LITTLE ROCK -- A bill to increase the number of Arkansas Public Employees Retirement System trustees to 13 by adding four trustees to represent retired members failed to clear the Arkansas Senate on Tuesday afternoon.
The Senate's 14-16 vote on House Bill 1283 by Rep. Les Warren, R-Hot Springs, fell four votes short of the 18 required for approval in the 35-member Senate. Sens. Linda Chesterfield, D-Little Rock; Missy Irvin, R-Mountain View; Jason Rapert, R-Conway; and Terry Rice, R-Waldron were recorded as not voting on the bill and Sen. Mat Pitsch, R-Fort Smith, voted present.
The Senate later expunged the vote to clear the way for another vote.
The retirement system is state government's second largest such agency with more than 75,000 working and retired members, and roughly $10 billion in investments.
Sen. Bill Sample, R-Hot Springs, told senators the Legislature's Joint Committee on Public Retirement and Social Security Programs frequently heard during 11 meetings across the state in 2019 the system's retired members "felt they did not have adequate representation on their board and they asked us to do something about it."
Sample said he and Warren wanted to make sure there was an odd number of members to prevent tie votes on decisions, and several groups asked for representation on the board, so they decided it would be fair to ask the state employees, counties and municipal groups to recommend appointments to the board.
"This bill is merely taking into consideration the requests from the membership of APERS," he said.
Act 311 of 2017 limited the system's trustees to two retired members, one representing state employees and the other representing local government employees. The law subsequently led Gov. Asa Hutchinson to replace three retired state employees on the board with a former state senator, who is a retired state employee, and two state agency directors.
Under House Bill 1283, the four new trustees would be system retirees.
The new members would be a retired former state employee appointed by the executive director of the Arkansas State Employees Association and approved by the association's board of directors; a retired county employee appointed by the executive director of the Association of Arkansas Counties and approved by the association's board of directors; a retired former municipal employee appointed by the executive director of the Arkansas Municipal League and approved by the league's executive committee; and a retired law enforcement officer from a nonmanagerial position to be appointed by the Senate president pro tempore and House speaker.
Under state law, the governor appoints three state employees and three non-state employees to the board, which also includes the state auditor, state treasurer and secretary of the Department of Finance and Administration. The governor appoints the secretary of the finance department.
HB1283 also would require the three non-state employee trustees to include at least one county judge and at least one mayor.
Sen. Mark Johnson, R-Ferndale, questioned whether the bill would run into some constitutional problems by delegating appointments to officials of private nonprofit organizations.
Sample said he doesn't believe there would be any problems.
Sen. Bob Ballinger, R-Ozark, said, "It is not good policy to empower private organizations to be able to appoint a governmental body, and that's what this does.
"I have good friends in the Association of Counties and the Municipal League, good people over there who lobby and are zealous ... but it is a special interest and, by this, you are empowering a special interest," he said.
Ballinger said he doesn't oppose the intent of the legislation to divide who makes appointments.
The bill could be changed to allow appointments by the president pro tempore and speaker, "people who are accountable to the public," he said.
"I think we need to try to do everything we can to stop this further delegation to private organizations to do governance," Ballinger said.
Sample said, "You got to remember one thing: all these appointees have a vested interest in this retirement system."
Afterward, Hutchinson spokeswoman Katie Beck said, "The governor has not expressed any opposition to the bill."