Nasty winter weather throughout large parts of the U.S. in the first quarter of 2014 resulted in a swift kick to the bottom line of many companies. Wal-Mart Stores reported weather-related losses of almost $100 million. Fort Smith-based ArcBest said the bad weather shaved $10.5 million off its topline.

Planalytics estimated that businesses nationwide during January suffered $5 billion in weather-related losses. Retailers, airlines and logistics firms led the pack. By April that figure swelled to $15 billion.

Retailers have long understood the relationship that weather plays on their net profits from tracking dangerous storms like Hurricane Sandy and the run on grocery staples and generators to more umbrella sales during spring showers and Gatorade sales spikes during the dog days of August.

With the Farmer’s Almanac forecasting a frigid winter throughout most of the country, retailers have opted to embrace Mother Nature all year long in a more proactive manner. Wal-Mart has worked with Weather FX for almost two years to try and get a handle on optimizing sales based on weather patterns – favorable and otherwise.

WEATHER TRIGGERS
Weather FX is a division of The Weather Company, which is also parent company of The Weather Channel. Sara Livingston, director of market solutions for Weather FX, said she works closely with Wal-Mart and a host of other retailers large and small who want to be proactive about merchandising around the weather all year long.

Wal-Mart’s chief merchandising officer Duncan Mac Naughton first referenced the partnership with Weather FX in March during a speech at the ISI Retail Summit. 

“We work with Weather FX to identify emerging weather patterns and then trigger advertising direct to customer. So for instance in Atlanta, you wake up maybe it is 55 degrees out this morning, 30% humidity by this afternoon it is 70 and 90% humidity. That would trigger, for instance, Gatorade ads or bottled water ads. It would go directly to the store's Facebook page to mobile applications and to our in-store network,” Mac Naughton said.

He said the same thing is done when pollen count rises, “we would immediately start to feature over-the-counter medication as well as all the other things folks are looking for.”

Wal-Mart spokewoman Molly Blakeman said one use this summer by the retailer involved featured ads online, mobile devices and social media sites for patio furniture and grills. She said the retailer continues to use the collected weather data paired with its sales data and merchandise across the company’s entire big box format.

Livingston said Weather FX makes thousands of data points available to retailers and other clients who get real time data in thousands of locations. That data includes temperature, precipitation, dew points, wind speeds and the combinations. She said they map sales data against weather data to try and derive optimum times to promote certain items which are communicated back the retailer in real time.

WEATHER NOW
Local companies have also joined forces to harness the power of weather-related sales. “Weather Now” from Crossmark is one example.

Corey Paquette, vice president of client service in Crossmark’s Walmart Division, said his company partnered with local tech startup Atlas Technology to offer clients weather merchandising services. They are four months into the service offering.

“At Crossmark, on the Walmart team, we have 2,200 reps covering all Walmart Stores.  This allows our reps to be in the stores two to three times per week, every week. With this coverage model we are able to go in at the beginning of the week and then again at the end to drive sales and capitalize on the weather event,” Paquette told The City Wire.

Outdoor paint sales is a prime example of where data and sales work together. The weather may be glorious all week long but if it is rainy on the weekend paint sales won’t lift. He said the timing of activity around expected weather is perhaps more important than the weather itself, Paquette said.
 
“There are companies that can send out weather models for next spring and let us know that a region will be X degrees cooler, warmer… wetter or drier than last year or average but it doesn’t allow us to capitalize on sales now. What Atlas and Crossmark are doing with Weather Now is taking an accurate, real 10-day forecast and putting resources against it,” Paquette said.

On Thursday of this week, he said Weather Now can provide retailers a 10-day forecast so they can plan for weekend sales.  From there they can deploy a rep to a store to go in at the beginning of the week, order product, secure a location by working with a store manager and then return at the end of the week to build a feature to be ready for the next weekend weather, he said.
 
Atlas Technology provides the big data crunching by gathering thousands of weather-related bits of information from multiple sources like Weather Underground and the National Oceanic and Atmospheric Administration (NOAA).

REMOVING EXCUSES
Shawn Beckwith, executive vice president of operations at Atlas, said this data has become a hot commodity for retailers and suppliers as well as third party merchandising groups. The partnership began with Crossmark because one of their customers requested the service. They needed to drive more sales of a particular item inside retail outlets.

Beckwith said the first cold snap of fall is a great time to promote weather stripping, but it has to occur on the weekend for optimum sales. He said if it’s cold on Wednesday but warms up by Friday consumers won’t take the bait. 

He said their research shows the onset of soup sales aren't necessarily related to cold weather, but more importantly the downward trend in average temperature.  For example, if a particular climate zone's average high temperature for the season is 75 degrees, a drop to 72 degrees is enough to trigger the mood.

"It's more about how you feel than the actual temperature for some categories," Beckwith said.

He said having good forecasts and reacting accordingly can help retailers and suppliers guard against losses. Beckwith said eggs are one of the items that sell out ahead of ice storms and snow blizzards, because they can be boiled ahead of time and are a protein source. But they have a short shelf life. 

The one thing that tends to happen if retailers are not plugged into weather-related demand is that the store sells out of eggs, but bad weather may prevent the truck returning the store to restock the coolers. Stuck trucks result in eggs expiring in a distribution center, which is a double hit for the retailer and the supplier, Beckwith said.

Beckwith also said the combination of data and marketing is already changing the retailer and supplier's behavior from explaining lower-than-expected sales to capitalizing on sensor driven demand, such as the weather.

The 2015 budgeting process for the city of Fort Smith is in full swing, with departments making requests for items large and small. Among the budgeting tasks for the city is determining awards of funding for non-profits doing work in Fort Smith.

According to Christy Deuster, administrative coordinator at the city's finance department, a meeting of a subcommittee to award funding was scheduled to have its first meeting Tuesday (Sept. 30) at 1 p.m. to review applications for funding from 13 different non-profits.

In all, Deuster said $162,000 is split evenly between three categories within the outside agency funding — recreational, arts and humanities, and social and community services.

Tuesday's meeting focused on social and community services, where the 13 non-profits seeking funding had requested $150,800 while only $54,000 was allocated for social and community services. Social and community services, Deuster said, emphasizes "life sustaining priorities" such as food, shelter and clothing for the needy. Examples of agencies to have applied for funding include the River Valley Regional Food Bank.

The continued funding of groups outside of Fort Smith city government comes as the city of Fort Smith faces stagnant sales tax revenues and rising costs for line items including employee health insurance and retirement contributions.

According to figures provided by city of Fort Smith Finance Director Kara Bushkuhl, the city's sales taxes (1% for streets and 1% combined for water and sewer projects and fire and parks and recreation) generated $3.27 million in revenue for the August report. The figure is 0.74% above the same month last year, but 1.66% lower than budgeted.

For the first eight months of the year, the total tax collections including the August report from the city's sales tax collections are up 1.37% from the same period last year but off budget by 1.04%.

In spite of stagnant revenues, Bushkuhl has indicated that the city is committed to providing cost of living and possible merit raises in next year's budget. It would be the first in about five years for most city staff. And even with the challenges posed by next year's budget, Dingman said there are no plans to target areas such as the outside agency funding for cuts. The outside agency line item accounts for just shy of 0.34% of the city's overall general fund budget.

"At this point, it hasn't come up as an item to cut in order to accommodate anything else, including salary adjustments," said Deputy City Administrator Jeff Dingman.

Dingman said the administration and finance department were still going through the process of reviewing departmental requests to determine where cuts are possible or necessary in order to balance the city's budget.

Deuster said while the goal is to fund the outside agencies to the full levels just as in years past, there was a possibility of cutting the funding based on budgetary needs within the general fund. Such a scenario has played out in recent years, with funding of $227,000 in requests for Fiscal Year 2009 and dropping the total by 28.63%, or about $65,000, from 2009 to Fiscal Year 2014.

She said agencies are aware that cuts to the budget may occur depending on what the city can afford and what direction the city's Board of Directors provides when budget meetings take place with city directors on Nov. 13 and Nov. 17.

But Dingman said it is entirely possible to fund pay raises and outside agency funding, but in order to do both, departments are going to have to continue working with less.

"The objective will be to try to propose a budget that will include both salary adjustments and maintain the outside agency funding. … We'll look (specifically at) new requests, requests for doing additional programs, requests for additional capital equipment, that sort of thing. Equipment replacement, we're looking at those types of things to see what types of things may be able to be deferred or stretched out or done by a lease purchase agreement or something like that where the operating costs maintain their current levels as much as possible."

But maintaining current levels, he said, could be nearly impossible.

"Even with that, the revenues are projected to remain relatively flat, or essentially flat. From this year's revenues to next year's revenues, I don't think we'll see an increase in revenues. And there will be increased costs, you know? Employee health insurance will have an increased cost, workers compensation insurance may have an increased cost. There's several things like that that just by nature of operating, the costs increase."

Dingman said a final budget would be available to the public for review about a week before formal budget meetings take place with city directors in November.

Overall Arkansas tax collections for the first quarter of the fiscal year were up only 0.8% compared to the same period in 2013 period, and are below budget forecasts by 0.5%, thanks to a reduction in consumer spending.

Year-to-date gross revenue (July 2014-September 2014) totaled $1.513 billion, up 12.4 million over the 2013 period but $8.1 million below what state budget forecasters predicted, according to the report issued Thursday (Oct. 2) by the Arkansas Department of Finance and Administration.

Individual income tax collections for the fiscal year totaled $713.7 million, up 3.2% from last year and just 0.7% above the budget forecast. Year-to-date sales and use tax collections were $557.4 million, down 1.7% compared to last year and 2.3% below the budget forecast. Income taxes and the sales and use tax collections are the two primary sources of state revenue.

John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division, said the biggest reason for the overall decline was a drop in sales tax collections.

“September results were below forecast in all major categories of collections. Sales tax collections accounted for $8.1 million of the decline for the month against forecast. Individual Income tax collections were down 1.5 percent from year ago results and below forecast by $4.1 million, largely due to payroll timing effects in the Withholding category,” Shelnutt explained in the report.

Sales tax collections are a reflection of consumer spending and consumer confidence.

Corporate income tax collections for the first two reporting months of the fiscal year totaled $103.2 million, down 4.5% compared to last year and 8.4% below forecast.

SEPTEMBER NUMBERS
September gross revenue was $585.4 million, down 0.8% from last year and 2% below forecast.

Individual income tax collections during September totaled $183.7 million, down 1.7% compared to September 2013 and below forecast by 1.4%.

Sales and use tax collections during the month totaled $188.2 million, down 3.3% from last year and 4.2% below the forecast.

Corporate income tax collections in September totaled $77 million, up $1.7 million compared to September 2013, but 1.4% below forecast.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2014 - Sept. 2014: $14 million
July 2013 - Sept. 2013: $13.3 million

Games of skill
July 2014 - Sept. 2014: $10.5 million
July 2013 - Sept. 2013: $9.6 million

Tobacco
July 2014 - Sept. 2014: $56.3 million
July 2013 - Sept. 2013: $56.9 million

Insurance
July 2014 - Sept. 2014: $22.1 million
July 2013 - Sept. 2013: $21.5 million

COLLECTIONS HISTORY
Tax collections during fiscal year 2014 (July 2013-June 2014) totaled $6.242 billion, up 0.5% above the previous fiscal year and up just 0.2% compared to budget estimates. The year marked the fourth consecutive year of revenue increases. The fiscal year ended with a budget surplus of $78.7 million.

Tax collections during fiscal year 2013 (September 2012-September 2013) totaled $6.214 billion, up 4.9% above the previous fiscal year and up 2.5% compared to budget estimates. One result of the gains was a budget surplus of $299.5 million.

