(a) A provider will be in fiscal distress if the provider fails to:

1. (1) Obtain a rate study as required;
2. (2) Implement the rates contained in the completed rate study within the time requirements provided under Arkansas Code § 14-234-802(c)(2)(B)(ii) – (iv); or
3. (3) Maintain a debt service coverage ratio of 1.05 or higher.

(b) A provider may be determined to be in fiscal distress if the provider:

1. (1) Does not comply with the training required by:

   1. (A) Arkansas Code § 14-234-805; and
   2. (B) 14 CAR § 2-107;
2. (2) Fails to file with Arkansas Legislative Audit an audit report or agreed-upon procedures and compilation report required by Arkansas Code § 14-234-120;
3. (3) Fails to maintain unencumbered cash or cash equivalents in an amount equal to one-twelfth (1/12) of the total expenses from the most recent fiscal year;
4. (4) Fails to 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. (5) Fails to make all required payments due to the:

   1. (A) Internal Revenue Service;
   2. (B) Department of Finance and Administration; or
   3. (C) Department of Health;
6. (6) Fails to make any bond, loan, or lease payment; or
7. (7) Fails to comply with an administrative order of the Environmental Protection Agency, Department of Health, or Division of Environmental Quality concerning operation and maintenance of the system.

(c) Providers determined to be in fiscal distress shall submit to the Department of Agriculture an improvement plan as required in Arkansas Code § 14-234-802(k) detailing in writing the provider’s plan to resolve:

1. (1) The violation or violations of rule or law; or
2. (2) Its fiscal insufficiency that caused it to be considered in fiscal distress.

(d) A provider will be determined by the Arkansas Natural Resources Commission to no longer be in fiscal distress if the provider:

1. (1) Resolves the violation of rule or law that caused it to be considered in fiscal distress and obtains written verification from the commission that the violation has been resolved; or
2. (2) Implements a change of rates that is shown by the study to resolve the provider’s fiscal insufficiency.