LITTLE ROCK — Critical editorials published in this newspaper have raised the ire of University of Arkansas Chancellor David Gearhart and others with ties to the university.
The initial editorial addressed a $3.1 million budgetary shortfall discovered last summer in the Division of Advancement at Fayetteville, characterizing that discrepancy as a “scandal” while maintaining that email exchanges between two university administrators about leaks of confidential information supposedly showed that they wanted to keep the problem “very, very quiet.”
In a guest column afterwards, an incensed, frustrated Gearhart presented the sharply contrasting picture of a regrettable budgeting miscalculation by two UA officials. He labeled the editorial “mean-spirited,” saying they distorted the facts.
I asked Gearhart for his documented timeline of events surrounding the controversy.
“I learned of a possible budget shortfall July 13 and we then thought it was $500,000,” he said. “I shared that discovery the same day.”
Gearhart said he then began informing university officials about the shortfall. On July 16 he met with his 10-member executive committee to inform them that foundation assets were being frozen. On July 18 he met with foundation officers.
On July 20, he ordered an internal audit that “involved many people in finance and administration.” Over three days in late July, Gearhart held numerous meetings with campus officials to put a hold on the budget and order a hiring freeze.
In early August, he held additional informational meetings with over 70 employees on campus.
On August 8, Joy Sharp, the university’s Division of Advancement budget officer was reassigned.
On October 15, Donald Pederson, vice chancellor for Finance and Administration, delivered the internal audit report, which determined a much larger problem than the university had initially believed, possibly as high as $3 million, said Gearhart.
On October 22, Gearhart met with UA System President Donald Bobbitt.
On October 24 and 29, he met with or notified “numerous staff, external stakeholders, benefactors and business leaders.”
He met with the Board of Trustees on November 2 to inform them of the shortfall and lay out the plan for nonrenewal of contracts.
On November 6, Gearhart notified Sharp and Vice Chancellor for Advancement Brad Choate that their mistakes would cost them their jobs, effective June 30.
Gearhart met with 15 members of the advancement office’s senior staff two days later.
He held numerous meetings between November 16 and 18 to discuss the shortfall with “about 30 campus officials, deans and development officers.”
By mid-November, he said, he’d met with about “150 people to inform them of this issue.” There was never any attempt to withhold information about the budget shortfall; just the opposite, he emphasized. By this point, many knew about the problem.
On November 26, the university received a Freedom of Information Act request seeking information about the shortfall from an Arkansas Business writer. Another request from an Arkansas Democrat-Gazette reporter arrived December 3 and was equally accommodated. The resulting news stories, Gearhart believes, were basically accurate on most events.
“There obviously was no attempted ‘cover-up’ whatsoever, although we don’t normally inform the general public about personnel issues or internal budget overages,” he said. “While we haven’t had a budget problem this large, we routinely have had overages in other departments.”
Gearhart said the Division of Advancement’s total annual budget was $10 million and that Choate had mistakenly overspent that by $3.1 million.
My understanding from Gearhart is that it apparently occurred largely because Choate hired more employees for the coming capital campaign than the number for which he had revenue available, hoping they would bring in more than enough to cover.
“All funds were spent on appropriate items, mainly personnel,” said Gearhart. “Frankly, I think he was overly focused on fundraising and letting his budget manager handle internal matters and budget items. Brad should have been watching more closely.”
The fact that the division’s budget comes from three sources was a complicating factor in knowing how much they had to spend, he explained. “But that’s not a valid excuse. He should have known.”
“We’ve accounted for every penny. They just overspent. They made a mistake.”
Gearhart said he was continuously notifying all those affected from the time he learned of the problem. “The editorials have been particularly meanspirited and, inexplicably, the editorial about the budgeting error largely ignored facts published on its own news pages, supplanting them with distortions and fabrications,” he said.
I’ll not speak to the editorials. But for any manager faced with such a startling revelation, seems to me that Gearhart handled this mistake professionally and transparently.
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Mike Masterson’s column appears regularly in the Arkansas Democrat-Gazette. Email him at mikemasterson10@hotmail.com. Read his blog at mikemastersonsmessenger.com.
Editorial, Pages 19 on 12/22/2012