Arkansas tax collections reversed a negative two-year slide in the 2011 fiscal year, with collections up 4.5% in the September 2010-September 2011 period. State tax collections for fiscal year 2011 totaled $5.673 billion, up 4.5% above the $5.43 billion in the 2010 period.

The biggest declines in the 2009 and 2010 fiscal years were with individual income tax collections and sales and use tax collections.

Northwest Arkansas’ construction pace has flipped in recent months with fewer residential projects and more commercial work. Overall the permit values of new residential and commercial building projects among the region’s four largest cities totaled $97.313 million in August, up 115% from the same month last year. 

The 109 new single residential permit values issued among the region’s four largest cities were valued at $30.156 million in August. The permit values were down 26.4% compared to $40.986 million from the same month last year. The number of permitted projects for the month declined 33.9% year-over-year.

This marked back-to-back monthly declines in residential activity from the year-ago period for the growing region. That said, several homebuilders interviewed by The City Wire in recent months have said the pace of new home sales is good and they are building as needed to keep up with buyer demand.

Bentonville issued 37 new residential permits valued at $11.843 million, down 41% year-over-year.

Fayetteville issued 34 permits for single family homes valued at $9.294 million, down 14.1%.

Rogers issued 22 new residential permits in August with a combined value of $4.369 million, down 36.1% from a year ago.

Springdale bucked the trend issuing 16 new residential permits which were valued at $4.649 million, an annual gain of 48.5%.

The unsold new home inventory stood at 483 homes at the end of August, up from 340 homes in the same month last year and 298 new homes in August 2012, according to Paul Bynum, market analyst with MountData.com. He reports the new unsold home inventory has risen 20% since January of this year. This compares to a 9.6% increase in existing home inventory so far this year.

COMMERCIAL SURGE
Bentonville is seeing a flurry of commercial activity across the city from a large vendor office building at 209 S.E. 34th St., valued at $7.15 million, to the new Neighborhood Market at 1703 W. Central with a permit value of $3.69 million. Construction on two large retail/office strip centers also continues along South Walton Boulevard. Both are spec projects by local investors.

Bentonville issued 4 new commercial projects in August valued at a total of $11.905 million. A year ago the total commercial projects from the four cities combined was just $6.23 million, Bentonville’s part was $2 million of that.

Commercial building permits in Fayetteville totaled $16.45 million, compared to zero new commercial starts a year ago. Multifamily projects on tap with August permits totaled $33.488 million, also a 100% gain from a year ago. 

City officials said the largest of the new commercial permits issued in August went to NAPA Construction for two-story dental office/retail space for Brady Dental. The upper floor is tagged as the dentist office with a retail shell space on the ground floor. The permit was valued at $2.09 million. Another 14,600-square-foot spec office building also was permitted with a value of $1.31 million. Both of the projects are located on Augustine Lane near Mellow Mushroom. 

The multifamily projects included a new six-story parking garage for the Sterling University Apartments. That project was valued at $5.012 million.

Springdale issued three new commercial permits in August totaling $2.328 million. Those include:
• CVS Pharmacy at 2001 S. Thompson St. ($1.433 million);
• Casey’s General Store at 4751 W. Don Tyson Parkway ($336,500); and
• A new McDonald’s at 4762 Elm Springs Road ($538,889).

A year ago the city has new commercial permits of $4.45 million.

In Rogers there were five new commercial permits totaling $2.987 million in August. Those included a large foundation permit for the new 10-story office building project by Hunt Ventures. The foundation permit was valued at $1.99 million. The Indian Motors service center at 2505 Dixieland was permitted with a value of $200,000. There were two other office buildings for end users issued permits valued at $200,000 and $440,000 as well as some small tenant finish out projects.

Commercial building activity has increased 10-fold from a year ago, spurred in part by some large multifamily projects in Fayetteville with speculative office development going up in both Benton and Washington counties. Commercial permits totaled $67.15 million in August, up from $6.7 million in August 2013 among the four cities in this report.

CONSTRUCTION JOBS
The local metro area employed roughly 9,000 people working in construction in August. This sector employment rose by 600 jobs year-over-year, according to the Bureau of Labor Statistics. That 7% increase puts the metro area ranking at 68 out of 339 regions tracked by the Association of General Contractors of America.

“Even as construction employment continues to rebound in many parts of the country, other areas continue to lose ground or backslide,” said Ken Simonson, the association's chief economist.

Fort Smith, for instance, saw its construction’s sector shed 400 jobs year-over-year, a 6% decline and among the bottom ranking at 319 of 339. Simonson said while construction spending has been increasing overall in the past year, the gains remain uneven. The industry appears likely to experience mixed results by segment and region for the rest of 2014 and into next year.

Association officials said the industry overall continues a slow and sometimes inconsistent recovery from its years-long downturn. They cautioned that many firms report having a hard time finding enough qualified workers. One in four firms report having to turn down projects because of worker shortages.

Friday (Oct. 3) marks National Manufacturing Day and events happening across the region will mark the event in an industry that has seen significant declines both nationally and in Arkansas in the last decade.

The Fort Smith area manufacturing sector employed an estimated 18,000 in August, down from 18,200 in July, and down from 18,400 August 2013. Sector employment is down almost 37% from a decade ago when August 2004 manufacturing employment in the metro area stood at 28,400. Also, the annual average monthly employment in manufacturing has fallen from 28,900 in 2005, 19,200 in 2012, and to 18,300 in 2013.

The Northwest Arkansas manufacturing sector employed an estimated 26,200 in August, down from 26,300 July, and down from the 26,500 during August 2013. Sector employment is down 21.3% from more than a decade ago when August 2004 manufacturing employment in the metro area stood at 33,300.

Manufacturing jobs in Arkansas during August totaled 155,600, unchanged compared to July and above the 151,900 in August 2013. Employment in the manufacturing sector fell in 2013 to levels not seen since early 1968. Peak employment in the sector was 247,300 in February 1995.

In spite of the significant drops in manufacturing employment in the Fort Smith region, it is still among the area's largest employment sectors and Fort Smith Regional Chamber of Commerce President and CEO Tim Allen said that was why Manufacturing Day is being celebrated locally.

"Manufacturing is part and parcel of Fort Smith's DNA," Allen said. "The chance to recognize the importance of this national focus is exciting. Particularly when you realize Fort Smith's history and future when it comes to manufacturing."

And while the industry has seen major declines nationally and locally in the last decade, manufacturing could see an upswing should a planned investment of $250 billion by Wal-Mart in products made in the United States over the next decade pan out.

“We will continue to lead on U.S. manufacturing. ... We have drawn a deeper understanding of the challenges that stand in the way from the work already done,” Michelle Gloeckler, Walmart’s executive president of consumables and U.S. manufacturing, said in August.

To start off Friday's events, the Fort Smith chamber's monthly First Friday breakfast will take place at the University of Arkansas at Fort Smith's student center featuring former Caterpillar executive John Harrison, who is currently with the company MyVIP2. His speech will focus on "how U.S. manufacturing facilities can better compete globally and also how to be the place to work," according to a Chamber press release.

Even as manufacturing employment has shrunk both locally and nationally during the last decade, the demand for highly skilled employees in manufacturing facilities has increased.

To highlight the need for skilled laborers, KMF Metal Fabrication Vice President Christy Koprovic said her Fort Smith facility would host a tour of students Friday from Darby Junior High to show that even in spite of the loss of manufacturing jobs nationally, local companies like KMF still need the skilled workforce. She said the hope to is change negative perceptions about manufacturing.

"KMF is seeking to reverse that trend by bringing in students throughout the school year to get them interested in manufacturing, as well as encourage them to pursue and excel in math and science," she said. "Darby students will be our second group of students this year who will visit the facility."

During the tour, she said KMF staff "will be giving demonstrations" of the various work done at the facility. The tour for students begins at 9 a.m. and lasts one hour, Koprovic said.

Further highlighting the need for skilled labor, UAFS will host tours of its new robotics lab at the Baldor Technology Center on the university campus Friday at 10:30 a.m.

A new certificate program in robotics was introduced at UAFS this year, with Chancellor Dr. Paul Beran noting at the time that 21 different companies in the Fort Smith region use robots of some sort in manufacturing processes in spite of the fact that there is not a single trained technician in the state. In launching the new certificate program, Beran said he was able to secure $300,000 from Gov. Mike Beebe to help launch the program, as well as receiving a donation of equipment from Baldor.

And Baldor is another Fort Smith company taking part in Manufacturing Day events, opening its doors to the public on Thursday (Oct. 2) from 10 a.m. to 3 p.m. for facility tours.

"Through this year's event we will share best practices with other local manufacturers, educate the community on the impact manufacturing has on the regional economy, and raise awareness of the career opportunities manufacturing provides,"the company said in its event listing on the National Manufacturing Day website.

Springdale-based SynergyTech is holding an open house from 11 a.m. to 4 p.m. on Oct. 23.

“SynergyTech plans to increase public awareness of manufacturer’s contributions to our economy, and the technology-driven, well-paying careers our manufacturers have to offer,” noted the Manufacturing Day website page for SynergyTech.

Link here for a list of the 21 Manufacturing Day events planned in the state of Arkansas.

Negotiations with between the city of Fort Smith, the Environmental Protection Agency and the United States Department of Justice have broken down, with the city expecting a lawsuit to be filed by the DOJ by the end of business Friday (Oct. 3) for non-compliance with the federal Clean Water Act.

According to City Administrator Ray Gosack, representatives from the city were prepared to meet with federal negotiators last week in Dallas for three days of meetings regarding the city's efforts to implement wet weather improvements to the city's sewer system.

"One working day before the meeting was to begin, the Department of Justice abruptly canceled the meeting," Gosack said in a prepared statement. "On Sept. 24, the department notified us that the federal government was ending negotiations and were considering the filing of litigation against Fort Smith in federal court."

Gosack added that while the city believes the two parties can find agreement through negotiations on next steps, litigation from the feds is expected at any time. City Attorney Jerry Canfield said while the city expected the filing in the U.S. District Court of Western Arkansas today, no such filing has yet been made. He expects the filing to be made at the court – based in Fort Smith – by the end of business Friday.

In August, The City Wiredetailed efforts made by the city of Fort Smith since 1993 when it was placed under an administrative order for violations of the Clean Water Act. Since that time, the city has invested more than $201.2 million improving the city's wet weather system. The city of Fort Smith has invested $201.2 million since 1993 on wet weather sewer improvements and another $150 million or more could be poured into improvements before the city atones for violations of the federal Clean Water Act – bringing the grand total for compliance with the law to $351.2 million.

In a special Thursday (Oct. 2) meeting of the Fort Smith Board of Directors to discuss the situation, Gosack said much of the more than $200 million in improvements has come during the last eight years.

During the meeting, Gosack told the Board that the city had "remediated more than 70% of the chronic sanitary sewer wet weather overflows, have had only (nine) wet weather overflows in the last year, and have additional work under construction or in design to address most of the remaining chronic overflow locations." He further claimed the city had reduced overflows during wet weather situations by 79% from 2007 to 2013.

As for why the feds ended negotiations and plans to file a lawsuit against the city, Gosack said he believed it stemmed from different priorities and realities between the federal government and the city.

"We think the federal government was concerned on a couple of points. One is the amount of work that was going to be done by the city of Fort Smith. And our concern was the affordability issue and the community's ability to pay."

He explained that affordability was taken into account when determining the level of work needed to be completed once the city agrees to a consent decree, which Utilities Director Steve Parke has previously described as "more of a contract format."

"We were concerned about the community's ability to pay for the amounts of work that the federal government was expecting to be accomplished," Gosack added, providing some insight into negotiations between the city and the feds. Gosack and Canfield have continued to insist that details of the negotiations are confidential by mandate of the federal government.

Asked by City Director Pam Weber how much it would cost for the city to simply comply with the demands of the federal government, Canfield said the figure was confidential.

