repurpose the use of money, where they acquired it for one purpose and would like to change the purpose of it," Walther said. "I assume they would have to come back before the steering committee to accomplish the repurposing."

The steering committee later approved Walther's motion to endorse the transformation department's request for up to $33.5 million in the funds.

Bond and Reps. Fred Allen, D-Little Rock, and Michelle Gray, R-Melbourne, dissented.

"We don't have enough time at this point in 2020 to accomplish the objectives of the cybersecurity and data center modernization program, but the administration feels that this is a very important thing that we would like to accomplish and, to the extent we can do it with CARES money as they become available, we are recommending that the CARES committee approve this approach," Walther said.

Afterwards, finance department spokesman Scott Hardin said, "We are in contact with our congressional delegation regarding the potential for a federal extension" beyond the Dec. 30 deadline.

"The extension would be a nationwide act, not specific to Arkansas," he said.

In making his pitch for the cybersecurity data center request, Walther told the steering committee that the covid-19 public health emergency has led to a much greater reliance by state agencies' workers on telework than in the past.

"As case numbers continue to persist, the state is under constant threat to protect data and systems' integrity," he said.

"The ... capability to telework supports compliance with the public health measures and supports social distancing criteria to respond to the current public health emergency," Walther said.

The covid-19 emergency also has spurred the move to telemedicine in certain public health agency programs, correctional facilities and schools, he said.

"But with this greater reliance on state agencies on telework and telemedicine comes a greater vulnerability to state information technology infrastructure to outside threats of all kinds," he said.

The data center modernization project is critical to providing additional security necessary to safeguard health, personnel and other information moving through the network, Walther said.

Bond said he has consistently opposed the data center funding proposal.

"Let me remind everybody that you could do $500 health and safety payments to public school teachers and staff all across Arkansas for about that $33.5 million," he said.

The transformation department's letter regarding its request doesn't mention covid-19 or coronavirus, Bond said.

"If we fund this, it is CARES Act malpractice," he said. "What we are doing is we are taking money from our CARES Act proceeds and funding something that the Legislature and the administrations past have not funded fully. That's not the purpose of the funds.

"I agree that we should fund infrastructure fully, but that is not the purpose of these funds," Bond said.

The state has more than $200 million in surplus funds, he noted. Hutchinson has proposed transferring $100 million in surplus funds to the state's long-term reserve fund, and the Legislature and governor could use state funds to fund the data center request, he said.

To Bond's contention that the relief funds shouldn't be spent on the project, Walther replied, "My justification does tie it to the coronavirus and the need we believe meets the criteria of spending the money in the CARES Act."

Meanwhile, cities and counties have applied for $144.7 million in federal coronavirus relief funds out of the $150 million allocated to them, said Paul Louthian, a deputy director and comptroller for the finance department.

"At this point, it looks like about $5.3 million has not been applied for," he told the steering committee.

Louthian added, "We had $3.3 million worth of allocations by the cities that they did not make any application at all for their funding.

"I want everybody to understand that they were contacted either by [the finance department] or [contractors] Haggerty/CTCH at least once, some of them multiple times, to discuss the application process and what the money could be used for and they simply chose not to make application, " he said.

"So at this point in time we consider those to be turned back available for distribution for the program that [Parks, Heritage and Tourism Department] Secretary [Stacy] Hurst is going to administer for the convention centers and visitors bureau," Louthian said.

He said 265 to 270 cities in Arkansas applied for the relief funds in Arkansas, while about 230 cities didn't. All 75 counties applied, he said.

John Wilkerson, general counsel for the Arkansas Municipal League, said the league made a robust effort to educate cities about their eligibility for funds, but some cities opted not to apply for the funds.

On Wednesday, the steering committee also approved requests from some cities and counties beyond pre-approved thresholds.

These requests included Grant County's request for $129,722 for a heating, ventilation and air conditioning retrofit of the courthouse; Harrison's request for $96,371 for an information department telework; North Little Rock's request for $74,988 for enhancing telework capabilities; and Bella Vista's request for $70,285 for expanding telework capabilities.

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