Natural Resources

Act 605 of 2021 tasked retail water providers with additional responsibilities in managing and operating their water systems, with some exceptions. These responsibilities include preparation of a rate study every five years or before any major development project. Rates determined from the study are required to be implemented within one year of the completion of the study, or two years if the recommended rates increase the provider’s rates by fifty percent or more.  Failure to complete a rate study or implement the required rate increases will result in a determination that the water provider is in fiscal distress.  Rate studies must be filed with the Arkansas Legislative Audit and the Arkansas Department of Agriculture’s Natural Resources Division.  

Additionally, when a municipal water system has 20 percent or more of its customer base outside of the municipal boundaries, the municipality must establish a non-voting advisory committee to advise the municipality on water system matters. This committee must represent the water users outside the municipal boundaries. 

Also under the legislation, all members of a retail water provider governing board must complete eight hours of training. The training must be completed within one year of becoming a board member.  A member with ten years or more of service on the governing board is exempt from training. The Act provides that the Natural Resources Division will utilize an advisory board of water professionals to develop the curriculum for the training. 

• Act 545 of 2023 
• Act 605 of 2021
• Act 925 of 2025
• Rules Implementing Oversight of Retail Water Providers

All listed rules are available on the Arkansas Department of Agriculture Rules page at
https://agriculture.arkansas.gov/resources/public-information/rules/

Rate Study Providers

Per Act 605 of 2021, the Natural Resources Division shall maintain an approved list of entities to conduct rate studies for Water Service Providers. The list of currently approved providers can be found below.  Entities that intend to provide Rate Studies for Water Service Providers, as required by the Act, shall apply for inclusion on the list of approved entities on the form provided below.

• Rate Study Provider Form Application 

Approved Retail Water Board Training Providers

Training Provider	Name	Titile	Address	Email	Phone
Arkansas Environmental Training Academy (AETA)	Randy Harper	Director	P.O. Box 3499, Camden, AR 71711	[email protected]	(870) 574-4590
Arkansas Rural Water Association (ARWA)	Chris Harris	Executive Director	P.O. Box 860, Lonoke, AR 72086	[email protected]	(501) 676-2255
Communities Unlimited, Inc.	Tonya Kendrix	AR State Coordinator	3 East Colt Square Drive, Fayetteville, AR 72703	[email protected]	(501) 291-9229

All rate studies performed by an approved rate study provider shall be an objective and unbiased review of the Water Service Provider’s fiscal status. All submitted rate studies must include a certification by the approved rate study provider that the study complies with Act 605 of 2021 and the rules implementing the Act. The Natural Resources Division may remove an approved rate study provider from its list of approved entities if it determines that an entity violated Arkansas law or Natural Resources Division rules in performing a rate study. 

Rate Studies 

All Water Service Providers, except those specifically exempted by Act 605 of 2021, must complete a rate study a minimum of every 5 years and prior to any major development project.  A major development project is defined as a project with a total cost exceeding 20 percent of the gross revenues of the provider for the immediately preceding fiscal year.    

Prior to a major development project, all Water Service Providers, except those specifically exempted by Act 605 of 2021, must complete their rate studies by the following deadlines: 

• July 1, 2024, and every five years thereafter for a provider that serves five hundred (500) or fewer customers 
• July 1, 2025, and every five years thereafter for a provider that serves five hundred (500) to one thousand (1,000) customers 
• July 1, 2026, and every five years thereafter for a provider that serves more than one thousand (1,000) customers 

The rates determined from the study are required to be implemented within one year of the completion of the study. If the increase will be 50 percent or more of the current rate, the system will have two years to implement the total increase.  Rate studies must be filed with the Arkansas Legislative Audit and the Natural Resources Division.  

Rate studies shall be based on the guidelines of the American Water Works Association and the Water Environment Federation and shall include: 

1. Reports containing the following information for the current year and projections for the next five years:
   
   A. A comprehensive cost analysis, including:
   
   i. Operations and maintenance (O&M) expenses;
   ii. Financing expenses, including but not limited to debt service payments, bond
   issuance costs, and commercial paper fees, if applicable;
   iii. Any required cash reserves unavailable to pay for expenses, including but not
   limited to the annual refurbishment and replacement account deposit requirement as
   set out in Ark. Code Ann. § 14-234-802(e);
   iv. Depreciation expenses;
   v. Future capital expenses;
   vi. Expenses required for an annual audit or agreed-upon procedures and compilation
   report;
   vii. Expenses required for rate studies required under Ark. Code Ann. § 14-234-802; and
   viii: Any other expenses not accounted for in paragraphs (a) through (g).
   
   B. A comprehensive revenue earnings analysis, including:
   
   i. Available Cash balance;
   ii. Non-rate revenue;
   iii. Rate revenue without recommended increases;
   iv. For the five projected years, recommended rate increases and the projected
   additional revenue derived therefrom;
   v. Debt Service Coverage Ratios;
   vi. The number of days that the available cash balance could cover O&M expenses without
   additional revenue;
   vii. Annualized revenue requirement.
   