"We may be getting into areas of the negotiations," Canfield said. "There have been extensive negotiations about what the requirements are and the cost of those. The affordability analysis. … I think in that format, it's probably a question that gets into the negotiations that we shouldn't answer."

Gosack added that the city had estimates, but declined to provide those.

But in August, Parke told The City Wire that another $150 million or more could be poured into improvements before the city would be in compliance with the Clean Water Act and out from under the thumb of the federal government. In all, that would bring the amount of money spent by the city on wet weather improvements to $351.2 million since 1993.

Gosack said the city is prepared to move forward on improvements – including projects underway at Navy Road, Jenny Lind and Zero, and Mill Creek – regardless of what action the federal government takes against the city. But it means the city is likely to impose fee hikes on its 30,607 sewer customers, he added. With the increases, Gosack said they are likely to be made incrementally over time, but could be imposed as early as 2015.

Of the more than $200 million already invested in the system, sales taxes were collected to pay off bonds financed for the projects. With the planned rate increases, Gosack said those should be made public "in a few weeks."

Even though the city is working to prevent wet weather overflows, Gosack did say a major problem now that is noted with the federal government is general overflows that occur due to tree roots growing into the sewer lines or grease or other foreign objects ending up in the line. Parke said should overflows continue happening, there is the possibility of fines totaling $32,500 per day for each violation.

Canfield said once the federal government files suit against the city of Fort Smith, the city will have 30 days to file a response.

Below is the full statement from the office of City Administrator Ray Gosack.

For the last 8-1/2 years, the City of Fort Smith has been in negotiations with the U.S. Department of Justice and the Environmental Protection Agency regarding sanitary sewer system wet weather overflows.  During periods of heavier rainfalls, stormwater enters the sewer system through defects in manholes and underground pipes and overwhelms the capacity of the sanitary sewer system.  This causes untreated sewage to overflow from the system.  The purpose of the negotiations and contemplated consent decree with the federal government has been to bring Fort Smith into compliance with the federal Clean Water Act.

We were scheduled to meet with the federal negotiators in Dallas last week for 3 days for what we believed would be the final negotiations.  One working day before the meeting was to begin, the Department of Justice abruptly cancelled the meeting.  On Sept. 24, the department notified us that the federal government was ending negotiations and were considering the filing of litigation against Fort Smith in federal court.  We continue to believe that negotiation of a consent decree could be successfully completed, and have communicated that to the Department of Justice.  Nonetheless, we expect the federal government to file its litigation at any time.

Our purpose this evening is to brief the board and community on the progress we've made over the last several years and our commitment to continue solving the problems.  We've remediated more than 70% of the chronic sanitary sewer wet weather overflows, have had only 9 wet weather overflows in the last year, and have additional work under construction or in design to address most of the remaining chronic overflow locations.  As shown on the maps, we have reduced the number of wet weather overflows by 79%.  The City of Fort Smith has spent and is committed to spend over $200 million to achieve this progress toward complying with the Clean Water Act.  The locations where much of this work has occurred are shown on the map.  Not coincidentally, the areas where overflows have been reduced are the same areas where significant work has occurred.

Regardless of any federal litigation, we are committed to continuing improvements to the operation of Fort Smith's sanitary sewer system.  Gathering wet weather flow data in the system to identify needed improvements and evaluate system performance, constructing capacity improvements to handle increased flows during wet weather conditions, eliminating sources of wet weather inflow and infiltration into the sewer system, and enhanced maintenance of the sewer system have been and will continue to be our priorities.  We have over $30 million in construction work underway or upcoming.  We are also planning to enhance maintenance of the sanitary sewer system to reduce the occurrence of overflows during dry weather normal operating conditions.  While we've experienced only 9 overflows due to wet weather conditions during the last year, we've experienced approximately 180 overflows due to blockages in sewer lines during dry weather periods of normal operation.  Many times, these blockages are caused by tree roots invading the sewer lines or by the build up of fats, oils and grease deposited by consumers into the sewer system.

The city must enhance its maintenance and public education efforts to alleviate overflows caused by blockages in the sanitary sewer system.  Planning for these programs is underway and will continue.  We will be discussing the specifics of this, including the impact on sewer rates, in the coming weeks.

All of the current and future efforts are affected by affordability.  Affordability takes into account the community's ability to pay, and is a factor which must be considered in determining the amount of work to be undertaken and how fast it will be accomplished.  Affordability affects the city's work programs, and is a consideration of which the city has been and will continue to be mindful.

Regardless of any pending litigation, the City of Fort Smith remains steadfast in its work to address the decades-old problems with its sanitary sewer system.  We've made substantial progress and will continue our efforts.  Our goal is to be in compliance with the federal Clean Water Act and to provide safe and environmentally responsible sanitary sewer services to our 87,000 residents and thousands of businesses.

Necessary but often frustrating road work, significant investments in downtown areas, important quality of life improvements and workforce training are essential elements of the ongoing transformation of Northwest Arkansas, according to area mayors.

Mayors Bob McCaslin of Bentonville, Greg Hines of Rogers and Doug Sprouse of Springdale were part of a panel discussion at The Summit Luncheon at Cross Church on Thursday (Oct. 2). The panel was moderated by Andy Wilson, program director for the church and a retired Wal-Mart exec.

Also attending was Dick Trammel, a banker with Arvest in Northwest Arkansas and a member of the Arkansas Highway Commission. Trammel said the price of progress among the nearly 30 major road projects across Benton and Washington counties is more than $698 million and the work is expected to continue until 2019. Trammel said the orange barrels are a sign “things will get better.” But he added, “it won’t be anytime soon.”

The much-needed widening of the Interstate 49 corridor that links the region together and to the rest of the state and country entails 25 different projects slated through 2017 for a total price tag of $605 million. Trammel said four of those have been completed at a cost of $40 million and there are seven more underway now with at a cost of $110 million. The biggest expense is yet to come, as 14 more future projects carry an estimated price tag of $455 million.

The $605 million being spent along I-49 in the two counties is broken down as follows:
• Bella Vista Bypass: 14.5 miles of new construction which is complete on the Arkansas side at a cost of $150 million.

• The U.S. 412 Bypass: 4.5 miles of new road construction from I-49 in north Springdale toward Northwest Regional Airport back around to Hwy. 412 out near Tontitown. This project is one of the last to begin around 2017 at a cost of $125 million.

• I-49 widening along 26 miles from Fayetteville to North Bentonville. The cost of this work is $200 million with a expected completion date of 2017.

• I-49 interchange work which is ongoing is expected to cost $130 million and take three more years to complete.

Trammel said there are four other large road projects in the region already underway that are not part of the I-49 work, but notable. Those are the Highway 62 Prairie Grove Bypass at $16 million; Highway 62 widening from Avoca to Garfield costing $24 million; Highway 102 through Centerton of which $5 million of work is complete and $15 million more is committed; and the widening of Highway 265 from North Fayetteville through Springdale that has a price tag of $25 million.

The cities along the I-49 corridor have also anted-up millions of their own from the Fayetteville Flyover to Don Tyson Parkway in Springdale to the $53 million 8th Street interchange coming to Bentonville by 2016.

DOWNTOWN INVESTMENT
None of the major cities in Northwest Arkansas have their downtown areas near the I-49 corridor, but they have all committed to investing and revitalizing their downtown areas.

McCaslin said Bentonville’s effort to rejuvenate its downtown began in February 2008 as an all-out effort to spruce up the square. The project was completed by April.

“This was a catalyst for investment that continues today. It was perhaps the most important work we did that has had the biggest impact. It doesn’t hurt to host the world’s largest public company and the gift by Alice Walton (Crystal Bridges Museum of American Art) is immeasurable, but the other public and private investments in our downtown area have also been huge,” McCaslin said.

He adds that property values near the downtown square have doubled and more since 2008.

“It’s a hopping place to be,” McCaslin said.

He said city residents approved more than $100 million in bonds back in 2007, most of which was spent on streets ($85 million). He said $15 million was spent on parks with police and fire each getting $5 million. The downtown rejuvenation project also was funded with that money as is the city’s part of the $53 million 8th Street widening from Walton Boulevard to a new interchange at I-49.

Rogers Mayor Greg Hines said the $15 million spent on improvements to Lake Atalanta and a 100-acre park near downtown and another $30 million shifted toward other downtown projects out of bond revenue funding is starting to bear fruit.

“I am proud to say that I too, am personally investing in our downtown. I have sold my home and purchased a lot in the historic district to build a home there. My parents have sold their home in Pinnacle Country and are also relocating downtown. Not a month goes by that we don’t actively show our downtown to investor groups wanting to redevelop downtown residential properties,” Hines said.

Springdale Mayor Doug Sprouse joked that two years ago Fayetteville Mayor Lioneld Jordan phoned him about paid parking downtown, which was a brewing controversy in Fayetteville.

“I told him that the only time paid parking would be a topic in downtown Springdale was if we agreed to pay someone to park there. That’s were Springdale was just two years ago. But lately we are riding a wave of good news and our downtown vision is taking shape,” Sprouse said.

He said the city is working on Turnbow Plaza and the downtown park area and Spring Creek will soon be uncapped to allow the creek to run through the park along the Razorback Greenway.

“We are just at the beginning edge of our downtown rejuvenation projects but investment is already flowing in,” Sprouse said.

The Walton Family and Tyson Foods have recently purchased downtown Springdale property as well as another investor group lead by Phillip Taldo who bought the Apollo Theater for $50,000.

QUALITY OF LIFE
Sprouse said quality of life is just as important toward spurring economic development as road work. He admits that Springdale has been behind the curve in past years with regard to its parks and trail systems, but they are working diligently to catch-up.

Earlier this week Springdale celebrated a major park expansion with the purchase of 43 acres and the Rabbit’s Foot Lodge near J.B. Hunt Park, which gives the city 175 acres of park around Lake Springdale. 

“I have known Karen Morton for years and she has owned the property since 1983. Over the past few years she has donated a few parcels to the city for the Greenway project and we thought owning the entire acreage and lodge that could join up with J.B. Hunt Park near Lake Springdale could be a great investment for the city. This 175-acre park, lodge and lake now sit almost exactly at the half-way point along the 36-mile Razorback Greenway,” Sprouse said.

He said Johnelle Hunt graciously contributed $500,000 toward the $1.05 million purchase price of the property.

“When I took this to the city council back in April with Mrs. Hunt’s offer it was a no-brainer for us to buy it,” he said. “We have several groups looking at the 3,000 square-foot lodge for possible educational uses in the natural setting.”

McCaslin said Bentonville and the region for that matter is a poster child for “diversity.”

“We have some 60 different ethnic groups that have come to live and work in the two-county region. ... While we also are known as ground zero for growing startups through capitalism in the free market, that does us no good if we can’t create a place where people want to live and invest,” McCaslin said.

He said the Bentonville Community Center which is slated to open next summer is an example of a quality of life investment by the city. The cost of this new recreation center is $16 million.

The Amazeum children’s discovery center will also open next summer in Bentonville, thanks to a private investment of $28.5 million. He said it’s a treasure for entire region.

Hines said the Walmart AMP – another effort made possible by Johnelle Hunt – is having a positive impact on Benton County, particularly Rogers and is partially responsible for steady growth in sales tax revenue since it opened in June.

“What a great gift to Benton County. It’s something we have needed for some time to draw top entertainment to the area, that previously only Fayetteville could host,” Hines said.

EDUCATION CONCERNS
All three mayors addressed education and the importance it will have on the region tomorrow. McCaslin said as good as Northwest Arkansas is at educating its youth, the perception by the outside world is still low.

“Maybe that’s because Arkansas with 2.9 million people is largely a rural state. It’s true that one in seven teenagers in Arkansas drop out of high school today and rely on some type of government aid. Until we change that, the perception of education in Arkansas will not improve,” McCaslin said.

He credits the success in Northwest Arkansas’ educational sector to an acceptance for charter schools and unique public school programs that challenge students from an early age.

Hines said the city of Rogers and its high schools share athletic facilities as with Veteran’s Park and this allows the school to put more money into classroom endeavors. He said the new Math and Science High School in Rogers and the Arts Academy, formerly Benton County School of the Arts, are examples of educational alternatives that prepare students for professions in specialized areas.

“If our schools don’t succeed then there is no hope for our cities,” said Spouse. 

Sprouse said it will require charter schools, high school vocational programs, junior colleges and technical trade schools to help train the next generation of skilled workers. Too many times he said companies look at this region and can’t find the necessary skilled workforce to locate here.

“Workforce training has got to be part of the solution and I know all the cities here and the Northwest Arkansas Council are working on this effort,” Sprouse said.

National Manufacturing Day has been a chance to promote the sector and lobby for renewed interest in making stuff in the U.S.A., but for a group of Junior High students from Fort Smith the day included “weird angles,” math and career options.

KMF Metal Fabrication was among the companies to open its doors to the public Friday, with a group of students from Darby Junior High School's Technology Student Association taking a tour of the company's facility in north Fort Smith.

Vice President Christy Koprovic of KMF Metal Fabrication led the student tour Friday morning and told the students about the various skills needed to not only operate the machines found inside KMF, but also to be able to properly measure and make goods needed by other manufacturing facilities in the region who use the machines and items KMF produces. Among the skills needed in the trade are math and science, she said.

"They couldn't do anything without math," she told the students. "And we need people who can think. Critical thinking is extremely important."

Philip Chadwick, assistant supervisor of production at KMF, told students how operating a metal-bending machine requires him to understand measurements and geometry and properly operate the computerized machine.

"To bend it correctly, I have to take measurements because if it's too thick, it breaks (the machine). With the weird angles, that's really where the math comes in."

Koprovic alerted the students to the potential in manufacturing, explaining that often the salary and benefits within the industry are among the best in the local economy. But she said as the industry continues to change, the students must use the skills they are learning now in order to be prepared for a career that can start as soon as some students leave their high school graduation ceremony.

Keith Smith, an instructor of engineering and technology education classes at Darby, said that was part of why he encouraged students to take part in the Manufacturing Day events and to take classes as early as junior high.

"It's real important to get these kids focused early on an area and get them thinking about (a career field) so when they get to high school, they're taking the correct classes that match up to the type of career they're most interested in."

National Manufacturing Day was celebrated Friday (Oct. 3) in the Fort Smith region with events that started early in the morning.

CHAMBER NOTES
At the Fort Smith Regional Chamber of Commerce's First Friday Breakfast, Melissa Hanesworth, chairman of the Chamber's board of directors and managing director at Pernod Ricard, noted that Fort Smith was the largest manufacturing hub in the state as she introduced the morning's speaker, Jon Harrison. Harrison was previously the plant manager for Caterpillar's North Little Rock facility.

Harrison noted the decline in manufacturing within the United States and in Arkansas specifically in the last decade.

The Fort Smith area manufacturing sector employed an estimated 18,000 in August, down from 18,200 in July, and down from 18,400 August 2013. Sector employment is down almost 37% from a decade ago when August 2004 manufacturing employment in the metro area stood at 28,400. Also, the annual average monthly employment in manufacturing has fallen from 28,900 in 2005, 19,200 in 2012, and to 18,300 in 2013.

The Northwest Arkansas manufacturing sector employed an estimated 26,200 in August, down from 26,300 July, and down from the 26,500 during August 2013. Sector employment is down 21.3% from more than a decade ago when August 2004 manufacturing employment in the metro area stood at 33,300.

GERMAN LEADERSHIP
Harrison showed figures that pointed to how the U.S. was second in the world in the number of manufacturing jobs lost in recent years, but noted Germany — another nation with a large manufacturing economy — was near the bottom of the list for the number of jobs lost.

The reason, he said, was because Germany was doing things the United States had not been doing until recently.

"Germany is much more proactive in these areas," he said, noting that bureaucracy was not as large of a burden in the European nation, taxes were simpler and education and training was central to the evolving manufacturing methods in use across Germany.

Tim Allen, president and CEO of the Fort Smith Regional Chamber of Commerce, said changes are taking place locally – to include robotics and other specialized skills training – to make the economy more adaptable to changes in manufacturing. He said it is one of the reasons the Fort Smith area would be able to maintain and possibly grow the number of manufacturing jobs in the community as more companies look to locate facilities in the United States.

"The old days of a lot of the hands-on manufacturing has left the U.S. and I think that's a natural purge in the market. So we see the high-tech manufacturing skills is definitely the future and that's one of the reasons UAFS' (robotics program) and manufacturing is going to work for Fort Smith where it may not work for other communities," he said.

The robotics certificate program at the University of Arkansas at Fort Smith was announced this year and targeted at providing the market with skilled technicians to work on robotic machines in factories across the region and the state. Currently, no licensed technicians are found in Arkansas.

To highlight the program, UAFS opened Friday its robotics lab at the Baldor Center for tours. Dr. Ken Warden, associate vice chancellor for workforce development at UAFS, said it was important to open up the labs for the public to understand not only the importance of robotics in manufacturing, but the job prospects still available in the industry.

"There are really good jobs in the Fort Smith region and the manufacturing sector. Giving students, whether they're senior high, junior high, K-12 students an opportunity to see the technology and the skills it takes and the wages that are associated with these high skills - that's a really good thing. (We're enabling) these kids to see what's available and the options that are there for them to make a good living as they leave the high school arena and coupling these jobs back to the university experience."

About 100 people will have a new place to call their work home Monday while others needing orthopedic care will have that care closer to home following the dedication Friday (Oct. 3) of the new Mercy Orthopedic Hospital in Fort Smith.

Mercy Fort Smith President Ryan Gehrig said planning for the hospital was seven years in the making, a part of the hospital's $192 million master plan for its Fort Smith operations. Initial estimates were that the new facility would cost $42 million.

"We've been striving to become a permeating presence in this community, to open up new clinics and better access to care for those we serve," Gehrig said.

The hospital sits at the corner of 79th Street and Phoenix Avenue in Fort Smith and boasts 69,000 square feet on two levels. The new hospital is located at the site where a group of doctors in 2008 tried to build an orthopedic hospital in May 2009. Mercy purchased the site close to two years later in February 2011. Initial planning and site design work began in August 2011 with the original plan to use the existing facility. After digging deeper into the project, Mercy officials decided to remove the steel frame that had been erected and start from scratch.

Mercy Orthopedic Hospital will be able to house 24 patients, but has space available to expand the capacity by 12 inpatient beds if needed. Dr. Keith Bolyard, medical director of Mercy Orthopedic Hospital, said the hospital was not designed to treat the sick like a traditional hospital.

"These are otherwise healthy patients with a knee, hip or shoulder that is slowing them down," he said. "Since this hospital is geared specifically to them, we've been able to design a place that will get them back on their feet faster than ever. No one wants to undergo surgery, but this will streamline the process offering them one place to go for all their needs from pre-op testing to post-op rehab."

In order to do that, the hospital is equipped with a 10,138 square foot outpatient rehabilitation clinic that can serve more than 100 patients per day. Included within the rehab clinic, Gehrig said, is a therapy pool that he said was unique to Fort Smith's orthopedic hospital.

"I was at the (Mercy Orthopedic Hospital) in Springfield, Mo., recently and their hospital didn't have a pool," he noted.

The facility also houses surgical suites as well as waiting areas for family and friends. Pre-operation screening including physicals, EKGs, X-rays and lab work can be done on site.

"This is a true health care destination for patients in need of elective total joint replacement," Gehrig said.

John Swope, president of Mercy Central Communities, said with the completion of Mercy Orthopedic Hospital, much of the $192 million master plan put in place in August 2011 was now in place.

The plan included five key areas:
1. Hire more physicians;
2. Improve technology across the Mercy Fort Smith system;
3. Upgrade current facilities;
4. Take healthcare to patients through new methods; and
5. Build new facilities.

"Our commitment to the Fort Smith community was to spend $192 million to build a healthier Fort Smith," he added.

And the commitment to a healthier Fort Smith goes beyond just being physically healthy, but also making a more economically healthy community, according to Gehrig.

"It will provide a positive economic impact on the community. In addition to the approximately 100 people that will be employed here, many more will come to the area seeking the services offered."

In addition to the orthopedic hospital, Mercy invested $10 million in its Heart and Vascular Center last year, completed $5.1 million in renovations of the Hembree Mercy Cancer Center and has opened or started construction on a variety of new clinics across Fort Smith.

The $42 million orthopedic hospital project, while not yet officially open for business, was opened to the public for tours following the dedication ceremony at noon Friday. The hospital officially opens for business Monday (Oct. 6).

Democratic candidate for governor Mike Ross recently unveiled a “Fair Pay & Equal Opportunity Plan” he said is meant to correct disparities in pay between men and women.

The plan would protect employees from retaliation for discussing wages with their co-workers and when they raise concerns about gender pay discrimination.

It would “help employers with equal pay practices” and recognize those that excel in that area. It would also work with public and private entities to train women and girls on salary negotiations and recognizing pay disparities.

An annual report on pay inequity in Arkansas would be published with recommendations for closing that disparity.

Standing before a sign proclaiming Arkansas the “land of equal opportunity,” the Democratic candidate for governor said, “I want my daughter and yours to have the same opportunities to succeed as our son.”

Arkansas employers are already subject to a state equal pay law. Ross’ campaign said more needs to be done. He cited statistics from the National Women’s Law Center ranking Arkansas 35th in terms of equal pay for equal work, with women earning 77 percent of what men earn.

At the press conference, Ross received the endorsement of Arkansas first lady Ginger Beebe, also a Democrat. Beebe cited Ross’ support of the private option Medicaid expansion – 59 percent of whose recipients are women, she and Ross said. She also cited Ross’ support for increasing the minimum wage.

She said Ross’ wife, Holly, “will be an example of what women can accomplish” as first lady. Holly Ross introduced Ross before his speech. Ross’ daughter, Sydney Ross Pack, introduced Beebe.

In other campaign developments, the website Buzzfeed reported Thursday that the campaign of Ross’ opponent, Asa Hutchinson, had plagiarized material on its website about Hutchinson’s plan to teach high school students computer coding. The writing on the site was identical or similar to a blog post by Bloomberg Beta’s Roy Bahat, comments by Sen. John Thune, and a USA Today column by Hadi Partovi.

The Hutchinson campaign told Buzzfeed that the post was written by an unpaid volunteer and that it would add attribution to its website. On Friday, the website did cite and refer to its sources.

“I’m shocked by it,” Ross said after his policy announcement. “First he gets caught up in this tax scandal, and now he’s caught up in plagiarizing issue papers within his campaign. I think it speaks to character. It speaks to trust, and I’m really troubled by it and I think the majority of the people in Arkansas will be.”

Hutchinson offered comments to Ross’ plan.

“The most recent Talk Business/Hendrix poll shows that our campaign has a lead among women and that’s because we are focused on issues like job creation, improving education and strengthening public safety,” said Hutchinson. “I fully support fair pay that is based on qualifications and ability, and there is no place for unfair treatment of employees based on sex. I hope this is something we can all agree on, especially because I have a daughter and granddaughter, and I want them to have the same opportunities as my sons and grandsons.”

Hutchinson also responded to Ross’ reaction to the BuzzFeed story.

“Mike Ross needs to elevate his campaign to talk about the issues facing middle-class Arkansans rather than drive voters away in the waning days of the campaign by constant negative attacks. These attacks discourage young people from participating in the process and they do nothing to help create one job in Arkansas,” Hutchinson said.