   2. The provider’s asset management plan, including:
   
   A. An inventory of essential assets. For each essential asset, the provider shall provide
   the following information:
   
   i. Asset type;
   
   a. Annual maintenance costs;
   b. Year installed;
   c. Vendor-specified useful life, if available;
   d. Anticipated date of replacement;
   e. Installation or replacement cost estimate; and
   f. Projected consequence of failure.
   
   B. The provider’s plan for replacement of essential assets.
   
   3. An explanation of the provider’s chosen rate design.
   4. Recommendations for any changes to the provider’s operations, including a plan on how the
   changes should be implemented.
   5. Certification by the entity performing the rate study that such study complies with Ark. Code
   Ann. § 14-234-801 et. seq. and the Rules.

Rate studies for providers that operate a joint and integrated water and sewer system shall analyze the total System.  Rate studies performed shall be an objective and unbiased review of the provider’s fiscal status. Proposed changes in rates should be based on achieving and maintaining a Debt Service Coverage Ratio of 1.1 or higher.

Rate studies may be submitted electronically to Arkansas Legislative Audit at: [email protected].

Water Service Providers in Fiscal Distress

The Natural Resources Division shall designate a water service provider as being under fiscal distress when a provider fails to obtain a rate study, fails to implement the rates contained in the study, or fails to maintain a debt service coverage ratio of 1.05 of higher. In addition, the Natural Resources Division may designate a water service provider as being under fiscal distress if its board members fail to:

1. Obtain required training;
2. File the required audit report or agreed-upon procedures and compilation report with the Arkansas Legislative Audit;
3. Maintain unencumbered cash or cash equivalents in an amount equal to one-twelfth of the total expenses from the most recent fiscal year;
4. Adopt a budget before the beginning of a new fiscal year providing for sufficient revenues to meet or exceed anticipated expenses during that fiscal year;
5. Make all required payments due to the United States Treasury – Internal Revenue Service, Arkansas Department of Finance and Administration, or Arkansas Department of Health;
6. Make any bond, loan, or lease payment; or
7. Comply with an administrative order of the US Environmental Protection Agency, Arkansas Department of Health, or Arkansas Division of Environmental Quality concerning operation and maintenance of the system. 

Within 90 days of being designated as being in fiscal distress, water service providers shall submit to the Natural Resources Division an improvement plan detailing the provider’s plan to resolve the issue or issues that caused it to be considered in fiscal distress. A provider will be determined by the Natural Resources Division to no longer be in fiscal distress if the provider resolves the issues that caused it to be considered in fiscal distress and obtains written verification from the Natural Resources Division that the issues have been resolved or the provider implements a change of rates that is shown by the study to resolve the provider’s fiscal insufficiency. 

• Water Service Provider Fiscal Distress Improvement Plan
• Water Service Provider Improvement Plan Template

View the Map of Systems in Fiscal Distress as of May 15, 2026

Water Service Provider Board Training

All members of a retail water provider governing board must complete eight hours of training within one year of becoming a board member.  A member of a water provider board as of January 1, 2021, shall receive the training required under this section by December 31, 2022.  A member with 10 years or more service on the governing board is exempt from training. The Natural Resources Division will consult with an advisory training board to develop the curriculum for the training.  Each provider board shall report the following information annually, by January 31.

• Retail Water Provider Board Annual Reporting Form – 2027

1. The names and contact information of each member on the provider board; 
2. Identification of which members have obtained eight hours of provider training; and 
3. An identification of which members have served on the board for more than ten (10) years and are exempt from the training requirement. 

Retail Water Provider Board Training Curriculum

Program Overview

Category	Details
Title	Retail Water Provider Board of Directors Training Curriculum
Approval Date	March 29, 2022
Governing Law	Act 605 of 2021
Required Completion	Within 1 year of election/appointment
Special Deadline	Board members serving on Jan 1, 2021: complete by Dec 31, 2022
Minimum Duration	8 hours
Training Format	Virtual or In-person
Exemption	Members serving 10+ years

---

Required Training Topics

Section	Topic Area	Subtopics
1	State and Federal Rules	Act 605 of 2021; Arkansas State Board of Health Rules; Safe Drinking Water Act; Arkansas Water Operator Licensing Law; Federal Lead and Copper Rules
2	Board Organization and Governance	Types of Boards; Member Roles (Legal, Fiduciary, Financial); FOIA (Meetings, Records, Emails, Recording); Conducting Meetings (Agendas, Minutes, Procedures); Policies; Personnel; Community Relations
3	Financial Management	Budgets; Rate Setting (O&M, Debt, Depreciation, Rate Design); Asset Management; Long-Term Planning; Capital Projects; Bids/Contracts; Audits; Record Keeping
4	Water System Operation	Operator Guidelines; Treatment & Distribution; Water Quality; Water Loss; Risk & Emergency Planning; Source Protection; Reporting
5	Technical Assistance	Available Resources

---

Training Provider Requirements

Requirement Area	Details
Approval Process	Submit curriculum to Natural Resources Division for review
Standards	Must meet minimum training requirements
Attendance Verification	Must ensure attendance and comprehension
Certificate Issuance	Provide certificate upon successful completion
Unique Identifier	Last 4 digits of SSN + first 3 letters of last name
Reporting Requirement	Submit list of attendees within 30 days

Program Contact: Autumn Causey
Email: [email protected]
Phone: (501) 682-3977