Wal-Mart’s goal to save people money does not end with the cost and pricing of goods sold in their stores. The retail giant continues to spread its wings in the service industry by announcing Monday (Oct. 6) plans to bring health care education and insurance enrollment specialists to its stores via a partnership with DirectHealth.com.

The program, “Healthcare Begins Here,” launch comes on the heels of a new clinic format began this summer as the retailer works to shave its insurance costs and those of its employees and customers.

“Our goal is to be the number one health-care provider in the industry,” said Labeed Diab, president of health and wellness for Wal-Mart U.S. “And the more we broaden our assortment, the more we broaden our offering, the more we educate the customer Wal-Mart is a great place to create a one-stop shop.”

THE BUSINESS OF HEALTHCARE
Health and wellness is big business for Wal-Mart’s Stores, garnering roughly $30 billion in sales, which was 11% of the retailer’s total U.S. sales in fiscal 2013. Sales grew 3.8% from the prior year but the retailer is barely scratching the surface of opportunities as there are major shifts underway in this segment.

Wal-Mart’s announcement notes that at least 60% of people have difficulty understanding their health insurance plan option and nearly 40% feel they picked the wrong plan after enrollment, according a report from the Kaiser Family Foundation. The retailer said this new partnership with DirectHealth.com is designed to bring transparency and simplicity to the changing health insurance market for millions of consumers who visit its stores each week.

DirectHealth.com, an online health insurance comparison site and an independent licensed health insurance agency, will provide a resource that seeks to provide Wal-Mart customers access to health insurance information and enrollment support.

“Walmart has long been known for innovation in health and wellness, and we’ll never stop delivering new products and services to the 140 million people who visit our stores each week,” Diab said. “For years, our customers have told us that there is too much complexity when it comes to understanding their health insurance options. Healthcare Begins Here addresses that complexity by bringing clarity and increased choice to the insurance enrollment process through DirectHealth.com.”

Diab adds that Wal-Mart has hosted insurance agents from individual insurers in its stores since 2005 to help answer questions regarding changing health care laws, Medicare and Medicaid programs. He said “Healthcare Begins Here” is a deeper layer of assistance and a next step in response to customers who wanted more options to choose from.

PROGRAM DATES
The program begins Oct. 10 and will run in 2,700 of 4,311 stores through Dec. 7, closely tracking with the Medicare open-enrollment period and partially overlapping with the open enrollment period for federal health insurance exchanges. The company said it will monitor the success of the program and potentially bring it back next year. 

Wal-Mart said DirectHealth.com offers access to more than 1,700 plans from 12 leading carriers Aetna, Cigna, Humana, UnitedHealthcare and participating Blue Cross and Blue Shield companies. (Link here for more information on the program. (Link here for more information about the program.)

The retailer has opened 11 in-store clinics run by Walmart itself that offer primary care such as health screenings and management of chronic conditions like diabetes. That's different from its 100 leased health care clinics in its stores that focus on basic services like flu shots.

Wal-Mart has not been as aggressive as other retail pharmacy chains with in-store clinics and other health care ventures. According to the Convenient Care Association, there are more than 1,400 health clinics inside retail chain stores – twice the number than in 2007. 

CVS Caremark leads the pack with 650 MinuteClinics in 25 states and Washington, D.C. Although Walgreen is second to CVS with Take Care clinics in 372 stores, it anticipates expansion in the next two years with a growth strategy that includes forming accountable care organizations (ACOs) and providing diagnosis and treatment services.

Walgreen partnered in 2013 with Florida-based Diagnostic Clinic, New Jersey-based Advocare, and Texas-based Scott & White Healthcare to form ACOs in which the retailer will benefit from gain sharing when the ACOs succeed in keeping patient healthy at a low cost.

Wal-Mart execs have said the early response to their own in-store clinics has been favorable thus far, but they reiterate that this format is still in the test phase.
Analysts agree that the emphasis by retailers on healthcare is not new. But, they continue to look for ways to draw traffic into their stores with expanded service offerings.

To John McCutcheon, co-owner of Polytech Plastic Molding in Prairie Grove, the idea of contracting for a chaplaincy program for his employees is “without question worth every penny.”

Statistics indicate as many of 60% of employees have trouble focusing on their job tasks because of personal problems; and up to 90% of absenteeism is linked to personal or family problems, according to a U.S. Department of Labor Study.

The return on investment for employee assistance programs such as chaplain services is hard to quantify in exact term. In 2012 Ford and General Motors studied their internal results and found a $9 return for every $1 invested in their employee assistance programs.

UNKNOWN BENEFITS, RISKS
A January 2013 “conference draft” study by Faith Ngunjiri of Concordia College and David Miller of Princeton University suggests no definitive evidence for a cost-benefit claim to corporate chaplaincy.

“In terms of bridging theory and practice, one of the issues that these leaders made clear is that what they know about the benefits of chaplaincy and the contribution to the bottom line is more a ‘gut feeling’ and anecdotal observations, as opposed (to) knowledge from systematic evaluation of their programs,” noted the report. “Thus, a further implication of this study is that scholars need to develop and test new metrics and measures that can be applied to evaluate chaplaincy programs in order to assess just how well they are meeting the needs of organizational members and contributing to individual and organizational outcomes, while minimizing or mitigating any attendant risks.”

“Attendant risks,” according to the report, are underlying pressures to conform to the type of faith used by the chaplains and/or the business leaders who engaged the program. The report notes that “proselytizing motivation could place the chaplains in an awkward situation as they are trained to ‘share the gospel only when invited to do so,’ rather than at the urging of organizational leaders, and also place employees who are not of the particular faith tradition in the situation where they may feel coerced to adopt certain religious views or risk losing their jobs.”

SOMEONE WHO CARES
McCutcheon was first exposed to a chaplaincy program while working at Pace Industries and knew he wanted to offer the same services at Polytech. He contracts with the same service Marketplace Chaplains USA, which employs 31 chaplains in Arkansas who work with 11 companies, including three in Northwest Arkansas. Marketplace provides one male and one female chaplain for each client location.

McCutcheon said the team comes through the plant about once a week to visit with employees and see if there’s anything the employees need help with or want to talk about. The chaplains are also available to visit employees and their family members in emergency situations such as a death or illness in the family.

“They are really sensitive about everyone’s time (at the plant),” McCutcheon said. “They are really there to provide a service if you need someone to talk to. From my perspective, it’s showing that you have someone who cares when you’re in those situations.” 

What the employees talk about with the chaplains is always confidential unless it’s illegal or causing harm to someone. Polytech gets a general report every six months that shares the general topic areas that are the biggest stressors to employees. 

RATES, RULES
John Lindsey is the division director for Arkansas and Louisiana for Marketplace Chaplains. He’s been with the organization for 23 years and was a regular chaplain for 11 years. He said the company’s largest client is Pilgrim’s Pride Poultry with about 50,000 employees reached nationwide. 

Lindsey said many companies who hire Marketplace hear about their services through word-of-mouth or media coverage. The rates depends on the number of employees the company wants served with a flat rate up to a certain number, with increases for employees beyond that.

All the male chaplains must be ordained but because not all Protestant denominations ordain women, the women do not have to be ordained. All chaplains must agree to the Marketplace Chaplains’ statement of faith and agree to work in teams.

Gene Eggman, executive vice president of Human Resources and Government Affairs at Pace, said the Marketplace Chaplains program is contracted to serve all of the Pace locations in North America since 2009.

“A common theme found on our vision and values statement is a commitment to compassion, which is something we strongly believe in,” Eggman said. “So in order to provide our associates a better, more compassionate working environment and peace of mind during stressful times, we offer this service at each Pace Industries location.

“In addition to the Chaplain visits to the locations to build relationships they are available to them 24 hours a day, 365 days a year to provide counseling support, advise, encouragement and personal attention to associates and their immediate families in need of a listening ear.”

FAITH, NO FAITH
Other companies in Northwest Arkansas have their own internal chaplaincy program. Tyson Foods was contacted Sept. 4 about its internal chaplaincy program but declined to comment. This denial was received on Sept. 29 after repeated attempts to connect with Tyson.

Tyson does, however, address its chaplaincy program on its website. According to the site, about 115 chaplains serve the company’s more than 115,000 employees. The program began in 2000.

“Organized as ministers in the workplace, these fellow Team Members represent a variety of religious faith backgrounds. Each chaplain is specially equipped by training and temperament to serve the wide depth and breadth of faith traditions held by their fellow Team Members, including those Team Members who claim no faith tradition,” the website reads. 

Some chaplaincy services are sensitive to the fact that some workers may not believe in religion or a God. Gil Stricklin, founder and president of Dallas-based Marketplace Ministries, addressed that issue in an October 2013 report in HC Online, an Australian-based news service for the human relations industry. Marketplace Ministries is the parent company of Marketplace Chaplains.

“There are still a lot of skeptics in the workplace," Stricklin said in the HC Online article. “If you mention chaplains or religion or faith they say: 'How can you take religion to the workplace? We don't mix religion and work. We don't mix church and state.”

Pensions for police officers and firefighters in Fort Smith are costing the city of Fort Smith large sums of money each year. And the city fund responsible for paying into the system is projected to go broke sometime in 2019.

According Fort Smith Finance Director Kara Bushkuhl, the Arkansas LOPFI (Local Police and Fire Retirement System) Contribution Fund in the city's budget has already been drawing more than is contributed for many years. Documents Bushkuhl provided to The City Wire paint the picture when it comes to police and fire pensions. Money put into the system versus the amount of money taken out to pay into LOPFI stayed in the black on an annual basis through 2007.

The next year (2008), the city withdrew $33,771 more than it put into the fund. And the snowball continued from 2008 to the current fiscal year (2014).

Even with the city on track to withdraw $1.161 million more from the fund during the next fiscal year than it pays in, the retirement contribution fund is expected to start fiscal year 2015 with a balance of $6.514 million. But that total fund balance is expected to only be $287,792 when fiscal year 2019 begins and continue going into the negatives at growing levels for the foreseeable future, culminating in a projected negative fund balance of $10.621 million by Dec. 31, 2022.

The funding of contributions to the plan comes from a variety of city sources, Bushkuhl explained, adding that the state of Arkansas mandates all cities to contribute to retirement plans for its fire responders. Two revenue sources include millage rates of one mil each charged for the police and fire retirements, as well as funneling 10% of district court fines to the pension contribution fund. The millage rates of one mil for each retirement fund bring in about $1.378 million each, or $2.757 million combined each year. The fines contribute about $137,000 per year to the fund.

Other funding comes from a portion of the eighth-cent sales tax for the new fire station at Chaffee Crossing, with about $500,000 in sales tax proceeds contributing to retirement contributions for firefighters stationed to the new firehouse.

Police officers and firefighters are also required to contribute to their retirements. Fort Smith fire responders reviously paid 6% of their salaries to retirement funds, but that changed to 8.5% in 2011.

But one of the major issues contributing to a drain on the retirement contribution fund, Bushkuhl said, is the old retirement plan the city's first responders were under until 1990. The plan, she said, allowed employees to work for the city's fire or police departments for a total of only 20 years and retire with half their annual salary for the rest of their lives.

In order to keep up with the number of retirees collecting from the retirement plan, the state has a base amount required by the city to be contributed for employee retirements - 15.67% of a police officer's pay and 17.49% of a firefighter's pay.

On top of those figures, the state uses an amortization formula to determine the city's contribution level to cover individuals already drawing off the system. With the amortization and base contributions combined, it means the city must contribute 32.36% of police officer's salaries and 39.5% of firefighter's salaries to retirement funding annually.

"Right now, they're both underfunded," Bushkuhl said, adding that the fire contributions are underfunded to the tune of $19 million, while police are underfunded by $17 million.

And even though funding is running into deficits for the retirement contributions, Bushkuhl said the state of Arkansas does not allow municipalities to sidestep responsibilities to retirees who in some cases started drawing retirements in their 40s after putting in 20 years of service before moving onto another full-time job.

In all, there are 118 retired firefighters drawing on the system and 93 retired police officers.

"Until all of those people are gone, that old pension plan for the police and fire will continue to survive," she explained.

Current estimates by the state of Arkansas project another 16 years of the city having to contribute the additional rates on top of base contributions for employees and retirees. But even with an additional 16 years to go — and that number could change based on formulas that take into account life expectancy and the fact that the city still has six employees who will be entitled to the former retirement plan — the plan will go broke by 2020, less than six years from now.

"I think it is a critical problem … because quite frankly, we just don't have it in the general fund," Bushkuhl said.

And the problem is expected to get worse based not only on the current obligations that will be due, but on future obligations that are still mounting.

"Every year, the amount of contributions changes based on salary that we pay, overtime … it's on overtime, regular salary and longevity. So this number we have to contribute continually goes up," Bushkuhl said.

The city's general fund budget from FY 2013 to FY2014 was flat at $47.9 million and sales tax revenues so far this year continue to be flat, as well. For the first eight months of the year, the total tax collections including the August report from the city's sales tax collections are up 1.37% from the same period last year but off budget estimates by 1.04%.

So with drawing additional monies from the general fund not an option, what other options are there? Bushkuhl said additional revenue sources or tax increases are a possibility.

Asked about layoffs to balance the contribution fund, Bushkuhl said job losses in the police, fire and other city departments were not on the table.

"Not yet. That's not a direction that we're looking at for 2015."

Asked whether it was a possibility beyond 2015, Bushkuhl replied, "I don't know. I can't really answer that. I would think the first thing we would do it come up with some other revenue source. I don't know what it would be."

Bushkuhl said the hope is to have a funding mechanism in place by the time state mandates requiring detailed municipal reporting of unfunded pension liabilities goes into affect in 2016.

County judges and sheriffs are pushing for a special session to deal with jail reimbursements for state inmates, but Gov. Mike Beebe and at least one key state lawmaker are unconvinced a special session will fix the problem.

In a public statement released on Monday (Oct. 6), the County Judges Association of Arkansas and the Arkansas Sheriffs’ Association said they have agreed to “actively pursue an immediate solution to a shortfall in state budgeting for county jail reimbursements for state inmates housed in county jails.”

Saying the need is “immediate,” county officials contend that the $28 a day reimbursement for state prisoners in county jails may be up to $17 less than needed per inmate per day.

County leaders said they would meet with lawmakers at Joint Budget hearings that begin Tuesday to address viable solutions, including a request for a special session.

In a special session this summer, the state Legislature and Gov. Mike Beebe approved roughly $6 million in additional funding to meet short-term needs for prison overcrowding at the state and county levels. Last week, Beebe released more than a million dollars in emergency funds to address the continuing shortfall.

The sheriffs’ and judges’ groups say about 2,300 state inmates are being held in county jails across the state and about 25% of county jail beds are occupied by state prisoners.

“Counties are facing challenging times even without this undue hardship,” said Chris Villines, Association of Arkansas Counties executive director. “The number of state inmates in county jails has a detrimental effect on local communities and local law and order. When you add the delay in reimbursement payments, this only compounds an already troubling financial and public safety crisis. We appreciate the fact that Gov. Mike Beebe has recognized the need and has agreed to release $1.1 million in rainy day funds to begin to address the crisis.”

Villines said one year of reimbursements for county jails would equal roughly $24 million, below the appropriation of $16.5 million. He also said $7 million of the $16.5 million is in category “B” funding, which will not be accessed until the end of the current fiscal year next May or June. Villines also said delays in payment from the state have also created “an unnecessary and severe economic hardship on county governments and local taxpayers in Arkansas.”

“This is an example of the state using counties as a source of credit,” Villines said. “Despite all our best efforts in economic development and education in Arkansas, our progress could flat line if we don’t address this issue and it gets out of control.”

Matt DeCample, spokesman for Gov. Beebe, said a special session is unlikely.

“After the release of additional rainy-day funds last week, Governor Beebe thinks all short-term fixes have been tapped before January. What is truly needed, a long-term solution, is not the kind of thing you begin discussing with a special session, you tackle that problem in a general session. While he’s always willing to sit down and discuss all possibilities, he currently doesn’t see an opportunity for additional short-term solutions before the next General Assembly.”

DeCample said in January that supplemental funding may be quickly approved to find additional money for the backup problem, but it would have to be with approval of a new governor.

The wait until January was echoed by incoming Senate President Pro Temp Jonathan Dismang (R-Beebe).

“We’re gearing up for pre-budget hearings right now and legislators have a full plate,” Dismang said. “I do not see the opportunity for us to have another special session before January.”

Wal-Mart CEO Doug McMillon took a bold stance earlier this year when he told the world he would push the envelope toward innovation to drive future growth and improve its sustainability record in the process. That speech was part of Wal-Mart’s Sustainability Milestone Meeting in February, an event that was followed up in Bentonville on Monday (Oct. 6) as the retailer outlined plans for a sustainable food system with an expanded goal to provide 4 billion healthier meals to those in need over the next five years.

“The future of food is absolutely critical for both our society and for our business, which means we have a huge opportunity to make a difference here,” Doug McMillon said in his opening remarks. “We’ve learned on our sustainability journey that we’re most successful when our initiatives create social and environmental value and business value at the same time. Food is our number one category worldwide, and we are going to do even more in our grocery business in the years ahead. Paving a sustainable future for food is necessary for society and our business.”

Michele Simon, president of EatDrinkPolitics, said Wal-Mart is great at garnering media attention with big numbers like 4 billion healthier meals for those in need, but she would like to see the retailer invest that money into higher wages for its workers, many of which require social assistance from food banks.

Jack Sinclair, vice president of grocery for Walmart U.S., said since 2010 Wal-Mart has given $2 billion cash and $260 million of in-kind contributions to hunger relief programs. Simon said supplying food banks is a noble action but it does get at the route of the hunger issue.

“I would like to see Wal-Mart work to alleviate the need for food banks they could start by ensuring their own store workers earn enough to shop for and purchase the food they want and need,” Simon added.

Wal-Mart’s answer to low wage arguments is that the majority of its hourly employees earn more than the state’s minimum wage, many of which will have the opportunity for manager promotions.

FOOD SHORTAGE
No one doubts the world is facing a food shortage by 2050 unless production capacity can double in that timeframe in order to feed 9 billion people around the globe.

“Food production is not keeping pace around the world, which means we have to innovate,” McMillon said.

He said the areas where Wal-Mart feels it can make the biggest contributions are in responsible sourcing of its products, working with suppliers on increasing yields while reducing water consumption and greenhouse gas emissions. All of which, McMillon said will be good for business and better for the environment.

“The good news is we have a track record of doing this. We have been meeting with farmers around the world to make this happen from Costa Rica to China and Zambia,” he said

Programs like “direct to farm” allow small producers to get into the Wal-Mart logistics system and to reduce transportation miles. It began in Costa Rica and has been scaled to other parts of the world.

“Our customers care for it (sustainability) and some of our suppliers need our help. We know something about efficient supply chains and we have become holistic merchants that look at the true cost of a product, which includes the water and land used in production,” McMillon said.

Simon said she would like to know if the savings created from more sustainable farming efforts go back to the small farmer or if are they passed on to the consumer or put into Wal-Mart’s sales margin.

FERTILIZER REDUCTION
Tim Richter, a Midwestern hog and corn farmer, took the stage in Bentonville on Monday touting the benefits of Triple Bottom Line. a commodity cooperative that has helped boost the returns on 7,000 farm acres with less fertilizer use. Richter has farms in Iowa and Missouri and he said optimizing fertiziler usage on his corn acreage has been a win for the farm productivity and provided a greener footprint for hogs and corn coming from his farms.

Wal-Mart said its food suppliers use corn and wheat from farms like Richter's in products that could wind up on Wal-Mart shelves. Reducing fertilizer usage on products sold in its stores is one of the main platforms Wal-Mart and the Environmental Defense Fund have recently partnered.

Richter said farmers can’t grow corn profitably without nitrogen based fertilizer, but by using technology-based tools like Adapt-N made available to him by Triple Bottom Line, he used the optimum amount on all his corn fields, which translated to $150 in additional profit per acre last year.

“The nitrogen I applied ended up in the crop which is where we want it, not in the air or water, so it increases profit while reducing greenhouse gases and water quality problems” he added.

Sinclair said the retailer has taken $3 billion out of the cost of grocery in the past three years because of responsible sourcing.

In 2010, Wal-Mart said it was going to double the amount of locally grown produce – produce for stores grown in the same state. The retailer reported it’s 17% ahead of goals this year. Wal-Mart said by next year 50% of its palm oil and beef from Brazil will be sourced by sustainable measures guarding against deforestation efforts.

LEANING ON PARTNERS
Wal-Mart does not apologize for leaning upon partners in its efforts of sustainability. Kathleen McLaughlin, president of sustainability at Wal-Mart, said it’s going to take everyone working together in some capacity to ensure the world doesn’t run out of fresh water and there is enough food for all in the coming decades.

At Monday’s meeting Wal-Mart recognized a partnership agreement with six large suppliers: General Mills, Kellogg, Pepsi, Monsanto, Cargill, and Coca Cola. Together this group pledged to reduce 8 million metric tons of greenhouse gases by employing more sustainable practices on 10 million acres farmed over the next three years.

Unilever also announced a pledge to have 100% of its soy-based products provided by sustainable farms by 2017. Mike Faherty of Unilever said the company plans to double productivity at half the costs.

Matt Carstens of United Suppliers Cooperatives said its members were committed to extend its reach to 10 million acres over the next three years, reducing 4.8 million metric tons of greenhouse gases in that time period.

Retail sustainability expert Stacy Mitchell has said Wal-Mart pivoted to the supplier emphasis in the last two years or so while other goals once stated where abandoned. Mitchell is a research analyst at the Institute for Local Self Reliance in Portland, Maine.

Mitchell said Wal-Mart has received much media attention for sustainability efforts when it’s their suppliers doing most of the heavy lifting. She said there is still much room for improvement in Wal-Mart’s sustainability goals but it may be easier and cheaper for the retailer to shift more focus on the supply chain for which they can take also credit.

Michelle Harvey, with the Environmental Defense Fund, said Wal-Mart has a big opportunity to leverage its scale further and expand upon its work to make the food healthier, provide clearer labels and better access in food deserts. She supports the work already done by Wal-Mart with its suppliers to reduce their carbon footprints.

FOOD DESERTS
Wal-Mart’s meeting also featured a store manager from Washington D.C., who spoke on behalf of the retailer’s efforts to put stores in food deserts.

“As part of our commitment to provide solutions to food deserts, we announced we would provide more than 1.3 million people living in more than 700 USDA designated food deserts with access to fresh, healthier food. We said we would open between 275 and 300 stores in areas serving food deserts by 2016,” Walmart noted in a 2011 news release.

Simon and other critics have said Wal-Mart’s efforts in food deserts are commendable but when they open stores and don’t pay livable wages the cycle of hunger is bound to continue.

Wal-Mart has also held true to its pledge to reduce salt and added sugar from certain products which bear the “Better For You” label on the front of the package.

“Grocery is a very personal category – it’s about what you feed your kids and how you take care of yourself.  It’s about your health and wellbeing. And it all comes down to trust. Customers have to trust us on food. When we focus on food, we are doing right by our customers, our communities, and our planet,” McMillon said.

House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Penn., journeyed to Northwest Arkansas and the Fort Smith regions on Monday (Oct. 6) to have a first hand look at infrastructure needs in Arkansas' third Congressional district.

U.S. Rep. Steve Womack, R-Rogers, said the purpose of the visit was to give Shuster a first-hand account of the needs in his home district.

"I have pleaded with him, given the opportunities I see in my own district, I've pleaded with him to come down to the district and see it first hand," Womack said, adding that the process of getting the Pennsylvania Republican to Arkansas began with a series of presentations in Washington highlighting the local infrastructure needs.

Shuster's visit not only gives Womack and local and state officials the opportunity to highlight the infrastructure needs including dredging the Arkansas River to 12 feet, but it gives Shuster an opportunity to see first hand the ongoing work to make Arkansas stand out as a state that is investing more local money in federal projects, such as completing Interstate 49 and highway rehabilitation across the state.

Womack said he and Shuster started the day in Benton County with a flyover of the Bella Vista Bypass that will eventually reroute traffic away from the city and through rural Benton County and McDonald County in Missouri. A vote for an increase in taxes to fund Missouri's portion of the project and several other statewide projects failed to win approval earlier this year, putting into question when the project could be completed.

After meeting with stakeholders in Northwest Arkansas, Womack brought Shuster to the Fort Smith area, where the two were presented with information on infrastructure needs along the Arkansas River, such as the dredging, but also discussed in detail additional I-49 construction. Shuster said he was impressed with the intermodal opportunities he saw in region, noting that highway, water and rail were "the fundamentals for growing an economy and you have all that right here in Fort Smith."

He said the knowledge of the region he gained through Monday's trip would be beneficial when returning to Washington to work on a "surface transportation bill.”

"This will be something that we look at and try to focus those dollars really on the major corridors in this country that move freight, that move people, and I-49 is one of those corridors. So (I will be) working with Steve (Womack) in Washington on the next surface bill, making sure we're focusing those dollars to go to places that you see right here, this roadway, that need to be completed from Canada down to Louisiana.”

The surface transportation bill Shuster discussed would likely be a five to six-year bill to appropriate funds for as many as 40 different transportation corridors across the nation, of which I-49 would likely be included, he said. The challenge in the current Congress with getting funding is the no earmark policy in place for the last several years, which has limited the ability of members of Congress to direct money to their home districts for specific projects.

In discussing the challenges, Womack said much of the I-49 stretch from Alma to Fayetteville was paid for through former U.S. Rep. John Paul Hammerschmidt's successful use of earmarks to bring dollars home to the third district. Shuster said convincing his colleagues in the House of the importance of funding for projects like I-49 would not necessarily be a daunting task.

"It's capital investment into the United States economy, capital investment into our transportation system. … They (other members of Congress) understand that and they know the importance of making those investments. So this is not pork. This a fundamental, this is a core function of government - state, local and federal levels of government - making sure we're all participating.”

It was similar to the language used by U.S. Sen. Jim Inhofe, R-Okla., a senior member of the Senate's Environment and Public Works (EPW) Committee, who went so far as to say the Constitution mandates infrastructure investment and discussed various ways of developing new revenue streams to fund a broke federal Highway Trust Fund.

Shuster said there is talk of taking "repatriated funds" from offshore accounts and companies that owe U.S. taxes and putting that toward replenishment of the trust fund, as well as taking oil production leases and royalties and using it for the trust fund.

"We're looking at a number of different ways to fill the hole in the trust fund because that's our big question right now because to get a five or six-year bill, we've got to make sure the trust fund is whole, is flush through that period.”

Regardless of how much money gets placed back in the federal Highway Trust Fund, Shuster said the thing working in Arkansas' favor as far as securing funding for projects like building out segments of I-49 is the state's chipping in above the federally-mandated minimum cost share of 80-20. Shuster said a meeting with the Arkansas Highway and Transportation Department Monday detailed the state's willingness to pay for 65% of the projects, leaving the federal government on the hook for only 35%, versus 80% on the traditional highway funding model.

"We have to reward states that are doing that, so Arkansas is doing that. What I see here in Fort Smith with the modes - water, rail, and highway, especially - you've really got something to build upon. And when you look at the next 20 years, the amount of freight that's going to travel through this country is on an incline. And making sure places like this are able to capture that opportunity is important.”

There were no firm commitments of what funding from a future transportation bill would go toward, though the 13 mile stretch between Barling and Alma which includes a bridge spanning the Arkansas River was discussed. The bridge itself is estimated to be around $200 million, while the entire stretch between Barling and Alma is estimated to cost $350 million.

Mat Pitsch, executive director of the Regional Intermodal Transportation Authority who will be sworn in as a state representative in 2015, said Inhofe's visit in August and Shuster's visit Monday were steps toward bringing money back to the region and hopefully completing that section or other sections of the interstate, such as the Bella Vista Bypass.

"It's invaluable to have someone, especially of that stature (Shuster's chairmanship of the House Transportation and Infrastructure Committee).”

Faced with insurance costs that could rise $500 million in the fiscal year, Wal-Mart Stores announced Tuesday (Oct. 7) plans to stop offering health insurance for an estimated 26,000 U.S. employees who work less than 30 hours a week.

“Similar to other retailers like Target, Home Depot, Walgreens and Trader Joe’s, we will no longer be providing health benefits to part-time associates who work less than 30 hours. This will impact about 2% (26,000) of our total U.S. workforce of 1.3 million. We will be working with a specialist, HealthCompare, to personally guide our associates through the process of finding the right, affordable health care,” said Sally Welborn, senior vice president of global benefits at Wal-Mart.

Welborn said Wal-Mart did not make this decision lightly.

“The fact remains that our plans exceed those of our peers in the retail industry. Our premiums remain well below the industry average compiled by expert Aon Hewitt. We also continue to pay the majority of health care costs for associates covered under our medical plans. For example, on average we cover more than 60% of our associates’ total health care costs and more than 75% of their premium costs. In contrast, the retail industry pays, on average, about 54% of total health care costs and 68% of employee premiums,” she said.

Welborn also said the company’s lowest cost plan saw premiums increase by $3.50 per pay period to $21.90, which is half the average premium for other retailer employees.

Mike McCurry, chief operating officer of Mercy Health, said during a June meeting in Rogers that more large employers such as FedEx Corp., Home Depot and Walgreens as are making radical changes to their plans by eliminating health care options for retirees and non-spouses and raising the minimum deductibles to keep costs down.

Wal-Mart execs warned investors that health care costs were spiraling higher at the start of this year, and lowered their earnings guidance in August when the costs predictions were expanded from $330 million to $500 million for this fiscal year. 

CRITICAL RESPONSE
Critics say the reality for Wal-Mart workers finding themselves uninsured is that they likely can’t afford to purchase plans on their own, but many may qualify for Medicaid or other government subsidies in their respective states.

“Wal-Mart, like Home Depot, Target and other large retailers, is wrongfully trying to take advantage of loopholes in its employee health care plans which provide coverage to full time employees by deliberately hiring more part time employees with whom they are not required to provide coverage. Just another example of Wal-Mart’s concern for the bottom line then the health and welfare of its employees”, said Jerry Reisman, an expert in workplace law and a partner at the Garden City, N.Y., law firm Reisman, Peirez, Reisman and Capobianco

Reisman said the largest American retailer is allowed to do something which they could not do if these employees were full time by denying them medical coverage under the disguise of being a part time employee. 

“The majority of these part timers would want to work full time and get benefits but Walmart’s greed exceeds its concern for it employees who not only need the work but the medical benefits as well,” Reisman added.

He would like to see Wal-Mart be a leader and take a progressive stand to provide full-time work and benefits to its employees, rather than being a follower of Home Depot and Target who also are mostly concerned with their bottom line.

Wal-Mart said part-time workers only account for 2% of its U.S. workforce. In the recent quarter Wal-Mart said it was giving workers options to pick up more hours as it beefs up staffing around its store operations. In the quarter, Walmart U.S. said labor costs rose more than $200 million from the same period a year earlier.

MAYO PARTNERSHIP
Wal-Mart workers who are allowed to keep their insurance coverage will be able to obtain care at the Mayo Clinic Cancer Center locations in Rochester, Minn., Jacksonville, Fla., or Phoenix, Ariz., if they should be diagnosed with breast, lung or colorectal cancer.

Welborn announced this Mayo Clinic partnership agreement on Tuesday (Oct. 7). She said upon diagnosis, employees can obtain a review of the medical records by Mayo Clinic and when recommended, they will receive care at 100% for on-site visits at Mayo Clinic beginning Jan. 1.

“We are proud to expand our Centers of Excellence with Mayo Clinic to help ensure that our associates and their covered family members who are diagnosed with cancer receive the best care,” Welborn said. “The three cancers covered under our program are among the most prevalent experienced by associates on our health care plans.”

Dr. Jan Buckner, the Mayo Clinic deputy director, said Wal-Mart approached the health care provider to form this partnership that extends Mayo Clinic Care to its insured employees. The benefits under the Walmart Centers of Excellence cancer program include: On-site visits will be covered at 100%; recommended treatment, such as chemotherapy, radiation or surgery without deductible or coinsurance; and travel expenses for the patient and a caregiver. 

“Our coordinated approach to cancer care offers patients the latest advances in treatment in a compassionate and caring environment,” said Dr. Jan Buckner, deputy director of practice at the Mayo Clinic.

Welborn said anyone who has been following the news for the last several years knows that health care is a major topic of debate. From doctors’ visits and prescriptions to insurance premiums, health care costs have increased for all individuals and the companies that insure them each year.

“Knowing this, Wal-Mart continues to work with health care providers and professionals, using our size and influence to negotiate the best rates and options for our associates,” she added.

The retailer also announced Monday (Oct. 7) a new partnership that allows consumers to compare healthcare insurance rates and shop for coverage in 2,700 of its U.S. stores and it has also set up 11 health clinics inside stores since early this spring that provides doctor visits for $4 for its insured employees and $40 for the general public.

Four years ago, business and community leaders in Northwest Arkansas put forth a five-year plan to set the region on a path to greater prosperity. Mission nearly accomplished, at least so much that eyes have turned to developing a three-year plan aimed at building on recent successes.

Mike Malone, CEO of the influential Northwest Arkansas Council, tells Talk Business & Politics that items outlined in a January 2011 strategic report have either been completed or are "substantially underway."

"It's time to build the blueprint for what we work on as a region next," Malone said.

The "Greater Northwest Arkansas Development Strategy" report, issued four years ago, called for a variety of investments and initiatives to enhance economic development, education and health care, arts and culture, and quality of life.

Building on the powerhouse institutions in the region – Wal-Mart Stores, Tyson Foods, J.B. Hunt, and the University of Arkansas – the northwest quadrant of the state set out to lay the foundation for another generation of residents to feed those core economic engines.

Some of the January 2011 goals included more physical infrastructure aimed at roads and the regional airport (XNA), a preservation of drinking water and recreational water sources, and community vitality that improved diversity and citizen engagement. The plan also called for increasing educational access and achievement, workforce development, and the support of existing businesses and new business recruitment.

Planning for the next three years will center on similar goals, Malone says. It is likely to emphasize more "human capital" investments, but not at the expense of traditional infrastructure.

"As has always been the case in Northwest Arkansas, there will be a focus on physical infrastructure. Roads certainly still matter, the airport is critical. But the physical infrastructure also includes the availability of utilities, trails, transit, and other elements. It's an expanded definition to focus on physical infrastructure," he said.

Not all infrastructure developments will be those that move trains, planes or automobiles.

"Certainly, the human capital needs of our large, growing companies will continue to be a focus, so I think there will be some recommendations there," Malone added. "More and more as a region, quality of place and amenities matter for both talent and business attraction. We're spending more time and there's a lot more effort on what we're calling the 'experience infrastructure.' There will be some elements of that in the plan. Making sure we have great downtowns, making sure we have arts, culture and outdoor recreation offerings that professionals and our residents are looking for."

At a "State of the Northwest Arkansas Region" conference in Springdale last week, Malone and others reported on economic indicators that are differentiating the area from other parts of Arkansas and counterparts in other states.

Kathy Deck, director of the UA Walton College Center for Business and Economic Research, pointed to several statistics that have seen improvement in the last year.

Population has grown by 1.9% to 491,966 in the region. GDP has lifted by 5.6% in the last five years to $22.593 billion. The region's per capita personal income and annual wages have also risen, which has led to a small decline – 0.4% – in the area's poverty rate, which stands at 16.8%.

Unemployment in the metro region remains the lowest in the state at 4.9% in August, but employment figures have been rockier and more unpredictable. The size of the Northwest Arkansas regional workforce during August was estimated at 232,136, down from the 233,372 in July, and 0.82% below the 234,076 during August 2013.

"What we're seeing right now is that employment growth is still good, but not quite as good as it has been in Northwest Arkansas. We're seeing that the labor force is actually shrinking year over year, which doesn't jive with our sales tax revenues, it doesn't jive with our building permit information, it doesn't jive with new utility hook-ups," Deck said.

And the answer for that trend is elusive, for now.

"We're still searching for a reason that the labor force would go in a situation where the employment situation is improving," she noted.

The paper check was once the most used form of currency by consumers at retail counters, but the times are changing rapidly. Whole Foods recently announced as of Sept. 1 it would no longer accept personal checks in Arkansas, Oklahoma, Texas and Louisiana, following a trend in other markets over the past few years.

“Most of our regions no longer accept personal checks, but the Southwest is not the last one to make the transition,” said Lindsay Robison, a Whole Foods spokeswoman based in Austin. “By accepting only electronic payments and cash, we will reduce wait times in line.”

Aldi, a discount grocer growing its footprint across the Midwest, has had a no-check policy in place for years. Customers there must pay in cash or with a debit card in keeping with the retailer’s no-frills, pass-the-savings-on strategy.

Local grocers like Harps Foods continues to accept checks, but they are making up a smaller part of overall transactions as consumers are more apt to use a debit card which is processed immediately versus a two-day lag in check processing. Kim Eskew, chief operating officer with Harps Foods, said they are in the process of updating all of the terminals in their 76 grocery stores. He said it's a substantial investment but it will give them the flexibility of accepting chip-based cards; and with some software modifications they could sign on for mobile payment plans in the future.

The number of checks written declined nearly 10% every year from 2009 to 2012, according to the 2013 Federal Reserve Payments Study released in July. Two-thirds of the noncash payments made in the U.S. were made by card in 2012, according to the study.

The 50% decline in checks written since 2000 has greatly reduced the need for processing centers which are run by the Federal Reserve Bank. At one time there were 40 check-processing centers. That has been reduced to one which is located in Atlanta, according to the Federal Reserve Bank website.

CHECKS WELCOME
The nation’s two largest grocers, Wal-Mart and Kroger, still accept checks with no immediate plans to stop.

Only about 5% of all transactions at Kroger are by check, according to spokesman Gary Huddleston. He said the company continues to accept checks because it also does a significant amount of check cashing, which is a fee service.

Wal-Mart also does a lion’s share of check cashing at its stores as well as supplying small businesses and non-profits with office supplies and other products, many of which still pay with a corporate check. The retail giant has also said it is about offering variety and assortment to its expansive customer base of 140 million shoppers a week. As long as some of its customers need the check option it plans to offer it.

Wal-Mart and a growing number of retailers and service providers are using electronic check conversion, which isn’t really payment with a check like the traditional method. The Federal Reserve explains that shoppers may think they are paying with a check but the check is used as a source of information — account number, check number and ABA Routing number that identifies the bank. The information is then used to make a one-time electronic payment from the consumer’s bank account — an electronic fund transfer. The check itself is not the method of payment.

That explains why Wal-Mart cashiers hand the processed check back to the shopper once the transaction is complete.

MOBILE PAY
Apple announced plans to launch Apple Pay later this month on its iPhone 6 and iPhone  6 Plus devices. Acceptance among retailers has been mixed. 

"A lot of it hinges on not so much Apple but the merchants that are out there and whether or not that consumer is going to have a good experience the first time they try to use Apple Pay," said eMarketer analyst Bryan Yeager. "That's been one of the key issues that every mobile payments provider has struggled with."

Apple has partnerships with MasterCard, Visa and American Express, along with leading banks that handle more than 83% of U.S. credit card transactions. The merchant list includes Macy's, Bloomingdale's, Disney, Walgreens, Staples, McDonald's, ToysRUs and Whole Foods for a total of more than 220,000 retail locations in the U.S.

Wal-Mart, Dillards, Best Buy and other major retailers have not signed on for Apple Pay because they have a competing mobile payment product in the works through a private pilot partnership in Merchant Customer Exchange.

Merchant Customer Exchange was formed to develop a customer-centric and secure mobile payment solution that it calls CurrentC. Unlike Apple Pay, CurrentC is not linked to credit and debit cards, but rather directly to shoppers' bank accounts. The app generates a QR code recognized by most existing checkout scanners that will deduct the purchase amount from a shopper's checking or savings account through the app without a transaction fee.

CurrentC was launched in private pilot mode in select locations across the country. The private pilot will expand through 2014, with regional and national rollouts to follow in 2015, according to Merchant Customer Exchange.

“CurrentC will offer customers a simpler, faster, secure way to checkout at their favorite merchants,” said CEO Dekkers Davidson. “At full scale, CurrentC will be accepted in more than 110,000 merchant locations across the country, giving consumers unmatched access to their favorite retailers. It will also offer innovative features and benefits, such as merchant loyalty programs and instant coupon savings, all stored on the phone and available right at the point-of- sale.”

CurrentC will enable customers to store and redeem digital coupons and offers and it works on any smartphone, not just the iPhone, and thus has a larger market for the time being, the release notes.

By 2018, mobile proximity payments in the U.S., which include payments made using a phone to make a physical transaction at the point of sale, will reach $118 billion, up from $3.5 billion in 2014, according to eMarketer. Analysts now don’t believe that any one system will rule the day.

RACE TO MARKET
Researcher Craig Hettenbach issued a blue paper to investors on Tuesday (Oct. 7) to analyze the effect Apple Pay may have on the mobile payments industry when it launches on the iPhone 6 and iPhone 6 Plus this month. Because Apple Pay is compatible with the existing infrastructure and Apple already has such a large install base of users, Hettenbach believes the company will have no trouble gaining traction.

He says a key factor for Apple's likely success is compatibility with the existing payment infrastructure. Apple Pay will allow users to make payments with bank cards offering a layer of protection by swapping out the card number for a different, representative number or a token number from card networks to protect user data.

Davidson said the CurrentC is a software-based solution that works with most existing point-of-sale and payment terminals — providing merchants large and small with a cost-effective entry point into the mobile payments movement. CurrentC will utilize a secure paycode and will not require additional hardware from most customers or merchants.

He the CurrentC provides a more secure payment experience than traditional methods by storing users’ sensitive financial information in its cloud vault rather than locally on the mobile device. This system also uses a token placeholder to facilitate transactions instead of constantly passing the data between the user, merchant and financial institution.

While mobile payment is sprouting wings analysts don’t believe consumers are quite ready to shelf their wallets like they have their checkbooks in recent years.

Same sex couples are now able to receive marriage licenses in most counties across the state of Oklahoma following the United States Supreme Court's decision Monday (Oct. 6) to not hear arguments in five different federal cases in which lower federal court judges found state bans on gay marriage to be unconstitutional.

In the Fort Smith region, Sequoyah and LeFlore County court clerks confirmed Tuesday (Oct. 7) they would issue licenses to same sex couples seeking to be married. Just west of Northwest Arkansas, the clerk in Delaware County was set to issue licenses, and the clerk in Delaware County was not certain of how the county was planning to handle the change.

Sam McCarter, Adair County Court Clerk, had not yet talked to the county’s legal counsel but said he believed the county would soon issue licenses for same sex marriages.

"From everything I've seen, I don't see how we can refuse (to issue a same sex marriage license). We've had people call, but no one has come in. Other court clerks are offering (to issue licenses), so again I don't see how I can refuse,” McCarter said.

Delaware County Court Clerk Carolyne Weaver said they were prepared to issue licenses and began issuing them Tuesday (Oct. 7).

"We changed forms like Sept. 30. They were getting them ready just in case it happened,” she said.

Sequoyah County Court Clerk Vicki Beaty said the county relied on a legal opinion from the county's district attorney following the inaction by the Supreme Court, which effectively removed a stay on a federal judge in Tulsa's opinion earlier this year that ruled Oklahoma's ban on gay marriage was unconstitutional.

"Our district attorney advised us on the Supreme Court decision and that's what we're doing, following the law," Beaty said of her offices move to begin issuing licenses to same sex couples.

Even though Beaty's office plans to issue licenses, forms must first be redesigned to comply with the law, she added.

"Basically, our forms are not complete for us to use yet. Until they get all the bugs worked out with our computers on the new forms, that's what we're waiting on. … It's changing it from man and woman and now they are naming it first applicant and second applicant."

Beaty did not provide a timeline of when the new forms would be ready or when computer systems would be updated to be gender neutral with regard to marriage licenses. With the forms and computer systems not yet updated, no same sex licenses have yet been issued in Sequoyah County.

In LeFlore County, Court Clerk Melba Hall said an opinion from the county's district attorney arrived late Monday and meant the county did not necessarily have an answer for individuals who inquired about whether they could obtain a marriage license for themselves and a same sex partner.

"They (callers) were the ones that first alerted us to the decision that came down. We've had about 15-20 calls and three or four couples that have come in prior to us having the forms revised," she said, adding that gender neutral forms had been available since lunch Tuesday.

"I expect to issue our first (same sex marriage license) by closing time," Hall added.

Gov. Mary Fallin, R-Okla., made clear in a statement that she was not pleased with the Supreme Court's inaction which basically cleared the way for marriage equality in Oklahoma.

"The people of Oklahoma have the right to determine how marriage is defined. In 2004, Oklahomans exercised that right, voting by a margin of 3-1 to define marriage as the union of one man and one woman," she said. "The will of the people has now been overridden by unelected federal justices, accountable to no one. That is both undemocratic and a violation of states’ rights. Rather than allowing states to make their own policies that reflect the values and views of their residents, federal judges have inserted themselves into a state issue to pursue their own agendas."

She said Oklahoma voters had their rights "trampled by an arrogant, out-of -control federal government that wants to substitute Oklahoma values with Washington, D.C. values.”

While the Supreme Court's refusal to hear the cases from Oklahoma and four other states has opened the door to gay marriage in those states, the ruling had little impact in other states where gay marriage has been ruled unconstitutional by state or local courts, including in Oklahoma's eastern neighbor of Arkansas.

In May, Pulaski County Circuit Judge Chris Piazza ruled that Arkansas' ban on gay marriage– approved by nearly 75% of voters in 2004 – was unconstitutional. Licenses were issued briefly in some counties across the state, but a stay was eventually issued halting same sex marriages in Arkansas while the case goes through the appeals process.

Human Rights Campaign, a Washington-based gay advocacy organization, said the inaction by the Supreme Court left same sex couples in states like Arkansas in limbo.

“Any time same-sex couples are extended marriage equality is something to celebrate, and today is a joyous day for thousands across America who will immediately feel the impact of today’s Supreme Court action," said HRC Arkansas Director Kendra R. Johnson. "But this news is an unfortunate reminder that LGBT Arkansans still lack basic legal protections against discrimination, and cannot legally marry the person they love in the place they call home.”